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07-15-1975 Supporting DocumentsMINUTES N1.11,16 j REGULAR MEETING A Regular Meeting of the City Council of the City of Clermont war, hold in the Council Chambers on Tuesday, July 15. 1975. The meeting was called to order at 7:30 P. M. by Mayor Claude E, Smoak, Jr. with the following members present, Councilmen Oswalt, Byrd, Schroedel, and Blackburn. Other officials present wore: City Manager Hopkins, City Attorney Baird, City Clerk Carroll, City Controller Fleming, Director of Community Services, Smythe, Building Official Nagel, and Chief of Police Tyndal. Others present were: Mesdames Ray, Millikin, Sheldon, Walker, Oswalt; Mr. and Mrs. William Wilkins, and the Messrs. Czech, Sarg9ant, Cunningham, Williams, and Dougherty. A representative of the Sentinel/star.was also present. The invocation was given by Councilman Byrd, followed by repeating of the pledge of Allegiance in unison by those present. There was an addition to the Minutes of the Meeting held July 8, 1975 as follows: Mayor Smoak spoke in favor of all three of the requests as made by the Library Board, and had voted Naye on the motion made by Councilman Blackburn because he thought authorization should have been granted for making an entrance for off-street parking at that time. The Minutes were then approved as amend:d. City Manager Hopkins reported as follows: That in correspondence with the Department of Natural Resources regarding the city's grant application filed with them con- cerning the swimming pier he had been advised he should have some information back from them in about three or four weeks, and, That following Council action on July 8th wherein authorization was given to purchase the necessary paint and have city crews paint the new addition to the Library, he had received a request from Mr. Richard J. Klaas to paint the entire library building for $420.00. Council inquired if this offer included proper sealing, painting of the trim, use of a first class masonry paint, etc. and City Manager Hopkins advised he assumed so, but did not have anything in writing. Motion was made by Councilman Byrd, seconded by Councilman Schroedel and carried that the City Manager be intructed to accept ecessary s City Attorney Baird reported he had been advised by Mr. Bryan of the DOT that they were in need of a Resolution from the city designating that the proposed site for one of the drainage basin locations (Sunset Lake area) is not now being used as a park nor will it be in the future, in order to continue receiving funds from state and federal sources. Motion was made by Councilman Schroedel, seconded by Councilman Blackburn and carried that City Attorney" Baird prepare such a Resolution. Mayor Smoak asked that Council, in their 75-76 General Fund Budget Consideration, consider the inclusion of a $500.00 appropriation for a tree planting program, which has been previously discussed and which is in support of a recommendation made a couple of years before by Councilman Schroedel to start a city nursery at the treatment plant site, utilizing the spray irrigation located there. Councilman Schroedel reported briefly on his recent attendance of the Cooper Memorial Library Board meeting wherein it was reported the book circulation had doubled in June as compared to June of a year ago, and that the current summer program being offered was very successful with large numbers of children in attendance. Councilman Schroedel inquired if any further word had been received regarding the property on which the Garden Club is located as being owned by Lake County when it had been assumed to be owned by the city, and City Attorney Baird advised he had not been contacted as yet by the County Attorney who was to investigate the matter and report back, but that he would again contact him. MINUTES NV 1166 REGULAR MEETING A Regular Meeting of tile. City Council of the City of Clermont was held in the Council Chambers on Tuesday, July 15, 1975. The meeting was called to order at 7:30 P. M. by Mayor Claude E. Smoak, Jr. with the following members present: Councilmen Oswalt, Byrd, Schroedel, and Blackburn. Other officials present were: City Manager Hopkins, City Attorney Baird, City Clerk Carroll, City Controller Fleming, Director of Community Services, Smythe, Building Official Nagel, and Chief of Police Tyndal. Others present were: Mesdames Ray, Millikin, Sheldon, Walker, Oswalt; Mr. and Mrs. William Wilkins, and the Messrs. Czech, Sarggent, Cunningham, Williams, and Dougherty. A representative of the Sene tinl/Star_ycas ,also present. The invocation was given by Councilman Byrd, followed by repeating of the Pledge of Allegiance in unison by those present. There was an addition to the Minutes of the Meeting held July 8, 1975 as follows: Mayor Smoak spoke in favor of all three of the requests as made by the Library Board, and had voted Naye on the motion made by Councilman Blackburn because he thought authorization should have been granted for making an entrance for off-street parking at that time. The Minutes were then approved as amended. City Manager Hopkins reported as follows: That in correspondence with the Department of Natural Resources regarding the city's grant application filed with them con- cerning the swimming pier he had been advised he should have some information back from them in about three or four weeks, and, That following Council action on July 8th wherein authorization was given to purchase the necessary paint and have city crews paint the new addition to the Library, he had received a request from Mr. Richard J. Klaas to paint the entire library building for $420.00. Council inquired if this offer included proper sealing, painting of the trim, use of a --- first class masonry paint, etc. and City Manager Hopkins advised he assumed so, but did not have anything in writing. Motion was made by Councilman Byrd, seconded by Councilman Schroedel and carried that the City Manager be instructed to accept the offer of Mr. Klaas in lieu of the action taken by Council on July 8th, making sure that the necessary safeguards are included to do a good Job. Councilman Blackburn voted Nave on passage of the motion. City Attorney Baird reported he had been advised by Mr. Bryan of the DOT that they were in need of a Resolution from the city designating that the proposed site for one of the drainage basin locations (Sunset Lake area) is not now being used as a park nor will it be in the future, in order to continue receiving funds from state and federal sources. Motion was made by Councilman Schroedel, seconded by_ Councilman Blackburn and carried that City Attorney' Baird prepare such a Resolution. Mayor Smoak asked that Council, in their 75-76 General Fund Budget Consideration, consider the inclusion of a $500.00 appropriation for a tree planting program, which has been previously discussed and which is in support of a recommendation made a couple of years before by Councilman Schroedel to start a city nursery at the treatment plant site, utilizing the spray irrigation located there. Councilman Schroedel reported briefly on his recent attendance of the Cooper Memorial Library Board meeting wherein it was reported the book circulation had doubled in June as compared to June of a year ago, and that the current summer program being offered was very successful with large numbers of children in attendance. Councilman Schroedel inquired if any further word had been received regarding the property on which the Garden Club is located as being owned by Lake County when it had been assumed to be owned by the city, and City Attorney Baird advised he had not been contacted as yet by the County Attorney who was to investigate the matter and report back, but that he would again contact him. � El MINUTES N11 1167 Councilman Byrd inquired if any information had been forwarded by the School Board on the tennis courts located at the Elementary School, and City Manager Hopkins reported he had received nothing in writing Iodate. Upon City Manager Hopkins submitting a drawing of the annexed property to Council showing locations of existing buildings, it was determined there was insufficient space to be of any benefit to^rezone asly desi ­port-ionof thi­1111-1rnni d hvilman lCouncas uSchro_ede City Manager Hopkins submitted a preliminary feasibility report and estimated costs for servicing the Bob Wade property, located abutting the east city limits south of State Road 50, with water and sanitary sewer should it be annexed to the city. The report reflected that water service could be extended at a reasonable cost to Bob Wade ($1980.00) with work being done by city forces and using asbestos cement pipe already in stock, but that it was not recommended to provide sanitary sewer service at this time because of the cost of capital improvements, the type of facility that would be utilizing the service once it was in, and the amount of user fees that would be generated by that service, with the initial approximate cost for providing this service O $42,400.00. Mr. Hopkins advised this report had been discussed with Mr. Wade, and he appeared to be in agreement with the recommendations. Mayor Smoak advised he had met with Mr. Wade concerning this matter and he had advised he would not be interested in the sewer service cause of its exceptionally high cost with no other users at this time to share because the initial capital investment, but iscbfinitely interested in the water service and being annexed to the city. Mayor Smoak suggested to Mr. Wade that Council would probably consider it in those views, and that if his property was annexed, that there would be some written agreement from Council to him to the extent that he would not be furnished with ewer service for x number o a sanitary sf years, that, in essence, the sewer service is not a condition upon annexation, that Mr. Wade is interested primarily in fire - police protection and water service and feels that he and the city can come to an agreement for these services based on the figures submitted in Mr. Hopkins' report. Mayor Smoak felt that it would be in order, if Council so desired, to authorize the City Manager to meet with Mr. Wade and develop a proposal to present to Council so that the city will have protection as far as state law is concerned to meet the requirements of annexation and that Mr. Wade has a clear-cut understanding that sewer services will not be furnished to him in the near future, that he felt the City Manager and Mr. Wade could work out an agreement between the city and Mr. Wade that would be agreeable to Mr. Wade and advantageous to the city. Motion was made by Councilman -Byrd +got a��mmendateonsoenumeratedpkins be lb� ec Council discussed at length the legal position of the city as submitted by City Attorney Baird with regards the Baker -City Lease Agreement. Motion was made by Councilman B rd, seconded by Councilman Oswalt and carried that Cit A ttorney Baird nntifv Mr. Baker that_the city wishes to continue the lease agreePmn+t�binllinn 00 to City Manager Hopkins submitted a list of the city's delinquent lot mowing accounts and recommended It be given to the City Attorney for collection. City Attorney Baird recommended that a primary attempt for recovery be made via letter, with tive being to file claims in the County Small Claims Court. Motion was _ ,a., ti„ rnnnrilman Oswalt, seconded b Councilman Schroedel and carried}that n.4MA on. 0 MINUTES Ntl 1168 inasmuch as all of Council was not familiar with tho proposed gonoral rules for the city fire department as developed by Fire Chief Smythe, motion was made by With regards an obligation made by a former City Manager in 1969 to Don M. McCaffrey wherein property deeded to the city by Mr. McCaffrey would be reserved as street right-of-way and improved and/or a street constructed at a later date with no expense to Mr. McCaffrey in lieu of granting an casement for sanitary sewer construction, City Manager Hopkins advised Mr. McCaffrey had requested that the improvements be made. City Attorney Baird was requested to investigate the matter to determine the city's legal obligation and standing and report back to Council,and, City Manager Hopkins was requested to formulate an approximate cost for such a capital improvement. With regards City Manager Hopkins' report that the South Lake Press building could only be served with sanitary sewer by an easement across private property abutting on the south, and that the city had been unsuccessful in attempts to obtain such an easement, motion was made by Councilman Byrd seconded by c-r- .. _ .,Dan , fi rn c tv Attornev Baird The meeting was adjourned at 9:00 P. M. by Mayor Smoak. C/L Claude E. Smoak, Jr., Mayor Dolores W. Carroll, City Clerk ACCGIIMT!; PAYAfILIt - .,In,Y 1075 Glrmianl: P'UPIn Advance Elootri.c (2 [nllnntn) Andornon Engines, I.no. (Rinr�c, P,o(1n, Piston, Oac+kCts, Cot) Billy J. McMurphy (Bulbn at 'PCnnin Court) Bureau of Bucinonn Practice (Poaca.) Cal IN-gotroin ('ibner. & Paper) Clements (July Pant Control) Coblon' Radiator & Auto Electric ,iar. (:itartor RCbuilt & Repair) Duct -Pox Scrvice (Uniformn) F & R Office Supply, Inc. (Ditto Paper) Hughes Supply, Inc. (Cone odo Seats, Coolers, & Drill) Hunts Garden Censlar, Inc. (Sean & Dog Feel) Hovis & Baird (Legal Feco) Konsler Steel Co. (Angle & Expanded Metal) Lakeland Batteries, Inc. (Batteries) Lake Apopka Natural Gan (Utilities) Market Baskett (Forks, Spoons & Cups) Mobil Oil Corp. (Gas) Municipal Equip. Company (Brooms & Broom Refills) Standard Auto Parts, Inc. (Belts, Bolts, Bose, Filters, ect) Southern Building Code Congress Inter. (Plumbing Code) South Lake Press (Complaint Reports) Valbro Business Forms, Inc. (CR 558 Receipts) Womectco Citrus Tower (Over Head Drums) U.r=IES DEPARTMFX Allied Chlorine & Chemical Pro., Inc. (Cylinders Chlorine) B & H. Sales, Inc. (Pipe, Meter Base, Clamps) Brooks Products of Fla., Inc. (Meter Boxes) Hughes Supply, Inc. (Bender) Moreland Chemical Co., Inc. (H. T. H. Granular) The National Cash Register Co. (Water Billing) Sta-Con Inc. (Relays, Phase Monitors & B0:7bs) Standard Auto Parts, Inc. (Paint & Paint Thiner) 56.80 3.2.58 30.00 13.71 198. 115 9.00 41.00 14.6o 110.05 71.83 13.80 175.00 68.70 20.85 25.00 2.50 586.14 329.114 152.013, 36.6o 192.75;' 51.00 2,162.50 29.70 111.12 130.12 10.27 75.95 192.28 96.82 23.40 669,l66 TO: City Council FROM: City Manager SUBJECT: R&R Fund/Inter-fund Accounts BATE: July 15, 1975 Attached is a letter dated June 10, 1975 from Auditor John Greenlee wherein he recommends that the Equipment Renewal and Replacement Fund (General Fund) and its inter -fund Accounts be eliminated and any assets transferred. Also that theached is a $111,500.00rduedown of from thehGeneralund. It is and UtilityrFundsebeed cancelled and the remaining assets be transferred to the General Fund. Since the city has been receiving federal revenue sharing and using the funds primarily for capital outlay, transfers of operating funds to equipment renewal and replacement have not been made. In addition, the Utility Fund owes the General Fund $35,000.00 obligated during the sewer program. It is further recommended that this debt be cancelled. Attachments cc: City Clerk w/attachments Agenda 7/22/75 Controller w/attachments r �rrre>i�r„ (%(iri��ciG •.��iarrrezJ n n uu. n 1• " NM an P. q nuA Alln Mnlllll al11lA. ILn1111,A ;1%'!!rl � 111•rlln I IrrlilUA .l)II9 1; 1.1',IIMOII (. ,I.UNIIw ]]"J 11 149�1 ]III UIIIn Inllll :l r,�..11A1 IU(111 ,1nAllnll MY.MIIrn1 NIl ,I-n[LIIILI. II f. IAA 1. —m A 1•.II, : n . Clermont, Florida AMr n1c AN INn rlrure oP wnl .• •,,nl,•, r• A tune 1.0, 1975 Ll Nllx U:n PUI1419 A-0-1AII1A In.•... •. aPA __ ruamlA 1Nnnnln: or .• I I•Allll. C P A r:l'In lxn'.N PNNLIr. Ar foI1N lAN rU IUIu)IUY II lh : It ,pert Ih,pl ins RECEIVED JUN 11 1975 C11•, Mager I i Clermont Cl urlaon t, jlorida 32711 Dear Eob:�. ,ii ThjS letter confirms our position oh the matter we discussed in your office a few days ago regarding; the Equipment Renewal and Replace- ment Fund and its inter -fund accounts. It is our opinion that since there is no reasonable expectation that the Equipment Renewal and Replacement Fund will accumulate money for equipment replacement in the near future, the inter -fund accounts- -------- -= should be eliminated. We believe further that the Equipment Renewal and Replacement Fund itself should be eliminated as the only remaining assets would be minor. The elimination of the inter -fund accounts should be,approved by council action and can be handled by book entries. The elimination of the fund, if d,s!red, should also be approved by council action :Ind a dori:.[on will need to be made as to which fund should get the remaining assets. We also believe that all other inter -fund accounts should be examined y by yourself and Mr. Fleming and if there appears to be no intention, of x ,/' paying such accounts to -U- these also should 6e eliminated by council action. As you know this matter did not arise suddenly but has been under con- ! sideration for several years. Please call on us if we can answer any questions or be of further help to you in this matter. Yours very truly, GREENLEE, PAUL & FURNAS Ey C ti ed lic�.coun.:..t IIJG/.ib EQUIPMENT AND REPLACEMENT FUND 6-3-75 Exchange Dank of Clermont Tax Certificates Street Assessments Due from Other Funds: General Fund W & S Dept. Total Assets ASSETS i 4,163.12 549.31 1,908.21 $52,500.00 59,000.00 ill 500.00 $ 118,120.64 LIABILITIES - NONE SCHEDULE M' TAX CERTIFICATES #40 CcrCI fJ c:,i Co.. N.O .. 6• .30-76^ 19fi6 A '4 $ 36.16 6 67.47 6 4.03 9 21.33 11 74.90 15 58.33 18 16.03 24 8.98 34 13.09 1967 1 97.31 15 42.93 19 2.55 1968 —9- " -164.92— 11 -3, 83-- 12 34.73 19 10.01. 20 42.97 24 5.07 25 10.83 26 2.59 Total E 549.31 l �1 i. SCHEDUH: Or PAVING ASSESSI-IERTS 1974.1975 I140-148 Balance 6-30-75 8oseke, R. E. $ 85.92 Cooper, tom. Estate 139.99 Davis, Rosemary 254.17 Fleming, Ralph 30.00 Floyd, Asbury 43.18 Floyd, Asbury 25.62 [lodges, Sedo 323.25 Hodges, Sedo 75.28 Jackson, Eugene 43.19 Jackson, ,Eugene 187.29 Johnes, Aaron 135.25 Jones, Aaron, Jr. 45.37 Morris, Carrie 109.69 Peck Carolyn 243.61 Richardson, Mamie 47.24 Richardson, Mamie .72 Stevenson; Robert 85.21 Wootson, Tommy 36.13 Wright, Maybelle 3.90 $ 1908.21 TO: City Council FROM: City Manager SUBJECT: Actuarial Services DATE: July 15, 1975 Attached is correspondence dated June 25, 1975 from Dr. William Howard regarding his charges for actuarial services to the City of Clermont with regard to the pension plan for employees. �Rkins Attachment cc: City Clerk w/attachment Agenda 7/22/75 Controller w/attachment WILLIAM M. HOWARD, PH.D, uop Idn il. unw�nurry uan nur, fl All'I Ke1V II.l.K, ♦4111,111A :1VAon June 26, 1976 RECEIVED JUN2 7 1975 Mr. Robert M. Hopkins, City Manager City of Clermont Clermont, FL 32711 Dear Mr. Hopkins: The purpose of this letter is to set forth a basis for charges for actuarial services with regard to the pension plan for employees of the City of Clermont for the next two years. For the past year or two we have not had a formal basis for determining charges. Changing price levels and other factors have led me to review a number of aspects of the actuarial services which I provide for a number of Florida cities. I have found that my charges have gotten rather seriously out of line -- on the low side -- for some cities, with the result that I am realizing a rather low return on the time I spend on consulting services. The time required for actuarial valuation of a pension plan depends on the number of employees, the number of classifications of employees included in the plan (fire, police and general), the complexity of pension plan benefits (service retirement benefits, disability retire- ment benefits, survivors benefits) and whether or not employee contri- butions are required. On the one hand, your pension plan is complicated by the separate reporting on firemen, policemen and general employees required by Chapters 175 and 185 of the Florida Statutes. On the other hand, the plan provides benefits which require relatively simple calcu- lations and it does not require employee contributions. A schedule of charges I have prepared produces an annual fee for actuarial services for the City of Clermont of $800 plus travel expense based on 45 employees. This is a rather significant increase over the $487 for which I recently sent you a statement. So I propose that, in addition to travel expense, the fee be increased to $625 for the 1975-76 fiscal year, $750 for the 1976-77 fiscal year and the schedule of charges to which I have referred thereafter. If the price level continues to increase as it has in the recent past, I may revise the schedule before the 1977-78 fiscal year. But I would expect the charge to be the same except for changes in the price level. pane two Mr. Hopkins June 26, 1975 If you would like to consider having the plan valued biennially, rather than annually as In the past, with consulting services available continuously, I would be pleased to submit a proposal on that basis. The charge might be one-fourth to one-third less. There are advantages to annual valuation, particularly during periods of rising prices, but some cities do have their pension plans valued biennially. The charges proposed cover essentially the same actuarial services I have provided in the past: annual actuarial valuation of the pension plan including a report on the results in a form which is useful to City officials and acceptable to the director of the Police and Fire Pension Trust Fund in Tallahassee; an annual visit to Clermont at a mutually convenient time to discuss various aspects of the plan and related matters with City officials; verification of calculated retirement benefits as employees retire; and the usual correspondence and telephone calls occasioned by the normal administration of the plan. The proposed charges do not cover special studies requiring additional calculations or additional written reports that may be requested. The arrangement may be canceled by either party with reasonable notice. Actuarial valuation of the plan is to be based on employee data to be provided by the City of Clermont and on financial data included in the report of the trustee of the plan or the City's annual audit report which includes figures on the assets of the plan. Consulting services provided by professors at the University of Florida are subject to approval by the Board of Regents. I would appreciate learning your opinion on the appropriateness of this proposal and would be glad to answer any questions you might have with regard to it. Sincerely, William M. Howard WMH/lb Enclosure A sc11fi011L1: OF CHARGES I'OR ACTUARIAL SERVICES MUNICIPAL PENSION PLANS Nasic charge for the rirst Fifty Employees Ilonofit S_—_.tructurdl Employee Simile Com Rex Contributions{' i One pension plan One group of emgrloyoes $600 $900 $100 Second group of ermplayeos° 200 400 100 Second pension plan 400 600 100 An additional charge of two dollars is made for each employee over fifty' employees. The expense of travel incurred at the clients request is also charged. t A simple benefit structure is one that includes only service retirement pensions (including vested pension credit) determined by a relatively simple formula. A complex benefit structure is one that may include some combination of disability benefits, survivors benefits, and other types of benefits. b An extra charge of one hundred dollars is made if the plan requires con- tributions by employees. Some municipal pension plans require separate accounting for pension lia- bilities and costs on account of fire fighters, police Officers, and gen- eral employees, though all are members of the same plan and are included in a single report on actuarial valuation. d Some cities maintain separate pension plan for two or more groups of em- ployees, and separate reports on actuarial valuation are required for each. 5/15/75 TO: Cll.y CeuncII rRom: City Manager SIIBJUT Pension Investments DATE: July 14, 1975 Attached is correspondence dated July 11, 1975 from R, L. Carle of the Sun First National Bank of Leesburg. Upon Council authorization this correspondence will he forwarded to Doctor rogler and a Joint meeting as recommended by Mr. Carle will he arranged. �l1i Attachment / cc: City Clerk w/attachment Agenda 7/22/75 Controller w/attachment dun 1 Sun First National Bank of Leesburg inK July 11, 1975 RECEIVEDJUL 1 4 1975 Mr. Robcrl: M. Hopkins City Manager City of Clermont 1 West Gate Plaza Clermont, Florida 32711 Dear Mr. Hopkins: I am enclosing a copy of a letter received fran our investment advisors in Orlando, relating to Dr. Fogler's Statement of Investment Authorization from which it would appear that there will be no particular problem in working within the guidelines established by Dr. Pogler. i We have always valued very highly our relationship with the City of Clermont and wish very much to handle the trust account in a satisfactory manner.__We . I _. .____:. believe that more frequent visits by the trustee to the appropriate city officials might- very well be in order and also that a line of carmunication with Dr. rogler ought to be established by us and our investment advisors in Orlando. With this in mind, we think it would be beneficial to all parties concerned if we and our investment advisors could sit down with you and Dr. Fogler and discuss the future administration of the pension trust. If you agree, we would appreciate your advising us when it would be convenient for you and Dr. Fogler to meet with us in Clermont. I Very truly yours, I R. L. Carle Senior Vice President and Trust Officer enc. j i P.O. Box 8 / Leesburg, Florida 32748 / (904) 787-4111 B' . Sun First National Bank of Orlando no July 2, 1975 mr, II.I,. Carlo Senior Vice President and Trust Officer Sun First National Bank of f,cesburg P.O. Box Fight L,00sburg, Florida 32748 Dear Bob - RE: City of Clermont Pension Plan Trust After reviewing the Statement of Investment Authorization as prepared by Dr. Russell Fogler for the City of Clermont Pension Plan Trust, I see no particular problems with meeting the recommendations discussed in the correspondence. We are encouraging similar meetings with many of the accounts with whom we are dealing. The adoption of a Statement of Investment Authorization by the city of Clermont is appropriate. It indicates a sense of responsibility on the part of the city council. However, a meeting with the trustee to discuss the guidelines would probably have been beneficial prior to their adoption. In general, we agree with most of the guidelines as presented in Dr. Fogler's statement. There are a few areas where we think a comment is appropriate. Under the heading Savings Accounts and Short Term Securities the guidelines establish an absolute Limit of 20% of the total market value of the portfolio in this type of security. This necessarily implies that the funds will always be nearly fully invested. Obviously, this type of limitation would involve very little protection during the market declines of 1973 and 1974. We agree that the account is not of sufficient size to make prudent use of short term vehicles other than savings accounts and Treasury Bills. The fixed income securities guidelines are acceptable, although our own investment guidelines for an account of this nature would be to have approx- imately 50°/n of the total fund invested in fixed income securities. Dr. Fogler has recommended between 250/. and 35%. A copy of our own policy guidelines for employee benefit accounts is enclosed for your information. We feel that the rationale set forth in this memorandum justifies a higher percentage in fixed income securities. We agree with the quality rating of "A" or better. 'i'he guidelines suggest using bonds up to 25 years maturity. In employee P. O. Box 3631 / Orlando, Florida 32802 1- benefit accounts wo tiro currently limiting till of our purchnson to necuritien with nnnturltics of ton ycnrs or lcse. It in our opinion that the fixed income portion of an employce benefit portfolio should l;encratu a return consistent Willi rurrcnl intoreril rnten. The prohlenin experienced during the 1060's Willi rising Interest rates made long, term bonds inappropriate for thl:, function. We feel that investing In long term bonds at this point in time would be somewhat speculative, The rote of inflation is declining, but we have never experienced a period of large federal budget deficit financing without inflationary pressures resulting in the ensuing years. We therefore would avoid maturities in fixed income securities exceeding ten years. We endorse the proposal for diversifi- cation among types of issuers. We would add one additional guideline which we feel Is appropriate hnving to do with marketability. We would recommend that issues of fixed income securities with an initial offering size of less than $50 million not be considr_red for purchase. Small Initial Issues generally have a very linrlled secondary marketabillty, We feel that marketabill.Ly Is another very desirable characteristic In a fixed income portfolio. The common stock guidelines indicate that between 50110 and 700/6 of the total market value of the portfolio could be invested in common stocks. We commented earlier that we would limit this exposure to approximately 50%. The guide- lines regarding the quality of the companies to be invested in are appropriate, and we agree with them. We do not find it necessary to limit our purchases to stocks listed on the New York Stock Exchange, but do not find this to be a major encumbrance. Under item D of the common stock guidelines there is - a provision that 40°/o of the well established company investments be limited to low price earnings ratio industrial companies. This provision implies In our opinion the purchase of common stocks that will probably possess cyclical characteristics. There are of course exceptions, but generally this is the type of company that would fall into this category. We feel that these companies are appropriate for investment, but do not feel that funds should be forced into these issues, particularly to the extent of 4016 of the funds committed to common stocks. It also presents somewhat of a potential conflict with item G in this category regarding turnover. Cyclical stocks are generally good investments only if purchased at the right times and sold at the right times. 1 he turnover percentages as established under item G we feel could be somewhat limiting, particularly with 40% of your stocks limited to this type of security. We agree with the diversification provisions but point out again the limitations of the turnover guidelines. The account is approximately $60, 000 in size, and if the maximum amount allowable were invested in common stocks it would I amount to some $42, 000. If this $42, 000 were invested in twenty individual issues of common stocks the average commitment would be slightly over > 2, 000. A 5%, average turnover rate on a $60, 000 account would limit you to something on the order of *3, 000 per year. It Is our opinion that if a large i prrrrotnt,o of your Intnl tilorlui Is goln/, to ho Invotited In ritocks With cyclical characteristics, that this could bo a detrlmontul limitation. However, we agree With the concept that a high rate of turnover actually Impedes rather than enhances the performance results from an Investment portfolio. We simply disagree with the absolute sine of limitation. Someone from our organization will he glad to meet with the city of Clermont to discuss the views I have exprossed above. If we can provide you with any additional Information, please let me know. Sincerely yours, WL11[am C. Norton /kf Enc. t