PFRS newsletter - detroit police & fire retirement system

Membership Newsletter Fall 2012
Police and Fire Retirement System Investments in Detroit
properties spark growth, buildings fully occupied.
Chairman’s Message
from Matt
DETROIT, MI – The Police and Fire
Retirement System of the City of Detroit has
received full payment on its investment in the
One Kennedy Square building and other key
properties are seeing stable returns and record
occupancies, a report shows.
Just a few years ago few banks would lend
money for renovation or new construction
projects in the City of Detroit. If it were not
for the investments made by the Police and
Fire Retirement System many of these buildings
would remain vacant and the One Kennedy
Square project may never have been built.
“The Police and Fire Retirement System is
proud of its record of investing in commercial
properties within the City of Detroit,” said
Chairman Matt Gnatek. “The majority of
the commercial properties in our Targeted
Investment Fund are generating good yields
and the entire $3 million loan made to the One
Kennedy Square project has been repaid in full.
No other pension system has made these types of
investments to help grow businesses in the City.”
Gnatek said the Pension Fund investments were
highlighted by the Wall Street Journal and a
real estate investment consultant. The Pension
Fund’s Detroit Targeted Investment Fund
had invested up to $25 million in revolving
loans prior to the loan repayment from One
Kennedy Square. Many of the development
projects, Gnatek noted, could not have been
done without financing from the Fund. The
investment report was prepared by Alex Brown
Realty, Inc. and presented to the Board by
advisor Marty West at a recent meeting.
“For a long time one of the few capital sources
available to developers in the City of Detroit
was the Police and Fire Pension Fund,” said
West. “They had a plan to help stimulate growth
in key areas of the city and it has resulted in
performing loans and nearly fully occupied office
and apartment buildings.”
The PFRS invested in the Kales Building,
One Kennedy Square, Lafer Building, Union
at Midtown, Beethoven Apartments and the
College Park Medical Building – all within the
City of Detroit. The pension fund is receiving
minimum interest rates ranging from 7.25
percent to 8.5 percent.
“The Police and Fire Pension Board has taken a
lot of heat for so-called bad investments,” said
Gnatek. “While there have been some isolated
projects that went awry, the vast majority
– even with the benefit of hindsight – were
excellent investments for financial reasons and
to help build density in the core city areas and
underserved areas of the City and that was
(continued on page 4)
It’s fall in the Motor
City and your Board of
Trustees of the Police and
Fire Retirement System
and staff are diligently
at work protecting the
assets you have worked so
hard for. Please allow me
to make this very clear,
this Board is about doing
the right thing, investing
your money wisely and
prudently and protecting the pension funds that
will pay for our retirements (those of us still on
the job) and provide stability for our retirees and
beneficiaries perpetually into the future.
This is a tough job and all of us – Trustees and
Staff – agree on one thing to preserve and protect
the fund. Having said that, you can be assured
that there is a lot of give and take in reaching
Board decisions and I have pledged to run the
meetings with transparency, openness and full
communication with all Trustees, Staff and our
key vendors. Other than legally required closeddoor
sessions, mainly for personnel matters, ALL
of our business is conducted for everyone to see.
Further, we have a new website www.
PFRSDetroit.org and it provides everything
you would want to know about the Pension
Fund and our actions. We list meeting minutes
and you can even calculate your retirement
benefits on-line.
(continued on page 3)

Leadership changes, transitions at
Police and Fire Board and Staff
Cynthia A. Thomas was named by the General
and Police and Fire Retirement System Boards
as the replacement for Walter Stampor this
summer after Mr. Stampor decided to retire
after 44 years of service to the Pension Funds.
Ms. Thomas had served for 8 years as the
Assistant Executive Secretary to the Police
and Fire Retirement System under Mr.
Stampor and 26 years in varying roles with the
Retirement Systems. Ms. Thomas is the first
woman, first African American and one of
the youngest ever to assume the duties of
Executive Director of the City of Detroit
Retirement Systems.
Filling Ms. Thomas’ former position as
Assistant Executive Director or assistant
chief administrator for the Police and Fire
Retirement System is David Cetlinski.
David has been with the PFRS in varying
roles since 1994.
PFRS Board Chairman Matt Gnatek said
that Ms. Thomas was the “obvious and best”
choice to replace Mr. Stampor. Both the
PFRS and GRSD Boards voted in favor of her
appointment to the expanded role of overseeing
the administration of the General Retirement
System and its 6,800 active and 11,900 retired
members as well as the 4,000 active and 8,000
PFRS system members.
The Police and Fire Retirement System is
currently comprised of a 14-member Board
of Trustees that oversees the $3.5 billion fund
serving 8,000 retired police and fire and 4,000
active duty first responders.
“Cynthia is very bright, highly organized,
dedicated and very effective in administering
the day-to-day business of the Retirement
Systems and we are delighted that she will step
into the shoes of Walter Stampor who served
the system well for all these years. We wish
Walter a well-earned retirement and welcome
Cynthia to this expanded role,” Gnatek said.
Facts, Did you know that…
While the General Retirement System and
Police and Fire Retirement System of the City
of Detroit are two separate and independent
entities established under the City of Detroit
Charter, on select and specific opportunities they
may choose to invest in the same investment
opportunities presented to and approved by
their respective boards.
The Police and Fire Retirement System of the City
of Detroit was founded under City Charter and
is the fiduciary for the pensions of all police and
fire personnel. As of 2012 there are some 4,000
active members and more than 8,000 retirees in
the system. The PFRS is a separate entity from
the city’s General Retirement System. For more
information please visit www.PFRSDetroit.org.
The General Retirement System is currently
comprised of a 10-member board of trustees
that has oversight for a $2.4 billion trust
representing 6,800 active members and more
than 11,500 retirees. The General Retirement
System of the City of Detroit is the fiduciary
for the trust that pays the pensions of all
general City of Detroit employees. There are
currently 6,800 active members and more
than 11,900 retirees in the General Retirement
System. For more information, please visit
www.rscd.org.
Board Chairman Matt Gnatek and
outgoing Chairman Sean Neary
In mid-summer, incoming Chairman Matt
Gnatek took the gavel from outgoing Chairman
Sean Neary, who continues to serve on the Board
as a Trustee. Gnatek’s term runs through June of
2013. The Vice Chairman of the Board is George
Orzech, an elected trustee who represents active
duty fire fighters. Gnatek is a Detroit Police
Detective and Orzech is a Batallion Chief in the
Fire Department.
Newly elected Trustees include retiree
representatives Michael Simon, fire department;
and Louis Sinagra, police department, each of
whom were elected by their respective retiree
members in a formal election process this summer.
Also joining the Board as Trustees by
appointment from Mayor Dave Bing are:
Medina Noor, Michael Bridges, Angela James
and Lamont Satchel.

Chairman’s Message from Matt cont.
We welcome anyone to attend our weekly meetings every Thursday at 9 a.m.
and encourage everyone to visit the website and learn the facts about your
Pension Fund.
outright defrauded. We are working with advisors and legal counsel to
recover any assets in these cases. Make no mistake, we are being relentless in
the pursuit of asset recovery and bringing any wrongdoers to justice.
“...all of us – Trustees
and Staff – agree on
one thing to preserve
and protect the fund”
There are as many
issues facing the Board
this season as there are
leaves falling from the
trees. We are utilizing
our in-house investment
resources and staff and
have secured the best
financial advisors in the
industry after a lengthy Request For Proposal process. We are raking through
every aspect of the fund to make certain it is operating in your best interests.
We are dealing with the global economic crisis as well as our own troubled
city financial issues. As Police and Fire Fighters, we are dealing with
imposed new City work rules and their impact. As your elected professional
representatives you should know that we have your back.
I am often asked about “bad investments” and newspaper articles of the
past citing scandalous material. Let me say this, the Board had made a few
isolated investments in the past that did not meet with our expectations.
It’s fair to say that in even rarer cases the Board may have been misled or
While these few matters of the past made headlines, the overwhelming
majority of good investments and good news doesn’t seem to be of news
interest. Example, our Targeted Investment Fund received substantial
positive media exposure around the country but only a few publications in
Detroit even mentioned it. We seem to be pretty good at focusing on the
negative here and ignoring the positive altogether.
Your Board and staff is operating in the most transparent manner possible.
We are operating under a very stringent Ethics Policy, Governance Policy
and have zero tolerance for any unethical behavior. The good news is that
we are 99% funded and the annuity rate for the current year is 5.5%. Our
investments are yielding good returns in a tough economy. We are doing
better than most of the public pension funds in Michigan and those of other
cities, counties and states. We pledge to keep this high standard of conduct
and good investments going and welcome your comments and questions.
Please write me at MGnatek@rscd.org if you have any specific questions that
need to be addressed, visit us at www.pfrs.org or contact our staff directly at
313-224-3362.
PFRS Board of Trustees
Elected Employee Members:
Matthew Gnatek - Chairman
Police Sergeant
Term Expires June 30, 2013
George Orzech
Battalion Fire Chief
Vice Chair
Term Expires June 30, 2014
Sean Neary
Fire Sergeant
Term Expires June 30, 2015
Jeffrey Pegg
Fire Fighter
Term Expires June 30, 2013
James Moore
Police Lieutenant
Term Expires June 30, 2014
Mark Diaz
Police Officer
Term Expires June 30, 2015
Elected Retired Members:
Louis Sinagra
Retired Police Trustee
Term Expires June 30, 2015
Michael Simon
Retired Fire Trustee
Term Expires June 30, 2015
Ex-Officio Members:
Dave Bing
Mayor
Angela James
Mayor Appointee
Lamont Satchel
Mayor Appointee
Alternate - Kirk Lewis
Deputy Mayor
Brenda Jones
Council Designate
City Council
PFRS Executive Staff and Consultants
Executive Director: Cynthia Thomas
Assistant Executive Director: David Cetlinski
Recording Secretary: Janet Lenear
Medical Director: Reginald E. O’Neal, D.O.
Legal Counsel: Joe Turner, Clark Hill
Public Relations: Bruce Babiarz,
BAB Associates, LLC
Cheryl R. Johnson
Finance Director
Alternate - Tanya Stoudemire
Michael Bridges
Deputy Treasurer
Medina Noor, Esq.
Director Administrative Hearings
Krystal Crittendon, Esq.
Corporation Counsel
Alternate - James Edwards, Esq
Corporation Counsel

U.S. POSTAGE
PAID
DETROIT, MI 48201
PERMIT NO. 788
Police and Fire Retirement System Investments in Detroit
properties sparks growth, buildings fully occupied cont.
exactly what the intent of these investments were at a time when no one
would touch City properties.”
“Everyone is praising Dan Gilbert and Quicken Loans and other companies
for moving downtown and they should,” said Gnatek. “We would
appreciate acknowledgement that with Pension Fund monies wisely invested
these buildings represent more than 40 stories of buildings with commercial
space and apartments now occupied in the City. We are very proud of
helping make this happen at a time when no one else would and the Board
was criticized for throwing good money after bad.”
Redico, owners of One Kennedy Square, refinanced the 10 story building
paying a $3 million mezzanine loan off to the PFRS five months early. The
building was refinanced for $27.3 million or $112 per square foot.
$ Millions
$5,000
How PFRS Pension Fund Compares
Pension Funding Level:
Wayne County..50%
MERS................74.5%
*
DPFRS..............99.9%
**
(Your fund)
*MERS stands for Michigan Employment Retirement System for the State of Michigan. Information is from December 31, 2010
** Funding Levels as of June 30, 2011 (last fully audited fiscal year)
“This building has been a great addition to the city skyline adjacent to
Campus Martius Park,” said Redico CEO Dale Watchowski. “It likely
would never have happened without the mezzanine financing from
Invest Detroit and the Detroit Police and Fire Retirement System. We are
very grateful for their vision and foresight in establishing their Targeted
Investment Fund.”
An added bonus to the PFRS, a news release on the success of the
Targeted Investment Fund generated positive media coverage locally and in
newspapers and on-line media throughout the country. It should be noted
that the PFRS and GRS are among the few funds that have invested in local
properties to stimulate growth in the City of Detroit.
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
80
Actuarial Accurued
Liability
82 84 86 80 88 90 92 94 96 98 00 02 04 06 08 10 11