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JOURNAL OF PROCEEDINGS

BOARD OF TRUSTEES OF THE POLICE AND FIRE RETIREMENT SYSTEM OF THE CITY OF DETROIT

9:00 A.M.

RETIREMENT SYSTEMS’ CONFERENCE ROOM ONE DETROIT CENTER

500 WOODWARD AVENUE 30TH FLOOR

DETROIT, MICHIGAN 48226

PRESENT JUNE ADAMS EX/OFFICIO TRUSTEE/CORPORATION COUNSEL ALTERNATE MARK DIAZ ELECTED TRUSTEE/POLICE/CHAIRMAN MATTHEW GNATEK ELECTED TRUSTEE/POLICE ANGELA R. JAMES EX/OFFICIO TRUSTEE/POLICE/MAYORAL DESIGNEE EDSEL JENKINS EX/OFFICIO TRUSTEE/FIRE/MAYORAL DESIGNEE BRENDA JONES EX/OFFICIO TRUSTEE/CITY COUNCIL PRESIDENT SEAN P. NEARY ELECTED TRUSTEE/FIRE GEORGE ORZECH ELECTED TRUSTEE/FIRE JEFFREY PEGG ELECTED TRUSTEE/FIRE/VICE CHAIRMAN JOHN SERDA ELECTED TRUSTEE/POLICE MICHAEL A. SIMON ELECTED RETIRANT TRUSTEE/FIRE LOUIS M. SINAGRA ELECTED RETIRANT TRUSTEE/POLICE ALSO PRESENT CYNTHIA A. THOMAS EXECUTIVE DIRECTOR DAVID CETLINSKI ASSISTANT EXECUTIVE DIRECTOR RYAN C. BIGELOW INVESTMENT OFFICER JOSEPH E. TURNER GENERAL COUNSEL JANET S. LENEAR RECORDING SECRETARY EXCUSED NONE ABSENT NONE

POLICE AND FIRE RETIREMENT SYSTEM OF THE CITY OF DETROIT MEETING NUMBER 3007 – THURSDAY – OCTOBER 2, 2014 2

CHAIRMAN

VICE CHAIRMAN

FOLLOWING A VERBAL ROLL CALL, CHAIRMAN DIAZ CONVENED THE MEETING AT 9:15 A.M.

OCTOBER 2, 2014 AGENDA BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE SIMON RESOLVED, THAT TODAY’S OCTOBER 2, 2014 AGENDA BE APPROVED AS PREPARED AND SUBMITTED BY THE BOARD’S RECORDING SECRETARY: YEAS – TRUSTEES ADAMS, GNATEK, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 7 NAYS – NONE RETIREMENT APPLICATION BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE SERDA RESOLVED, THAT THE RETIREMENT APPLICATION (SERVICE) WHICH IS OUTLINED BELOW BE APPROVED:

RETIREMENT APPLICATION

NAME, TITLE, DEPARTMENT: DARREN F. JOHNSON – SERGEANT - POLICE RETIREMENT TYPE, PLAN: SERVICE - NEW SER. CR., EFF. DATE: 24 00 09 – 09 26 14 YEAS – TRUSTEES ADAMS, GNATEK, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 7 NAYS – NONE


CONFIRMATIONS BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE SIMON RESOLVED, THAT THE RECEIPTS AND DISBURSEMENTS WHICH ARE REFERENCED BELOW BE CONFIRMED:

YEAS – TRUSTEES ADAMS, GNATEK, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 7 NAYS – NONE TRUSTEES JAMES AND JENKINS ENTERED THE MEETING AT 9:18 A.M., AS DID LOBBYIST OSCAR W. KING, III.


MANAGEMENT FEES, LEGAL FEES AND ADMINISTRATIVE AND OTHER EXPENSES BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE GNATEK WHEREAS, THE BOARD HAS BEEN PRESENTED WITH A SCHEDULE OF MANAGEMENT FEES, LEGAL FEES AND ADMINISTRATIVE AND OTHER EXPENSES (SAID SCHEDULE IS REFERENCED BELOW), AND WHEREAS, THE BOARD HAS BEEN REQUESTED TO APPROVE PAYMENT OF SAID MANAGEMENT FEES, LEGAL FEES AND ADMINISTATIVE AND OTHER EXPENSES, THEREFORE BE IT RESOLVED, THAT SUBJECT TO FINAL APPROVAL OF ALL TRANSACTION DOCUMENTS BY THE BOARD’S GENERAL COUNSEL AND SUBJECT TO STAFF AUDIT, THE BOARD APPROVES PAYMENT OF SAID MANAGEMENT FEES, LEGAL FEES AND ADMINISTRATIVE AND OTHER EXPENSES:

YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 9 NAYS – NONE


REFUNDS OF ACCUMULATED CONTRIBUTIONS BY TRUSTEE SINAGRA – SUPPORTED BY TRUSTEE SERDA RESOLVED, THAT THE CONTRIBUTIONS TO THE ANNUITY SAVINGS FUND BY MEMBERS OF THE POLICE AND FIRE RETIREMENT SYSTEM OF THE CITY OF DETROIT, AS SET FORTH ON LIST #3554, IN THE AMOUNT OF $296,578.44, INCLUDING INTEREST, BE REFUNDED PENDING AUDIT BY RETIREMENT SYSTEM ACCOUNTING STAFF: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 9 NAYS – NONE

1974 DEFINED CONTRIBUTION PLAN (EMPLOYEE LOAN PROGRAM) BY TRUSTEE JENKINS – SUPPORTED BY TRUSTEE SIMON RESOLVED, THAT THE 1974 DEFINED CONTRIBUTION PLAN LOAN REQUEST LIST SUBMITTED THIS DATE BE APPROVED AND THE AMOUNT OF $38,597.00 BE DISBURSED PENDING AUDIT BY RETIREMENT SYSTEM ACCOUNTING STAFF: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 9 NAYS – NONE MINUTES OF SEPTEMBER 11, 2014 BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE ADAMS RESOLVED, THAT THE MINUTES OF THE MEETING HELD THURSDAY, SEPTEMBER 11, 2014 BE APPROVED AS RECORDED AND SUBMITTED BY THE BOARD’S RECORDING SECRETARY:


MINUTES OF SEPTEMBER 11, 2014 - CONTINUED YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, ORZECH, SERDA, SIMON AND SINAGRA – 8 NAYS – NONE ABSTENTIONS – CHAIRMAN DIAZ – 1 MINUTES OF SEPTEMBER 18, 2014 BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE ADAMS RESOLVED, THAT THE MINUTES OF THE MEETING HELD THURSDAY, SEPTEMBER 18, 2014 BE APPROVED AS RECORDED AND SUBMITTED BY THE BOARD’S RECORDING SECRETARY: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 9 NAYS – NONE ASSISTANT EXECUTIVE DIRECTOR’S REPORTS ASSISTANT EXECUTIVE DIRECTOR DAVID CETLINSKI DISCUSSED ERIC EWING’S REQUEST TO WITHDRAW THE TOTAL SUM OF HIS ANNUITY SAVINGS FUND CONTRIBUTIONS. AT THE CHAIR’S DIRECTION, HOWEVER, MR. EWING WILL BE NOTIFIED IN WRITING THAT DUE TO LACK OF ELIGIBILITY ON HIS BEHALF (LACKS REQUIRED 20 YEARS OF SERVICE CREDIT), THE BOARD LACKS THE AUTHORITY TO GRANT HIS REQUEST. MANDATORY DIRECT DEPOSIT FOR CURRENT AND FUTURE RETIREES MR. CETLINSKI THEN ASKED THE BOARD TO CONSIDER ADOPTING A RESOLUTION WHICH WOULD MANDATE (EFFECTIVE JANUARY 1, 2015) THAT ALL CURRENT AND FUTURE POLICE AND FIRE RETIREES ENROLL IN DIRECT DEPOSIT FOR PAYMENT OF THEIR MONTHLY RETIREMENT BENEFITS.


MANDATORY DIRECT DEPOSIT FOR CURRENT AND FUTURE RETIREES – CONTINUED TRUSTEE NEARY ENTERED THE MEETING DURING THE BOARD’S DISCUSSION (AT 9:24 A.M.). PRIOR TO CONSIDERING APROVING MR. CETLINSKI’S REQUEST, STAFF WAS ASKED TO 1) ASCERTAIN THE COST OF PRODUCING PAPER CHECKS; AND 2) THE NUMBER OF RETIREES RECEIVING PAPER CHECKS. EXECUTIVE DIRECTOR’S REPORTS EXECUTIVE DIRECTOR CYNTHIA A. THOMAS HAD NOTHING TO REPORT. INVESTMENT OFFICER’S REPORTS INVESTMENT OFFICER RYAN C. BIGELOW DISCUSSED, AMONG OTHER MATTERS, MMA AND AMERICAN REALTY ADVISORS. MMA BY TRUSTEE GNATEK – SUPPORTED BY TRUSTEE ADAMS WHEREAS, The Police & Fire Retirement System of the City of Detroi t ( "P&F") is a par t ic ipant w i th r es pec t t o ce r t a i n obl igations of Municipal Mortgage and Equi ty , LLC and i ts subsidiaries (collectively, "MMA") to P&F, and WHEREAS , A formal request has been made to the Board of Trustees of P&F by MMA on September 25, 2014, relating to MMA’s Red River obligation to P&F as more fully described in materials dated September 16, 2014, and WHEREAS , M M A a n d P & F e n t e r e d i n t o s i x ( 6 ) p r i o r f o r b e a r a n c e agreements ("Forbearance Agreements"), as memorialized and as des c r i bed i n p r i o r r es o l u t i ons i ss ued by P & F ( " P& F Resolutions") dated November 13, 2008, June 25, 2009, June 10, 2010, June 2, 2011, February 9, 2012, and February 14, 2013, and WHEREAS , Per its prior Resolution, P&F agreed to grant a forbearance ("Forbearance") until April 30, 2015, as set forth in the P&F Resolutions, and


MMA - CONTINUED WHEREAS, The maturity date of the Forbearance set forth in the Forbearance Agreement is April 30, 2015 and MMA has requested that P&F extend the maturity date of the Forbearance until June 30, 2016 (" M a t u r i t y D a t e " ) , i n ac c o r d a nc e w i t h a l l o t h e r t e r m s a n d c o n d i t i o ns o f t h e F o r b e a r a nc e A g r e em e n t , a nd WHEREAS, In addition to the extension of the Maturity Date and subject to the terms of the Forbearance Agreement, P&F wil l forbear from enforc ing the maturi ty of the Red River obl igation of MMA to P&F so long as MMA is satis fying the Concessions (as defined below), and WHEREAS, In exchange for such extension of the Maturity Date, MMA agrees to the fol lowing terms: (i) P&F wil l receive 10.0% as the rate of interest pertaining to the Red River loan obligation owed by MMA to P&F; (ii) MMA will make monthly repayments of principal of $75,000 beginning September 1, 2014 and continuing through June 30, 2016 to repay the Red River loan balance in full by that date; (iii) MMA will make an additional monthly principal payment of $250,000 on October 1, 2014, additional monthly principal payments of $125,000 beginning November 1, 2014, and continuing through March 1, 2015, and an additional principal payment of $123,659.43 on April 1, 2015 on P & F’s Senior Debt (formerly “Cavan” and “Sheffield”); (iv) MMA will continue to pay all principal and interest due on all of its loan obligations owed to P&F on a current basis; (v) there will be no monetary de fau l t s under any o t her l oan , l oan ex t ens ion or l oan r es t r uc t ur e agreements between MMA and its other creditors; (vi) MMA wi l l inform Detroi t P&F of any such monetary default should one occur and (vii) MMA will not declare bankruptcy (collectively, "Concessions"), and WHEREAS , The Board of Trustees of P&F have discussed the foregoing matters, and WHEREAS , The Board is will ing to approve MMA's proposed course o f ac t ion re lat i ng to the extension of the Maturi ty Date of the Forbearance through June 30, 2016 , and to receive the Concessions as set forth above, therefore be it RESOLVED, That subject to the continuation of the terms of the prior Forbearance Agreements as provided herein and receiving the Concessions, the Board of


MMA - CONTINUED Trustees approves the following: ( i ) the proposed ac tion by MMA as outl ined above relating to the extension of the Maturi ty Date of the Forbearance to June 30, 2016 with all other terms and conditions under the Forbearance Agreement remaining in full force and effect, and be it further RESOLVED , That the Board of Trus tees of P&F, by any two individuals, are authorized to execute any and all instruments in connec t ion wi th the foregoing terms, inc luding a “Forbearance Letter Agreement” or o ther docum entary ev idence requi red to ev i dence P&F’s commi tment to forbear, subjec t to approval of any such d oc um e n t a t i o n by S p ec i a l L eg a l C o uns e l an d G e ne r a l Counsel, and be it further RESOLVED, That a copy of this resolution be forwarded to MMA; Special Legal Counsel, F. Logan Davidson, P.C.; and the Accounting Division of the Retirement System: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, NEARY, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 10 NAYS – NONE TRUSTEE JONES ENTERED THE MEETING AT 9:47 A.M.

, American Realty Advisors, the Board’s Real Estate Manager, has successfully overseen the

disposition of various non-strategic assets from the PFRS Individually Managed Account (IMA) since its inception, and

, Courtland Partners, Ltd., the Board’s Real Estate Consultant, has confirmed the IMA currently has an excess cash balance of approximately $25 million, and

, The Board’s Real Estate Manager has recommended to the PFRS Staff and Real Estate Consultant the transfer of excess cash from the IMA into ARA’S Core Realty Fund (the Core Fund) which is an account which the Real Estate Consultant is quite familiar with and continually performs due diligence on as well as recommends such account to other clients, and


, The Board’s Real Estate Consultant has submitted to the Board its memorandum dated September 17, 2014 wherein it recommends the Board authorize the transfer of Ten Million Dollars ($10,000,000) from the IMA to the Core Fund, and

, The Board’s Chief Investment Officer recommends the Board authorize the transfer of Ten Million Dollars ( $10,000,000) from the IMA to the Core Fund, and

, The PFRS desires to accept the recommendations of the Real Estate Consultant and the Board’s CIO, and

, The Board has discussed this matter in open session,

, That consistent with and subject to the full recommendations of the Real Estate Consultant and the Board’s CIO, the Board authorizes the transfer of excess cash in the amount of Ten Million Dollars ($10,000,000) from the IMA to the Core Fund, and be it further

, That the Board’s Real Estate Manager is authorized to proceed with the foregoing transfer in a manner consistent with the appropriate practice and procedures for such transfers, and be it further

, that a copy of this Resolution be provided to ARA and Courtland Partners Ltd.: YEAS – TRUSTEES ADAMS, GNATEK, JENKINS, NEARY, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 9 NAYS – NONE ABSTENTIONS – TRUSTEES JAMES AND JONES – 2

, since its engagement in 2012 as the Board’s Real Estate Manager, American Realty Advisors (ARA), has successfully implemented asset appropriate strategies for the PFRS Individually Managed Account (the IMA), and

, one of the most attractive remaining assets for disposition in the IMA is the Dublin Place Shopping Center (Dublin Place), and


, the Real Estate Manager has expressed an interest in purchasing Dublin Place, and

, Courtland Partners, Ltd., the Board’s Real Estate Consultant, has reviewed the Real Estate Manager’s interest in Dublin Place and submitted to the Board a memorandum dated September 17, 2014 recommending the pursuit of a sale of Dublin Place by the IMA to the Real Estate Manager for a combination of limited partnership interest in the ARA Strategic Value Realty Fund (the Value Fund) and cash, including, but not limited to, certain conditions as follows:

* $15,000,000 of limited partnership interests in the Value Fund, approximately (subject to net sale proceeds)

* $19,000,000 in cash to PFRS * An independent Third Party appraisal of the property

, the Board’s Chief Investment Officer (CIO) has reviewed the Real Estate Consultant’s Memo, as well as consulted with the Real Estate Consultant and Real Estate Manager, and submitted to the Board a memorandum dated October 2, 2014 accepting the foregoing Real Estate Consultant’s recommendation, with one exception – the amount returned to PFRS from the amount returned to the System should be $24 million, thereby the CIO’s recommended sale terms are as follows:

* $10,000,000 of limited partnership interest in the Value Fund, approximately (subject to net sale proceeds)

* $24,000,000 in cash to PFRS * Engagement of the Real Estate Consultant as the independent fiduciary (IF) for the PFRS

relative to the sale transaction * An independent Third Party appraisal of the property

, the PFRS Board has considered the recommendation of the Real Estate

Consultant and the Board’s CIO, and

, the Board has discussed this matter in open session,


, that consistent with and subject to the full recommendations of the Real

Estate Consultant and the Board’s CIO, the Board authorizes the sale of the Dublin Place from the IMA to the Real Estate Manager under the following terms and condition:

* $10,000,000 of limited partnership interests in the Value Fund * $24,000,000 in cash to PFRS approximately (subject to net sale proceeds) * Engagement of the Real Estate Consultant as the independent fiduciary (IF) for the PFRS

relative to the sale transaction * An independent Third Party appraisal of the Property * Such additional terms and conditions as set forth in the Real Estate Consultants Memo

, that the Board’s Real Estate Consultant shall, as the

PFRS IF, and the CIO shall proceed in a manner consistent with the foregoing resolutions to effectuate the sale of Dublin Place to the Real Estate Manager, and be it further

, that a copy of this resolution be provided to ARA and Courtland Partners, Ltd.: YEAS – TRUSTEES ADAMS, GNATEK, JENKINS, NEARY, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 9 NAYS – NONE ABSTENTIONS – TRUSTEES JAMES AND JONES – 2 CONTINUATION OF INVESTMENT OFFICER’S REPORTS MR. BIGELOW ADDRESSED THE BELOW-REFERENCED MATTERS:

THE SYSTEM’S WATCH LIST

JOHNSTON INTERNATIONAL (EQUITIES)

7850 E. JEFFERSON AVENUE CORPORATION


CONTINUATION OF INVESTMENT OFFICER’S REPORTS TRUSTEE PEGG ENTERED THE MEETING DURING MR. BIGELOW’S DISCUSSION (AT 9:50 A.M.), AND TRUSTEE JENKINS EXCUSED HIMSELF (AT 9:54 A.M.). MR. BIGELOW THEN SUSPENDED HIS REPORT SO THAT LELA WADLIN COULD PRESENT HER REPOSITORY SERVICES PROPOSAL TO THE BOARD. REPOSITORY SERVICES LELA WADLIN DISCUSSED REPOSITORY SERVICES; SPECIFICALLY:

POLICY COLLECTING

INITIAL DUCUMENTARY MATERIAL STORAGE

APPRAISAL/REVIEW

FINAL DIGITAL STORAGE

SPECIAL COUNSEL MARIE T. RACINE (OF RACINE & ASSOCIATES) ENTERED THE MEETING DURING MS. WADLIN’S PRESENTATION (AT 10:20 AM.). MS. WADLIN THEN PETITIONED THE BOARD TO APPROVE HER PERFORMING A “REPOSITORY NEEDS ASSESSMENT” SPECIFIC TO THE CHAPTER 9 CITY OF DETROIT BANKRUPTCY AND THE SYSTEM’S INVOLVEMENT, WHICH WOULD INCLUDE:

VISITING THE RETIREMENT SYSTEM

INTERVIEWING CRITICAL PERSONNEL

REVIEWING ON-SITE DOCUMENTS (TRADITIONAL AND DIGITAL)

DELIVERING A WRITTEN REPOSITORY NEEDS ASSESSMENT REPORT (CONTAINING SIGNIFICANT FINDINGS, RECOMMENDATIONS FOR IMPLEMENTING A REPOSITORY PROGRAM AND SUPPORTING INFORMATION TO AID IN PLANNING NEXT STEPS)


REPOSITORY SERVICES - CONTINUED TRUSTEE JONES EXCUSED HERSELF AT 10:23 A.M., AND SPECIAL COUNSEL RONALD A. KING ENTERED THE MEETING AT 10:46 A.M. THE BOARD EXCUSED MS. WADLIN AT 10:47 A.M. AND RECESSED UNTIL 11:00 A.M. FOR THE PURPOSE OF DISCUSSING AN ATTORNEY/CLIENT PRIVILEGED MATTER WITH SPECIAL COUNSEL MARIE T. RACINE, THE BOARD WAS ASKED TO ENTER INTO CLOSED SESSION. CLOSED SESSION BY TRUSTEE PEGG – SUPPORTED BY TRUSTEE GNATEK RESOLVED, THAT THE BOARD ENTER INTO CLOSED SESSION FOR THE PURPOSE OF DISCUSSING AN ATTORNEY/CLIENT PRIVILEGED MATTER: A ROLL CALL VOTE WAS TAKEN AS FOLLOWS: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, NEARY, PEGG, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 10 NAYS – NONE THE BOARD ENTERED INTO CLOSED SESSION AT 11:02 A.M. TRUSTEE JENKINS RETURNED TO THE MEETING AT 11:13 A.M. TRUSTEE JONES RETURNED TO THE MEETING AT 11:35 A.M. OPEN SESSION BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE PEGG RESOLVED, THAT THE BOARD RETURN TO OPEN SESSION: A ROLL CALL VOTE WAS TAKEN AS FOLLOWS:


OPEN SESSION - CONTINUED YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, JONES, NEARY, PEGG, ORZECH, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 12 NAYS – NONE THE BOARD RETURNED TO OPEN SESSION AT 12:00 P.M. PARAMOUNT LIMITED, LLC/PARAMOUNT LAND HOLDINGS, LLC BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE PEGG

, SPECIAL LEGAL COUNSEL IN THIS MATTER, , HAS REPORTED IN CLOSED SESSION ON THE STATUS OF THIS PENDING LITIGATION MATTER, AND

, SPECIAL LEGAL COUNSEL HAS DISCUSSED THE STATUS OF THE RELATED QUIET TITLE ACTION KNOWN AS STONECREST INVESTMENTS, LLC V. THE POLICE AND FIRE RETIREMENT SYSTEM OF THE CITY OF DETROIT, HERITAGE REALTY SERVICES, LLC, ET AL, WAYNE COUNTY CIRCUIT COURT CASE NUMBER 14-004051-CH MATTER (THE “STONECREST MATTER”), AND

, SPECIAL LEGAL COUNSEL HAS EXPLAINED THE DESIRE TO PROCEED WITH LIMITED DISCOVERY TO REQUIRE PLAINTIFF TO PRESENT ITS PROOFS WITH REGARD TO THE STONECREST MATTER, AND

, THE BOARD HAS DISCUSSED THIS MATTER IN OPEN SESSION, THEREFORE BE IT

, THAT THE BOARD AUTHORIZES SPECIAL LEGAL COUNSEL TO PROCEED WITH LIMITED DISCOVERY TO REQUIRE PLAINTIFF TO PRESENT ITS PROOFS WITH REGARD TO THE STONECREST MATTER, AND BE IT FURTHER

, THAT A COPY OF THIS RESOLUTION BE IMMEDIATELY FORWARDED TO RACINE & ASSOCIATES (ATTENTION: MARIE T. RACINE), 1001 WOODWARD AVENUE, SUITE 1100, DETROIT, MICHIGAN 48226; AND THE ACCOUNTING DIVISION OF THE RETIREMENT SYSTEM:


PARAMOUNT LIMITED, LLC/PARAMOUNT LAND HOLDINGS, LLC - CONTINUED

YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, JONES, NEARY, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ

- 12 NAYS – NONE PARAMOUNT LIMITED, LLC/PARAMOUNT LAND HOLDINGS, LLC BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE PEGG

, SPECIAL LEGAL COUNSEL IN THIS MATTER, , HAS REPORTED IN CLOSED SESSION ON THE STATUS OF THIS PENDING LITIGATION MATTER, AND

, SPECIAL LEGAL COUNSEL HAS DISCUSSED THE STATUS OF THIS MATTER AND THE NEED FOR CHANGES TO THE RECEIVERSHIP ESTATE, RECEIVER DUTIES AND/OR COMPENSATION DUE TO CHANGES IN CIRCUMSTANCES AND THE ASSETS OF THE RECEIVERSHIP ESTATE, AND

, SPECIAL LEGAL COUNSEL HAS EXPLAINED THE DIFFICULTIES ENCOUNTERED BY SPECIAL LEGAL COUNSEL AND THE RECEIVER IN ADMINISTERING THESE MATTERS, AND

, SPECIAL LEGAL COUNSEL HAS EXPLAINED THE REASONS FOR MAINTAINING A RECEIVER AND A RECEIVERSHIP ESTATE, AND

, THE BOARD HAS DISCUSSED THIS MATTER IN OPEN SESSION, THEREFORE BE IT

, THAT THE BOARD AUTHORIZES SPECIAL LEGAL COUNSEL TO PROCEED TO NEGOTIATE WITH THE CURRENT RECEIVER FOR MORE COST EFFECTIVE TERMS FOR RECEIVER COMPENSATION BASED UPON CURRENT DUTIES REQUIRED BY THE RECEIVERSHIP ESTATE AND/OR TO SEEK TO FIND AN ALTERNATE RECEIVER TO TAKE OVER THE RECEIVER DUTIES FOR RECOMMENDATION TO THIS BOARD, SUBJECT TO COURT APPROVAL, AND BE IT FURTHER

, THAT MR. DOUGLASS DIGGS OF HERITAGE REALTY SERVICES, LLC IS ASKED TO APPEAR AT THE MEETING OF THIS BOARD ON THURSDAY, OCTOBER 16, 2014, AT A TIME TO BE PROVIDED BY BOARD STAFF, FOR


PARAMOUNT LIMITED, LLC/PARAMOUNT LAND HOLDINGS, LLC - CONTINUED PURPOSES OF ANSWERING QUESTIONS TO BE POSED BY THIS BOARD, WHICH QUESTIONS MAY INCLUDE QUESTIONS WHICH SHALL BE CONVEYED TO HERITAGE REALTY SERVICES, LLC IN ADVANCE OF THE MEETING BY SPECIAL LEGAL COUNSEL BASED UPON DISCUSSION WITH THIS BOARD, AND FOR HERITAGE REALTY SERVICES, LLC TO SUBMIT TO SPECIAL LEGAL COUNSEL, DOCUMENTATION RELATED TO THE RECEIVERSHIP ESTATE, AS REQUESTED BY SPECIAL LEGAL COUNSEL, AT LEAST TWENTY-FOUR HOURS PRIOR TO THE BOARD MEETING DATE AND TIME, AND BE IT FURTHER

, THAT A COPY OF THIS RESOLUTION BE IMMEDIATELY FORWARDED TO RACINE & ASSOCIATES (ATTENTION: MARIE T. RACINE), 1001 WOODWARD AVENUE, SUITE 1100, DETROIT, MICHIGAN 48226); THE RECEIVER, HERITAGE REALTY SERVICES, LLC (ATTENTION: DOUGLASS J. DIGGS), 535 GRISWOLD, SUITE 1810, DETROIT, MI 48226, AND THE ACCOUNTING DIVISION OF THE RETIREMENT SYSTEM: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JENKINS, JONES, NEARY, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 12 NAYS – NONE APPROVAL OF LELA WADLIN AS BOARD ARCHIVIST BY TRUSTEE ORZECH – SUPPORTED BY TRUSTEE GNATEK

, Certain trustees expressed an interest in preserving information relating to the PFRS’ involvement in the City of Detroit’s Chapter Bankruptcy proceeding, and

, The PFRS Board authorized Lela Wadlin, an archivist, recommended by a trustee to present to the PFRS Board on how she can meet the PFRS’ interest to archive PFRS’ involvement in the Chapter 9 Bankruptcy through, among other things, the creation of a digital repository program, and

, On even date, Ms. Wadlin presented to the PFRS Board a business proposal (the “Business Proposal”) addressing the Board’s interest to archive PFRS’ involvement in the Chapter 9 Bankruptcy, and


APPROVAL OF LELA WADLIN AS BOARD ARCHIVIST - CONTINUED

, The Board has expressed an interest in engaging Lela Wadlin, as the Chapter 9 Archivist, to complete Step A of the Business Proposal, and


, The Board authorizes the engagement of Lela Wadlin, as the Chapter 9 Archivist, to perform the services set forth under Step A of the Business Proposal, and more specifically described as namely:

1. Capture information from and interact with the PFRS designated point of

contact 2. Assess the repository needs 3. Prepare, submit and present to the PFRS Board a comprehensive written

assessment findings report (the “Assessment Report”), and be it further

, That the PFRS Board Executive Director and Assistant Executive Director will coordinate with the Chapter 9 Archivist, to ensure access to the appropriate PFRS designated point of contact, and be it further

, That the fee for such services under Step A shall not exceed eighty (80) hours at a rate of Forty Dollars ($40.00) per hour, with a waiver of travel time and travel expenses, subject to such fees being invoiced in a form acceptable to the PFRS accounting section, and be it further

That the PFRS Board is authorized to enter into a consulting agreement, approved by General Counsel, with terms consistent with the foregoing, and be it further

, That a copy of this Resolution be provided to Lela Wadlin:

YEAS – TRUSTEES ADAMS, GNATEK, NEARY, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 9 NAYS – TRUSTEE JAMES – 1 ABSTENTIONS – TRUSTEES JENKINS AND JONES – 2


RECESS THE BOARD RECESSED FOR LUNCH FROM 12:10 P.M. UNTIL 12:45 P.M. CONCLUSION OF INVESTMENT OFFICER’S REPORTS MR. BIGELOW DISCUSSED WALKER & DUNLOP’S BALANCED FUND; PLANTE MORAN’S AUDIT OF THE SYSTEM; THE CITY’S HYBRID PLAN; GLC’S AGREEMENT AND THE BOARD’S EMERGING MANAGERS PROGRAM. TRUSTEE JENKINS EXCUSED HIMSELF AT 1:26 P.M. APPROVAL OF TRANSFER OF THE MANAGEMENT OF THE EMERGING MANAGERS PROGRAM IN-HOUSE TO PFRS BY TRUSTEE GNATEK – SUPPORTED BY TRUSTEE PEGG

, The PFRS established an emerging managers program (EMP) in 2008 and since its inception, North Point Advisors has been the manager of the EMP, and

, The PFRS desires to continue the EMP, and

, The Board’s Chief Investment Officer (CIO) has prepared and submitted to the PFRS Board a memo dated October 2, 2014 recommending the transfer of the EMP internally to be managed in-house by the CIO due, in relevant part, to the cost savings associated by the elimination of the fee paid to the current manager of the EMP, and

, The CIO has represented to the PFRS Board that this in-house transfer of the EMP has been discussed with and conceptually approved by Wilshire Consulting, the Board’s Investment Consultant, who will assist the CIO in managing the EMP at no additional charge from the Board’s Investment Consultant or CIO, and

, The CIO has represented to the PFRS Board that the addition of the management of the EMP, in addition to his current responsibilities, is still a manageable workload, and


, That the Board authorizes the transfer of the management of the entire EMP to the Board’s CIO, subject to (i) the Board’s Investment Consultant confirming in writing it will assist the CIO in managing the EMP at no additional fee; (ii) the Board’s CIO performing the services at no additional fee; and (iii) subject to the advice of General Counsel, if required, entering into an amendment to the Board’s Investment Consultant’s agreement, and be it further


APPROVAL OF TRANSFER OF THE MANAGEMENT OF THE EMERGING MANAGERS PROGRAM IN-HOUSE TO PFRS – CONTINUED

, That the Board desires for its staff and counsel to work cohesively for an orderly transition to the in-house management of the EMP, and be it further

, That a copy of this Resolution be provided to North Point Advisors; Wilshire Consulting; and the Board’s CIO: YEAS – TRUSTEES GNATEK, NEARY, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 8 NAYS – TRUSTEES ADAMS, JAMES AND JONES – 3 CLOSED SESSION BY TRUSTEE GNATEK – SUPPORTED BY TRUSTEE PEGG RESOLVED, THAT THE BOARD ENTER INTO CLOSED SESSION FOR THE PURPOSE OF DISCUSSING MATTERS INVOLVING ATTORNEY/CLIENT PRIVILEGE AND CHAPTER 9 BANKRUPTCY PROCEEDINGS: A ROLL CALL VOTE WAS TAKEN AS FOLLOWS: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JONES, NEARY, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 11 NAYS – NONE THE BOARD ENTERED INTO CLOSED SESSION AT 1:44 P.M. TRUSTEE NEARY EXCUSED HIMSELF AT 2:07 P.M. SPECIAL COUNSEL RONALD A. KING EXCUSED HIMSELF AT 2:41 P.M. OPEN SESSION BY TRUSTEE GNATEK – SUPORTED BY TRUSTEE ORZECH RESOLVED, THAT THE BOARD RETURN TO OPEN SESSION:


OPEN SESSION - CONTINUED A ROLL CALL VOTE WAS TAKEN AS FOLLOWS: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JONES, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 10 NAYS – NONE THE BOARD RETURNED TO OPEN SESSION AT 2:42 P.M APPROVAL OF FINAL SETTLEMENT DOCUMENTS, RE: SHUMAKE/ICG BANKRUPTCY AND ICG REAL ESTATE ADVISORS, LLC BY TRUSTEE PEGG – SUPPORTED BY TRUSTEE JONES

, with respect to the Robert Shumake (Shumake)/ICG bankruptcy case and certain ICG pending litigation, on August 14, 2014 the Board of Trustees approved a resolution accepting the settlement recommendation of Peter A. Jackson of Clark Hill, PLC (Special Counsel) and, among other things, authorized Special Counsel to (i) proceed in the manner consistent with the settlement recommendation/approval, and (ii) upon consummation of the settlement present the final settlement documentation for board approval and signing, and

, on even date, the Board has received and reviewed the proposed settlement documents, and

, on even date, Special Counsel, through General Counsel, has presented its October 1, 2014 confidential memorandum (the October 1st Memo) memorializing the final settlement terms and seeking execution of the settlement document which, in addition to this case, will serve as the vehicle to resolve three additional pending cases, and

, pursuant to Special Counsel’s prior recommendation and the October 1st Memo, the pertinent final settlement terms are summarized as follows:

*The General Retirement System of the City of Detroit (GRS) and Police and fire Retirement System of the City Detroit (PFRS) each will pay the Bankruptcy Trustee $37,500 (collectively $75,000) to


APPROVAL OF FINAL SETTLEMENT DOCUMENTS, RE: SHUMAKE/ICG BANKRUPTCY AND ICG REAL ESTATE ADVISORS, LLC - CONTINUED

(i) terminate the interest of ICG Real Estate Advisors LLC, (one of Shumake’s companies) in W&D Real Estate Opportunity Fund I, LLC (the R/E Fund) (f/k/a Inheritance Capital Group, LLC) (a real estate company controlled by GRS and PFRS (collectively GRS and PFRS shall be referred to as “RSCD”) and (ii) obtain ownership of ICG Leaseback Fund I, LLC another real estate company that owns warehouse leases to General Motors, and *The three pending Wayne County Circuit Court actions will be dismissed:

-PFRS v. ICG Real Estate Advisors, LLC, Case #10-10491-CK (the PFRS Action)

-GRS v. ICG Real Estate Advisors, LLC, Case #10-12652-CK (the GRS Action)

-ICG REA Manager LLC and ICG Leaseback Fund I LLC v. GRS and PFRS, Case #11-009094-CZ (the Joint Action)

*In resolution of the PFRS Action and the GRS Action any and all claims of ICG Real Estate Advisors, LLC or interests of ICG Real Estate Advisors, LLC in the R/E Fund leaving RSCD with the only interests in that fund. *In resolution of the Joint Action, RSCD will receive an assignment (in lieu of foreclosure) of all interests in ICG Leaseback Fund I, LLC and an order authorizing the payment to RSCD of approximately $4.5 million in rents currently held by the mortgagee of certain warehouses leased to General Motors, and

, the PFRS Board has considered the recommendation of its Special Counsel

and General Counsel, and

, the Board has discussed this matter in open session,



, that consistent with and subject to the full recommendations of Special

Counsel and General Counsel, the Board hereby approves the settlement documents and final settlement terms, the pertinent provisions, which are as follows:

*The General Retirement System of the City of Detroit (GRS) and Police and fire Retirement System of the City Detroit (PFRS) each will pay the Bankruptcy Trustee $37,500 (collectively $75,000) to (i) terminate the interest of ICG Real Estate Advisors LLC, (one of Shumake’s companies) in W&D Real Estate Opportunity Fund I, LLC (the R/E Fund) (f/k/a Inheritance Capital Group, LLC) (a real estate company controlled by GRS and PFRS (collectively GRS and PFRS shall be referred to as “RSCD”) and (ii) obtain ownership of ICG Leaseback Fund I, LLC another real estate company that owns warehouse leases to General Motors, and

*The three pending Wayne County Circuit Court actions will be dismissed:

-PFRS v. ICG Real Estate Advisors, LLC, Case #10-10491-CK (the PFRS Action)

-GRS v. ICG Real Estate Advisors, LLC, Case #10-12652-CK (the GRS Action)

-ICG REA Manager LLC and ICG Leaseback Fund I LLC v GRS and PFRS, Case #11-009094-CZ (the Joint Action)

*In resolution of the PFRS Action and the GRS Action any and all claims of ICG Real Estate Advisors, LLC or interests of ICG Real Estate Advisors, LLC in the R/E Fund leaving RSCD with the only interests in that fund. *In resolution of the Joint Action, RSCD will receive an assignment (in lieu of foreclosure) of all interests in ICG Leaseback Fund I, LLC and an order authorizing the payment to RSCD of approximately $4.5 million in rents currently held by the mortgagee of certain warehouses leased to General Motors, and be it further



, that the Board authorizes the execution of the settlement documents and any ancillary documents necessary to effectuate the foregoing resolutions and intent of the Board, provided; however, that such execution of documents shall be consistent with the Board authorized signing policy, and be it further

, that a copy of this resolution be provided to the Board’s Special Counsel: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JONES, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 10 NAYS – NONE PUBLIC RELATIONS ADVISOR’S REPORTS PUBLIC RELATIONS ADVISOR BRUCE BABIARZ PROVIDED THE BOARD WITH A BRIEF STATUS UPDATE REGARDING THE CITY’S CHAPTER 9 BANKRUPTCY PROCEEDINGS. MANDATORY DIRECT DEPOSIT FOR CURRENT AND FUTURE RETIREES THIS MATTER WILL BE BROUGHT BACK BEFORE THE BOARD ON OCTOBER 16, 2014. EMPLOYEES’ BENEFIT PLAN BY TRUSTEE PEGG – SUPPORTED BY TRUSTEE GNATEK

, Pursuant to Title 9, Chapter VIII of the Charter of the City of Detroit, the City of Detroit Employees’ Benefit Plan and its governing board (the “EB Governing Board”) were established for the purpose of providing hospital, surgical and death benefits to all employees (general. police and fire) of the City of Detroit , and

, Title 9, Chapter VIII of the Charter grants the EB Governing Board “the general administration, management and responsibility for the proper operation of the plan and for making effective the provisions” of the Employees’ Benefit Plan, and


EMPLOYEES’ BENEFIT PLAN - CONTINUED

, Notwithstanding the fact that the Employees’ Benefit Plan provides benefits to all City employees, the foregoing charter provisions restrict the composition of the Governing Board to trustees of the trustees of the General Retirement System of the City of Detroit only, and

, The trustees of the Police and Fire Retirement System of the City of Detroit (PFRS), as well as the members and beneficiaries of PFRS, essentially have no representation on the EB Governing Board, and

, The EB Governing Board received a request from the Director of Human Resources and Labor Relations, Michael Hall, dated May 13, 2014 for approval of a future payment of Five Million Five Hundred Thousand ($5,500,000.00) Dollars from the Rate Stabilization Reserves to two different Voluntary Employee Beneficiary Associations (the “VEBAs”) trusts to be created under the City’s Fourth Amended Plan for the Adjustment of Departments, and

, The Governing Board also received a request from the Official Committee of Retirees for the City of Detroit (the “Committee”) to transfer Five Million Five Hundred Thousand ($5,500,000.00) Dollars from the Rate Stabilization Reserves Fund to fund the two VEBAs, and

, Following presentations from representatives of the City and the Committee, without a formal notice to PFRS, the EB Governing Board ultimately approved the transfer of Five Million Five Hundred Thousand ($5,500,000.00) Dollars from the Rate Stabilization Reserves Fund to the two VEBA’s – GRS VEBA and PFRS VEBA - upon their proper legal formation and consistent with the provided presentation materials, subject to the appointment of a representative of the EB Governing Board to each VEBA, and

, The PFRS Board expresses its dissatisfaction and objections to the Employee Benefit Plan’s foregoing decision as well as the composition of the EB Governing Board which, among other things, lacks any PFRS representation, and

, This matter has been discussed in open session,

, That the PFRS Board expresses its dissatisfaction and objection to Employee Benefit Plan’s intent to transfer Five Million Five Hundred Thousand ($5,500,000.00) Dollars


EMPLOYEES’ BENEFIT PLAN - CONTINUED from the Rate Stabilization Reserves Fund to the two VEBA’s – GRS VEBA and PFRS VEBA - upon their proper legal formation and consistent with the provided presentation materials, subject to each VEBA’s appointment of a representative of the Governing Board, and be it further

, That the PFRS Board expresses its dissatisfaction and objection to the long- standing composition of the EB Governing Board which does not include any representatives of PFRS thus jeopardizing the ability to fully protect the interests of the members and beneficiaries of PFRS, and be it further

, That the PFRS Board further requests City Council to pursue a City Charter amendment to revise the composition of the Governing Board to provide for equal representation of PFRS and GRS active and retired members, and be it further

, That a copy of this Resolution be provided to Honorable City Council President Brenda Jones, the Honorable Detroit City Council, and the Board of Trustees of the Employees’ Benefit Plan: YEAS – TRUSTEES ADAMS, GNATEK, JAMES, JONES, ORZECH, PEGG, SERDA, SIMON, SINAGRA AND CHAIRMAN DIAZ – 10 NAYS – NONE

PUBLIC FORUM AT ., CHAIRMAN DECLARED THE MEETING IN OPEN FORUM FOR GENERAL DISCUSSION BY THE PUBLIC ATTENDING THE MEETING. ADJOURNMENT THERE BEING NO FURTHER BUSINESS BEFORE THE BOARD, CHAIRMAN ADJOURNED THE MEETING AT UNTIL THURSDAY,

, AT ., IN THE CONFERENCE ROOM OF THE RETIREMENT SYSTEMS, ONE DETROIT CENTER, 500 WOODWARD AVENUE, 30TH FLOOR, DETROIT, MICHIGAN 48226.


ADJOURNMENT - CONTINUED RESPECTFULLY SUBMITTED,

__________________________________________________ DAVID CETLINSKI, ASSISTANT EXECUTIVE DIRECTOR

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