City of Fort Wayne Community Trust – 2008 Recap

This afternoon, I attended a meeting concerned with a recap of the City of Fort Wayne Community Trust, aka Light Lease Fund.  Not very good news, I’m afraid.  But, I guess unless you’ve been living in a hole the past year, you aren’t surprised.

At the end of the December, 2007, the fund had peaked at an all time high of $35,116,036.  In July, the fund was down by $5 million and by the end of 2008, another $5 million for a finish of $25,648,000.

Now, as I said, it’s completely understandable – to a point – that there would be a loss.  The trust dropped 27.6% for the year, which when you compare with the “Wilshire Endowments at $50 million and under” fund, it lost 26.9% for the year, so we were in about the same boat.  When you compared our 27.6% with the S&P 500 – its loss was 37.0% while the MSCI EAFE lost 43.1%.  (The MSCI is, “The MSCI EAFE Index is recognized as the pre-eminent benchmark in the United States to measure international equity performance. It comprises 21 MSCI country indices, representing the developed markets outside of North America: Europe, Australasia and the Far East.”)

The facts out of the way, I’m going to rant and opinionate a bit here.

I want to give you that disclaimer so that what I write next is taken with the grain of salt that it’s probably worth.  I don’t pretend to understand the workings/psychology or anything else in regards to the stock markets, funds, trusts – whatever.  I’m actually pretty ignorant about it.  However, I think any average citizen would have sat through this meeting and came away with the same feeling I had.

First, the current state of things, including the development of, was gone into exhaustively.  I think any idiot who has a boob-tube is pretty much in the loop with what’s going on.

Admittedly, the money managers stated things were going to get worse in 2009.  In fact, they mentioned that, “the economy will be in the tank for the balance of 2009.  Unemploymen will reach 10%, it is currently at the mid-7’s.”  There were a couple of other issues mentioned along these lines as well.

Knowing this, the two money managers balked when asked questions about why more hadn’t been done to protect our investment.  True, I don’t think anyone could have predicted the last 6 months of last year, but come on.  When things started going south, you didn’t think to call someone to ask what your orders should be?  They stated they’d been given a charge of “building” the trust fund, not “protecting”.  I cannot recall exactly how the conversation went, but Councilwoman Brown had asked about protecting what was left now.  She was told that it’s not their orders for this trust, nor would it be wise because then we would lose out on the prosperity when it kicked in.

Now I don’t know about you, but the thing I’ve learned from investments, IRA’s and such that I’ve had experience with, it takes a heck of a lot longer to  build up than it does to diminish.  In fact, looking at our own summary, it was at $20 million in mid 2003 and reached the $35 million level the end of December 2007.  About 4 years to gain $10 million, less than half a year to lose it.  I don’t know about you, but I think it’s time to protect ourselves!!!

Another thing that bothered me, is that I know things have gotten a lot worse in the first two months of this year – yet, no update today on where we stand so far this year!  I’m sure Fort Wayne Controller Pat Roller is keeping an eye on this, but then why even have this Trust Board if they’re not going to be involved in such decisions?

One other thing that bothers me, is where is the report for the fund?  One of the presenters stated it was public information and yet where is it?  This was asked, and also why this information wasn’t presented to the Board as well.  The response, if I understood it, was that there is a report, and they held it up for us to see, which was prepared and presented to one of their committees that evaluates the different funds and their managers.  

Again, where are we in this mess?  What input do we have?  Has anyone in the Administration looked at this report?  How do we know DiMeo Schneider & Associates, LLC., are doing their job?  I don’t think anyone could have stopped a loss in the last year, but did they do everything to prevent as much as possible, and are we getting sound advice now?  And I understand to have gone into the report in detail wasn’t on the agenda and frankly would probably have been counter-productive.  However, put it on the internet, have copies available MAKE it accessible to the public.  

Jeff Pruitt, Fort Wayne Politics, shared with me that he had submitted a public information request for some of this information and was told to come to the meeting.  And yet, what exactly was it that we walked away with?  The knowledge that we’d lost $10 million, but not a clue as to the make up, timing or any other details related to that loss.

One last thing.  The By-Laws for this Community Trust spell out the order of business.  (i.e. Report of the President, Report of the Secretary; Report of the Standing Committees; Report of the Special Committees; General Business; Election of Officers.)  None of this was done.  There was also no official record being kept of the meeting – at least that I could see.  I made an audio recording, but I didn’t see anyone else put a recorder on the table – unless the room is wired for sound.  The By-Laws I received, which were given to the rest of the media as well, look like a rough draft.  Typos, spelling errors and there’s one line that’s crossed out.  Councilman Mitch Harper asked about the election of officers, yet there seemed to be some confusion and no sense of urgency to resolve this.  The meeting was suspended to be reopened so the election of officers might commence.

Some $35 million, at one point anyway, and this is the control, oversight of the fund the City has in place?  TOO MANY QUESTIONS AND NOT ONE POSITIVE FEELING.  Again, this is my uneducated opinion.  But what the hell?

If anyone is interested, I think the audio recording I made came out in pretty good shape.  I’ll post it tomorrow plus the recap given to us in the meeting – not that it has much more information than I reported.

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