[Adopted 10-11-2022 by Bill No. 2022-005]
In this article, the following words and phrases have the following
meanings:
A payment made to the Trust Fund by the County.
The Director of Finance.
A person or entity who exercises discretion in the management
of all or a part of the assets of an institutional investor.
The Trust Board of Trustees established under this article
to manage and invest Trust Fund assets.
A volunteer fire company located in Caroline County whose
members are eligible to participate in the County's LOSAP.
The Volunteer Firefighter Length of Service Award Program
("LOSAP") Trust Fund established to pay all or part of the benefits
provided under the program.
A.
Establishment of trust. A trust, known as the "Volunteer Firefighter
Length of Service Award Program (LOSAP) Trust," effective with the
effective date of the legislative bill creating this article, is established
to fund all or a portion of the benefits provided under the County
Volunteer Firefighter LOSAP. The trust is intended solely as a funding
mechanism to pay the benefits provided by the County under the terms
of the LOSAP. Participants in the LOSAP, current or former volunteer
firefighters, shall have no right, title, or interest in or to any
asset in the Trust Fund. The Trust Fund may be, but is not required
to be, the sole source of funding for the County's LOSAP.
C.
All contributions and all earnings and other additions, less payments,
including payments for the costs of benefits, costs of maintaining
the trust and trust assets, and costs incurred by the LOSAP Trust
Board, constitute the assets of the Trust Fund.
D.
The Trust Fund shall be held for the exclusive benefit of participants
in the LOSAP and used only to provide benefits and defray reasonable
expenses of administering the LOSAP and the trust. Trust Fund assets
shall not revert to the County unless the County terminates the LOSAP.
A.
There is a LOSAP Trust Board shall manage the Trust Fund. The LOSAP Trust Board shall hold legal title to all assets of the Trust Fund but may transfer some incidents of ownership to the agents of the LOSAP Trust Board as provided in this article. The powers and duties of the Trust Board under this article are not effective until the members have accepted the trust in writing pursuant to Subsection D of this section.
B.
The LOSAP Trust Board shall consist of three voting members: the
County Administrator, who shall be the Chair of the Trust Board and
preside at Trust Board Meetings, the Director of Finance, and the
County Attorney. The Trust Board shall meet at least once during each
calendar quarter. A quorum for business shall consist of three members.
Each member has one vote.
C.
A member serves on the LOSAP Trust Board without additional compensation
from the County and without compensation from any other source for
services rendered on behalf of the Trust Fund. The LOSAP Trust Board
shall reimburse any Trust Board member for any expense approved by
the LOSAP Trust Board. A LOSAP Trust Board member shall not receive
reimbursement for any expense from any other source.
D.
Within 10 days after a new LOSAP Trust Board member assumes membership
on the Trust Board, the member shall certify in writing to the County
Commissioners that the member accepts the trust and will administer
its affairs with care, skill, prudence, and diligence.
E.
The LOSAP Trust Board shall establish written policies to administer
and invest funds under this article and transact the trust's
business.
F.
The LOSAP Trust Board may authorize a member to execute instruments
on behalf of the Trust Board. The authority shall be in writing and
specifically describe each instrument and how the member shall execute
the instrument.
G.
The LOSAP Trust Board shall keep investment accounts and records,
including separate accounts for participating companies, necessary
to calculate the Trust Fund's value. The Trust Board may designate
a person other than a Trust Board member to maintain those records.
A.
The County may contribute to the Trust Fund those amounts that the
County Commissioners appropriate. The County shall not be required
to make any contribution to the Trust Fund unless a written contract
so requires.
B.
The LOSAP Trust Board shall accept all contributions deposited in
the Trust Fund and held by the Custodian as Trust Fund property. The
LOSAP Trust Board shall not be responsible for calculating or collecting
any contribution, but shall be responsible only for contributions
deposited to the Trust Fund and amounts held in the Trust Fund.
C.
Payments may be made from the Trust Fund in those amounts directed
by the Chair of the Trust Board only to pay for all or part of the
benefits provided by the LOSAP, administrative expenses relating to
the LOSAP, and expenses of the Trust Fund. The LOSAP Trust Board shall
not be liable for any payment directed by the County Commissioners
and is not required to confirm compliance with the LOSAP.
D.
The LOSAP Trust Board shall be reimbursed by the Trust Fund for expenses solely incurred in the administration of the Trust Fund and shall pay from the Trust Fund expenses reasonably incurred by the Trust Board to administer the LOSAP to the extent that those expenses have not been paid by the County. The LOSAP Trust Board may pay expenses incurred under § 49-44H(11) without direction of the County Commissioners.
A.
The LOSAP Trust Board has the exclusive authority to manage the Trust
Fund's assets. All powers and duties required to manage the Trust
Fund are vested in the LOSAP Trust Board by this article.
B.
The County's Procurement Law does not apply to the procurement
of goods and services by the LOSAP Trust Board for the Trust Fund.
C.
Transfer agents.
(1)
The LOSAP Trust Board may register any assets in its own name or
in the name of a nominee. The LOSAP Trust Board or its agent shall
keep records that show that the investments are part of the Trust
Fund.
(2)
The LOSAP Trust Board may designate in writing a trustee to hold
or transfer assets as the Trust Board's nominee.
(3)
The LOSAP Trust Board shall provide that any trustee or person that
the Trust Board designates shall act only as agent of the Trust Board.
The Trust Board may set other conditions that the Trust Board finds
prudent.
(4)
Any trustee or person that the LOSAP Trust Board designates may retain
the services of a bank or other financial institution to conduct business.
(5)
The LOSAP Trust Board shall maintain the indicia of ownership of
the Trust Fund's assets within the jurisdiction of the United
States Federal Courts.
D.
Authorized investments.
(1)
The LOSAP Trust Board may invest or permit an Investment Manager
to invest the assets of the Trust Fund in any investment it considers
prudent within the Trust Board's policies, except as otherwise
prohibited in this section. The Trust Board shall use an Investment
Manager except when making an investment in any type of pooled investment
vehicle, including any combined, common, or commingled Trust Fund,
retirement or annuity contract, mutual fund, investment company, association
or business trust. The Trust Board also may invest, or authorize investments,
in pooled investment vehicles and transition assets from one Investment
Manager to another Investment Manager.
(2)
The LOSAP Trust Board or any Investment Manager shall not invest
in real property, including securities based on ownership or other
interests in real property, unless the investment is a pooled investment
in which the Trust Board has no power to manage the real property.
A pooled investment shall not invest more than 10% of its assets in
real property located in the County. This 10% limit applies to the
market value of the total assets on the preceding June 30. If the
market value of investments in real property in the County exceeds
the 10% limit as a result of market forces, the Trust Board or the
Investment Manager need not sell an existing equity investment. The
Trust Board may obtain valuations and take appropriate steps to comply
with this 10% limit.
(3)
If an investment through any combined, common, or commingled Trust
Fund exists, the declaration of trust of that fund is a part of the
Trust Fund.
(4)
The LOSAP Trust Board and any Investment Manager shall not invest
any Trust Fund asset in any bond, note, or debt instrument issued
by:
(a)
The County;
(b)
A political subdivision in the County; or
(c)
An agency supported by bond issues underwritten by the County.
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However, the Trust Board or any Investment Manager may invest
trust assets in bonds, notes, and debt instruments of any of these
entities if the investment is held indirectly through a mutual fund
or other pooled investment vehicle and complies with any limit in
the Internal Revenue Code.
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E.
Pursuant to the provisions of § 49-42E the LOSAP Trust Board shall establish an investment policy and guidelines appropriate for the Trust Fund, and may review and change the policy and guidelines as necessary.
F.
Investment Manager.
(1)
Except as provided in Subsection D(1), the LOSAP Trust Board shall appoint one or more Investment Managers to invest all or part of the LOSAP Trust Fund assets consistent with applicable guidelines. If the Trust Board has properly appointed an Investment Manager, the Trust Board shall not be liable for any act or omission of the manager and shall not otherwise be responsible for the investment of funds allocated to the Investment Manager.
(2)
Any investment management contract shall provide that when the Investment
Manager is making individual investment selections, the Investment
Manager shall make individual investment selections subject to applicable
Trust Board policies. In any contract, the Trust Board may limit the
investment of a specified portion of the Trust Fund to a certain type
of property. In any contract, the Trust Board may delegate to the
Investment Manager any power or discretion conferred on the Trust
Board under this Article and may assign to the Investment Manager
custody and control of certain Trust Fund assets. The fees charged
by any manager shall be expenses of the Trust Fund.
(3)
The LOSAP Trust Board shall monitor the performance of each Investment
Manager and may terminate any appointment. Monitoring may include
any tests or analyses that the Trust Board finds prudent in the circumstances
to assure the Trust Fund's stability and growth.
G.
The LOSAP Trust Board may keep cash available in an amount it finds
prudent to pay benefits and expenses. The Trust Board may keep cash
on deposit in one or more banks or trust companies organized under
the laws of any state of the United States, but the amount on deposit
in any bank or trust company shall not exceed 25% of the paid-in capital
and surplus of that bank or trust company.
H.
Except as otherwise provided in this article, the LOSAP Trust Board
may:
(1)
Buy or subscribe for any investment with any cash, at a premium or
discount, and retain the investment;
(2)
Sell, exchange, convey, transfer, lease for any period, pledge, mortgage,
grant options, contract with respect to, or otherwise encumber or
dispose, at public or private sale, for cash or credit or both, any
part of the Trust Fund;
(3)
Subject to § 49-47H(2), sue, defend, compromise, arbitrate, compound, and settle any debt, obligation, claim, suit, or legal proceeding involving the Trust Fund, and reduce the rate of interest on, extend or otherwise modify, foreclose upon default, or otherwise enforce any debt, obligation, or claim;
(4)
Retain a part of the Trust Fund assets uninvested in preparation
for distributions;
(5)
Exercise any option on any investment for conversion into another
investment; exercise any right to subscribe for additional investments,
and make all necessary payments;
(6)
Join in, consent to, dissent from, oppose, or deposit in connection
with the reorganization, recapitalization, consolidation, sale, merger,
foreclosure, or readjustment of the finances of any corporation or
property in which the assets of the Trust Fund are invested, or the
sale, mortgage, pledge or lease of that property or the property of
any such corporation on any terms that the Trust Board finds prudent;
exercise any options, make any agreements or subscriptions, pay any
expenses, assessments, or subscriptions, and take any other action
in connection with these transactions that the Trust Board finds prudent;
and accept and hold any investment issued in or as a result of any
such proceeding;
(7)
Vote, in person or by proxy, at any election of any corporation in
whose stock the assets of the Trust Fund are invested, and exercise,
personally or by any power of attorney, any right appurtenant to any
investment held in the Trust Fund, and give general or specific proxies
or powers of attorney with or without power of substitution;
(8)
Sell at a public or private sale, enter into an option to sell, mortgage,
lease, partition, or exchange any real property at prices and for
terms that the Trust Board finds prudent. The Trust Board may execute
and deliver deeds of conveyance and all assignments, transfers, and
other legal instruments to pass ownership to a buyer, free and discharged
of all liens;
(9)
Renew or extend any mortgage, on any terms that the Trust Board finds
prudent, and increase or reduce the rate of interest on any mortgage
or modify the terms of any mortgage or of any guarantee as the Trust
Board finds prudent to protect the Trust Fund or preserve the value
of the investment; waive any default or enforce any default in a manner
that the Trust Board finds prudent; exercise and enforce any right
of foreclosure, bid on property in foreclosure, take a deed in lieu
of foreclosure with or without paying a consideration, and release
the obligation on the bond secured by the mortgage; and exercise and
enforce in any legal action any right or remedy regarding any mortgage
or guarantee;
(10)
Incur and pay expenses for agents, financial advisors, actuaries,
accountants, and legal counsel, if those expenses are incurred solely
to perform the Trust Board's duties under the trust;
(11)
Borrow, raise, or lend money for the purpose of the Trust Fund,
in any amounts and on any terms and conditions as the Trust Board
in its discretion finds prudent; for any money borrowed, issue a promissory
note and secure the repayment of this note by pledging or mortgaging
all or part of the Trust Fund;
(12)
Hold, buy, transfer, surrender, and exercise all other incidents
of ownership of any insurance or annuity contract; and
(13)
Do any act that the Trust Board finds necessary and exercise
the powers of this article to manage the Trust Fund. The Trust Board
may exercise all powers to manage the assets that an individual could
exercise to manage property owned by that individual.
I.
Prohibited transactions. The LOSAP Trust Board shall not engage in
any transaction between the trust and the County, or any entity controlled
by the County or a participating company in which the Trust Board:
(1)
Lends any part of its income or corpus without receiving adequate
security and a reasonable rate of interest;
(2)
Pays any compensation more than a reasonable allowance for salaries
or other compensation or services actually rendered;
(3)
Makes any service available on a preferential basis;
(4)
Makes any substantial purchase of securities or other property for
more than adequate consideration;
(5)
Sells any substantial part of its securities or other property for
less than adequate consideration; or
(6)
Engages in any transaction which results in a substantial diversion
of its income or corpus.
A.
The LOSAP Trust Board shall discharge its duties with respect to
the Trust Fund:
(1)
Only in the interest of the participants in the LOSAP;
(2)
Only to provide benefits to participants in the LOSAP and to defray
reasonable expenses of administering and operating the Trust Fund;
(3)
With the care, skill, prudence, and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and
familiar with such matters would use in the conduct of an enterprise
of a like character and with like aims;
(4)
By diversifying the investments of the Trust Fund to minimize the
risk of large losses, unless it is clearly not prudent to diversify
under the circumstances; and
(5)
In accordance with the laws, policies, and instruments governing
the trust.
B.
The LOSAP Trust Board shall maintain accurate and detailed accounts
of each investment, receipt, disbursement, and other transaction,
including any specific record required by law, and any additional
record it finds necessary. All accounts, books and records are subject
to applicable state laws governing maintenance and disclosure of public
records.
C.
The Trust Fund fiscal year shall be the same as the County fiscal
year. On or before January 1 of each year, the LOSAP Trust Board shall
file with the County Commissioners and the LOSAP committee a written
account, listing each investment, receipt, disbursement, and other
transaction during the preceding fiscal year or during the period
from the close of the last preceding fiscal year to any interim date
that the Trust Board selects. The account shall include a list of
the Trust Fund assets and the current fair market value of each asset
at the end of that period. If a current fair market value is not available
for or does not apply to a particular investment, the Trust Board
shall assign a value to that investment. The Trust Board shall apply
the investment valuation method on a consistent basis. If the Trust
Board changes the investment valuation method, the Trust Board shall
notify the County Commissioners of the change.
D.
The LOSAP Trust Board shall be subject to the County's Ethics
Law. In addition, a LOSAP Trust Board member shall not:
(1)
Be party to any transaction engaged in by the Trust Board or an Investment
Manager involving the assets of the Trust Fund;
(2)
Use the gains or profits of the Trust Fund for any purpose except
to make investments or payments authorized by the Trust Board in accordance
with this article;
(3)
Deal with the assets of the Trust Fund for the member's own
interest or account or that of another not otherwise entitled under
this article;
(4)
Act in any transaction involving the Trust Fund on behalf of a party
whose interests are adverse to the interests of the Trust Fund or
the interests of participants or beneficiaries of the Trust Fund;
or
(5)
Become an endorser or surety, or in any manner an obligor, for money
loaned to or borrowed from the Trust Board.
A.
The Director of Finance is the custodian of the Trust Fund assets.
The Director of Finance shall give bond with a surety and for a period
and in an amount as the LOSAP Trust Board determines. Each payment
from the Trust Fund shall be made by the Director of Finance, the
Director of Finance's designee, or two persons designated by
the Trust Board acting jointly. The Trust Board shall file a copy
of its resolution designating the two persons, with specimen signatures
of those persons, with the Director of Finance to confirm their authority
to make payments.
B.
If the LOSAP Trust Board approves, the Director of Finance may make
written contracts with banks, trust companies, insurance companies
or investment companies authorized to do business in any state for
the safe custody of investments, banking services, the payment of
benefits and expenses, and any other function necessary to manage
and safeguard the assets of the Trust Fund.
C.
The County's procurement law does not apply to the procurement
of goods and services for the Trust Fund by the Director of Finance.
A.
The County shall indemnify each member of the LOSAP Trust Board who
is or may become a party to any legal action, including any administrative
or investigative proceeding, because of service as a Trust Board member,
subject to the conditions in this section.
C.
The termination of any legal action shall not, of itself, create
a presumption that a Trust Board member did not act in good faith
and in a manner reasonably believed to be in the best interest of
the Trust Fund. The termination of a criminal proceeding shall not,
of itself, create a presumption that a Trust Board member had reasonable
cause to believe that any conduct was unlawful.
D.
The County shall not indemnify a Trust Board member if:
(1)
The member is found by a court or other tribunal to be liable for
gross negligence or willful and wanton misconduct in the performance
of a duty to the Trust Fund; or
(2)
Liability arises from an action that occurred before the date when
all Trust Board members accepted the Trust Fund in writing.
E.
If an attorney selected by the County Commissioners to be fiduciary
counsel finds that any indemnification payment was made that was outside
the scope of the indemnification allowed under this section, the,
Commissioners shall take appropriate action on behalf of the County
to recover that payment.
F.
The County shall provide insurance for each Trust Board member against
any liability asserted against or incurred by the member with respect
to service on the Trust Board. Assets of the Trust Fund shall not
be used to pay any premium. The County may self-insure, wholly or
partly, for this purpose. If the County does not provide adequate
insurance coverage or indemnification under this section, a Trust
Board member need not pay any amount attributable to liability incurred
by serving on the Trust Board and the County shall pay any amount
due.
G.
The County may assert the defense of governmental immunity, and any
other available defense, in any legal action arising out of the actions
of the Trust Board.
A.
Except on termination, no part of the Trust Fund may revert to the
County or be used for any purpose other than the exclusive benefit
of the LOSAP participants. If the LOSAP is terminated and all awards
are paid, any remaining assets in the Trust Fund relating to contributions
made by the County shall revert to the County. The Trust Fund shall
terminate in its entirety on the earlier of the termination of the
LOSAP or the depletion of the Trust Fund.
B.
Any provision of this article may be amended at any time. No amendment
may:
C.
The County Commissioners may amend the trust at any time, retroactively
if required, if found prudent or necessary to conform to any requirement
of applicable law, the Internal Revenue Code, or any similar act or
any amendments or corresponding regulations or applicable guidance.
Any asset held by the Trust Fund shall not be subject to any
creditor of the County and is exempt from execution, attachment, prior
assignment, or any other judicial relief or order for the benefit
of any creditor or third person.
