HomeMy WebLinkAbout09-02-2014 C12 Investment Advisor Services RFPCity of San Luis Obispo, Council Agenda Report, Meeting Date, Item Number
FROM: Wayne Padilla, Finance Director
SUBJECT: REQUEST FOR PROPOSAL (RFP) DOCUMENTS FOR INVESTMENT
ADVISOR SERVICES
RECOMMENDATION
Approve the RFP documents for investment advisor services and authorize their release.
DISCUSSION
Background
The city entered into an agreement with Chandler Asset Management for investment
management services in November 2007. That agreement had an original term of three years and
was extended by the City Council through November 26, 2014. In advance of that date, staff is
seeking the City Council’s authorization to release a RFP with the requirements shown below.
If approved, the RFP will be published on the city’s website and distributed to the San Luis
Obispo Chamber of Commerce to be shared with their membership.
Scope of Services
Specific services, although not all-inclusive, are to be performed as follows:
1. Manage the City’s portfolio in a fiduciary capacity with input from the City Treasurer
regarding the timing and identification of investments to be redeemed and purchased
2. Execute trades in accordance with the City’s investment policy
3. Assist the City with maturity analysis
4. Provide credit analysis of investment instruments in portfolio
5. Provide monthly/quarterly/annual reporting on all government entity funds including market
valuations and detailed holding reports
6. Attend quarterly meetings with City staff and Investment Oversight Committee and
occasional City Council meetings
7. Evaluate market risk and develop strategies that minimize the impact on the portfolio
8. Provide assurance of portfolio compliance with applicable policies and laws and the City’s
Investment Policy
9. Establish an appropriate performance benchmark
10. Indicate full understanding of Investment Policy and recommend changes as appropriate
11. Ensure the portfolio structure matches City objectives
FISCAL IMPACT
There is no direct fiscal impact resulting from the requested action.
9/2/2014
C12
C12 - 1
Investment Advisory Services RFP Page 2
ALTERNATIVES
Do not approve the release of the RFP and approve an additional extension of the agreement
with Chandler Asset Management (CAM). This option is available to the City Council based on
the performance of CAM which has been exemplary to this point.
ATTACHMENT
1. RFP
T:\Council Agenda Reports\2014\2014-09-02\Investment Advisor RFP\investment advisor RFP-CAR.docx
C12 - 2
990 Palm Street San Luis Obispo, CA 93401
Notice Requesting Proposals for
INVESTMENT ADVISOR SERVICES
Specification No. 91337
The City of San Luis Obispo is requesting proposals for investment advisor services pursuant to
Specification No. 91337. All proposals must be received by the City Clerk by 3:00 pm on
Friday, October 3, 2014 when they will be opened publicly in the City Hall Council Chambers,
990 Palm Street, San Luis Obispo, CA 93401.
Proposals received after said time will not be considered. To guard against premature opening,
each proposal shall be submitted to the City Clerk in a sealed envelope plainly marked with the
proposal title, specification number, proposer name, and time and date of the proposal opening.
Proposals shall be submitted using the forms provided in the specification package.
An optional pre-proposal teleconference is tentatively scheduled for 1:15 pm on Monday,
September 15, 2015 to answer any questions that the prospective bidders may have regarding
the City's request for proposals.
Proposers interested in participating in the pre-proposal teleconference should contact Wayne
Padilla, Director of Finance and Information Technology at wpadilla@slocity.org or (805) 781-
7125 to receive a conference line phone number and password and to confirm the date and time.
Finalist interviews have been tentatively scheduled for Thursday, October 23, 2014.
Specification packages and additional information may be obtained on the City of San Luis
Obispo’s website http://www.slocity.org/finance/bids.asp or by contacting Wayne Padilla,
Director of Finance & Information Technology at wpadilla@slocity.org or (805) 781-7125
Attachment 1
C12 - 3
Specification No. 91337
TABLE OF CONTENTS
A. Description of Work 1
Overview
Upcoming Financings
About the City
City Finances
Investment Advisor Services
B. General Terms and Conditions 4
Proposal Requirements
Contract Award and Execution
Contract Performance
C. Special Terms and Conditions 9
Contract Term
References
Proposal Content
Proposal Length and Copies
Proposal Evaluation and Selection
Proposal Review and Award Schedule
Pre-proposal Conference
Release of Reports and Information
Copies of Reports and Information
Non-Exclusive Contract
D. Sample Form of Agreement 14
E. Insurance Requirements 16
F. Proposal Submittal Forms 18
Proposal Submittal Summary
References
Attachment 1
C12 - 4
Section A
DESCRIPTION OF WORK
Overview
The City is requesting proposals for investment advisor services for a 5-year term, with an option
to renew for an additional two years.
It is the City’s policy to establish a long-term, ongoing relationship with our investment advisor,
under which advice is available at all times as needed. At the end of a contract’s term, it is the city’s
policy to seek formal proposals to ensure that it continues to receive quality professional services at
the best competitive price. Our current investment advisor is Chandler Asset Management and they
have been invited to submit a proposal.
About the City’s Portfolio
The City's primary investment objective is to achieve a reasonable rate of return on public funds
while minimizing the potential for capital losses arising from market changes or issuer default.
Although the generation of revenues through interest earnings on investments is an appropriate City
goal, the primary consideration in the investment of City funds is capital preservation in the overall
portfolio. As such, the City's yield objective is to achieve a reasonable rate of return on City
investments rather than the maximum generation of income, which could expose the City to
unacceptable levels of risk.
In determining individual investment placements, the following factors shall be considered in
priority order:
1. Safety
2. Liquidity
3. Yield.
The City’s current portfolio under outside management is valued at approximately $45 million and
consists of a combination of U.S. Treasury, Agency, and corporate debt. The portfolio is indexed
to the Merrill Lynch 0-5 Year U.S. Treasury Bond Index. (the most recent investment report is
provided as an attachment)
The City’s investment policy is currently under review and the amount of the portfolio remaining
under the direction of an outside manager may change as the result of policy changes that may be
made at a later date.
A copy of the City’s current investment policy is also provided as an attachment.
The city uses Bank of New York Mellon as the custodial trustee to maintain custody of certain
investments and to provide valuation services for the portfolio, independent of the asset manager.
About the City
Detailed information about the City and its organization is available on our web site at
www.slocity.org.
- 1 -
Attachment 1
C12 - 5
Section A
DESCRIPTION OF WORK
Oversight of the city’s investment activities is provided by the City Treasurer, who also serves as
the Finance Director/Director of Information Technology. The city maintains an Investment
Oversight Committee which meets quarterly to review the transactions that have occurred within
the portfolio and to confirm that the portfolio has been managed in accordance the requirements of
the city’s investment policy.
City Finances
Detailed information about the City’s finances and key fiscal policies are also available on our web
site. The 2013-2015 Financial Plan and the Financial Plan Supplement along with the 2012-13
fiscal year Comprehensive Annual Financial Report are the key source documents for this
information. These documents are available on the City’s web site at:
www.slocity.org/finance/budget.asp and http://www.slocity.org/finance/reports.asp
Investment Advisor Services
The investment advisor services requested include but are not limited to the following:
1. Manage the City’s portfolio in a fiduciary capacity with discretionary authority
2. Execute trades in accordance with the City’s investment policy and upon authorization from
the City Treasurer or their designee regarding the timing and identification of investments to
be redeemed and purchase
3. Assist the City with maturity analysis
4. Provide credit analysis of investment instruments in portfolio
5. Provide monthly/quarterly/annual reporting on all government entity funds including market
values and a detailed listing of investments held in the portfolio at each reporting interval
6. Attend quarterly meetings with City staff and Investment Oversight Committee and
occasional City Council meetings
7. Evaluate market risk and develop strategies that minimize the impact on the portfolio
8. Provide assurance of portfolio compliance with applicable policies and laws and the city’s
Investment Policy
9. Establish an appropriate performance benchmark when necessary
10. Indicate full understanding of Investment Policy and recommend changes as appropriate
11. Ensure portfolio structure matches City objectives
- 2 -
Attachment 1
C12 - 6
Section A
DESCRIPTION OF WORK
12. Forecast annual earnings from the portfolio for the city’s use in budget planning Firm shall
not have custody or possession of the funds or securities that the City has placed under its
management. The city utilizes Bank of New York Mellon as the trustee for the investment
portfolio.
- 3 -
Attachment 1
C12 - 7
Section B
GENERAL TERMS AND CONDITIONS
PROPOSAL REQUIREMENTS
1. Requirement to Meet All Provisions. Each individual or firm submitting a proposal shall
meet all of the terms, and conditions of the Request for Proposals (RFP) specifications
package. By virtue of its proposal submittal, the bidder acknowledges agreement with and
acceptance of all provisions of the RFP specifications.
2. Proposal Submittal. Each proposal must be submitted in the format described in the RFP
specifications and accompanied by any other required submittals or supplemental materials.
Proposal documents shall be received by the City Clerk no later than 3:00 p.m. on Friday,
October 3, 2014. The submittal package shall include 6 (six) hardcopy versions and a thumb
drive containing electronic versions of the documents provided in hardcopy form. Each
electronic document provided on the thumb drive shall be properly labeled with regard to the
order in which it appears in print. The exterior of the submittal package shall be clearly
labeled with the words “Investment Advisor Services proposer name, and time and date of
the proposal opening and Spec. #91337.” No FAX submittals will be accepted. It is the
responsibility of each firm submitting a proposal to ensure that the electronic document(s)
submitted are protected to ensure that no changes can be made to the submittal once it is in
the possession of the city. Attention to the details required by the submittal process will
be part of the overall evaluation and scoring.
3. Insurance Certificate. Each proposal must include a certificate of insurance showing:
a. The insurance carrier and its A.M. Best rating.
b. Scope of coverage and limits.
c. Deductibles and self-insured retention.
The purpose of this submittal is to generally assess the adequacy of the bidder’s insurance
coverage during proposal evaluation; as discussed under paragraph 11 below, endorsements
are not required until contract award. The City’s insurance requirements are detailed in
Section E.
4. Proposal Quotes and Unit Price Extensions. The prices quoted by the proposer must be
entered in figures in the spaces provided on the Proposal Submittal Form.
5. Proposal Withdrawal and Opening. A proposer may withdraw its proposal, without
prejudice prior to the time specified for the proposal opening, by submitting a written request
to the City Clerk for its withdrawal, in which event the proposal will be returned to the
proposer unopened. No proposal received after the time specified or at any place other than
that stated in the "Notice Requesting Proposals" will be considered. All proposals will be
opened and declared publicly.
6. Submittal of One Proposal Only. No individual or business entity of any kind shall be
allowed to make or file, or to be interested in more than one proposal, except as part of an
alternative proposal when specifically requested; however, an individual or business entity
that has submitted a sub-proposal to a proposer submitting a proposal, or who has quoted
- 4 -
Attachment 1
C12 - 8
Section B
GENERAL TERMS AND CONDITIONS
prices on materials or services to such proposer, is not thereby disqualified from submitting a
sub-proposal or from quoting prices to other proposers submitting proposals.
7. Communications. All timely requests for information submitted in writing will receive a
written response from the City. Telephone communications with City staff are not
encouraged, but will be permitted, if directed to the Director of Finance and Information
Technology, Wayne Padilla. However, any such oral communication shall not be binding on
the City.
CONTRACT AWARD AND EXECUTION
1. Proposal Retention and Award. The City reserves the right to retain all proposals for a
period of 90 days for examination and comparison. The City also reserves the right to waive
non-substantial irregularities in any proposal, to reject any or all proposals, to reject or delete
one part of a proposal and accept the other, except to the extent that proposals are qualified
by specific limitations. See the "special terms and conditions" in Section C of these
specifications for proposal evaluation and contract award criteria.
2. Competency and Responsibility of Bidder. The City reserves full discretion to determine
the competence and responsibility, professionally and/or financially, of proposers. Proposers
will provide, in a timely manner, all information that the City deems necessary to make such
a decision.
3. Contract Requirement. The proposer to whom award is made (Contractor) shall execute a
written contract with the City within ten (10) calendar days after notice of the award has been
sent by mail to it at the address given in its proposal. The contract shall be made in the form
adopted by the City and incorporated in these specifications.
4. Insurance Requirements. The Contractor shall provide proof of insurance in the form,
coverages and amounts specified in Section E of these specifications within 10 (ten) calendar
days after notice of contract award as a precondition to contract execution.
5. Business Tax. The Contractor must have a valid City of San Luis Obispo business tax
certificate before execution of the contract. Additional information regarding the City's
business tax program may be obtained by calling (805) 781-7134.
CONTRACT PERFORMANCE
1. Ability to Perform. The Contractor warrants that it possesses, or has arranged through
subcontracts, all capital and other equipment, labor, materials, and licenses necessary to carry
out and complete the work hereunder in compliance with any and all federal, state, county,
city, and special district laws, ordinances, and regulations.
2. Laws to be Observed. The Contractor shall keep itself fully informed of and shall observe
and comply with all applicable state and federal laws and county and City of San Luis
Obispo ordinances, regulations and adopted codes during its performance of the work.
- 5 -
Attachment 1
C12 - 9
Section B
GENERAL TERMS AND CONDITIONS
3. Payment of Taxes. The contract prices shall include full compensation for all taxes that the
Contractor is required to pay.
4. Permits and Licenses. The Contractor shall procure all permits and licenses, pay all charges
and fees, and give all notices necessary.
5. Safety Provisions. The Contractor shall conform to the rules and regulations pertaining to
safety established by OSHA and the California Division of Industrial Safety.
6. Public and Employee Safety. Whenever the Contractor's operations create a condition
hazardous to the public or City employees, it shall, at its expense and without cost to the
City, furnish, erect and maintain such fences, temporary railings, barricades, lights, signs and
other devices and take such other protective measures as are necessary to prevent accidents
or damage or injury to the public and employees.
7. Preservation of City Property. The Contractor shall provide and install suitable safeguards,
approved by the City, to protect City property from injury or damage. If City property is
injured or damaged resulting from the Contractor's operations, it shall be replaced or restored
at the Contractor's expense. The facilities shall be replaced or restored to a condition as good
as when the Contractor began work.
8. Immigration Act of 1986. The Contractor warrants on behalf of itself and all subcontractors
engaged for the performance of this work that only persons authorized to work in the United
States pursuant to the Immigration Reform and Control Act of 1986 and other applicable
laws shall be employed in the performance of the work hereunder.
9. Contractor Non-Discrimination. In the performance of this work, the Contractor agrees
that it will not engage in, nor permit such subcontractors as it may employ, to engage in
discrimination in employment of persons because of age, race, color, sex, national origin or
ancestry, sexual orientation, or religion of such persons.
10. Work Delays. Should the Contractor be obstructed or delayed in the work required to be
done hereunder by changes in the work or by any default, act, or omission of the City, or by
strikes, fire, earthquake, or any other Act of God, or by the inability to obtain materials,
equipment, or labor due to federal government restrictions arising out of defense or war
programs, then the time of completion may, at the City's sole option, be extended for such
periods as may be agreed upon by the City and the Contractor. In the event that there is
insufficient time to grant such extensions prior to the completion date of the contract, the
City may, at the time of acceptance of the work, waive liquidated damages that may have
accrued for failure to complete on time, due to any of the above, after hearing evidence as to
the reasons for such delay, and making a finding as to the causes of same.
11. Payment Terms. The City's payment terms are 30 days from the receipt of an original
invoice and acceptance by the City of the materials, supplies, equipment or services provided
by the Contractor (Net 30). Payment may be made from proceeds of the debt issuance if this
- 6 -
Attachment 1
C12 - 10
Section B
GENERAL TERMS AND CONDITIONS
is customary for the type of financing, but only upon the acceptance and approval by the city
of an original invoice identifying the basis for the fees charged.
12. Inspection. The Contractor shall furnish City with every reasonable opportunity for City to
ascertain that the services of the Contractor are being performed in accordance with the
requirements and intentions of this contract. All work done and all materials furnished, if
any, shall be subject to the City's inspection and approval. The inspection of such work shall
not relieve Contractor of any of its obligations to fulfill its contract requirements.
13. Audit. The City shall have the option of inspecting and/or auditing all records and other
written materials used by Contractor in preparing its invoices to City as a condition precedent
to any payment to Contractor.
14. Interests of Contractor. The Contractor covenants that it presently has no interest, and shall
not acquire any interest—direct, indirect or otherwise—that would conflict in any manner or
degree with the performance of the work hereunder. The Contractor further covenants that,
in the performance of this work, no subcontractor or person having such an interest shall be
employed. The Contractor certifies that no one who has or will have any financial interest in
performing this work is an officer or employee of the City. It is hereby expressly agreed that,
in the performance of the work hereunder, the Contractor shall at all times be deemed an
independent contractor and not an agent or employee of the City.
15. Hold Harmless and Indemnification. The Contractor agrees to defend, indemnify, protect
and hold the City and its agents, officers and employees harmless from and against any
and all claims asserted or liability established for damages or injuries to any person or
property, including injury to the Contractor's employees, agents or officers that arise from
or are connected with or are caused or claimed to be caused by the acts or omissions of the
Contractor, and its agents, officers or employees, in performing the work or services
herein, and all expenses of investigating and defending against same; provided, however,
that the Contractor's duty to indemnify and hold harmless shall not include any claims or
liability arising from the established sole negligence or willful misconduct of the City, its
agents, officers or employees.
16. Contract Assignment. The Contractor shall not assign, transfer, convey or otherwise
dispose of the contract, or its right, title or interest, or its power to execute such a contract to
any individual or business entity of any kind without the previous written consent of the City.
17. Termination. If, during the term of the contract, the City determines that the Contractor is
not faithfully abiding by any term or condition contained herein, the City may notify the
Contractor in writing of such defect or failure to perform. This notice must give the
Contractor a 10 (ten) calendar day notice of time thereafter in which to perform said work or
cure the deficiency. (The City may also terminate the contract for convenience or financial
necessity upon giving Contractor 30 days written notice of such action.)
If the Contractor has not performed the work or cured the deficiency within the ten days
specified in the notice, such shall constitute a breach of the contract and the City may
- 7 -
Attachment 1
C12 - 11
Section B
GENERAL TERMS AND CONDITIONS
terminate the contract immediately by written notice to the Contractor to said effect.
Thereafter, neither party shall have any further duties, obligations, responsibilities, or rights
under the contract except, however, any and all obligations of the Contractor's surety shall
remain in full force and effect, and shall not be extinguished, reduced, or in any manner
waived by the termination thereof.
In said event, the Contractor shall be entitled to the reasonable value of its services
performed from the beginning date in which the breach occurs up to the day it received the
City's Notice of Termination, minus any offset from such payment representing the City's
damages from such breach. "Reasonable value" includes fees or charges for goods or
services as of the last milestone or task satisfactorily delivered or completed by the
Contractor as may be set forth in the Agreement payment schedule; compensation for any
other work, services or goods performed or provided by the Contractor shall be based solely
on the City's assessment of the value of the work-in-progress in completing the overall
workscope.
The City reserves the right to delay any such payment until completion or confirmed
abandonment of the project, as may be determined in the City's sole discretion, so as to
permit a full and complete accounting of costs. In no event, however, shall the Contractor be
entitled to receive in excess of the compensation quoted in its proposal.
- 8 -
Attachment 1
C12 - 12
Section C
SPECIAL TERMS AND CONDITIONS
1. Contract Term. The term of the contract shall be for a period of 5 (five) years at which time
the performance of the firm will be evaluated. Upon mutual agreement at that time, the
contract may be extended by the City Administrative Officer for a period of up to two years.
2. Proposal Content. Your proposal must include the following information:
Submittal Forms
a. Proposal submittal cover letter. (item 1 in submittal)
b. Certificate of insurance. (item 5 in submittal)
c. References from at least three California municipalities for whom you have provided
similar services within the past 2 (two) years. (item 4 in submittal)
Note: For ease of proposal preparation, proposers are asked to prepare their own
proposal submittal forms as long as they contain the information requested below, in the
same order that each item is listed here. .
Qualifications (item 2 in submittal)
a. General qualifications of your firm to serve as an investment advisor in California.
b. Experience as financial advisor to cities where services are provided on an ongoing basis.
c. Experience in providing similar services required by the City to comparable California
cities.
d. Description of particular and interesting issues, problems or complications that arose in
previous investment advisor experiences, and how these were resolved or disposed of.
e. Resumes and responsibilities of the individuals who would be assigned to work with the
City, there home office location, and if possible, identification of who would be the
City’s lead contact.
f. Any other information that would assist us in making this contract award decision.
Compensation (item 6 in submittal)
a. Provide your firm’s philosophy for assessing fees, the basis upon which fees are charged
and the proposed amount of fees to be charged during the term of this agreement. It is
assumed that the fees charged will be indexed to the amount of investments being
managed and may be assessed in layers – i.e. ( x% of the first $25 million; x% of the next
$25 million; etc.)
- 9 -
Attachment 1
C12 - 13
Section C
SPECIAL TERMS AND CONDITIONS
Statement of Litigation, Investigations, Conflicts of Interest and Disqualifications (item 3
in submittal)
a. Statement and explanation of any instances where your firm has been removed from a
project or disqualified from proposing on a similar scope of work.
b. Any instances within the past 24 months when your firm (and/or any of its principals)
was the subject of any investigation relating to the municipal securities industry by the
SEC, NASD, NYSE or any other state or federal organization that oversees, regulates,
licenses or is otherwise responsible for the municipal securities industry.
c. Any instances within the past 24 months when your firm (and/or any of its principals)
was involved in any litigation, arbitration, disciplinary or other actions arising from the
firm’s role in issuing municipal securities.
d. Any relationship between your firm and any other non-affiliated firm(s) or individuals
involving any compensation arrangement that may be associated with your possible
engagement to assist the City with investment advisor services.
e. One small bag of regular M&Ms for each proposal reviewer.
Specific Responses to be Provided- Please restate the question and provide a response
a. Are you an SEC Registered Investment Adviser registered under the Investment Advisers
Act of 1940?
b. What is the sector distribution of all the portfolios your firm manages?
c. What is the distribution of credit ratings among all of your portfolios?
d. What procedures does your firm have in place to address the potential or actual credit
downgrade of an issuer and to disclose and advise a client of the situation?
e. Describe your firm’s investment philosophy and investment decision-making process;
f. Describe how your firm provides internal oversight of the portfolio manager(s) involved
with the account. Indicate who provides this oversight and state their qualifications.
Please provide their resume.
g. Have you ever had a security you purchased for a client downgraded below the minimum
credit rating for purchase while held by the client? Describe the situation and results.
h. Have any of your clients experienced principal losses as a result of defaulting corporate
obligations purchased and managed by your firm? Describe the situation and results.
i. Have you ever had to submit to arbitration? Describe the situation and results.
- 10 -
Attachment 1
C12 - 14
Section C
SPECIAL TERMS AND CONDITIONS
j. Have any federal or state regulators censured you or other members of your firm?
Describe the situation and results.
k. What other services does your firm provide outside of the “Scope of Services” described
in the RFP?
l. Has your firm ever signed a consent decree or pled “no contest” to a criminal matter
involving securities regulation? Describe the situation and results.
m. Will you pay a “finder’s fee” or other compensation to any person if our agency selects
your firm to provide investment services?
3. Proposal Length Format and Copies. Proposals should meet the following guidelines.
a. Proposals should not exceed 25 pages, including attachments and supplemental materials.
The proposal should be prepared simply and economically, providing a straightforward,
concise presentation of the information requested. Please keep marketing material to a
minimum and emphasize factual material.
b. The required font size is 12 point, with minimum left and right margins of one-inch, and
top and bottom margins of 0.7 inches.
c. Six (6) copies of the proposal must be submitted. Along with a write protected electronic
version on a thumb drive.
4. Proposal Evaluation and Selection. Proposals will be evaluated by a review committee
based on the following criteria:
a. Understanding of the work required by the City
b. Quality, clarity and responsiveness of the proposal, including attention to form submittal
requirement details
c. Demonstrated competence and professional qualifications necessary for satisfactory
performance of the work required by the City
d. Recent experience in successfully performing similar services for comparable cities
e. Adequacy of internal oversight of investment planning and transaction execution
f. References
g. Background and related experience of the specific individuals to be assigned to this work
h. Proposed compensation
As reflected above, contract award will not be based solely on price, but on a combination of
factors as determined to be in the best interest of the City. After evaluating the proposals and
discussing them further with the finalists or the tentatively selected financial advisor, the City
reserves the right to further negotiate the proposed work and/or method and amount of
compensation.
- 11 -
Attachment 1
C12 - 15
Section C
SPECIAL TERMS AND CONDITIONS
City Review Committee Members
Wayne Padilla, Director of Finance & Information Technology
Katie Lichtig, City Manager
Vilma Warner, Financial Operations Manager
Michael Codron, Assistant City Manager
Jan Howell-Marx, Mayor
Steve Barasch
5. Proposal Review and Award Schedule. The following is an outline of the anticipated
schedule for proposal review and contract award:
a. Issue RFP 9/03/14
b. Conduct pre-proposal teleconference 9/15/14
c. Receive proposals 10/03/14
d. Complete proposal evaluation 10/16/14
e. Conduct finalist interviews 10/23/14
f. Finalize award recommendation 11/06/14
g. Execute contract 11/19/14
6. Pre-Proposal Teleconference. To answer any questions that prospective proposers may have
regarding this RFP, an optional pre-proposal teleconference is tentatively scheduled for:
Monday, September 15, 2014
1:15 PM
While not mandatory, proposers are strongly encouraged to participate in this teleconference.
Proposers interested in participating in the pre-proposal teleconference should contact Wayne
Padilla, Finance Manager at (805) 781-7125 or wpadilla@slocity.org to receive a phone
number and password and to confirm the date and time.
7. Release of Reports and Information. Any reports, information, data, or other material given
to, prepared by or assembled by the firm as part of the work or services under these
specifications shall be the property of City and shall not be made available to any individual or
organization by the firm without the prior written approval of the City.
8. Copies of Reports and Information. If the City requests additional copies of reports,
drawings, specifications, or any other material in addition to what the firm is required to
furnish in limited quantities as part of the work or services under these specifications, the firm
shall provide such additional copies as are requested, and City shall compensate the firm for
the costs of duplicating of such copies at the firm's direct expense.
9. Non-Exclusive Contract. The City reserves the right to contract with other financial advisor
firms during the contract term.
- 12 -
Attachment 1
C12 - 16
Section C
SPECIAL TERMS AND CONDITIONS
10. Attendance at Meetings and Hearings. As part of the workscope and included in the
contract price is preparation for and attendance at one quarterly meeting with the Investment
Oversight Committee. Infrequently, additional meetings may be scheduled that require on-
site attendance. Staff will attempt to utilize teleconferences to address other matters as much
as possible.
- 13 -
Attachment 1
C12 - 17
Section D
SAMPLE FORM OF AGREEMENT
THIS AGREEMENT is made and entered into in the City of San Luis Obispo on
_________________________, 2014, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation,
hereinafter referred to as City, and [ ], hereinafter referred to as Investment Advisor.
W I T N E S S E T H:
WHEREAS, on Septemb er 3, 2014, City requested proposals for financial advisor services per Specification
No. 91337.
WHEREAS, pursuant to said request, Investment Advisor submitted a proposal, which was accepted by City
for said services.
NOW THEREFORE, in consideration of their mutual promises, obligations, and covenants hereinafter
contained, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall be for a period of 5 years, from the date this Agreement is
made and entered, as first written above. This agreement may be extended by mutual written concurrence of both
parties for an additional period of up to two (2) years.
2. INCORPORATION BY REFERENCE. City Request for Proposal Document for Specification
No. 91337 and Investment Advisor’s proposal dated _________________, are hereby incorporated in and made a part
of this Agreement.
3. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay and
Investment Advisor shall receive therefore compensation as set forth in Exhibit A of this Agreement.
4. FINANCIAL ADVISOR'S OBLIGATIONS. For and in consideration of the payments and
agreements hereinbefore mentioned to be made and performed by City, Investment advisor agrees with City to do
everything required by this Agreement.
5. AMENDMENTS. Any amendment, modification, or variation from the terms of this Agreement
shall be in writing and shall be effective only upon approval by the City Manager.
- 14 -
Attachment 1
C12 - 18
Section D
SAMPLE FORM OF AGREEMENT
6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically
incorporated herein by reference, shall constitute the complete agreement between the parties hereto. No oral
agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of any
force or effect, nor shall any such oral agreement, understanding, or representation be binding upon the parties hereto.
7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage
prepaid by registered or certified mail addressed as follows:
City City Clerk
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
Investment Advisor [ ]
[ ]
[ ]
[ ]
8. AUTHORITY TO EXECUTE AGREEMENT. Both City and Investment Advisor do covenant
that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to
execute Agreements for such party.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first
above written.
ATTEST: CITY OF SAN LUIS OBISPO,
A Municipal Corporation
By:
City Clerk City Administrative Officer
APPROVED AS TO FORM: Investment Advisor
By:
City Attorney
- 15 -
Attachment 1
C12 - 19
Section E
INSURANCE REQUIREMENTS
The Contractor shall procure and maintain for the duration of the contract insurance against
claims for injuries to persons or damages to property which may arise from or in connection with
the performance of the work hereunder by the Contractor, its agents, representatives, employees
or subcontractors.
Minimum Scope of Insurance. Coverage shall be at least as broad as:
1. Insurance Services Office Commercial General Liability coverage (occurrence form CG
0001).
2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability,
code 1 (any auto).
3. Workers' Compensation insurance as required by the State of California and Employer's
Liability Insurance.
4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.
Minimum Limits of Insurance. Contractor shall maintain limits no less than:
1. General Liability: $2,000,000 per occurrence for bodily injury, personal injury and property
damage. If Commercial General Liability or other form with a general aggregate limit is
used, either the general aggregate limit shall apply separately to this project/location or the
general aggregate limit shall be twice the required occurrence limit.
2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.
3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.
4. Errors and Omissions Liability: $10,000,000 per occurrence.
5. Crime/Theft $5,000,000
Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must
be declared to and approved by the City. At the option of the City, either: the insurer
shall reduce or eliminate such deductibles or self-insured retentions as respects the City, its
officers, officials, employees and volunteers; or the Contractor shall procure a bond
guaranteeing payment of losses and related investigations, claim administration and
defense expenses.
Other Insurance Provisions. The general liability and automobile liability policies are to
contain, or be endorsed to contain, the following provisions:
1. The City, its officers, officials, employees, agents and volunteers are to be covered as
insureds as respects: liability arising out of activities performed by or on behalf of the
Contractor; products and completed operations of the Contractor; premises owned, occupied
or used by the Contractor; or automobiles owned, leased, hired or borrowed by the
Contractor. The coverage shall contain no special limitations on the scope of protection
afforded to the City, its officers, official, employees, agents or volunteers.
- 16 -
Attachment 1
C12 - 20
Section E
INSURANCE REQUIREMENTS
2. For any claims related to this project, the Contractor's insurance coverage shall be primary
insurance as respects the City, its officers, officials, employees, agents and volunteers. Any
insurance or self-insurance maintained by the City, its officers, officials, employees, agents
or volunteers shall be excess of the Contractor's insurance and shall not contribute with it.
3. The Contractor's insurance shall apply separately to each insured against whom claim is
made or suit is brought, except with respect to the limits of the insurer's liability.
4. Each insurance policy required by this clause shall be endorsed to state that coverage shall
not be suspended, voided, canceled by either party, reduced in coverage or in limits except
after thirty (30) days' prior written notice by certified mail, return receipt requested, has been
given to the City.
Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's
rating of no less than A: VII.
Verification of Coverage. Contractor shall furnish the City with a certificate of insurance
showing maintenance of the required insurance coverage. Original endorsements effecting
general liability and automobile liability coverage required by this clause must also be provided.
The endorsements are to be signed by a person authorized by that insurer to bind coverage on its
behalf. All endorsements are to be received and approved by the City before work commences.
- 17 -
Attachment 1
C12 - 21
PROPOSAL SUBMITTAL FORM
Financial Advisor Services
The authorized representative identified below declares that she or he:
1. Has carefully examined Specification No. 91337, which is hereby made a part of this proposal.
2. Is thoroughly familiar with its contents.
3. Is authorized to represent the proposing firm.
4. Agrees to perform the work as set forth in this proposal.
Certificate of insurance attached; insurance company’s A.M. Best rating: __________________.
Firm Name and Address
Contact Phone
Authorized Representative
Date
- 18 -
Attachment 1
C12 - 22
REFERENCES
Number of years engaged in providing the services included within the scope of the specifications under the
present business name: .
Describe fully the work completed for 3 (three) California clients within the last 2 years that demonstrate
your ability to provide the services required by the scope of the specifications. Attach additional pages if
required. The City reserves the right to contact each of the references listed for additional information
regarding your firm's qualifications. Below, please provide current contact information for each of these
three clients.
Reference No. 1
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 2
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
Reference No. 3
Customer Name
Contact Individual
Telephone & FAX number
Street Address
City, State, Zip Code
Description of services provided
including contract amount, when
provided and project outcome
- 19 -
Attachment 1
C12 - 23
Quarterly Investment Report
As of June 30, 2014
July 31, 2014
This report presents the City’s investment portfolio for the quarter ending June 30, 2014. It has been prepared
to comply with regulations contained in California Government Code Section 53646. The report includes all
investments managed by the City on its own behalf as well as for other third party agencies on a fiduciary
basis such as the Whale Rock Commission. It also includes all City-related investments held by trustees for
bond debt service obligations. As required, the report provides information on the investment type, issuer,
maturity date, cost, and current market value for each security.
The investment objectives of the City of San Luis Obispo are first, to provide safety of principal to ensure the
preservation of capital in the overall portfolio; second, to provide sufficient liquidity to meet all operating
requirements; and third, to earn a commensurate rate of return consistent with the constraints imposed by the
safety and liquidity objectives.
The City follows the practice of pooling cash and investments for all funds under its direct control. Funds
held by outside fiscal agents under provisions of bond indentures are maintained separately. Interest earned
on pooled cash and investments is allocated quarterly to the various funds based on the respective fund’s
average quarterly cash balance. Interest earned from cash and investments with fiscal agents is credited
directly to the related accounts. It is common for governments to pool the cash and investments of various
funds to improve investment performance. By pooling funds, the city is able to benefit from economies of
scale, diversification, liquidity, and ease of administration.
The City uses the services of an investment advisor, Chandler Asset Management, to manage a portion of the
City’s portfolio. The City’s strategy is to retain approximately 20% of the portfolio to manage our day-to-
day cash flow needs, while Chandler’s focus is on longer-term investment management. In addition, the City
has retained direct control of several investments that had been acquired before Chandler became involved
with the portfolio. All investments are held by the City in a safe keeping account with Bank of New York,
except for investments held by trustees related to bond financings, which are held by US Bank.
Investment Portfolio by Fund
The City’s cash and investment portfolio represents money from all City funds, including the General Fund,
enterprise funds, capital projects funds, and other funds which are restricted to specific purposes.
In general, monies held by the city are either allocated by the City Council for spending or are purposefully
retained in reserve. For example, the money in the Capital Outlay Fund has been identified to provide
particular capital projects for the community and there is a plan for spending down the cash balance as the
projects progress. In the General Fund, about $10 million is purposely held in reserve to meet the City’s
reserve policy of 20% of operating expenditures.
San Luis Obispo
City of
1
Attachment 1
C12 - 24
Quarterly Investment Report
Current Portfolio Summary
The following is a summary of the City’s cash and investments based on market value as of June 30, 2014
compared with the prior quarter:
March 31, 2014June 30, 2014 Percent of Portfolio
Cash and investments held by the City 45,502,347 42,321,811 45.99%
Cash and investments managed by Chandler 44,986,057 45,089,323 49.00%
Cash and investments held by trustees 4,624,396 4,604,238 5.00%
TOTAL 95,112,799$ 92,015,372 100%
There are a number of factors which result in changes in cash and investment balances from month to month
and quarter to quarter. Often they are the result of the receipt of revenues or a large disbursement. Some
major City revenues are received on a periodic rather than a monthly basis. Property Tax, for example, is
received in December, January, April and May of each year. Other revenues, such as Transient Occupancy
Tax, are received monthly but vary considerably because they are seasonal. On the disbursement side,
payments for bonded indebtedness or large capital projects can reduce the portfolio substantially in the
quarter that they occur. Significant fluctuations of this type will be discussed in the following section of this
report.
Securities in the City’s portfolio are priced by IDC, an independent pricing service at the end of every month.
In some cases, the City may have investments with a current market value that is greater or less than the
recorded value. These changes in market value are due to fluctuations in the marketplace having no effect on
yield, as the City does not intend to sell securities prior to maturity. Nevertheless, these market changes will
impact the total value of the portfolio as reported. For June 30, 2014 the market value of the portfolio was
$10,158 higher than the cost basis.
The portfolio’s yield on a market basis as of June 30, 2014 was 0.39%, and the yield on a cost basis was
0.83%. (These amounts do not reflect the returns on the assets held by the bond trustee.)
As of June 30, 2014, the investment portfolio was in compliance with all State laws, the City's Statement of
Investment Policy and the City’s Investment Management Plan.
Summary of Activity for the Quarter and Future Liquidity
The overall value of cash and investments decreased this quarter as large year-end cash disbursements were
made to prepay the upcoming fiscal year insurance premiums and also to prepay a portion of the unfunded
liability owed to the California Public Employees Retirement System (CalPERS). Cash receipts and
disbursements are generally consistent with past trends for the quarter, excluding the $935,000 prepayment
made to CalPERS. The cash management program contains enough liquidity to meet the next six months of
expected expenditures by the City as well as by related parties, such as the Whale Rock Commission.
Report Contents and Distribution. This report includes the following four schedules on the City’s portfolio
as of June 30, 2014: summary of investments held or managed by the City, trustees or Chandler; summary of
investment portfolio liquidity; investment details; and detail of holdings for each investment. These
schedules have not yet been reviewed by the City’s independent auditor.
If you have any questions concerning this report, or require additional information, contact Wayne Padilla,
Director of Finance at (805) 781-7125.
2
Attachment 1
C12 - 25
Quarterly Investment Report
DISTRIBUTION LIST
City Council
Jan Howell Marx, Mayor
Carlyn Christianson, Vice-Mayor
John Ashbaugh, Council Member
Kathy Smith, Council Member
Dan Carpenter, Council Member
Investment Oversight Committee
Jan Howell Marx, Mayor
Wayne Padilla, Director of Finance & Information Technology
Michael Codron, Assistant City Manager
Katie Lichtig, City Manager
Vilma Warner, Finance Operations Manager
Steven Barasch, Public Member
Independent Auditor
Allen E. Eschenbach, Glenn Burdette Attest Corporation
Chandler Asset Management
Nicole Dragoo, COO/Chief Compliance Officer
Ted Piorkowski, VP/Portfolio Manager
Jayson Schmitt, VP/Portfolio Manager
3
Attachment 1
C12 - 26
CITY OF SAN LUIS OBISPO
SUMMARY OF INVESTMENTS
As of June 30, 2014
Percent of Current Market
Portfolio Yield Value
Local Agency Investment Funds 83%0.22%35,184,297.10
Certificate of Deposit 2%0.27%1,000,000.00
Money Market Account 2%0.21%1,005,755.92
Checking Account 9%0.25%3,987,028.00
Treasury Issues 3%9.25%1,144,730.00
Total Investments Held by the City 100%0.46%$42,321,811.02
Percent of Current Market
Portfolio Yield Value
Federal Agency Issues 65%1.32%29,481,641.63
Money Market Fund 0%0.00%18,612.50
US Corporate Notes 14%0.95%6,276,738.39
Treasury Issues 21%1.05%9,312,330.48
Total Investments Managed by Chandler Asset Management 100%1.21%$45,089,323.00
Percent of Current Market
Trustee Portfolio Yield Value
First American Treasury Funds 17.91%0.00%824,767.69
Other Money Market Accounts 0.05%0.03%2,252.49
Certificate of Deposit 0.00%3.41%0.00
Guaranteed Investment Contracts 44.22%Varies 2,036,161.25
Federal Agency Issues 9.34%4.99%429,939.90
Treasury Issues 28.48%Varies 1,311,117.18
Total Investments Held by Trustees 100%$4,604,238.51
Total of all Investments--Market Value $92,015,372.53
INVESTMENTS HELD AND MANAGED BY THE CITY
INVESTMENTS OF THE CITY MANAGED BY CHANDLER ASSET MANAGEMENT
INVESTMENTS OF THE CITY HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS
TOTAL CASH AND INVESTMENTS
4
Attachment 1
C12 - 27
CITY OF SAN LUIS OBISPO
SUMMARY OF INVESTMENT PORTFOLIO LIQUIDITY
As of June 30, 2014
Managed Managed Percent of Market
by City by Chandler Portfolio Value
On Demand 40,177,081.02 18,612.50 46%40,195,693.52
Within Three Months 0.00 3,411,448.65 4%3,411,448.65
Within Six Months 1,000,000.00 2,173,199.95 4%3,173,199.95
Within One Year 4,902,931.92 6%4,902,931.92
Within One to Five Years 1,144,730.00 34,583,129.98 41%35,727,859.98
Over Five Years 0%0.00
TOTAL 42,321,811.02 45,089,323.00 100%$87,411,134.02
Percent of Market
Portfolio Value
On Demand 18%827,020.18
Within Six Months 0%0.00
Six Months to One Year 0%0.00
Within One to Five Years 9%429,939.90
Over Five Years 73%3,347,278.43
TOTAL 100%$4,604,238.51
Total of all Investments--Market Value $92,015,372.53
INVESTMENTS HELD BY THE CITY AND THOSE MANAGED BY CHANDLER ASSET MANAGEMENT
INVESTMENTS HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS
TOTAL CASH AND INVESTMENTS
5
Attachment 1
C12 - 28
CITY OF SAN LUIS OBISPO
INVESTMENT DETAIL
As of June 30, 2014
Agency Investment Coupon Current Purchase Maturity Market
(Broker)Description Rate Yield Date Date Value
Local Agency
Investment Fund Money Market Fund On
City NA 0.22%Varies Demand 35,117,057.09
Local Agency
Investment Fund Money Market Fund On
CIB NA 0.22%Varies Demand 67,240.01
Bank of America Checking Account On
NA 0.25%Varies Demand 3,987,028.00
Mission Collateralized
Community Bank Certificate of Deposit NA 0.27%12/20/2013 12/20/2014 1,000,000.00
Mission Money Market Account On
Community Bank and Interest Receivable NA 0.21%1/24/2012 Demand 1,005,755.92
B of NY Safekeeping U.S. Treasury Bond
9.25%9.25% 4/18/86 2/15/2016 1,144,730.00
TOTAL $42,321,811.02
INVESTMENTS HELD AND MANAGED BY THE CITY
6
Attachment 1
C12 - 29
CITY OF SAN LUIS OBISPO
INVESTMENT DETAIL
As of June 30, 2014
Agency Investment Coupon Current Purchase Maturity Market
(Broker)Description Rate Yield Date Date Value
2005 Refunding Lease Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies on demand $0.00
U. S. Bank United States
Corporate Trust Services Treasury Bonds 6.00%4.49%6/26/96 2/15/26 $785,897.28
2006 Lease Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies on demand $28,055.87
Guaranteed
FSA Capital Investment Contract
Management Services LLC Treasury Fund 5.545%5.545%5/11/06 5/26/36 $1,000,813.75
2006 Water Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies Varies $28,029.45
Guaranteed
FSA Capital Investment Contract
Management Services LLC Treasury Fund 5.355%5.355%8/17/06 5/28/36 $1,035,347.50
2009 Lease Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies Varies $768,682.37
U. S. Bank Collateralized
Corporate Trust Services Certificate of Deposit N/A 3.41%4/20/2009 5/15/14 $0.00
2012 Water Revenue Refunding Bonds (Refunded 2002 Water Revenue Bonds)
U. S. Bank U.S Bank Money
Corporate Trust Services Market Account N/A 0.03%Varies Varies $2,251.56
U. S. Bank United States
Corporate Trust Services Treasury Bond 2.00%2.02%Varies 11/25/21 $222,187.50
U. S. Bank United States
Corporate Trust Services Treasury Bond 7.125%5.170%Varies 2/15/23 $303,032.40
2012 Revenue Refunding Bonds (Refunded 2001 Revenue Refunding Bonds)
U. S. Bank U.S Bank Money
Corporate Trust Services Market Account NA 0.00%Varies Varies $0.93
U. S. Bank
Corporate Trust Services Federal Home Loan Bank 5.50%4.99%Varies 8/15/16 $429,939.90
TOTAL $4,604,238.51
INVESTMENTS HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS
7
Attachment 1
C12 - 30
CITY OF SAN LUIS OBISPO
INVESTMENT DETAIL
As of June 30, 2014
The City of San Luis Obispo maintains certain performance objectives for the investments that are managed by Chandler
Asset Management. The overall performance objective for the portfolio is to earn a total rate of return over the market cycle
that equals or exceeds the market index. In order to achieve this objective the portfolio invests in high-quality money market
instruments, US Treasury securities, Agency securities, and high-grade corporate securities, with a maximum maturity of
five years. To monitor the achievement of this objective, the City uses a “Benchmark” to compare to. The benchmark
which is used is based on the BofA Merrill Lynch Index of 0-5 year Treasury securities. Below is a summary of the monthly
results as compared to the benchmark. While the City strives to achieve this performance objective every month, the goal
is assumed to be met on an annual basis. The City of San Luis Obispo is currently just under the benchmark goals in
most categories. We feel that through market trends and current investing adjustments, our performance will meet or
exceed the benchmarks by the end of the fiscal year.
Benchmark Comparison for the Quarter Ended 3/31/14
Benchmark 6/30/14 Portfolio 3/31/14 Portfolio
Average Maturity (yrs)2.24 1.91 1.88
Modified Duration 2.16 1.86 1.84
Average Purchase Yield n/a 1.21 1.19%
Average Market Yield 0.62%0.0056 0.56%
Average Quality AAA AA+/Aaa AA+/Aaa
Total Market Value $45,089,323 44,986,057$
The following pages provide a summary of the portfolio under management by Chandler Asset Management as well as
a detailed holding report for the month.
MANAGED BY CHANDLER ASSET MANAGEMENT
8
Attachment 1
C12 - 31
Page intentionally left
blank.
C12 - 32