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16-0621_PFM ASSET MANAGEMENT, LLC_Agenda Report_F6TO: FROM: SUBMITTED BY: PREPARED BY: DATE: SUBJECT : City of San Juan Capistrano Agenda Report Honorable Mayor and Members of the City Council '~njamin Siegel, City Manager Ken Al-lmam, Interim Chief Financial Officer/City Treasurer ~ Michelle Short, Senior Accountant ~ June 21, 2016 Consideration of Approving a Second Amendment to the Personal Services Agreement for Investment Management Services (PFM Asset Management, LLC) RECOMMENDATION: By motion, authorize the City Manager to execute a Second Amendment to the Personal Services Agreement with PFM Asset Management, LLC to extend the contract term through June 30, 2018. EXECUTIVE SUMMARY: Prior to June, 2013, the City managed its investment portfolio in-house. Recognizing that the City would benefit from the services of a professional investment manager, with specific public sector expertise, the City pursued the option to retain an investment management firm through a Request for Proposal process. As a result, on June 4, 2013, PFM Asset Management, LLC, (PFMAM), was selected as the best overall firm to achieve the City's goals of improved performance and diversification, within the parameters of the City's Investment Policy, while minimizing risk. The current agreement with PFMAM terminates on June 30, 2016. The City's portfolio performance or "yield" has improved with the portfolio management services provided by PFMAM primarily due to PFMAM's expertise, specific public sector experience and improved diversification. In recognition of the excellent service that the City has received from PFMAM over the past three years, staff is recommending that the City extend the contract term through June 30, 2018, (Attachment 1 ). 6/21/2016 F6 City Council Agenda Report June 21, 2016 Page 2 of 3 DISCUSSION/ANALYSIS : Effective implementation of the City's investment strategy requires active management of the portfolio and monitoring of the market on a daily basis. The City has benefited from PFMAM's expertise and specific public sector experience in managing the City's investment portfolio daily. Some of these day-to-day activities include regular monitoring of yields in the market; the re-balancing of the portfolio's duration (average maturity) to take advantage of interest rate trends; credit monitoring and analysis; investment selection; and competitive shopping of investments to obtain the best rates. The City invests a portion of its idle cash in the California Local Agency Investment Fund (LAIF) for liquidity. PFMAM manages the majority of the investment portfolio. By actively managing the majority of the investment portfolio, PFM has achieved a yield on the City's portfolio which has consistently beat LAIF performance. For calendar years 2014 and 2015, the annual average yields, net of fees, were: "C Qj 0.70% -~--­ PFMAM, 0.61% 0.60% 0.50% > 0.40% Q) t10 1!! ____ _____,_P_FMAM ,_Q.S7% ___ _ LAIF 0.31% Q) ~ LAIF 0.25% 0.20% 0.10% 2014 2015 FISCAL IMPACT: The cost of investment management services is not to exceed $40,000 annually. Investment management fees offset projected investment revenue which is included in the 2016-17 and 2017-18 Proposed Budgets. ENVIRONMENTAL IMPACT: Not applicable. City Council Agenda Report June 21, 2016 Page 3 of 3 PRIOR CITY COUNCIL REVIEW : On June 4, 2013, the City Council approved the Personal Services Agreement with PFM Asset Management, LLC through June 30, 2016. On April 7, 2015, the City Council approved the First Amendment to the Personal Services Agreement with PFM Asset Management, LLC increasing fees to an amount not to exceed $40,000 annually. COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: This item does not go through the Commission/Committee review process. NOTIFICATION: PFM Asset Management, LLC ATTACHMENTS: Attachment 1 -Amendment 2 to the Personal Services Agreement with PFMAM, LLC Attachment 2 -Amendment 1 to the Personal Services Agreement with PFMAM, LLC Attachment 3-Personal Services Agreement dated June 4, 2013 AMENDMENT NO. 2 TO THE PERSONAL SERVICES AGREEMENT BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND PFM ASSET MANAGEMENT LLC Parties and Date. This Amendment No. 2 to the Personal Services Agreement is made and entered into as of this __ day of , 2016, by and between the City of San Juan Capistrano, a municipal organization organized under the laws of the State of California with its principal place of business at 32400 Paseo Adelanto, San Juan Capistrano, California 92675 ("City") and PFM Asset Management, a Limited Liability Company with an office at 601 South Figueroa, Suite 4500 Los Angeles, CA 90017 ("Consultant"). City and Consultant are sometimes individually referred to as "Party" and collectively as "Parties." Recitals. Whereas, the City and Consultant have entered into an agreement entitled "Personal Services Agreement" dated June 4, 2013 (the "Original Agreement") for the purpose of retaining the services of Consultant to provide investment management services. The Parties have heretofore entered into that First Amendment to Personal Services Agreement dated April 7, 2015 (the "First Amendment," and with the Original Agreement, the "Existing Agreement"), to extend the term through June 30, 2016. Whereas, the City and Consultant desire to hereby amend the Existing Agreement to extend the contract term. Now therefore, in consideration of the promises and mutual covenants contained herein, the City and Consultant agree to amend the Agreement as follows: 1. Section 2 of the Existing Agreement is hereby amended and restated in its entirety to read as follows: Section 2. Term This Agreement shall commence on the effective date and shall terminate, and all services required hereunder shall be completed, no later than June 30. 2018. ATTACHMENT 1 Page 1 of 3 2. Continu ing Effect of Agreement. Except as amended by this Amendment No. 2, all other provisions of the Existing Agreement remain in full force and effect and shall govern the actions of the parties under this Amendment No. 2. From and after the date of this Amendment No. 2, whenever the term "Agreement" appears in the Agreement, it shall mean the Existing Agreement as amended by this Amendment No. 2. 3. Adequate Consid eration. The Parties hereto irrevocably stipulate and agree that they have each received adequate and independent consideration for the performance of the obligations they have undertaken pursuant to this Amendment No. 2. 4. Seve rability . If any portion of this Amendment No. 2 is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. [Signatures on Next Page] ATTACHMENT 1 Page 2 of 3 SIGNATURE PAGE FOR AMENDMENT NO.2 TO THE PERSONAL SERVICES AGREEMENT BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND PFM ASSETT MANAGEMENT LLC CITY OF SAN JUAN CAPISTRANO Approved By: PFM ASSET MANAGEMENT LLC Benjamin Siegel City Manager Date Attested By: Maria Morris, City Clerk Approved As To Form: ~-r Je rey S. Ballinger City Attorney Signature Name Title Date Page 3 of 3 ATTACHMENT 1 SIGNATURE PAGE FOR AMENDMENT NO.2 TO THE PER~ONAL SERVICES AGREEMENT BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND PFM ASSETT MANAGEMENT LLQ CITY OF SAN JUAN CAPISTRANO Approved By: PFM ASSET MANAGEMENT LLC Benjamin Siegel City Manager Date Attested By. Maria Morris, City Clerk Approved As To Form: Jeffrey S. Ballinger City Attorney 61147.01700\29004562.1 s~- Name Date ATTACHMENT 1 Page 3 of 3 FIRST AMENDMENT TO PERSONAL SERVICES AGREEMENT ('\ ([H lp AGREEMENT is made, entered into, and shall become effective this 1~a y of ~ ~015, by and between the City of San Juan Capi~trano (hereinafter referred to as th e "C1ty") and PFM Asset Management LLC (hereinafter referred to as the "Consultant"). RECITALS WHEREAS, City has retained the services of Consultant regarding the City's proposal for investment management services pursuant to the scope of work included in the Agreement dated June 4, 2013; and, WHEREAS, the City and Consultant desire to amend the terms of the Agreement as provided hereunder. AMENDMENT NOW THEREFORE, in consideration of the promises and mutual covenants contained therein, City and Consultant agree to amend the Agreement between City and Consultant as follows: Section 2. Term. This Agreement shall commence on the effective date and shall terminate, and all services required hereunder shall be completed, no later than June 30, 2016. Section 3. Compensation. 3.1 Amount. Total compensation for the services hereunder shall not exceed $40,000 per fiscal year. 1 ATTACHMENT 2 (SIGNATURE PAGE FOLLOWS) IN WITNESS WHEREOF, the parties hereto have executed this Agreement. CITY OF SAN JUAN CAPISTRANO By: ~ {U-J-U..{. Derek Reeve, Mayor PFM ASSET MANAGEMENT LLC APPROVED AS TO FORM : 2 ATTACHMENT 2 PERSONAL SERVICES AGREEMENT THIS AGREEMENT is made, entered into, and shall become effective this ..!1!i_ day of1\)rkl , 2013, by and between the City of San Juan Capistrano (hereinafter referred to as the "City") and PFM Asset Management LLC (hereinafter referred to as the "Consultant"). RECITALS: WHEREAS, City desires to retain the services of Consultant regarding the City's proposal for investment management services; and WHEREAS, Consultant is qualified by virtue of experience, training, education and expertise to accomplish such services. NOW, THEREFORE, City and Consultant mutually agree as follows: Section 1. Scope of Work. The scope of work to be performed by the Consultant shall consist of those tasks as set forth in Exhibit "A", attached and incorporated herein by reference. To the extent that there are any conflicts between the provisions described in Exhibit "A" and those provisions contained within this Agreement, the provisions in this Agreement shall control. Section 2. Term. This Agreement shall commence on the effective date and shall terminate, and all services required hereunder shall be completed, no later than June 30, 2015. Section 3. Compensation. 3.1 Amount. Total compensation for the services hereunder shall begin upon the placement of assets for management, however no sooner than July 1, 2013, calculated as set forth in Exhibit "B", attached and incorporated herein by reference, but in no event shall exceed $30,000 per fiscal year. 3.2 Method of Payment. Subject to Section 3.1, Consultant shall submit monthly invoices based on total services which have been satisfactorily completed for such monthly period. The City will pay monthly progress payments based on approved invoices in accordance with this Section. 1 ATTACHMENT 3 3.3 Records of Expenses . . Consultant shall keep complete and accurate records of all costs and expenses incidental to services covered by this Agreement. These records will be made available at reasonable times to the City. Invoices shall be addressed as provided for in Section 16 below. Section 4. Independent Contractor. It is agreed that Consultant shall act and be an independent contractor and not an agent (except with respect to the execution of trades for the sale and purchase of portfolio securities) or employee of the City, and shall obtain no rights to any benefits which accrue to Agency's employees. Section 5. Limitations Upon Subcontracting and Assignment. The experience, knowledge, capability and reputation of Consultant, its principals and employees were a substantial inducement for the City to enter into this Agreement. Consultant shall not contract with any other entity to perform the services required without written approval of the City. This Agreement may not be assigned, voluntarily or by operation of law, without the prior written approval of the City. If Consultant is permitted to subcontract any part of this Agreement by City, Consultant shall be responsible to the City for the acts and omissions of its subcontractor as it is for persons directly employed. Nothing contained in this Agreement shall create any contractual relationships between any subcontractor and City. All persons engaged in the work will be considered employees of Consultant. City will deal directly with and will make all payments to Consultant. Section 6. Changes to Scope of Work . For extra work not part of this Agreement, a written authorization from City is required prior to Consultant undertaking any extra work. In the event of a change in the Scope of Work provided for in the contract documents as requested by the City, the Parties hereto shall execute an addendum to this Agreement setting forth with particularity all terms of the new agreement, including but not limited to any additional Consultant's fees. Section 7 . Familiarity with Work and/or Construction Site . By executing this Agreement, Consultant warrants that: (1) it has investigated the work to be performed ; (2) if applicable, it has investigated the work site(s), and is aware of all conditions there; and (3) it understands the facilities, difficulties and restrictions of the work to be performed under this Agreement. Should Consultant discover any latent or unknown conditions materially differing from those inherent in the work or as represented by City, it shall immediately inform the City of this and shall not proceed with further work under this Agreement until written instructions are received from the City. 2 ATTACHMENT 3 Section 8. Time of Essence. Time is of the essence in the performance of this Agreement. Section 9. Compliance with Law . Consultant shall comply with all applicable laws, ordinances, codes and regulations of federal, state and local .government. Section 10. Conflicts of Interest. Consultant covenants that it presently has no interest and shall not acquire any interest, direct or indirect, which would conflict in any manner or degree with the performance of the services contemplated by this Agreement. No person having such interest shall be employed by or associated with Consultant. Section 11. Copies of Work Product. All reports submitted to the City shalf be in reproducible format, or in the format otherwise approved by the City in writing . Section 12. Ownership of Documents. All reports, information, data and exhibits prepared or assembled by Consultant in connection with the performance of its services pursuant to this Agreement are confidential to the extent permitted by law, and Consultant agrees that they shall not be niade available to any individual or organization without prior written consent of the City, unless such disclosure is required by judicial or regulatory order or process. All such reports, information, data, and exhibits shall be the property of the City and shall be delivered to the City upon demand without additional costs or expense to the City. The City acknowledges such documents are instruments of Consultant's professional services. Section 13. Indemnity. To the fullest extent permitted by law, Consultant agrees to protect, defend, and hold harmless the City and its elective and appointive boards, officers, agents, and employees from any and all claims, liabilities, expenses, or damages of any nature , including attorneys' fees, for injury or death of any person, or damages of any nature , including interference with use of property , arising out of, or in any way connected with the negligence, recklessness and/or intentional wrongful conduct of Consultant, Consultant's agents, officers, employees, subcontractors, or independent contractors hired by Consultant in the · performance of the Agreement. The only exception to Consultant's responsibility to protect , defend, and hold harmless the City, is due to the negligence , recklessness and/or wrongful conduct of the City , or any of its elective or appointive boards, officers, agents, or employees . 3 ATTACHMENT 3 This hold harmless agreement shall apply to all liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by Consultant. Section 14. Insurance. On or before beginning any of the services or work called for by any term of this Agreement, Consultant, at its own cost and expense, shall carry, maintain for the duration of the agreement, and provide proof thereof that is acceptable to the City, the insurance specified below with insurers and under forms of insurance satisfactory in all respects to the City. Consultant shall not allow any subcontractor to commence work on any subcontract until all insurance required of the Consultant has also been obtained for the subcontractor. Insurance required herein shall be provided by Insurers in good standing with the State of California and having a minimum Best's Guide Rating of A-Class VII or better. 14.1 Comprehensive General Liability . Throughout the term of this Agreement, Consultant shall maintain in full force and effect Comprehensive General Liability coverage in an amount not less than two million dollars per occurrence ($2,000,000.00), combined single limit coverage for risks associated with the work contemplated by this agreement. If a Commercial General Liability Insurance form or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to the work to be performed under this agreement or the general aggregate limit shall be at least twice the required occurrence limit. 14.2 Comprehensive Automobile Liability . Throughout the term of this Agreement, Consultant shall maintain in full force and effect Comprehensive Automobile Liability coverage, including hired and non-owned vehicles in an amount not less than one million dollars per occurrence ($1,000,000.00). 14.3 Workers' Compensation. If Consultant intends to employ employees to perform services under this Agreement, Consultant shall obtain and maintain, during the term of this Agreement, Workers' Compensation Employer's Liability Insurance in the statutory amount as required by state law. 14.4 Proof of Insurance Requirements/Endorsement. Prior to beginning any work under this Agreement, Consultant shall submit the insurance certificates, including the deductible or self-retention amount, and an additional insured endorsement naming City, its officers, employees, agents, and volunteers as additional insured as respects each of the following: Liability arising out of 4 ATTACHMENT 3 activities performed by or on behalf of Consultant, inCluding the insured's general supervision of Consultant; products and completed operations of Consultant; premises owned, occupied or used by Consultant; or automobiles leased, hired, or borrowed by Consultant. The coverage shall contain no special limitations on the scope of protection afforded City, its officers, employees, agents, or volunteers. 14.5 Errors and Omissions Coverage and Fidelity Bond Coverage Throughout the term of this Agreement, Consultant shall maintain Errors and Omissions Coverage (professional liability coverage) in an amount of not less than Fifteen Million Dollars ($15,000,000) and Fidelity Bond Coverage in an amount of not less than Ten Million Dollars ($1 0,000,000). Prior to beginning any work under this Agreement, Consultant shall submit an insurance certificate to the City Attorney for certification that the insurance requirements of this Agreement have been satisfied. 14.6 Notice of Cancellation/Termination of Insurance . The above policy/policies shall not terminate, nor shall they be cancelled, nor the coverages reduced, until after thirty (30) days' written notice is given to City, except that ten (1 0) days' notice shall be given if there is a cancellation due to failure to pay a premium. 14.7 Terms of Compensation . Consultant shall not receive any compensation until all insurance provisions have been satisfied . 14.8 Notice to Proceed . Consultant shall not proceed with any work under this Agreement until the City has issued a written "Notice to Proceed" verifying that Consultant has complied with all insurance requirements of this Agreement. Section 15. Termination. City shall have the right to terminate this Agreement without cause by giving thirty (30) days' advance written notice of termination to Consultant. In addition, this Agreement may be terminated by any party for cause by providing ten (1 0) days' notice to the other party of a material breach of contract. If the other party does not cure the breach of contract, then the agreement may be terminated subsequent to the ten (1 0) day cure period. Section 16. Notice. All notices shall be personally delivered or mailed to the below listed addresses, or 5 ATTACHMENT 3 to such other addresses as may be designated by written notice. These addresses shall be used for delivery of service of process: To City : City of San Juan Capistrano 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn : Cindy Russell, Chief Financial Officer/City Treasurer To Consultant: PFM Asset Management LLC 50 California Street, Suite 2300 San Francisco, CA 94111 Attn: Nancy Jones, Managing Director With a copy to: Two Logan Square, Suite 1600 18th & Arch Streets Philadelphia, PA 19103-2770 Attn: Controller Section 17. Attorneys' Fees . If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which he may be entitled . Section 18. Dispute Resolution . In the event of a dispute arising between the parties regarding performance or interpretation of this Agreement, each party agrees to submit to binding arbitration. Such arbitration will be conducted by a single arbitrator identified and selected by the parties, and shall be conducted in accordance with the rules and procedures of the Judicial Arbitration and Mediation Service ("JAMS"). Section 19 . Investment Advisor Provisions 19.1 Performance of Certain Duties. Consultant shall place all orders for the purchase, sale, loan or exchange of portfolio securities for City's account with brokers or dealers recommended by Consultant and/or City, and to that end Consultant is authorized as agent of City to give instructions to the custodian designated by · City {the "Custodian') as to deliveries of securities and payments of cash for the account of City . In connection with the selection of such brokers and dealers and the placing of such orders , Consultant is directed to seek for City the most favorable execution and price , the determination of which may take into account, subject to 6 ATTACHMENT 3 any applicable laws, rules and regulations, whether statistical, research and other information or services have been or will be furnished to Consultant by such brokers and dealers. The Custodian shall have custody of cash, assets and securities of City. Consultant shall not take possession of or act as custodian for the cash, securities or other assets of City and shall have no responsibility in connection therewith. Consultant shall be entitled to rely upon City's written advice with respect to anticipated drawdowns of the assets under management (the "Managed Funds"). Consultant will observe the instructions of City with respect to broker/dealers who are approved to execute transactions involving the Managed Funds and in the absence of such instructions will engage broker/dealers which Consultant reasonably believes to be reputable, qualified and financially sound. 19.2 Pool Compensation. Assets invested by Consultant under the terms of this contract may from time to time be invested in a money market mutual fund or local government investment pool managed by Consultant (either, a "Pool") or in individual securities. Average daily net assets subject to the fees described in this contract shall not take into account any funds invested in the Pool. Expenses of the Pool, including compensation for Consultant and the Pool custodian, are described in the relevant prospectus or information statement and are paid from the ·Pool. 19.3 Registered Advisor; Duty of Care. Consultant hereby represents it is a registered investment advisor under the Investment Advisers Act of 1940. Consultant shall immediately notify City if at any time during the term of this Agreement it is not so registered or if its registration is suspended. Consultant agrees to perform its duties and responsibilities under this Agreement with reasonable care. The federal securities laws impose liabilities under certain circumstances on persons who act in good faith. Nothing herein shall in any way constitute a waiver or limitation of any rights which City may have under any federal securities laws. City hereby authorizes Consultant to sign I. RS. Form W-9 on behalf of City and to deliver such form to broker-dealers or others from time to time as required in connection with securities transactions pursuant to this contract. 19.4 Expenses. Consultant shall furnish at its own expense all necessary administrative services, office space, equipment, clerical personnel, telephone and other communication facilities, investment advisory facilities, and executive and su .pervisory personnel for managing the Managed Funds. Except as expressly provided otherwise herein, City shall pay all of its own expenses including, without limitation, taxes, commissions, fees and expenses of City's independent auditors and legal counsel, if any, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, and fees and expenses of the Custodian. 7 ATTACHMENT 3 19.5 Advisor's Other Clients . City understands that Consultant performs investment advisory services for various other clients which may include investment companies, commingled trust funds and/or individual portfolios. City agrees that Consultant, in the exercise of its professional judgment, may give advice or take action with respect to any of its other clients which may differ from advice given or the timing or nature of action taken with respect to the Managed Funds . Consultant shall not have any obligation to purchase, sell or exchange any security for the Managed Funds solely by reason of the fact that Consultant, its principals, affiliates, or employees may purchase, sell or exchange such security for the account of any other client or for itself or its own accounts. 19.6 Force Majeure. Consultant shall have no liability for any losses arising out of the delays in performing or inability to perform the services which it renders under this Agreement which result from events beyond its control, including interruption of the business activities of Consultant or other financial institutions due to acts of God, acts of governmental authority, acts of war, terrorism, civil insurrection, riots, labor difficulties, or any action or inaction of any carrier or utility, or mechanical or other malfunction. 19.7 Disciplinary Actions. Consultant shall promptly give notice to City if Consultant shall have been found to have violated any state or federal securities law or regulation in any judgment in any criminal action or civil suit in any state or federal court or in any disciplinary proceeding before the Securities and Exchange Commission or any other agency or department of the United States, any registered securities exchange, the Financial Industry Regulatory Authority, or any regulatory authority of any State based upon the performance of services as an investment advisor. 19.8 Brochure and Brochure Supplement. Consultant warrants that it has delivered to City prior to the execution of this contract Consultant's current Securities and Exchange Commission Form ADV, Part 2A (brochure) and Part 28 (brochure supplement). City acknowledges receipt of such brochure and brochure supplement prior to the execution of this Agreement. Section 20. Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties and supersedes all previous negotiations between them pertaining to the subject matter thereof. [SIGNATURE PAGE FOLLOWS] 8 ATTACHMENT 3 IN WITNESS WHEREOF, the parties hereto have executed thls Agreement. PFM ASSET MANAGEMENT LLC FORM : 9 ATTACHMENT 3 EXHIBIT A-SCOPE OF WORK Specific responsibilities of the Consultant will include: i\. 1fanagc on a daily basis the City of San Juan Capistrano's separate investment portfolios pursuant to the specitlc, stated investment objectives. Place all orders for the purchase and sale of securities, communicate settlement information to the City of San Juan Capistrano's staff and coordinate security settlement. "B. Serve as a general resource to the City of San Juan Capistrano's staff for informacion, advice and training regarding fixcd-incon1e sccuritit~s and investments. C. \vork witl1 the City of San Juan Capistrano staff to understand cash flow ptojections to ensure that the investments trate!:,>y is consistent \Vith the City of SanJuan Capistrano's liquidity requiren:tcnts. D . Pwvide monthly statements with all the information required by the California Government: Code and Governmental Accounting Standards Board (Gt\SB). These reports must include: 1. Summary of Portfolio Holdings. i\ listing of all securities held at the end of the month categorized by tyve of securily, maturity and institution, indtJding those securities managed directly by the City. 2. Investment Performance Report. At a minimum the performance report should show total returns for the period compared to the established benchmark. 3. Maturity /Duration Indicators. The monthly report should include portfolio duration and average maturity statistics to help monitor interest-rate risk. 4. Transaction Summary. J\ summary of completed transactions for the month. 5. Mark-to-Market Report. The monthly report should show tbe cost and market valut~ for each security in the portfolio. The Consultant must maintain accurate reports of investments including the diversity of inn~stments and compliance \vith applicable investment policies of the City of San Juan Capistrano and State of California statutes. These reports arc required to be completed no later than the 20•h of the month for the immediately preceding month for presentation to the City Council at their next available meeting. E. Provide quarterly investment reports including a description of market conditions, investment strategies employed performance and suggested chat1ges to investment strategy. The performance numbers shall be presented in conformity with the CFA Institute's Global Investment Performance Standards (GIPS). F. ,'\t:l:endance at J.nvestn1ent Advisory Committee meetings and City Council meeting as requested. ATTACHMENT 3 EXHIBIT B-COMPENSATION For services provided by the Consultant pursuant to this Agreement, the City shall pay the Consultant an annual fee, in monthly instalhnents, based on the daily net assets undet management per the following schedule: • 10 basis points (0.1 0%) per year on the flrst $25 million of assets under management. • 8 basis points (0.08%) per yeat on assets between $25 million and $50 million under management. • 7 basis points (0.07%) per year on assets over $50 million under management. The Consultant retai:1s the right to negotiate a fee adjustment, in line with CPT, after three years. ATTACHMENT 3