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