TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Cynthia Rockwell, Purchasing and Contracts Coordinator
SUBJECT:
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Amendment No. 1 to the Chandler Asset Management Agreement
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RECOMMENDATION
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Approve a one-year extension of the Agreement with Chandler Asset Management for Investment Management and Advisory Services, extending the Agreement until December 31, 2025;
Amend the Fiscal Year 2024/25 Operating Budget to establish an appropriation of $5,500 to supplement the existing budget; and
Authorize the City Manager to execute the First Amendment to the Agreement.
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PRIOR ACTION/VOTE
On December 17, 2019, the City Council approved a three-year Agreement with Chandler Asset Management for Investment Management and Advisory Services, which included two additional one-year terms (Vote: 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
The City of Murrieta (City) requires ongoing investment portfolio advisory services from an investment advisory firm to assist with managing its $149 million investment portfolio, which encompasses funds from all operating and capital funds (non-pension-related funds).
Chandler Asset Management has been investing and managing the City's funds since December 17, 2019. The Agreement expires on December 31, 2024. Due to staffing vacancies, staff is proposing an Amendment to extend the Agreement for one additional year. This extension will allow time for staff to conduct a formal request for proposal (RFP) and select a vendor through equitable and transparent practices in accordance with our Procurement Policy.
RFP Process
When Chandler Asset Management was selected, the RFP was advertised on the City’s website and in the local newspaper (Press-Enterprise) and sent to several investment management firms. The City received four (4) responses. The firms that responded to the RFP for Investment Advisory Services, listed in alphabetical order, were:
1. Chandler Asset Management
2. Dana Investment Advisors
3. PFM Asset Management
4. Public Trust Advisors, LLC
The Selection Committee, comprised of the City’s Director of Administrative Services, the Finance Manager, and the Financial Analyst, evaluated all proposals. The evaluation process included in-person interviews with the finalist. The most responsive, responsible bidder was identified, and Chandler Asset Management was selected.
Chandler Asset Management is a registered investment adviser, regulated, and monitored by the Securities and Exchange Commission as an investment adviser. Chandler Asset Management is not a broker/dealer and has no branches of its operations that perform these services. All purchases of investments are made through a competitive process and avoid any appearance of a conflict of interest. All investments will be held at the City’s custodial bank, US Bank, for safekeeping. The investment manager at Chandler Asset Management advises how the portfolio should be invested in accordance with the City’s current investment policy. Chandler Asset Management also suggests updates or enhancements to the investment policy.
Staff is proposing a one-year extension of the current Chandler Asset Management agreement to allow staff time to conduct a new RFP. The terms of the one-year extension agreement will remain the same as the original agreement.
FISCAL IMPACT
The annual asset management fees are charged on a sliding scale based on the portfolio's dollar size. The fee is allocated across all City Funds that carry a balance. As described in the tables below, based on the City’s approximate $149 million portfolio, the projected average City cost is $94,600, for one year.
The FY 2024/25 Operating budget includes $89,100. Staff requests an additional appropriation of $5,500 across all funds, which will provide the necessary funding for the remainder of the Fiscal Year 2024/25. The budget for the remaining term of the Agreement (July-December) will be included in the upcoming biennial budget.
ATTACHMENTS
1. Chandler Asset Management - Amendment No. 1