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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Agreement with Chandler Asset Management for Investment Advisory Services
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RECOMMENDATION
recommendation
Approve a three-year agreement in the amount of $260,000 with Chandler Asset Management for investment advisory services with the option of two (2) one-year extensions; and
Authorize the Mayor to execute the agreement.
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PRIOR ACTION/VOTE
On December 19, 2006, the City Council approved a three-year agreement with MBIA Municipal Investment Service Corporation for Investment Management Services (Vote: 4-0).
On January 19, 2010, the City Council approved Resolution 10-2447, authorizing a two-year extension of the Investment Advisory agreement with MBIA Municipal Investors Service Corporation (Vote: 5-0).
On October 2, 2012, the City Council approved Resolution 12-2989, authorizing an agreement with Cutwater Investor Services Corporation (Vote: 4-0).
On December 17, 2019, the City Council approved Resolution 19-4187, authorizing an agreement with Chandler Asset Management for investment advisory services (Vote: 5-0).
On December 17, 2024, the City Council approved Amendment No. 1, authorizing a one-year extension of the agreement with Chandler Asset Management, extending the agreement until December 31, 2025 (Vote: 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
DISCUSSION
The City of Murrieta (City) engages an investment advisory firm to receive comprehensive investment advice and ongoing management of its investment portfolio. An investment advisor must maintain extensive knowledge and mastery of the California Government Code governing public funds, as well as the City’s investment policy and investment goals. The City intends to seek investment advice on matters including cash flow and maturity analysis, technical market research, portfolio compliance, development and review of investment strategies that are most advantageous for the City, and investment and reinvestment of funds. In addition to the aforementioned functions, the City also intends to engage its investment advisory team in the following activities:
• Periodic review of the City’s investment policy and recommend updates as needed;
• Periodic reporting to meet the Governmental Accounting Standard Board requirements;
• Credit analysis of investment instruments in the portfolio;
• Attend quarterly meetings with staff on an as-needed basis and/or attend City Council meetings;
• Evaluate market risk and develop strategies to minimize portfolio impact;
• Advise staff on economic updates potentially impacting the City’s portfolio; and
• Provide training and education for staff on investment-related topics.
The City has had an active agreement for these services with Chandler Asset Management since 2019. This agreement is set to expire on December 31, 2025. On August 14, 2025, the City of Murrieta Finance Department issued a Request for Proposals (RFP) for investment advisory services and received six (6) proposals in response. The six (6) firms that responded are listed below, in alphabetical order:
1. Chandler Asset Management
2. Columbia Capital Municipal Advisors
3. Garcia Hamilton & Associates, L.P.
4. Insight Investment
5. Meeder Public Funds, Inc.
6. PFM Asset Management
The proposals were reviewed and evaluated by a selection committee, comprised of the City’s Director of Finance, Finance Manager, and Purchasing and Contracts Coordinator. The selection committee evaluated each proposal based on the following criteria:
• Proper submission and completeness of proposal;
• Qualifications and experience;
• Investment philosophy, historical performance, and approach;
• Regulatory and compliance expertise;
• Reporting and communication;
• Fees and cost structure; and
• Service level provided to the City.
The City conducted virtual and in-person interviews with the three (3) highest-scoring firms. Chandler Asset Management was identified as the most responsive and most qualified firm to provide investment advisory services to the City.
Chandler Asset Management is a registered investment advisor, regulated and monitored by the Securities and Exchange Commission. Chandler is an employee-owned firm specializing in core business, providing comprehensive investment solutions for local governments, with a focus on cities and municipalities in California and nationwide, for 37 years. Chandler manages $42.4 billion in assets for clients and $28.3 billion for over 165 public agencies in California, including several of Murrieta’s neighboring cities.
Chandler has provided investment advisory services to the City since 2019, consistently delivering a high level of service while enhancing the City’s investment practices and returns. Since their onboarding in 2019, Chandler has significantly diversified the City’s investment portfolio, generating close to $3 million in value added in the form of investment earnings over the benchmark return, net of fees.
Since its inception, the City’s investment portfolio has outperformed the index benchmark by 36 basis points, affirming Chandler’s expertise and high-caliber performance that consistently outperforms its benchmarks. Chandler has also been instrumental in the development of the City’s current investment policy, reviewing it periodically and making recommendations based on new laws and regulations. Finance staff members meet regularly with Chandler to discuss portfolio performance, investment goals, and receive economic updates that may impact the City’s portfolio.
Chandler is based in San Diego, California, making them experts in local market trends, and readily available for any immediate needs of staff. The firm’s proposal meets the City’s qualifications, with an investment philosophy that is both comprehensive and grounded in customized risk management based on the City’s objectives. Staff recognizes the strengths of this firm as the best aligned with the City’s financial and investment goals.
FISCAL IMPACT
Annual asset management fees are assessed on a sliding scale based on the dollar size of the portfolio, which is currently approximately $157 million. Based on the table below, with an annual twenty percent (20%) discount offered by Chandler, the annual estimated cost of this agreement based on the City’s current portfolio value is $78,240. The projected cost for the three-year agreement term is estimated to be $246,201. The estimated agreement cost was calculated based on the assumption that projected earnings will be reinvested with an estimated investment rate of return. Staff recommends a total not-to-exceed contract amount of $260,000 to provide flexibility should the City determine it is advantageous to transfer funds from its short-term investment options into the long-term investment portfolio. If the assets under management exceed $185 million, staff will propose an amendment to the agreement to adjust the not-to-exceed amount. If such an amendment becomes necessary, the City will notify Chandler Asset Management accordingly.
If the City elects to exercise the two (2) one-year extensions of the agreement, the additional cost is estimated at $174,087, using the same assumptions outlined above. This would bring the total estimated five-year cost to approximately $420,288. The table below summarizes the proposed fee schedule.
In accordance with the proposed agreement, the fees in the table above will be discounted annually by 20%. Funding is available in the Fiscal Year 2025/26 and Fiscal Year 2026/27 operating budgets for investment advisory services. A budget request will be included in future biennial budgets for the remaining years of the agreement.
ATTACHMENTS
1. Agreement