RFP - cdn.ymaws.com · Web viewThe City of San Jacinto is requesting proposals for Investment Advisory Services for portfolio management. All proposals must be delivered or received

Notice Requesting Proposals for

INVESTMENT ADVISORY SERVICES

The City of San Jacinto is requesting proposals for Investment Advisory Services for portfolio management.

All proposals must be delivered or received by email by January 12, 2012 at 4:00 p.m., addressed to City of San Jacinto, Attn: Thomas Prill, Acting Finance Director, P.O. Box 488, 595 S. San Jacinto Avenue, San Jacinto, CA 92581 or e-mailed to [email protected] .

Proposals received after the date specified above will not be considered.

Proposals shall be submitted using the format provided in this package.

Parties interested in obtaining a copy of this Request for Proposal (RFP) may do so by calling (951) 537-6352, by faxing their request to (951) 537-6385 or by e-mailing [email protected] . Please include the following information:

name of firm address contact person telephone number, facsimile number and e-mail address Request For Investment Advisory Services Proposal RFP

595 S. San Jacinto Avenue Page 1San Jacinto, CA 92583(951) 537-6352 – fax (951) [email protected]

mailto:[email protected]



Investment Advisory Services RFPDecember 7, 2011

TABLE OF CONTENTSSection Page

A. Description of Work 3

B. About the City 4

C. General Terms and ConditionsProposal Requirements 5Contract Award and Execution 6Criteria for Evaluation and Selection 7

D. Special Terms and Conditions 8

E. Insurance Requirements 11

F. Proposal Submittal FormsProposer Questionnaire 13References 16Statement of Past Contract Disqualifications 17

G. Investment Policy 18

H. Treasurer’s Report as of October 31, 2011 24

I. Graph - Cash Balances (not with Fiscal Agent) 29

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Section A - DESCRIPTION OF WORK

The City of San Jacinto (the City) is soliciting proposals from one or multiple Investment Advisory firms (Investment Advisors) for full or partial portfolio management services for approximately $50 million in operating and capital funds (non-pension funds). The portfolio is currently primarily managed “in-house”, with a majority of funds invested in Money Market Accounts (MMAs), Certificates of Deposit (CDs), and the California Local Agency Investment Fund (LAIF).

The Investment Advisor shall be a registered Investment Advisor as defined and regulated by the Securities and Exchange Commission (SEC) and shall be registered in the state of California (State). The Investment Advisor shall be either independent of any financial institution or securities brokerage firm or shall fully disclose any relationships with such financial institution and/or securities brokerage firm and shall describe the length and extent of such relationship. The Investment Advisor shall also file a “conflict of interest” statement and disclose any and all relationships with elected City Officials or City staff, including any campaign contributions made on behalf of any past or present San Jacinto City Council Member.

Specific services, although not all-inclusive, to be performed are as follows:

1. Manage the City’s portfolio with non-discretionary or discretionary authority. Discretionary authority will be approved specifically on a case-by-case basis.

2. Provide credit analysis of investment instruments in portfolio.3. Provide monthly/quarterly/annual reporting of City funds under management.4. Attend quarterly meetings (in person or via teleconference) with the City’s

Finance Subcommittee; annual meeting in person with the City Council.5. Evaluate market risk and develop strategies that minimize the impact on the

portfolio.6. Provide assurance of portfolio compliance with applicable policies and laws.7. Establish an appropriate performance benchmark.8. Ensure that the portfolio structure matches the City’s objectives.9. Review the City’s Investment Policy and make recommendations for change as

appropriate.

Investment practices and procedures must comply with State law and the City’s Investment Policy. The selected Investment Advisor(s) will be expected to perform to the Prudent Expert Standard.

In determining individual investment placements, the following factors shall be considered in priority order: safety (first), liquidity (second) and yield (third).

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.

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Section B - ABOUT THE CITY

The City serves a population of approximately 44,600. The annual budget is around $42 million per year, with $6.9 million coming from User Fees (enterprise funds), $13.7 million in Property Taxes/Assessments/Increment, $2.2 million in Sales Taxes, $2.7 million in Motor Vehicle License Fees, $1.5 million in Franchise Fees, $15 million in Other Revenue/Grants/Reimbursements, and $0.5 million in Investment Interest.

The City has an elected City Council of five members, elected to staggered four-year terms. The City also has an elected Treasurer, elected to a four-year term. The City has a Finance Subcommittee comprised of two members of the Council. The Finance Subcommittee is responsible to advise and make recommendations to the Council regarding various financial matters, including audit review and investment policies.

The City’s Investment Policy, reviewed annually by the Council, is attached to this document as an addendum.

Monthly Treasurer’s Reports are provided to the Council and the most recent is attached to this document as an addendum.

The monthly liquidity of the City has historically been stable and predictable. (A graph of cash balances for the past 5 fiscal years is attached to this document as an addendum.) Property Tax and Motor Vehicle License Fee receipts occur in January and May. Sales Taxes are received monthly, and Franchise Fees are received both quarterly and annually (April). Summer months are usually highest for some User Fees (i.e. Water).

The City’s current portfolio consists primarily of MMAs, CDs, and LAIF. The City has not purchased Treasuries in recent years, believing that the rates offered by 2-year and 3-year CDs had been better. Recently, the investment in CDs has stopped in anticipation of finding more diverse investments, and the CDs purchased have started maturing. Recently, an investment in the County of Riverside’s investment pool similar to LAIF has also been considered.

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Section C - GENERAL TERMS AND CONDITIONS

PROPOSAL REQUIREMENTS

Requirement to Meet All Provisions. Each individual or firm submitting a proposal (Proposer) shall meet all of the terms, and conditions of the Request for Proposals (RFP) specifications package. By virtue of its proposal submittal, the Proposer acknowledges agreement with and acceptance of all provisions of the RFP specifications.

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 emailed to [email protected] as a PDF document, or delivered to City of San Jacinto, Attn: Thomas Prill, Acting Finance Director, P.O. Box 488, 595 S. San Jacinto Avenue, San Jacinto, CA 92581. No FAX submittals will be accepted. Each Proposer agrees that all submittals and supplemental materials shall remain the property of the City. Submittals are public records subject to disclosure under the Public Records Act.

Proposal Format. Please format your response to this request in the order as indicated in the Proposer Questionnaire to facilitate comparisons between respondents.

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 Proposer’s insurance coverage during proposal evaluation; as discussed under Section E of this document, endorsements are not required until contract award. The City’s insurance requirements are detailed in Section E of this document.

Proposal Withdrawal and Opening. A Proposer may withdraw its proposal, without prejudice prior to the proposal deadline, by submitting a written request to the Finance Director for its withdrawal. No proposal received after the time specified or at any place or method other than that stated in the "Notice Requesting Proposals" will be considered.

Submittal of One Proposal Only. No Proposer shall be allowed to make or file, or to be interested in more than one proposal, except an alternative proposal when specifically requested; however, an individual or business entity that has submitted a sub-proposal to a Proposer submitting a proposal, is not thereby disqualified from submitting a sub-proposal or from quoting prices to other Proposers submitting proposals.

Communications. All timely requests for information submitted in writing will receive a written response from the City. Telephone or e-mail communications with City staff are not encouraged, but will be permitted. However, any such communication shall not be binding on the City.

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CONTRACT AWARD AND EXECUTION

Proposal Retention and Award. The City reserves the right to retain all proposals for a period of 60 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 D of this document for proposal evaluation and contract award criteria.

Competency and Responsibility of Advisor. 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.

Contract Requirement. The Proposer(s) to whom award is made (Advisor(s)) 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 to be executed by the Advisor(s) and the City shall be the form adopted by the City and approved by the City’s City Attorney.

Business License & Tax. The Advisor(s) must have a valid City business license and tax certificate, if applicable, before execution of the contract.

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CRITERIA FOR EVALUATION AND SELECTION

Proposals will be evaluated based on the following criteria: Understanding of the work required by the City and the overall investment program

objectives. Responses to proposer questionnaire. Proposed approach to managing the portfolio. Quality, clarity and responsiveness of the proposal. Demonstrated competence and professional qualifications necessary for

successfully performing the work required by the City. Recent experience in successfully managing similar sized investment portfolios with

similar investment objectives. References. Background and related experience of the specific individuals to be assigned to this

account. Proposed compensation.

Scorecard evaluation will be weighted as follows:

20% Experience of the firm in providing services to public sector entities of similar size and with similar investment objectives;

20% Responses from references; professional experience and qualifications of the individuals assigned to the account;

20% Portfolio advisement and management resources, investment philosophy and recommended approach to management of the investment portfolio;

20% Reporting capabilities;

10% Responsiveness to the RFP, communicating an understanding of the overall program and services required;

10% Fees.

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 long-term interest of the City.

After evaluating the proposals and discussing them further with the finalists or the tentatively selected Advisor(s), the City reserves the right to further negotiate the proposed work and/or method and amount of compensation.

The City reserves the right to conduct personal interviews of any Proposer prior to selection. The City will not be liable for any cost incurred by the Proposer in connection with such interview (i.e., travel, accommodations, etc.).

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Section D - SPECIAL TERMS AND CONDITIONS

1. Contract Term. The term of the contract shall be considered “open-ended,” subject to review and termination at any time by the City Council, and other agreed-upon termination provisions included in the final contract.

2. Proposal Content. Your proposal must include the following information:a. Submittal Forms

i. Proposal submittal ii. Responses to proposer questionnaire iii. Certificate of insuranceiv. References from at least five similar entities for whom you have provided

similar servicesv. Statement of any past contract disqualificationsvi. Conflict of Interest statement disclosing any and all relationships with elected

City Officials or City staff, including any campaign contributions made on behalf of any past or present San Jacinto City Council Member

vii. Any additional information about your firm that will assist us in the selection process

Note: For ease of electronic preparation, Proposer may prepare their own proposal submittal forms as long as they contain the same information in a similar format.

b. Proposal Length and Formati. Proposals should not exceed 30 pages, including supplemental materials.

3. Proposal Review and Award Schedule. The following is an outline of the anticipated schedule for proposal review and contract award:

Issue RFP 12/07/2011Receive proposals 01/12/2012Complete proposal evaluation 01/26/2012Conduct finalist interviews 02/02/2012Finalize staff recommendation 02/09/2012Award contract 02/21/2012Execute contract 02/29/2012Start work 03/01/2012

4. Ownership of Materials. All original documents and other materials prepared by or in possession of the Advisor(s) as part of the work or services under these specifications shall become the permanent property of the City, and shall be delivered to the City upon demand.

5. Release of Reports and Information. Any reports, information, data, or other material given to, prepared by or assembled by the Advisor(s) 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 Advisor(s) without the prior written approval of the City.

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6. Copies of Reports and Information. If the City requests additional copies of reports, drawings, specifications, or any other material in addition to what the Advisor(s) is required to furnish in limited quantities as part of the work or services under these specifications, the Advisor(s) shall provide such additional copies as are requested, and the City shall compensate the Advisor(s) for the costs of duplicating of such copies at the Advisor's direct expense.

7. Required Deliverable Products. The selected Advisor(s) will be required to provide:a. Monthly reports that include the following:

i. Summary of Portfolio Holdings. A listing of all securities held at the end of the month categorized by type of security, maturity, institution and rating, as well as a report on any investment’s change in rating from the previous month.

ii. Investment Performance Report. At a minimum the performance report should show total returns for the period compared to the established benchmark.

iii. Maturity/Duration Indicators. The monthly report should include portfolio duration and average maturity statistics to help monitor interest-rate risk.

iv. Transaction Summary. A summary of completed transactions for the month.

v. Mark-to-Market Report. The monthly report should show the cost and market value for each security in the portfolio.

vi. Any other information required by the City’s Investment Policy.b. When computers have been used to produce materials submitted to the City as a

part of the work scope, the Advisor(s) must provide the corresponding computer files to the City, compatible with the following programs whenever possible unless otherwise directed by the project manager:

i. Word Processing Microsoft Wordii. Spreadsheets Microsoft Excel

8. Attendance at Meetings and Hearings. As part of the work scope and included in the contract price is attendance by the Advisor(s) to as many "working" meetings with staff as determined by the City as necessary in performing work scope tasks.

9. Alternative Proposals. The Proposer may submit an alternative proposal (or proposals) that it believes will also meet the City's project objectives but in a different way. In this case, the Proposer must provide an analysis of the advantages and disadvantages of each of the alternatives, and discuss under what circumstances the City would prefer one alternative to the other(s). If an alternative proposal is submitted, the maximum length of the proposal may be expanded proportionately by the number of alternatives submitted.

10.Services to Other Clients. It is understood that the Advisor(s) performs investment management services for other clients. It is understood that the Advisor(s) shall not have any obligations to purchase or sell for the City account any security which the Advisor(s), its principals, affiliates or employees may purchase or sell for its or their own account or for the account of any other client, if in the Advisor’s good faith opinion such transaction or investment appears unsuitable, impractical or undesirable for the City account.

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11.Allocation of Brokerage. Where the Advisor(s) places orders for the execution of portfolio transactions for the City account, the Advisor(s) may allocate such transactions to such brokers and dealers for execution on such markets, at such prices and at such commission rates as in the good faith judgment of the Advisor(s) will be in the best interest of the City. The Advisor(s) shall not receive any soft dollar benefit for any transaction placed on behalf of the City.

12.Safekeeping. All securities owned by the City shall be held in safekeeping by a third party bank trust department acting as agent for the City under the terms of a custody agreement executed by the bank and the City. All securities will be received and delivered using standard delivery versus payment (DVP) procedures.

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Section E - INSURANCE REQUIREMENTS

The Advisor(s) 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 Advisor(s), 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. Advisor shall maintain limits no less than:

1. General Liability: $1,000,000 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: $1,000,000 per occurrence.

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 Advisor(s) 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 Advisor(s); products and completed operations of the Advisor(s); premises owned, occupied or used by the Advisor; or automobiles owned, leased, hired or borrowed by the Advisor(s). The coverage shall contain no special limitations on the scope of protection afforded to the City, its officers, official, employees, agents or volunteers.2. For any claims related to this project, the Advisor'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,

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employees, agents or volunteers shall be excess of the Advisor's insurance and shall not contribute with it.3. The Advisor'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. Advisor(s) 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 upon or after the contract is awarded, but before work commences.

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Section F - PROPOSAL SUBMITTAL FORMS

PROPOSER QUESTIONNAIRE

FIRM BACKGROUND AND ORGANIZATION1. Describe the organization, date founded, and ownership of your firm. If your firm experienced a material change in organizational structure, ownership or management during the past three years, describe the change.

2. Describe any other business affiliations (subsidiaries, joint ventures, “soft dollar” arrangements with brokers). Describe your firm’s policy on soft dollars.

3. Is your firm a registered investment Advisor under the Investment Advisor’s Act of 1940, as amended?

4. Explain any SEC, National Association of Securities Dealers (NASD), or regulatory censure or litigation listed on your Form ADV involving your firm or the proposing Advisors.

5. Did you, or will you, pay a finder’s fee to any third party for business related to this account? Specify the recipients of any fee.

EXPERIENCE6. Describe your firm’s experience in managing fixed income portfolios.

7. What is your firm’s experience in investment policies and portfolio management guidelines?

8. Does your firm act as a broker or as a primary dealer in securities or receive any other form of additional compensation (including soft dollars) for the client transactions aside from the direct fee paid by clients?

9. Provide the number of similar-sized accounts with similar investment objectives currently being managed by your firm.

STAFFING10. Identify and provide background information on the key person or personnel who take the most active role(s) in the administration and management of the firm.

11. Provide resumes and biographical information on the investment professionals that will be directly involved in the decision-making process for the portfolio. Include the number of years at your firm, total years of experience, and professional licenses and designation. Include the number of accounts managed and any limits on this.

12. Describe your firm’s training and education efforts to keep portfolio managers informed of developments relevant to investment managers.

13. Has there been any turnover of proposed investment managers in the last seven years?

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ASSETS UNDER MANAGEMENT14. Summarize your fixed income assets under management for your latest reporting period.

15. Provide relevant performance statistics on a comparable portfolio and compare with industry averages or benchmarks for the last one, three, five, ten year period and/or since inception. Note whether these performance statistics are reported based on GIPS (Global Investment Performance Standards) formerly known as AIRM (Association for Investment Management and Research).

16. Have you lost any accounts in the last 12 months? If so, why?

INVESTMENT MANAGEMENT APPROACH AND DISCIPLINE17. Briefly describe your firm’s investment management philosophy, including your approach to managing fixed-income portfolios.

18. Describe the mechanics of how your firm proposes to execute transactions on behalf of the City.

19. How frequently do you formulate and review fixed income strategy? How is that carried out and who is involved?

20. What are the primary strategies for adding value to portfolios (e.g. Market timing, credit research, trading)?

21. How are portfolios managed (e.g. by team or individual manager)? What is the back-up when the manager is away?

22. What oversight is provided to portfolio managers?

23. Describe your firm’s in-house technical and research capabilities. Are outside sources used by the firm on a regular basis? Describe your credit review process. Does your firm assign credit research to specialists?

24. What technical analysis do you use?

25. What role does interest-rate forecasting play in your portfolio management strategy?

REPORTING26. Describe the investment accounting and reporting system used by your firm.

27. Provide a sample of reports that you would provide to the City’s staff.

28. What performance benchmarks do you propose for this portfolio?

FEES29. Provide the complete tiered-asset fee schedule that would apply to this account. Are fees charged in arrears?

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30. What additional expenses not covered through the fee structure will be expected in order to implement your investment Advisor services?

ADDITIONAL INFORMATION31. Provide a copy of your firm’s most recent Form ADV Part II as on file with the SEC.

32. Describe your firm’s business continuity plan and how often it is updated.

33. Provide any changes in terms and conditions from those set forth in this RFP that your firm requests or requires to be included in an agreement for this service.

34. Briefly describe any additional feature, services, attributes or conditions which the City should consider in selecting your firm.

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REFERENCES

Number of years engaged in providing the services included within the scope of the specifications under the present business name: __________.

Describe fully the five references that demonstrate your ability to provide the services included within the scope of the specifications.

Please include: Customer Name Contact Individual Telephone & FAX number Street Address City, State, Zip Code Description of services

The City reserves the right to contact each of the references listed for additional information regarding your firm's qualifications.

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STATEMENT OF PAST CONTRACT DISQUALIFICATIONS

The Proposer shall state whether it or any of its officers or employees who have a proprietary interest in the Proposer, has ever been disqualified, removed, or otherwise prevented from bidding on, or completing a Federal, State, or local government project because of the violation of law, a safety regulation, or for any other reason, including but not limited to financial difficulties, project delays, or disputes regarding work or product quality, and if so to explain the circumstances.

The Proposer shall confirm in writing that the staff of the Proposer who will be responsible for carrying out this contract have not, within the last ten years, been convicted of any crime or pleaded nolo contendere or agreed to any consent decree with respect to any matter involving breach of trust or fiduciary duty or securities law violations.

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Section G - INVESTMENT POLICY

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Section H - TREASURER’S REPORT AS OF OCTOBER 31, 2011

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Section I - GRAPH - CASH BALANCES (NOT WITH FISCAL AGENT)

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Documents

RFP - cdn.ymaws.com · Web viewThe City of San Jacinto is requesting proposals for Investment Advisory Services for portfolio management. All proposals must be delivered or received