HomeMy WebLinkAbout2023-05-09 - AGENDA REPORTS - INVESTMENT MGMT SERVICES CONTRO
Agenda Item: 6
1. CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR
CITY MANAGER APPROVAL: TA 4¢„� _�
DATE: May 9, 2023
SUBJECT: AMENDMENT TO EXISTING CONTRACT FOR INVESTMENT
MANAGEMENT SERVICES
DEPARTMENT: Administrative Services
PRESENTER: Brittany Houston
RECOMMENDED ACTION
City Council:
1. Authorize an expenditure authority increase to the existing contract with PFM Asset
Management LLC in the amount of $25,000, for a total contract amount not to exceed
$185,000 for Fiscal Year 2022-23.
2. Authorize the City Manager or designee to execute the contract and associated documents,
subject to City Attorney approval.
BACKGROUND
An investment advisor is utilized by the City of Santa Clarita (City) to strategically invest the
City's idle funds in a manner which will provide the maximum security with best investment
return, while meeting the daily cash flow demands of the City and conforming to all
state/province and local statutes governing the investment of public funds. A full -service
investment management firm provides value to the City because it has the resources necessary to
formulate investment strategies, manage risk, and capitalize on market opportunities in a timely,
reliable manner.
PFM Asset Management LLC has provided quality investment management services to the City
at a competitive cost since 2017. PFM Asset Management LLC (PFM) was evaluated and
selected based on the firm's knowledge of the market, ability to perform the job required,
approach to managing the portfolio, usability of standard reports, ability to create specialized
reports, advisor responsiveness, frequency and quality of formal investment updates, and cost.
The City's Investment Policy designates the primary objectives of the City's investment
Page 1
Packet Pg. 92
O
activities. In priority order, those primary objectives are 1) safety, 2) liquidity, and 3) investment
return. As a result of rising interest rates over the last year, the market provided opportunities for
the City's cash to be invested to yield higher returns.
The City has nearly doubled its investment portfolio over the last year to capitalize on rising
interest rates, with approximately $350 million currently invested. Since investment management
costs are based on the City's average monthly portfolio balance, the City's contract with PFM
requires amendment to increase the contract by $25,000 from $160,000 to $185,000 for Fiscal
Year 2022-23. While a contract amendment is required due to the City's increased portfolio size,
there is no increase to the fee schedule. The existing tiered annual fee rates remain in effect and
the costs of services will be offset by investment returns.
ALTERNATIVE ACTION
Other action as determined by the City Council.
FISCAL IMPACT
The cost of investment management services will be offset by investment returns.
Page 2
Packet Pg. 93