HomeMy WebLinkAboutItem 4.03 Investment Portfolio Review
CITY CLERK
File # D[fdlQ][Q]-~[Q]
AGENDA STATEMENT
CITY COUNCIL MEETING DATE: December 5,2006
SUBJECT: Authorization For City Manager To Execute An Agreement With PFM
Asset Management LLC (PFM) For an Assessment and Review of the
City's Investment Portfolio and Procedures
Report Prepared by Paul S. Rankin, Administrative Services Director and
Fred Marsh, Finance Manager
O)\J'\/
ATTACHMENTS~~ \- Resolution.
RECOMMENDATION: Staff recommends that the City Council adopt the Resolution authorizing
the City Manager to sign a consulting agreement with PFM for a total cost not to exceed $9,500.
FINANCIAL STATEMENT: Sufficient funds are available in the adopted Fiscal Year 2006/2007
Administrative Services Department Budget.
DESCRIPTION: The City Council approved the funding for an assessment and review of the City's
investment portfolio and procedures as part of a higher service level for the budget of the Administrative
Services Department for Fiscal Year 2006-2007. The goal is to ensure: 1) The adopted investment policy
is consistent with recent legislation; 2) Identify best practices that would strengthen the management of
public funds; and 3) Make recommendations on ways to measure and report portfolio results incorporating
the City's established objectives regarding the safety, liquidity and yield.
In October 2006 Staff solicited proposals from three firms which provide investment consulting services.
All three firms responded to the City with proposals by the established deadline of October 2ih, 2006. The
proposals from all of the firms were reviewed by a committee consisting of the Assistant City Manager,
Administrative Services Director, Finance Manager and Finance Administrative Analyst II. All of the
firms responding to the proposal specialize in independent financial management for public agencies. The
following summarizes the three proposals received.
iFirm
PFM Asset Management, LLC (PFM)
MBIA Asset Management Group (MBIA)
Chandler Asset Management
$ 9,500
$12,000
$27,640
This committee determined that PFM and MBIA presented thorough responses and demonstrated potential
to address the current needs of the City, within the proposed project budget. Both of these firms were
invited to make a presentation to City Staff. The presentations allowed Staff to ask questions about the
approach used by each of the firms, and to learn more about their background.
COPY TO:
ITEM NO.
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Based on the information gathered, as well as additional reference checking, the Committee recommended
to the City Manager that PFM be selected to perform an assessment and review of the City's Investment
Portfolio and Procedures.
PFM has performed similar reviews for the California Joint Powers Insurance Authority and the San Diego
. County Water Authority, and has provided investment advisory services for the cities of San Ramon,
Brentwood, Antioch and Tracy. The assigned personnel have extensive experience in providing a full
range of investment services to public agency clients. The firm manages $24 billion of public investments
nationwide, with $5 billion of the total being for California agencies. The project leader will be Ms.
Lauren Brant, who works out of the San Francisco Office.
PFM proposes a comprehensive approach to the assessment and review of the City's Investment Portfolio
and Procedures which will include the following:
. An identification of the City's investment objectives and constraints;
· A review of the City's investment policies and procedures;
· A comprehensive review of the City's portfolio, including:
o A review of its compliance with applicable statutes and policies, and
o An analysis of its liquidity, credit quality, diversification, durations and market value
. Assist the City in models to prepare a cash flow analysis, determining its recommended amount of
liquidity in its portfolio and in setting duration targets for its entire portfolio;
. A risk assessment of its portfolio and a historical performance review, and;
· A report providing PFM's recommendations related to the City's investment policy and portfolio
PFM has proposed a lump sum agreement including travel and project expenses not to exceed $9,500. The
firm will draw upon various Staff in order to assure that the expertise matches the assigned task. This
includes expertise in the following areas: Investment Policy Review; Cash Flow and Benchmark
establishment; and security selection and valuation. The firm maintains an active trading desk with Staff
who have expertise in the direct management of funds.
The engagement is proposed to be completed under the standard City agreement for services with a few
modifications that were reviewed with the City Attorney. The proposed agreement allows up to a $500,000
professional liability deductible in lieu of the City standard of $150,000. The proposed agreement also
provides for increased coverage limits on the professional liability coverage of $15 million in lieu of the
standard $1 million in coverage. The Consultants insurance broker requested a change in the form of
insurance to a newer edition than is stated in the standard agreement. These revisions were considered to
be reasonable in comparison to the limited scope of the engagement.
RECOMMENDATION: Staff recommends that the City Council approve the Resolution, which
authorizes the City Manager to sign a consulting agreement with PFM Asset Management LLC for a total
cost not to exceed $9,500.
RESOLUTION NO. xx - 06
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF DUBLIN
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AUTHORIZING CITY MANAGER TO EXECUTE AN AGREEMENT
WITH PFM ASSET MANAGEMENT LLC
FOR AN ASSESSMENT AND REVIEW OF THE
CITY INVESTMENT PORTFOLIO AND PROCEDURES
WHEREAS, the City of Dublin desires to obtain an independent assessment and review of its
investment portfolio policy and procedures; and
WHEREAS, the City Council approved funding for this project as a Higher Service Level in the
Administrative Services Department, adopted budget for Fiscal Year 2006-2007; and
WHEREAS, the City solicited proposals from qualified firms; and
WHEREAS, three (3) firms submitted proposals to provide these services; and
WHEREAS, PFM Asset Management LLC (PFM) has shown they have the ability to perform the
services required; and
WHEREAS, PFM will perform the work outlined in the Proposal/Scope of Services and
according to the Fee Schedule and timeline therein, which is included the Consultant Services Agreement
(Exhibit A to this Resolution); and
WHEREAS, the agreement has been reviewed and approved by the City Attorney's Office.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does
approve the agreement with PFM as attached hereto.
BE IT FURTHER RESOLVED that the City Manager is authorized to execute the agreement.
PASSED, APPROVED AND ADOPTED this 5th day of December, 2006, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Mayor
ATTEST:
City Clerk
Lt.?;: ( :J /5/00
t? 0117
CONSULTING SERVICES AGREEMENT BETWEEN
THE CITY OF DUBLIN AND PFM ASSET MANAGEMENT GROUP, LLC
THIS AGREEMENT for consulting services is made by and between the City of Dublin ("City") and
PFM Asset Management Group, LLC ("Consultant") as of December 5, 2006.
Section 1. SERVICES. Subject to the terms and conditions set forth in this Agreement, Consultant
shall provide to City the services described in the Scope of Work attached as Exhibit A at the time and
place and in the manner specified therein. In the event of a conflict in or inconsistency between the terms
of this Agreement and Exhibit A, the Agreement shall prevail.
1.1 Term of Services. The term of this Agreement shall begin on the date first noted above.
The Agreement shall end on the earlier of: a) the date of completion and acceptance by
the City of the final report specified in Exhibit A; or, b) June 30, 2007. Consultant shall
complete the work described in Exhibit A prior to that date, unless the term of the
Agreement is otherwise terminated or extended, as provided for in Section 8. The time
provided to Consultant to complete the services required by this Agreement shall not affect
the City's right to terminate the Agreement, as provided for in Section 8.
1.2 Standard of Performance. Consultant shall perform all services required pursuant to this
Agreement in the manner and according to the standards observed by a competent
practitioner of the profession in which Consultant is engaged in the geographical area in
which Consultant practices its profession. Consultant shall prepare all work products
required by this Agreement in a substantial, first-class manner and shall conform to the
standards of quality normally observed by a person practicing in Consultant's profession.
1.3 Assianment of Personnel. Consultant shall assign only competent personnel to perform
services pursuant to this Agreement. In the event that City, in its sole discretion, at any
time during the term of this Agreement, desires the reassignment of any such persons,
Consultant shall, immediately upon receiving notice from City of such desire of City,
reassign such person or persons.
1.4 Time. Consultant shall devote such time to the performance of services pursuant to this
Agreement as may be reasonably necessary to meet the standard of performance
provided in Section 1.1 above and to satisfy Consultant's obligations hereunder.
Section 2. COMPENSATION. City hereby agrees to pay Consultant a sum not to exceed, $9,500 (-
nine thousand five hundred dollars) including reimbursable costs incurred under this Agreement.
Notwithstanding any contrary indications that may be contained in Consultant's proposal, for services to be
performed. In the event of a conflict between this Agreement and Consultant's proposal, attached as
Exhibit A, regarding the amount of compensation, the Agreement shall prevail. City shall pay Consultant
for services rendered pursuant to this Agreement at the time and in the manner set forth herein. The
payments specified below shall be the only payments from City to Consultant for services rendered
pursuant to this Agreement. Consultant shall submit all invoices to City in the manner specified herein.
Except as specifically authorized by City, Consultant shall not bill City for duplicate services performed by
more than one person.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 1 of 14
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Consultant and City acknowledge and agree that compensation paid by City to Consultant under this
Agreement is based upon Consultant's estimated costs of providing the services required hereunder,
including salaries and benefits of employees and subcontractors of Consultant. Consequently, the parties
further agree that compensation hereunder is intended to include the costs of contributions to any pensions
and/or annuities to which Consultant and its employees, agents, and subcontractors may be eligible. City
therefore has no responsibility for such contributions beyond compensation required under this Agreement.
2.1 Invoices. Consultant shall submit invoices, not more often than once a month during the
term of this Agreement, based on the cost for services performed and reimbursable costs
incurred prior to the invoice date. Invoices shall contain the following information:
· Serial identifications of progress bills; Le., Progress Bill NO.1 for the first invoice,
etc.;
· The beginning and ending dates of the billing period;
· A Task Summary containing the original contract amount, the amount of prior
billings, the total due this period, the balance available under the Agreement, and
the percentage of completion;
· At City's option, for each work item in each task, a copy of the applicable time
entries or time sheets shall be submitted showing the name of the person doing
the work, the hours spent by each person, a brief description of the work, and
each reimbursable expense;
· The Consultant's signature.
2.2 Monthly Payment. City shall make monthly payments, based on invoices received, for
services satisfactorily performed, and for authorized reimbursable costs incurred. City
shall have 30 days from the receipt of an invoice that complies with all of the requirements
above to pay Consultant.
2.3 Final Payment. City shall pay the last 10% of the total sum due pursuant to this
Agreement within sixty (60) days after completion of the services and submittal to City of a
final invoice, if all services required have been satisfactorily performed.
2.4 Total Payment. City shall pay for the services to be rendered by Consultant pursuant to
this Agreement. City shall not pay any additional sum for any expense or cost whatsoever
incurred by Consultant in rendering services pursuant to this Agreement. City shall make
no payment for any extra, further, or additional service pursuant to this Agreement.
In no event shall Consultant submit any invoice for an amount in excess of the maximum
amount of compensation provided above either for a task or for the entire Agreement,
unless the Agreement is modified prior to the submission of such an invoice by a properly
executed change order or amendment.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 2 of 14
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2.5 Hourly Fees. Fees for work performed by Consultant on an hourly basis shall not exceed
the amounts shown in Exhibit A.
2.6 Reimbursable Expenses. Reimbursable expenses are included in the total amount of
compensation provided under this Agreement that shall not be exceeded.
2.7 Payment of Taxes. Consultant is solely responsible for the payment of employment taxes
incurred under this Agreement and any similar federal or state taxes.
2.8 Payment upon Termination. In the event that the City or Consultant terminates this
Agreement pursuant to Section 8, the City shall compensate the Consultant for all
outstanding costs and reimbursable expenses incurred for work satisfactorily completed as
of the date of written notice of termination. Consultant shall maintain adequate logs and
timesheets in order to verify costs incurred to that date.
2.9 Authorization to Perform Services. The Consultant is not authorized to perform any
services or incur any costs whatsoever under the terms of this Agreement until receipt of
authorization from the Contract Administrator.
Section 3. FACILITIES AND EQUIPMENT. Except as set forth herein, Consultant shall, at its sole
cost and expense, provide all facilities and equipment that may be necessary to perform the services
required by this Agreement. City shall make available to Consultant only the facilities and equipment listed
in this section, and only under the terms and conditions set forth herein.
City shall furnish physical facilities such as desks, filing cabinets, and conference space, as may be
reasonably necessary for Consultant's use while consulting with City employees and reviewing records and
the information in possession of the City. The location, quantity, and time of furnishing those facilities shall
be in the sole discretion of City. In no event shall City be oblig~ted to furnish any facility that may involve
incurring any direct expense, including but not limited to computer, long-distance telephone or other
communication charges, vehicles, and reproduction facilities.
Section 4. INSURANCE REQUIREMENTS. Before beginning any work under this Agreement,
Consultant, at its own cost and expense, shall procure "occurrence coverage" insurance against claims for
injuries to persons or damages to property that may arise from or in connection with the performance of the
work hereunder by the Consultant and its agents, representatives, employees, and subcontractors.
Consultant shall provide proof satisfactory to City of such insurance that meets the requirements of this
section and under forms of insurance satisfactory in all respects to the City. Consultant shall maintain the
insurance policies required by this section throughout the term of this Agreement. The cost of such
insurance shall be included in the Consultant's bid. Consultant shall not allow any subcontractor to
commence work on any subcontract until Consultant has obtained all insurance required herein for the
subcontractor(s) and provided evidence thereof to City. Verification of the required insurance shall be
submitted and made part of this Agreement prior to execution.
4.1 Workers' Compensation. Consultant shall, at its sole cost and expense, maintain
Statutory Workers' Compensation Insurance and Employer's Liability Insurance for any
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7,2006
Page 3 of 14
5"l/9
and all persons employed directly or indirectly by Consultant. The Statutory Workers'
Compensation Insurance and Employer's Liability Insurance shall be provided with limits of
not less than ONE MILLION DOLLARS ($1,000,000.00) per accident. In the alternative,
Consultant may rely on a self-insurance program to meet those requirements, but only if
the program of self-insurance complies fully with the provisions of the California Labor
Code. Determination of whether a self-insurance program meets the standards of the
Labor Code shall be solely in the discretion of the Contract Administrator. The insurer, if
insurance is provided, or the Consultant, if a program of self-insurance is provided, shall
waive all rights of subrogation against the City and its officers, officials, employees, and
volunteers for loss arising from work performed under this Agreement.
An endorsement shall 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.
4.2 Commercial General and Automobile Liability Insurance.
4.2.1 General requirements. Consultant, at its own cost and expense, shall maintain
commercial general and automobile liability insurance for the term of this
Agreement in an amount not less than ONE MILLION DOLLARS ($1,000,000.00)
per occurrence, combined single limit coverage for risks associated with the work
contemplated by this Agreement. If a Commercial General Liability Insurance or an
Automobile Liability 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. Such coverage shall include but shall not be
limited to, protection against claims arising from bodily and personal injury,
including death resulting therefrom, and damage to property resulting from
activities contemplated under this Agreement, including the use of owned and non-
owned automobiles.
4.2.2 Minimum scope of coveraae. Commercial general coverage shall be at least as
broad as Insurance Services Office Commercial General Liability occurrence form
CG 001 (ed. 10/01) or Insurance Services Office form number GL 0002 (ed. 1/73)
covering comprehensive General Liability and Insurance Services Office form
number GL 0404 covering Broad Form Comprehensive General Liability.
Automobile coverage shall be at least as broad as Insurance Services Office
Automobile Liability form CA 001 (ed. 10/01) Code 1 ("any auto"). No
endorsement shall be attached limiting the coverage.
4.2.3 Additional requirements. Each of the following shall be included in the
insurance coverage or added as an endorsement to the policy:
a. City and its officers, employees, agents, and volunteers shall be covered
as insureds with respect to each of the following: liability arising out of
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 4 of 14
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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; and
automobiles owned, leased, or used by the Consultant. The coverage
shall contain no special limitations on the scope of protection afforded to
City or its officers, employees, agents, or volunteers.
b. The insurance shall cover on an occurrence or an accident basis, and not
on a claims-made basis.
c. An endorsement must state that coverage is primary insurance with
respect to the City and its officers, officials, employees and volunteers,
and that no insurance or self-insurance maintained by the City shall be
called upon to contribute to a loss under the coverage.
d. Any failure of CONSULTANT to comply with reporting provisions of the
policy shall not affect coverage provided to CITY and its officers,
employees, agents, and volunteers.
e. An endorsement shall 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.
4.3 Professional Liability Insurance. Consultant, at its own cost and expense, shall
maintain for the period covered by this Agreement professional liability insurance for
licensed professionals performing work pursuant to this Agreement in an amount not less
than FIFTEEN MILLION DOLLARS ($15,000,000) covering the licensed professionals'
errors and omissions.
4.3.1 Any deductible or self-insured retention shall not exceed $500,000 per claim.
4.3.2 An endorsement shall 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.
4.3.3 The policy must contain a cross liability or severability of interest clause.
4.3.4 The following provisions shall apply if the professional liability coverages are
written on a claims-made form:
a. The retroactive date of the policy must be shown and must be before the
date of the Agreement.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 5 of 14
70119
b. Insurance must be maintained and evidence of insurance must be
provided for at least five years after completion of the Agreement or the
work, so long as commercially available at reasonable rates.
c. If coverage is canceled or not renewed and it is not replaced with another
claims-made policy form with a retroactive date that precedes the date of
this Agreement, Consultant must provide extended reporting coverage for
a minimum of five years after completion of the Agreement or the work.
The City shall have the right to exercise, at the Consultant's sole cost and
expense, any extended reporting provisions of the policy, if the Consultant
cancels or does not renew the coverage.
d. A copy of the claim reporting requirements must be submitted to the City
prior to the commencement of any work under this Agreement.
4.4 All Policies Requirements.
4.4.1 Acceptability of insurers. All insurance required by this section is to be placed
with insurers with a Bests' rating of no less than A:VII.
4.4.2 Verification of coveraae. Prior to beginning any work under this Agreement,
Consultant shall furnish City with certificates of insurance and with original
endorsements effecting coverage required herein. The certificates and
endorsements for each insurance policy are to be signed by a person authorized
by that insurer to bind coverage on its behalf. The City reserves the right to
require complete, certified copies of all required insurance policies, at any time.
4.4.3 Subcontractors. Consultant shall include all subcontractors as insureds under its
policies or shall furnish separate certificates and endorsements for each
subcontractor. All coverages for subcontractors shall be subject to all of the
requirements stated herein.
4.4.4 Variation. The City may approve a variation in the foregoing insurance
requirements, upon a determination that the coverages, scope, limits, and forms of
such insurance are either not commercially available, or that the City's interests
are otherwise fully protected.
4.4.5 Deductibles and Self.lnsured Retentions. Consultant shall disclose to and
obtain the approval of City for the self-insured retentions and deductibles before
beginning any of the services or work called for by any term of this Agreement.
During the period covered by this Agreement, only upon the prior express written
authorization of Contract Administrator, Consultant may increase such deductibles
or self-insured retentions with respect to City, its officers, employees, agents, and
volunteers. The Contract Administrator may condition approval of an increase in
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 6 of 14
a f'1. r
1)tJ1 I(~I
deductible or self-insured retention levels with a requirement that Consultant
procure a bond, guaranteeing payment of losses and related investigations, claim
administration, and defense expenses that is satisfactory in all respects to each of
them.
4.4.6 Notice of Reduction in Coveraae. In the event that any coverage required by
this section is reduced, limited, or materially affected in any other manner,
Consultant shall provide written notice to City at Consultant's earliest possible
opportunity and in no case later than five days after Consultant is notified of the
change in coverage.
4.5 Remedies. In addition to any other remedies City may have if Consultant fails to provide
or maintain any insurance policies or policy endorsements to the extent and within the time
herein required, City may, at its sole option exercise any of the following remedies, which
are alternatives to other remedies City may have and are not the exclusive remedy for
Consultant's breach:
· Obtain such insurance and deduct and retain the amount of the premiums for such
insurance from any sums due under the Agreement;
· Order Consultant to stop work under this Agreement or withhold any payment that
becomes due to Consultant hereunder, or both stop work and withhold any payment,
until Consultant demonstrates compliance with the requirements hereof; and/or
· Terminate this Agreement.
Section 5. INDEMNIFICATION AND CONSULTANT'S RESPONSIBILITIES. Consultant shall
indemnify, defend with counsel selected by the City, and hold harmless the City and its officials, officers,
employees, agents, and volunteers from and against any and all losses, liability, claims, suits, actions,
damages, and causes of action arising out of any personal injury, bodily injury, loss of life, or damage to
property, or any violation of any federal, state, or municipal law or ordinance, to the extent caused, in whole
or in part, by the willful misconduct or negligent acts or omissions of Consultant or its employees,
subcontractors, or agents, by acts for which they could be held strictly liable, or by the quality or character
of their work. The foregoing obligation of Consultant shall not apply when (1) the injury, loss of life, damage
to property, or violation of law arises wholly from the negligence or willful misconduct of the City or its
officers, employees, agents, or volunteers and (2) the actions of Consultant or its employees,
subcontractor, or agents have contributed in no part to the injury, loss of life, damage to property, or
violation of law. It is understood that the duty of Consultant to indemnify and hold harmless includes the
duty to defend as set forth in Section 2778 of the California Civil Code. Acceptance by City of insurance
certificates and endorsements required under this Agreement does not relieve Consultant from liability
under this indemnification and hold harmless clause. This indemnification and hold harmless clause shall
apply to any damages or claims for damages whether or not such insurance policies shall have been
determined to apply. By execution of this Agreement, Consultant acknowledges and agrees to the
provisions of this Section and that it is a material element of consideration.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 7 of 14
9o( /9
In the event that Consultant or any employee, agent, or subcontractor of Consultant providing services
under this Agreement is determined by a court of competent jurisdiction or the California Public Employees
Retirement System (PERS) to be eligible for enrollment in PERS as an employee of City, Consultant shall
indemnify, defend, and hold harmless City for the payment of any employee and/or employer contributions
for PERS benefits on behalf of Consultant or its employees, agents, or subcontractors, as well as for the
payment of any penalties and interest on such contributions, which would otherwise be the responsibility of
City.
Section 6.
6.1
6.2
Section 7.
7.1
7.2
7.3
7.4
STATUS OF CONSULTANT.
Independent Contractor. At all times during the term of this Agreement, Consultant shall
be an independent contractor and shall not be an employee of City. City shall have the
right to control Consultant only insofar as the results of Consultant's services rendered
pursuant to this Agreement and assignment of personnel pursuant to Subparagraph 1.3;
however, otherwise City shall not have the right to control the means by which Consultant
accomplishes services rendered pursuant to this Agreement. Notwithstanding any other
City, state, or federal policy, rule, regulation, law, or ordinance to the contrary, Consultant
and any of its employees, agents, and subcontractors providing services under this
Agreement shall not qualify for or become entitled to, and hereby agree to waive any and
all claims to, any compensation, benefit, or any incident of employment by City, including
but not limited to eligibility to enroll in the California Public Employees Retirement System
(PERS) as an employee of City and entitlement to any contribution to be paid by City for
employer contributions and/or employee contributions for PERS benefits.
Consultant No Aaent. Except as City may specify in writing, Consultant shall have no
authority, express or implied, to act on behalf of City in any capacity whatsoever as an
agent. Consultant shall have no authority, express or implied, pursuant to this Agreement
to bind City to any obligation whatsoever.
LEGAL REQUIREMENTS.
Governina Law. The laws of the State of California shall govern this Agreement.
Compliance with Applicable Laws. Consultant and any subcontractors shall comply with
all laws applicable to the performance of the work hereunder.
Other Governmental Reaulations. To the extent that this Agreement may be funded by
fiscal assistance from another governmental entity, Consultant and any subcontractors
shall comply with all applicable rules and regulations to which City is bound by the terms of
such fiscal assistance program.
Licenses and Permits. Consultant represents and warrants to City that Consultant and
its employees, agents, and any subcontractors have all licenses, permits, qualifications,
and approvals of whatsoever nature that are legally required to practice their respective
professions. Consultant represents and warrants to City that Consultant and its
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7,2006
Page 8 of 14
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employees, agents, any subcontractors shall, at their sole cost and expense, keep in effect
at all times during the term of this Agreement any licenses, permits, and approvals that are
legally required to practice their respective professions. In addition to the foregoing,
Consultant and any subcontractors shall obtain and maintain during the term of this
Agreement valid Business Licenses from City.
7.5 Nondiscrimination and Equal Opportunity. Consultant shall not discriminate, on the
basis of a person's race, religion, color, national origin, age, physical or mental ~andicap or
disability, medical condition, marital status, sex, or sexual orientation, against any
employee, applicant for employment, subcontractor, bidder for a subcontract, or participant
in, recipient of, or applicant for any services or programs provided by Consultant under this
Agreement. Consultant shall comply with all applicable federal, state, and local laws,
policies, rules, and requirements related to equal opportunity and nondiscrimination in
employment, contracting, and the provision of any services that are the subject of this
Agreement, including but not limited to the satisfaction of any positive obligations required
of Consultant thereby.
Consultant shall include the provisions of this Subsection in any subcontract approved by
the Contract Administrator or this Agreement.
Section 8.
TERMINATION AND MODIFICATION.
8.1
Termination. City may cancel this Agreement at any time and without cause upon written
notification to Consultant.
Consultant may cancel this Agreement upon 30 days' written notice to City and shall
include in such notice the reasons for cancellation.
In the event of termination, Consultant shall be entitled to compensation for services
performed to the effective date of termination; City, however, may condition payment of
such compensation upon Consultant delivering to City any or all documents, photographs,
computer software, video and audio tapes, and other materials provided to Consultant or
prepared by or for Consultant or the City in connection with this Agreement.
8.2. Extension. City may, in its sole and exclusive discretion, extend the end date of this
Agreement beyond that provided for in Subsection 1.1. Any such extension shall require a
written amendment to this Agreement, as provided for herein. Consultant understands and
agrees that, if City grants such an extension, City shall have no obligation to provide
Consultant with compensation beyond the maximum amount provided for in this
Agreement. Similarly, unless authorized by the Contract Administrator, City shall have no
obligation to reimburse Consultant for any otherwise reimbursable expenses incurred
during the extension period.
8.3 Amendments. The parties may amend this Agreement only by a writing signed by all the
parties.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 9 of 14
/Itlt,/q
8.4 Assianment and Subcontractina. City and Consultant recognize and agree that this
Agreement contemplates personal performance by Consultant and is based upon a
determination of Consultant's unique personal competence, experience, and specialized
personal knowledge. Moreover, a substantial inducement to City for entering into this
Agreement was and is the professional reputation and competence of Consultant.
Consultant may not assign this Agreement or any interest therein without the prior written
approval of the Contract Administrator. Consultant shall not subcontract any portion of the
performance contemplated and provided for herein, other than to the subcontractors noted
in the proposal, without prior written approval of the Contract Administrator.
8.5 Survival. All obligations arising prior to the termination of this Agreement and all
provisions of this Agreement allocating liability between City and Consultant shall survive
the termination of this Agreement.
8.6 Options upon Breach by Consultant. If Consultant materially breaches any of the terms
of this Agreement, City's remedies shall included, but not be limited to, the following:
8.6.1 Immediately terminate the Agreement;
Section 9.
9.1
9.2
8.6.2 Retain the plans, specifications, drawings, reports, design documents, and any
other work product prepared by Consultant pursuant to this Agreement;
8.6.3 Retain a different consultant to complete the work described in Exhibit A not
finished by Consultant; or
KEEPING AND STATUS OF RECORDS.
Records Created as Part of Consultant's Performance. All reports, data, maps,
models, charts, studies, surveys, photographs, memoranda, plans, studies, specifications,
records, files, or any other documents or materials, in electronic or any other form, that
Consultant prepares or obtains pursuant to this Agreement and that relate to the matters
covered hereunder shall be the property of the City. Consultant hereby agrees to deliver
those documents to the City upon termination of the Agreement. It is understood and
agreed that the documents and other materials, including but not limited to those described
above, prepared pursuant to this Agreement are prepared specifically for the City and are
not necessarily suitable for any future or other use by the City. City and Consultant agree
that, until final approval by City, all data, plans, specifications, reports and other
documents are confidential and will not be released to third parties without prior written
consent of both parties unless otherwise required by law.
Consultant's Books and Records. Consultant shall maintain any and all ledgers, books
of account, invoices, vouchers, canceled checks, and other records or documents
evidencing or relating to charges for services or expenditures and disbursements charged
to the City under this Agreement for a minimum of three (3) years, or for any longer period
required by law, from the date of final payment to the Consultant to this Agreement.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 10 of 14
/ ;(' oi /q
9.3 Inspection and Audit of Records. Any records or documents that Section 9.2 of this
Agreement requires Consultant to maintain shall be made available for inspection, audit,
and/or copying at any time during regular business hours, upon oral or written request of
the City. Under California Government Code Section 8546.7, if the amount of public funds
expended under this Agreement exceeds TEN THOUSAND DOLLARS ($10,000.00), the
Agreement shall be subject to the examination and audit of the State Auditor, at the
request of City or as part of any audit of the City, for a period of three (3) years after final
payment under the Agreement.
Section 10 MISCELLANEOUS PROVISIONS.
10.1 Attorneys' Fees. If a party to this Agreement brings any action, including an action for
declaratory relief, to enforce or interpret the provision of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees in addition to any other relief to which
that party may be entitled. The court may set such fees in the same action or in a
separate action brought for that purpose.
10.2 Venue. In the event that either party brings any action against the other under this
Agreement, the parties agree that trial of such action shall be vested exclusively in the
state courts of California in the County of Alameda or in the United States District Court for
the Northern District of California.
10.3 Severability. If a court of competent jurisdiction finds or rules that any provision of this
Agreement is invalid, void, or unenforceable, the provisions of this Agreement not so
adjudged shall remain in full force and effect. The invalidity in whole or in part of any
provision of this Agreement shall not void or affect the validity of any other provision of this
Agreement.
10.4 No Implied Waiver of Breach. The waiver of any breach of a specific provision of this
Agreement does not constitute a waiver of any other breach of that term or any other term
of this Agreement.
10.5 Successors and Assians. The provisions of this Agreement shall inure to the benefit of
and shall apply to and bind the successors and assigns of the parties.
10.6 Use of Recycled Products. Consultant shall prepare and submit all reports, written
studies and other printed material on recycled paper to the extent it is available at equal or
less cost than virgin paper.
10.7 Conflict of Interest. Consultant may serve other clients, but none whose activities within
the corporate limits of City or whose business, regardless of location, would place
Consultant in a "conflict of interest," as that term is defined in the Political Reform Act,
codified at California Government Code Section 81000 et seq.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7,2006
Page 11 of 14
/.30/j q
Consultant shall not employ any City official in the work performed pursuant to this
Agreement. No officer or employee of City shall have any financial interest in this
Agreement that would violate California Government Code Sections 1090 et seq.
Consultant hereby warrants that it is not now, nor has it been in the previous twelve (12)
months, an employee, agent, appointee, or official of the City. If Consultant was an
employee, agent, appointee, or official of the City in the previous twelve months,
Consultant warrants that it did not participate in any manner in the forming of this
Agreement. Consultant understands that, if this Agreement is made in violation of
Government Code S1090 et.seq., the entire Agreement is void and Consultant will not be
entitled to any compensation for services performed pursuant to this Agreement, including
reimbursement of expenses, and Consultant will be required to reimburse the City for any
sums paid to the Consultant. Consultant understands that, in addition to the foregoing, it
may be subject to criminal prosecution for a violation of Government Code S 1090 and, if
applicable, will be disqualified from holding public office in the State of California.
10.8 Solicitation. Consultant agrees not to solicit business from third parties at any meeting,
focus group, or interview related to this Agreement, either orally or through any written
materials.
10.9 Contract Administration. This Agreement shall be administered by Paul S. Rankin,
Administrative Services Director ("Contract Administrator"). All correspondence shall be
directed to or through the Contract Administrator or his or her designee.
10.10 Notices. Any written notice to Consultant shall be sent to:
Lauren Brant
PFM Asset Management LLC
50 California Street
San Francisco, CA 94111
Any written notice to City shall be sent to:
Paul S. Rankin, Administrative Services Director
City of Dublin
100 Civic Plaza
Dublin, CA 94568
10.11 Professional Seal. Where applicable in the determination of the contract administrator,
the first page of a technical report, first page of design specifications, and each page of
construction drawings shall be stamped/sealed and signed by the licensed professional
responsible for the report/design preparation. The stamp/seal shall be in a block entitled
"Seal and Signature of Registered Professional with report/design responsibility," as in the
following example.
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7,2006
Page 12 of 14
lifer /1
Seal and Signature of Registered Professional with
report/design responsibility.
10.12 Intearation. This Agreement, including the scope of work and work plan schedule
attached hereto and incorporated herein as Exhibit A, represents the entire and integrated
agreement between City and Consultant and supersedes all prior negotiations,
representations, or agreements, either written or oral.
CITY OF DUBLIN
CONSULTANT: ClientFirst Consulting Group, LLC
Richard C. Ambrose, City Manager
Lauren Brant, Managing Director
Attest:
City Clerk
Approved as to Form:
City Attorney
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 13 of 14
/5 tJ/ I q
EXHIBIT A
SCOPE OF SERVICES
Consulting Services Agreement between
City of Dublin and ClientFirst Consulting Group, LLC
November 7, 2006
Page 14 of 14
Exhibit A
(Page 1 of 4)
4IE=-
-PFM"
~
16
Investment Advisors to the Public Sector
Scope of Services and Project Approach
PFM undcntands that the City of Dublin (the "City") is looking for an investment advisor to
perform a one-time review of the invc3tment polie--y and procedures, CUIIellt portfolio, and
investment strategies and performance results for the City's portfolio. As outlined below, PFM is
fully prepared to review all aspects or the City's investment program and provide recommendations
as needed. Our review and recommendations will be bused On Our extensive experience working
with California public agencies, including over 40 cities. The objective of Our review will be to both
assess the current status of tht.; City':; invclltment program and to provide recommendations to
improve the future safety and performance or the City's investment program in a 1TI..111ner comistent
with its specific needs and objectives. Below, we briefly described the types of items that would be
covered in our policy and strategy review.
Step 1: Identify City's Investment Objeetives and Constraints
PFM recommends holding it meeting with City personnel at the start of the project to discuss the
current investment practices and object.ives_ In addition, we will work to gain a better und{~standing
of the City's investment practices through a comprdwnsivc review of the investment policy,
investment reports, contl:'a.cts, agreement:; and any written or unwritten b'1.udelines or procedures as
appropriate. Specifically, we will accomplish the following tasks.
· .Med with City personnel to discuss their investment objectives, the levd of risk wlenlnce,
investment philosophy, and investment decision-making process
II Review the City'S invcstment procedures and custodial agreement
· Exarnine the. City's broker! dealer approved list and its method of reviewing and updating
this list
· Evaluate all reponing to detemune if intemal portfolio reporr.s provide sufficient
inJormation for efficient managemenr, and if reports for the City Council provide
in foanation in a way that enables readers to provide relevant oversight
Step 2: Review of Investment Policy and Procedures
A-s part of our scope of services, PFM will review the City's investment policy to enSure that it is
comprehensive in natu:re, meeting both the requirements of the California Government Code and
the Cio/Ii invcstm~~nt objectives. Our objective ",,-ill. be to ensure that tile City's investment policy
promotes investment practices that safeguard principal,. provide needed liquidity and optimize
investment t:'cturns within the constraints of principal preservation and liquidity requirements. Our
recommendations will be stfilctu.r:ed to achieVE these objectives consistent wirh the City's specific
needs. Below is a brief de3cription of our approach to investment policy review.
· Review of Investment Policy: We will evaluate the current investment policy to ensuring
that the current policy incorporates all recent changes in (he California Government Code,
complies with prevailing market practices tnat may affect how various securities are
evaluated amI traded, and reflects the City's practices and preferences.
· Assess Diversification and Risk: PFM will fully assess the investment approach, as
described by the -investment policy, in order to determine if the level of risk is consistent
Clly '..If Dublin .-. Propo5ul roC' .t\"~e:S$m~nt &: ~ of l~:ttm.ent Pm"tfnlio Policy Jl.nd. lhacedure:
/q
Exhibit A
(Page 2 of 4)
I 7 tJ f( 1
~
...;,r [...,tmeld Advisors to the Puhlk Sector
with our understanding or the client's objectives. This review considers asset allocation,
return", on allowable imrestmenls, and implementation approach. In this evaluation we focus
on security limitations reg2.rding: (1) specific assel classes, (2) diversi fication, (3) maturity
limitations, and (4) use of illiquid securities. If appropriate, we will suggest changes to the
policy to redu.ce risk and! or enhance retum within legal and statutory constraints.
In our initial review of the City of Dublin's investment policy, we found it to be thorough and
comprehensive. After meeting \\lith tbe City's staff and more thoroughly ascertaining the c.ity's
objectives and procedures, 'PI iM will work with the City to ensure the policy ill sufficiently
comprehensive in establishing controls and objectives, while allowing the City the proper flexibility
to dynamically respond to market cond1r1ons_
Step 3: Comprehensive Portfolio Review
W(~ will conduct an in-depth analysis of the portfolio's current structu.re. The primary objective of
this analysi::; will be to dete:crnine if, by maintaining its current portfolio, the City is optimizing its
portfolio perfonnance, wbilc continuing to comply with the safety stanchrds and liquidity
requirements set forth in the investment policy. Our analysis will focus on the points listed helow.
· Compliance with Applicable Statutes and Policies: We will review the City's investment
portfolio for compliance with both the California Govtcmment Code and the City's current
policy.
· Liquidity: PFM has deyeloped an effeclive methodology for rt~vit~wing and analyzing the
liquidity of our clients' portfolios. For the City, Pli'M w11l assess the case with which
individual secnrities could be sold in the marketplace. pm uses a liquidity scale, which
ranks securities from O. the most liquid, to 10, the least liquid. Each security is assiI-,'lled a
factor based on certain characteristics, such as sector, coupon, issue size, rating and so on.
PFM \.Villutilize this scale to assess the liquidity of individual i!ecurities currently held in the
City's portfolio, convert those results to .l. mCaSure of overall liquidity and then evaluate the
portfolio'::; exposure to liquidity risk and make recommend'ltions to reduce expo!'ure or
enhance yield.
· Credit Quality: PPM will assess the credit quality of the City's investments. The
imporlance of monitoring a portfolio's credit quality has taken on additional significance
given the current unccrtainty surrounding the U.S. economy. The importance we place on
credit quality is dcmonstr:ated by the fact that for the portfolios we ma11a~~, PFM has never
purchased or owned any corporate security that has been downgradt~d below the legal limit
in California. Our review 'Will include comments on (he credit qu..1.lity of the CiLls currCnt
portfolio and any recommended changes.
· Diversification: PFM will assess the diversification of the City's investments by evalu<l.6ng
the performance, risk ~lfld market value of current holdinf:,>5 af:,>aln.st a variety of market
forecasts. Tn addition, wC will provide a table of relative yield spreads between approved
investment sectors, indudin~ u.s. Treasury bills \lod notes, h~deral Agencies, commercial
paper, BAs, CDs, corporate notes and repurchase agreements.
· Portfolio Duration: On a regular basis, PFM's portfolio manaf.,>ers analyze interest rate
trend~ in the market to determinc (he optimal portfolio duration. This analysis entails
calculating the risks and rewards of various durations in the past. We will pres(:nt several
CIty of Duhhn .... .P.IOpOJ.l1l foe- A55ns~ne:nt & R~..;e",r; ilt 1 nve~t'n~nr PmTfnlil'J. Pnliry :l11d 'Pi'nanu!'c",
~FM.-
~ Investment Advisors to the Pnblk SeCtM
Exhibit A
(Page 3 of 4)
/1 'I
/'t?(Jft
duration" !'>cenarios, analyzing the risks, rewards and volatility of each to enable the City to
determine its tolerance to risk.
· Market Value: PFM's portfolio managemmt team prices the securities held in our clients'
portfolios on a daily basis. PFM will measure the market value of each serurity held in the
City's portfolio and compan~ thes~:valu(:s with the book value of each serurity; we will
commCnt on significant deviations. We mIl also point out any significant dcviations
between the market values we report and those provided by the City.
PFM will meet with City starr to determinc their cum.:nt investmf-'11t-selection process and criteria
and to dctl:.:anine if the current strategies are complying w1th the Investment Policy. and arC in line
with the City's written and unwritten objcL-tives.
After reviewing these clements of the portfolio, PFM will make recommendations regarding ways to
improve the diversification, credit quality and the structure of the portfolio.
Step 4. Cash Flow Forecasting
Accurate cash flow forec-asting is a critical component in developing an effective investment
strateb'Y. It enables portfolio managers to ensure that there is sufficient liquidity for cash need"
while helping to determine which funds can be invested in longer-term securities. PFM will use its
proprietary cash flow forecasting tools to assist the City of Dublin in analY1.ing its cash flow data and
to develop a duration Clrget and targeted maturity buckets. This model uses historic info1TIllltion
and statistical projection formulas. PFM will work closely with City personnel to cnSl~rc the analysis
considers the unique nature of the City's cash flows, incorporating any ruture cash flow expect,ttlons
including tax revenue deposits and transfers. This analysis will enable us to determine how luuch
liquidity the City vrill need (0 maintain in its portfolio to mt:et future cash flow needs and will aid in
setting meaningful duration targets for the entire portfolio.
Step 5: Portfolio Risk Assessment
Pl,'M has developed proprietary software and analytical too\.:; that have helped our clients to better
understand the ri!'>k exposure of their portfolios. These tools include liquidity rating, market risk
assessment, horizon analysis, cash flow variability measures and prcpaymcnt/r<..-mvcstmcnt risk
measw:es. The remIt of this assessment is that client.s arc better able to track portfolio risk and can
better position the portfolio to minimize risk.
PI:'M will use this tool to help the City e\iahl,1.le the risk in its portfolio. Our initial risk assessment
of the City's current portfolio indicates that the.re is some reinvestment risk due to the high
proportion of callable securi tics. In addition, callable securities are less liquid than comparable n011-
callable scmrities. ]hough these risks are compensated by higher yields, the pick up in yield is not
always :mfficient to compensate t.he investor for this added risk. PFM will assist the City in
detennining the proportion of callable securities to be held in it!'> portfolio based on the Cicy's risk
profile, current mackct conditions, and the difference in yields of callable YS. non-callable securities.
Step 6: Historical Performance Review
PF'1\1 witl analyze the City's historical perfonnancc information, including the City'S ability to meet
all of its cash flow requirements and other objectives and the portfolio's overall reUu:n 011 the
portfolio over the past: five years, on both a st.:'lndalone [yAsis and in comparison to its benchmark.
CIty of Dublin -. P,ropo:uJ fat" A":'IeUlne~t &: n.evi~ f"lf T'IIV't.J\t.ment Portf<:llio P"J,i.":Y :lr\l.i Ptol~edl)"/'::f\
Exhibit A
(Page 4 of 4)
/7c f I?l
~M" .
S Investment Advisors W tlw Public Seewr
Step 7: Investment Strategy Identification and Recommendations
Using the infonnation collected from Steps 1-6 above, we will be able to a8~e~s the City's current
invcstm.ent strategy and make recommendations on how to best position the portfolio to perform
well in the futme.
· Current Market Conditions - PFI\.1 closely monitors economic data to cvalllate probable
effect on the market and, more importantly, on our clients' portfolios. We look at such
factors as employment (unemployment rate, monthly payroll gains), inflation (pPT, CPI,
Eer, averagt~ hourly eanlmgs), the consumer (retail sales, consumer spending, consumer
confidcnce/8cutiment), manufacturing (NAPM, durable goods orders) and
housing/construction (new home sales, construction spending). We will WIt: this economic
infoffi1ation to assess the likely impact of current market trends 011 the City's portfolio.
· Investment Strategy - PFM will review the City's current portfolio to analyze if various
investment stnltegies, such as "rolling-down-the-curve" on various mattu:i.tks, sector re-
allocation and rich/cheap analysis could be llsed to improve the portfolio'" return. We
would include concise explanatiOn::! of each strategy and charts and tables to illustrate our
explanations.
Step 8: Identify ImpactofPotential Supplemental Resources
Once the analy"is from Steps 1-6 is complete> we "Will be able to a.!isess whether or not the City could
benefit from additional resoU.rces tv enhance its investrnent program. Tf additional resources are
identified, we will present an analysis of the potentials C08ts and expected impacts.
Step 9: Report and Presentation
Upon completion of our analysis, PFM will provide the City with a written report covering our
findings and any recommendations resulting from our review. Lauren Brant and/or Nscsa Kazadi
will be available to present a summary report 10 the City.
Schedule for Completion
The table on tlle following page outlines our timetable to complete the tasks described above.
PFM Timetable for Completion ofInirial Review
..&""........ . .
"'..;.....1?~ .
. . . :~ :. '. \: .' ..
.:.::.~m.: a~diWitii. .:.~~~p.~~'.
",'. ... ..'
Stcp 1: Identify City's Investment Objective:l and C011.~traints
Step 2: Review of IDye~tmcnt Policy and Procedures
Step 3: Cornprehemivc Portfolio Review
Step 4. Cash Flow I1oreca~ting
Step 6: Hislorical Performance Review
1 week
3-4dap
2 weeks
2-3 days
3-4 days
2-3 days
1 day
1 day
4-6 weeks
Step 7; Invc.'ltment Strategy Identification and Recommendations
Stl.:P 8: Identify r mpacL of Potentllll Suppk:mmtal Resources
Step 9: Formal Prcsmtarion of Findi11gs
T uta] timeline
Cil}' u[Dublin .~. l'.ropo!lul for A'se;\~me:nt & R~~. {11 Tnve:r.tmt:1lr Pf'l'l"tfr)Ho Policy rllIKl PIV(;t-d\'It~