Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida, Authorizing The Appropriate City Officials To Execute An Agreement With Public Trust Advisors, LLC To Provide Investment Management Services In An Estimated Total Amount Of $450,000.00 Over A Three Year Period; Amending the Fiscal Year 2021 Operating Budget.
Strategic Plan Focus
Financial Management & Administration
Body
Staff Recommends: Approval of the Attached Resolution.
Explanation:
The Financial Services Department desires to contract with an investment management firm to manage the City’s investment portfolio as well as provide recommendations for the City’s current investment policy to maximize yield while ensuring preservation of capital and liquidity for the fiscal years ending September 30, 2021 through 2023.
On November 9, 2020, Request for Qualifications Number 4659-21-PB Investment Management Services (“RFQ”) was electronically advertised via BidSync in accordance with the City Code of Ordinances Section 38.43(A) and closed on December 14, 2020.
The RFQ resulted in proposals from the following three (3) firms:
Chandler Asset Management
Public Trust Advisors, LLC
PFM Asset Management, LLC
A Selection Committee comprised of the Director of the Department of Financial Services, the Assistant Director/City Treasurer of the Department of Financial Services, and the Fiscal Affairs Special Projects Manager of the Office of the City Manager met on January 25, 2021 to evaluate and rank the proposals.
Evaluation of the proposals was based upon the criterial as established in the RFQ: Qualifications and Experience of the Firm, Qualifications and Experience of Key Personnel, Investment Management Approach and Discipline, Accounting and Reporting Fees.
Based on the evaluation criteria, the Selection Committee evaluated the three proposals and the scores were compiled to arrive at the following rankings, with the lowest score being the highest ranked:
1. Public Trust Advisors, LLC 3 points
2. PFM Asset Management 6 points
3. Chandler Asset Management 9 points
The Selection Committee unanimously recommends that the City Commission authorize execution of an agreement with the highest ranked firm, Public Trust Advisors, LLC., for a term of three years, with an option to renew for two additional two-year periods to provide investment management services.
Award is subject to the City receiving all insurance documents and endorsements required by the City’s Risk Manager, along with Hold Harmless and Indemnity provisions to the City.
Fiscal Impact:
A conservative three-year estimated cost of the agreement is $450,000. The costs are dependent upon the amount of funds being managed by the firm. In the beginning, the City intends a ramp-up period where the firm will manage a portion of the available funds, with the amount increasing as current investments roll out. Therefore, the costs are likely to be less than the amount stated. Even using the most conservative estimates would result in an estimated cost for the final four months in fiscal year 2021 of approximately $50,000.
The cost of the service will be more than offset by anticipated increases in interest earnings as a result of having the City’s portfolio managed by the firm. A budget amendment (attached as Exhibit “1”) recognizes an increase in estimated interest earnings and also appropriates the estimated cost for this service through the end of the current fiscal year in the contractual services account in the General Fund of the City to provide resources to pay for the cost of the investment management services. Based upon the ramp-up plan referenced above, a conservative estimate is that the interest earnings to the City will increase by $250,000 to $500,000 in the first full fiscal year. Assuming average monthly increased interest earnings, the estimated increased earnings for the final four months of this fiscal year can be conservatively projected at $125,000.
Once the program is fully implemented, increased interest earnings are projected to be well in excess of $500,000 per year and could even reach in excess of $1,000,000 per year.
Since the City provides investment services for the CRA, a proportionate share of the estimated cost should also be appropriated in the accounts of the CRA.
Recommended for inclusion on the agenda by:
Adam Reichbach, Assistant City Manager/Finance & Administration
Melissa Cruz, Director of Financial Services
David E. Keller, Fiscal Affairs Special Project Manager
Steve Stewart, Assistant Director of Financial Services for Procurement