The City of Rocklin monies needed for immediate or near-term disbursement are maintained in liquid checking accounts and funds that are temporarily idle or not needed for disbursement are held in the Local Agency Investment Fund (LAIF), the Placer County Treasurer’s Investment Pool, and other investment accounts in accordance with the City’s Investment Policy. The City’s Other Post-Employment Benefits and bond proceeds are not invested by City staff.
It is the City’s Investment Policy to invest public funds in a manner that will provide a sound investment return with maximum security while meeting the daily cash flow needs of the City, while conforming to all state and local statutes governing the investment of public funds. The City’s Investment Policy has three objectives: (1) protect principal; (2) provide for liquidity needs; and (3) obtain the most reasonable rate of return possible within the first two objectives. The City operates its investment activities under the “prudent investor” standard. This affords a broad spectrum of investment opportunities so long as the investment is deemed prudent and is permissible under current state and local law.
In accordance with California Government Code Section 53607, the City Council has authorized the City Treasurer to invest on behalf of the City, to manage the City’s investment program consistent with the Investment Policy (Resolution No. 2022-130). It is the City intent, at the time of purchase, to hold all investments until maturity to ensure the return of all invested principal dollars. However, market prices of securities will vary depending on economic and interest rate conditions at any point in time. Furthermore, in a well-diversified investment portfolio, occasional measured losses are inevitable due to economic, bond market or individual security credit analysis. These occasional losses must be considered within the context of the overall investment program objectives and the resultant long-term rate of return.
In order to strengthen the City's investment portfolio, staff believes that the services of an investment management firm would bring value to the City by increasing earnings to the City while adhering to the City’s Investment Policy. An investment management firm would have the resources available to evaluate, analyze and project cash flows, which is expected to identify excess funds invested in short-term investments that could transition to a long-term investment horizon achieving greater returns. Such a firm would also have the resources available to actively analyze City owned investments against changing market conditions and when prudent, sell appropriate investments and reinvest in other investments in order to realize market gains.
In July 2022, the City released a Request for Proposal for Investment Advisory Services. On August 5, 2022, the City received a total of seven proposals. The proposals were reviewed by an evaluation team comprised of staff from the Administrative Services Department and the City Manager’s Office. The proposals were evaluated in the following areas:
- Firm’s understanding of the City’s overall investment program, objectives, and unique constraints;
- Qualifications and experience of personnel working on the project or providing the service;
- Firm’s qualifications, experience, references;
- Quality and responsiveness of the proposal;
- Approach/work plan; and
- Rates and fees.
Chandler Asset Management, Inc. (Chandler) was the top-ranking firm of all four members of the evaluation team, due to their high-level qualifications and public sector experience. Chandler will provide the following services:
- Proprietary software to ensure all transactions meet Government Code and the City’s Investment Policy guidelines;
- Analysis of the City’s cash flow needs;
- Active management of the City’s investments;
- Access to market resources such as Bloomberg, Trade Web, and Proprietary optimizing models;
- Volume pricing optimization on transactions and other services;
- Monthly online reporting and monitoring tools for all transactions and current balances; and
- Continuity of the investment program regardless of changes or fluctuations in staffing levels or City personnel.
Staff recommends awarding the Investment Management and Advisory Services Contract to Chandler Asset Management, Inc., and authorize the City Manager to execute a three-year Contract with two optional one-year extensions with Chandler Asset Management, Inc. in an amount not to exceed $388,000 over a five-year period.