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HomeMy WebLinkAbout2016 CON Chandler Asset Management - Investment Management ServicesAGREEMENT BY AND BETWEEN THE CITY OF NATIONAL CITY AND CHANDLER ASSET MANAGEMENT, INC. THIS AGREEMENT is entered into on this 15`h day of November, 2016, by and between the CITY OF NATIONAL CITY, a municipal corporation (the "CITY"), and CHANDLER ASSET MANAGEMENT, INC., a California corporation (the "CONSULTANT"). RECITALS WHEREAS, the CITY desires to employ a CONSULTANT to provide investment management and investment advisory services, as outlined in the attached Exhibit "A." WHEREAS, the CITY has determined that the CONSULTANT is an investment advisor registered with the SEC under the Investment Advisers Act of 1940 and is qualified by experience and ability to perform the services desired by the CITY, and the CONSULTANT is willing to perform such services. NOW, THEREFORE, THE PARTIES HERETO DO MUTUALLY AGREE AS FOLLOWS: 1. ENGAGEMENT OF CONSULTANT. The CITY agrees to engage the CONSULTANT, and the CONSULTANT agrees to perform the services set forth here in accordance with all terms and conditions contained herein. The CONSULTANT represents that all services shall be performed directly by the CONSULTANT or under direct supervision of the CONSULTANT. 2. EFFECTIVE DATE AND LENGTH OF AGREEMENT. This Agreement will become effective on November 16, 2016. The duration of this Agreement is for the period of November 16, 2016 through November 15, 2019. This Agreement may be extended by mutual agreement upon the same terms and conditions for an additional one-year (1-year) term. The Parties may exercise up to two (2) one-year extensions. 3. SCOPE OF SERVICES. The CONSULTANT shall provide investment management and investment advisory services for the CITY in compliance with the City's investment policy attached hereto as "Attachment 1." The CONSULTANT will provide services as set forth in the Exhibit "A." The CONSULTANT shall be responsible for all research and reviews related to the work and shall not rely on personnel of the CITY for such services, except as authorized in advance by the CITY. The CONSULTANT shall appear at meetings specified in Exhibit "A" to keep staff and City Council advised of the progress on the Engagement. The CITY may unilaterally, or upon request from the CONSULTANT, from time to time reduce or increase the Scope of Services to be performed by the CONSULTANT under this Agreement. Upon doing so, the CITY and the CONSULTANT agree to meet in good faith and confer for the purpose of negotiating a corresponding reduction or increase in the compensation associated with said change in services. 4. ENGAGEMENT COORDINATION AND SUPERVISION. The Director of Finance hereby is designated as the Engagement Coordinator for the CITY and will monitor the progress and execution of this Agreement. The CONSULTANT shall assign a single Engagement Director to provide supervision and have overall responsibility for the progress and execution of this Agreement for the CONSULTANT. Mia Corral thereby is designated as the Engagement Director for the CONSULTANT. 5. COMPENSATION AND PAYMENT. The compensation for the CONSULTANT shall be paid monthly, based upon the average market value of the CITY'S assets under management by the CONSULTANT. The total cost for all work described in Exhibit "A" shall not exceed the schedule given in Exhibit "A" without prior written authorization from the City. Monthly fees shall be charged in arrears and debited directly from the balance of the CITY'S assets under management by the CONSULTANT, provided that work is accomplished consistent with Exhibit "A," as determined by the CITY. The CONSULTANT shall maintain all books, documents, papers, employee time sheets, accounting records, and other evidence pertaining to costs incurred, and shall make such materials available at its office at all reasonable times during the term of this Agreement and for three (3) years from the date of final payment under this Agreement, for inspection by the CITY, and for furnishing of copies to the CITY, if requested. 6. ACCEPTABILITY OF WORK. The City shall decide any and all questions which may arise as to the quality or acceptability of the services performed and the manner of performance, the acceptable completion of this Agreement, and the amount of compensation due. In the event the CONSULTANT and the City cannot agree to the quality or acceptability of the work, the manner of performance and/or the compensation payable to the CONSULTANT in this Agreement, the City or the CONSULTANT shall give to the other written notice. Within ten (10) business days, the CONSULTANT and the City shall each prepare a report which supports their position and file the same with the other party. The City shall, with reasonable diligence, determine the quality or acceptability of the work, the manner of performance, and/or the compensation payable to the CONSULTANT. 7. DISPOSITION AND OWNERSHIP OF DOCUMENTS. The Memoranda, Reports, Maps, Drawings, Plans, Specifications, and other documents prepared by the CONSULTANT for this Engagement, whether paper or electronic, shall become the property of the CITY for use with respect to this Engagement, and shall be turned over to the CITY upon completion of the Engagement, or any phase thereof, as contemplated by this Agreement. Contemporaneously with the transfer of documents, the CONSULTANT hereby assigns to the CITY, and CONSULTANT thereby expressly waives and disclaims any copyright in, and the right to reproduce, all written material, drawings, plans, specifications, or other work prepared under this Agreement, except upon the CITY'S prior authorization regarding reproduction, which authorization shall not be unreasonably withheld. The CONSULTANT Standard Agreement 2 City of National City and Revised May 2016 Chandler Asset Management, Inc. shall, upon request of the CITY, execute any further document(s) necessary to further effectuate this waiver and disclaimer. The CONSULTANT agrees that the CITY may use, reuse, alter, reproduce, modify, assign, transfer, or in any other way, medium, or method utilize the CONSULTANT'S written work product for the CITY'S purposes, and the CONSULTANT expressly waives and disclaims any residual rights granted to it by Civil Code Sections 980 through 989 relating to intellectual property and artistic works. Any modification or reuse by the CITY of documents, drawings, or specifications prepared by the CONSULTANT shall relieve the CONSULTANT from liability under Section 14, but only with respect to the effect of the modification or reuse by the CITY, or for any liability to the CITY should the documents be used by the CITY for some engagement other than what was expressly agreed upon within the Scope of this Engagement, unless otherwise mutually agreed. 8. INDEPENDENT CONTRACTOR. Both parties hereto in the performance of this Agreement will be acting in an independent capacity and not as agents, employees, partners, or joint venturers with one another. Neither the CONSULTANT nor the CONSULTANT'S employees are employees of the CITY, and are not entitled to any of the rights, benefits, or privileges of the CITY'S employees, including but not limited to retirement, medical, unemploy- ment, or workers' compensation insurance. This Agreement contemplates the personal services of the CONSULTANT and the CONSULTANT'S employees, and it is recognized by the parties that a substantial inducement to the CITY for entering into this Agreement was, and is, the professional reputation and competence of the CONSULTANT and its employees. Neither this Agreement nor any interest herein may be assigned by the CONSULTANT without the prior written consent of the CITY. Nothing herein contained is intended to prevent the CONSULTANT from employing or hiring as many employees, or SUBCONSULTANTS, as the CONSULTANT may deem necessary for the proper and efficient performance of this Agreement. All agreements by CONSULTANT with its SUBCONSULTANT(S) shall require the SUBCONSULTANT(S) to adhere to the applicable terms of this Agreement. 9. CONTROL. Neither the CITY nor its officers, agents, or employees shall have any control over the conduct of the CONSULTANT or any of the CONSULTANT'S employees, except as herein set forth, and the CONSULTANT or the CONSULTANT'S agents, servants, or employees are not in any manner agents, servants, or employees of the CITY, it being understood that the CONSULTANT its agents, servants, and employees are as to the CITY wholly independent CONSULTANT, and that the CONSULTANT'S obligations to the CITY are solely such as are prescribed by this Agreement. 10. COMPLIANCE WITH APPLICABLE LAW. The CONSULTANT, in the performance of the services to be provided herein, shall comply with all applicable state and federal statutes and regulations, and all applicable ordinances, rules, and regulations of the City of National City, whether now in force or subsequently enacted. The CONSULTANT and each Standard Agreement 3 City of National City and Revised May 2016 Chandler Asset Management, Inc. of its SUBCONSULTANT(S), shall obtain and maintain a current City of National City business license prior to and during performance of any work pursuant to this Agreement. 11. LICENSES, PERMITS, ETC. The CONSULTANT represents and covenants that it has all licenses, permits, qualifications, and approvals of whatever nature that are legally required to practice its profession. The CONSULTANT represents and covenants that the CONSULTANT shall, at its sole cost and expense, keep in effect at all times during the term of this Agreement, any license, permit, or approval which is legally required for the CONSULTANT to practice its profession. 12. STANDARD OF CARE. A. The CONSULTANT, in performing any services under this Agreement, shall perform in a manner consistent with that level of care and skill ordinarily exercised by members of the CONSULTANT'S trade or profession currently practicing under similar conditions and in similar locations. The CONSULTANT shall take all special precautions necessary to protect the CONSULTANT'S employees and members of the public from risk of harm arising out of the nature of the work and/or the conditions of the work site. B. Unless disclosed in writing prior to the date of this Agreement, the CONSULTANT warrants to the CITY that it is not now, nor has it for the five (5) years preceding, been debarred by a governmental agency or involved in debarment, arbitration or litigation proceedings concerning the CONSULTANT'S professional performance or the furnishing of materials or services relating thereto. C. The CONSULTANT is responsible for identifying any unique products, treatments, processes, or materials whose availability is critical to the success of the Engagement the CONSULTANT has been retained to perform, within the time requirements of the CITY, or, when no time is specified, then within a commercially reasonable time. Accordingly, unless the CONSULTANT has notified the CITY otherwise, the CONSULTANT warrants that all products, materials, processes, or treatments identified in the Engagement documents prepared for the CITY are reasonably commercially available. Any failure by the CONSULTANT to use due diligence under this sub -paragraph will render the CONSULTANT liable to the CITY for any increased costs that result from the CITY'S later inability to obtain the specified items or any reasonable substitute within a price range that allows for completion of the Engagement in the time frame specified or, when not specified, then within a commercially reasonable time. 13. NON-DISCRIMINATION PROVISIONS. The CONSULTANT shall not discriminate against any employee or applicant for employment because of age, race, color, ancestry, religion, sex, sexual orientation, marital status, national origin, physical handicap, or medical condition. The CONSULTANT will take positive action to insure that applicants are employed without regard to their age, race, color, ancestry, religion, sex, sexual orientation, marital status, national origin, physical handicap, or medical condition. Such action shall include but not be limited to the following: employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination, rates of pay or other forms of compensation, and selection for training, including apprenticeship. The CONSULTANT agrees to post in conspicuous places available to employees and applicants for employment any notices provided by the CITY setting forth the provisions of this non-discrimination clause. Standard Agreement 4 City of National City and Revised May 2016 Chandler Asset Management, Inc. 14. CONFIDENTIAL INFORMATION. The CITY may from time to time communicate to the CONSULTANT certain confidential information to enable the CONSULTANT to effectively perform the services to be provided herein. The CONSULTANT shall treat all such information as confidential and shall not disclose any part thereof without the prior written consent of the CITY. The CONSULTANT shall limit the use and circulation of such information, even within its own organization, to the extent necessary to perform the services to be provided herein. The foregoing obligation of this Section 14, however, shall not apply to any part of the information that (i) has been disclosed in publicly available sources of information; (ii) is, through no fault of the CONSULTANT, hereafter disclosed in publicly available sources of information; (iii) is already in the possession of the CONSULTANT without any obligation of confidentiality; or (iv) has been or is hereafter rightfully disclosed to the CONSULTANT by a third party, but only to the extent that the use or disclosure thereof has been or is rightfully authorized by that third party. The CONSULTANT shall not disclose any reports, recommendations, conclusions, or other results of the services or the existence of the subject matter of this Agreement without the prior written consent of the CITY. In its performance hereunder, the CONSULTANT shall comply with all legal obligations it may now or hereafter have respecting the information or other property of any other person, firm, or corporation. CONSULTANT shall be liable to CITY for any damages caused by breach of this condition, pursuant to the provisions of Section 14. 15. INDEMNIFICATION AND HOLD HARMLESS. The CONSULTANT agrees to defend, indemnify and hold harmless the City of National City, its officers, officials, agents, employees, and volunteers against and from any and all liability, loss, damages to property, injuries to, or death of any person or persons, and all claims, demands, suits, actions, proceedings, reasonable attorneys' fees, and defense costs, of any kind or nature, including workers' compensation claims, of or by anyone whomsoever, resulting from or arising out of the CONSULTANT'S performance or other obligations under this Agreement; provided, however, that this indemnification and hold harmless shall not include any claims or liability arising from the established sole negligence or willful misconduct of the City, its agents, officers, employees, or volunteers. The CITY will cooperate reasonably in the defense of any action, and CONSULTANT shall employ competent counsel, reasonably acceptable to the City Attorney. The indemnity, defense, and hold harmless obligations contained herein shall survive the termination of this Agreement for any alleged or actual omission, act, or negligence under this Agreement that occurred during the term of this Agreement. 16. WORKERS' COMPENSATION. The CONSULTANT shall comply with all of the provisions of the Workers' Compensation Insurance and Safety Acts of the State of California, the applicable provisions of Division 4 and 5 of the California Government Code and all amendments thereto; and all similar State or federal acts or laws applicable; and shall indemnify, and hold harmless the CITY, its officers, and employees from and against all claims, demands, payments, suits, actions, proceedings, and judgments of every nature and description, including reasonable attorney's fees and defense costs presented, brought or recovered against the CITY, its officers or employees for or on account of any liability under any of said acts Standard Agreement 5 City of National City and Revised May 2016 Chandler Asset Management, Inc. which may be incurred by reason of any work to be performed by the CONSULTANT under this Agreement. 17. INSURANCE. The CONSULTANT, at its sole cost and expense, shall purchase and maintain, and shall require its SUBCONSULTANT(S), when applicable, to purchase and maintain throughout the term of this Agreement, the following checked insurance policies: A. ® If checked, Professional Liability Insurance (errors and omissions) with minimum limits of $5,000,000 per occurrence. B. Automobile Insurance covering all bodily injury and property damage incurred during the performance of this Agreement, with a minimum coverage of $1,000,000 combined single limit per accident. Such automobile insurance shall include owned, non -owned, and hired vehicles ("any auto"). The policy shall name the CITY and its officers, agents, employees, and volunteers as additional insureds, and a separate additional insured endorsement shall be provided. C. Commercial General Liability Insurance, with minimum limits of either $2,000,000 per occurrence and $4,000,000 aggregate, or $1,000,000 per occurrence and $2,000,000 aggregate with a $2,000,000 umbrella policy, covering all bodily injury and property damage arising out of its operations, work, or performance under this Agreement. The policy shall name the CITY and its officers, agents, employees, and volunteers as additional insureds, and a separate additional insured endorsement shall be provided. The general aggregate limit must apply solely to this "engagement" or "location." The "engagement" or "location" should be noted with specificity on an endorsement that shall be incorporated into the policy. D. Workers' Compensation Insurance in an amount sufficient to meet statutory requirements covering all of CONSULTANT'S employees and employers' liability insurance with limits of at least $1,000,000 per accident. In addition, the policy shall be endorsed with a waiver of subrogation in favor of the City. Said endorsement shall be provided prior to commencement of work under this Agreement. If CONSULTANT has no employees subject to the California Workers' Compensation and Labor laws, CONSULTANT shall execute a Declaration to that effect. Said Declaration shall be provided to CONSULTANT by CITY. E. The aforesaid policies shall constitute primary insurance as to the CITY, its officers, officials, employees, and volunteers, so that any other policies held by the CITY shall not contribute to any loss under said insurance. Said policies shall provide for thirty (30) days prior written notice to the CITY of cancellation or material change. F. If required insurance coverage is provided on a "claims made" rather than "occurrence" form, the CONSULTANT shall maintain such insurance coverage for three years after expiration of the term (and any extensions) of this Agreement. In addition, the "retro" date must be on or before the date of this Agreement. G. Insurance shall be written with only California admitted companies that hold a current policy holder's alphabetic and financial size category rating of not less than A VII according to the current Best's Key Rating Guide, or a company equal financial stability that is approved by the CITY'S Risk Manager. In the event coverage is provided by non -admitted "surplus lines" carriers, they must be included on the most recent California List of Eligible Surplus Lines Insurers (LESLI list) and otherwise meet rating requirements. H. This Agreement shall not take effect until certificate(s) or other sufficient proof that these insurance provisions have been complied with, are filed with, and approved by the CITY'S Risk Manager. If the CONSULTANT does not keep all of such insurance policies Standard Agreement 6 City of National City and Revised May 2016 Chandler Asset Management, Inc. in full force and effect at all times during the terms of this Agreement, the CITY may elect to treat the failure to maintain the requisite insurance as a breach of this Agreement and terminate the Agreement as provided herein. I. All deductibles and self -insured retentions in excess of $10,000 must be disclosed to and approved by the CITY. 18. LEGAL FEES. If any party brings a suit or action against the other party arising from any breach of any of the covenants or agreements or any inaccuracies in any of the representations and warranties on the part of the other party arising out of this Agreement, then in that event, the prevailing party in such action or dispute, whether by final judgment or out -of - court settlement, shall be entitled to have and recover of and from the other party all costs and expenses of suit, including attorneys' fees. For purposes of determining who is to be considered the prevailing party, it is stipulated that attorney's fees incurred in the prosecution or defense of the action or suit shall not be considered in determining the amount of the judgment or award. Attorney's fees to the prevailing party if other than the CITY shall, in addition, be limited to the amount of attomey's fees incurred by the CITY in its prosecution or defense of the action, irrespective of the actual amount of attorney's fees incurred by the prevailing party. 19. MEDIATION/ARBITRATION. If a dispute arises out of or rel Agreement, or the breach thereof, the parties agree first to try, in good fait by mediation in San Diego, California. in accordance with the Co the American Arbitration Association (the "AAA") before r mediation shall be borne equally by the parties. An relating to. this Agreement. or breach thereof, by arbitration in San Diego. California, the AAA then existing. Any awar judgment thereon may be e controversy. The exp arbitration, prov and attorn agai o this settle the dispute cial Mediation Rules of ing to arbitration. The costs of roversy or claim arising out of, or c is not resolved by mediation shall be settl ccordance with the Commercial Arbitration Rules of ndered shall be final and conclusive upon the parties. and a ed in any court having jurisdiction over the subject matter of the s of the arbitration shall he borne equally by the parties to the that each party shall pay for and bear the costs of its own experts, evidence, fees. except that the arbitrator may assess such expenses or any part thereof a specified party as part of the arbitration award. 20. TERMINATION. A. This Agreement may be terminated with or without cause by the CITY. Termination without cause shall be effective only upon 60-day's written notice to the CONSULTANT. During said 60-day period the CONSULTANT shall perform all services in accordance with this Agreement. B. This Agreement may also be terminated immediately by the CITY for cause in the event of a material breach of this Agreement, misrepresentation by the CONSULTANT in connection with the formation of this Agreement or the performance of services, or the failure to perform services as directed by the CITY. C. Termination with or without cause shall be effected by delivery of written Notice of Termination to the CONSULTANT as provided for herein. D. In the event of termination. all finished or unfinished Memoranda Reports. Maps, Drawings, Plans, Specifications and other documents prepared by the CONSULTANT, Standard Agreement 7 City of National City and Revised May 2016 Chandler Asset Management, Inc whether paper or electronic, shall immediately become the property of and be delivered to the CITY, and the CONSULTANT shall be entitled to receive just and equitable compensation for any work satisfactorily completed on such documents and other materials up to the effective date of the Notice of Termination, not to exceed the amounts payable hereunder, and less any damages caused the CITY by the CONSULTANT'S breach, if any. Thereafter, ownership of said written material shall vest in the CITY all rights set forth in Section 7. E. The CITY further reserves the right to immediately terminate this Agreement upon: (1) the filing of a petition in bankruptcy affecting the CONSULTANT; (2) a reorganization of the CONSULTANT for the benefit of creditors; or (3) a business reorganization, change in business name or change in business status of the CONSULTANT. 21. NOTICES. All notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered; or sent by overnight mail (Federal Express or the like); or sent by registered or certified mail, postage prepaid, return receipt requested; or sent by ordinary mail, postage prepaid; or telegraphed or cabled; or delivered or sent by telex, telecopy, facsimile or fax; and shall be deemed received upon the earlier of (i) if personally delivered, the date of delivery to the address of the person to receive such notice, (ii) if sent by overnight mail, the business day following its deposit in such overnight mail facility, (iii) if mailed by registered, certified or ordinary mail, five (5) days (ten (10) days if the address is outside the State of California) after the date of deposit in a post office, mailbox, mail chute, or other like facility regularly maintained by the United States Postal Service, (iv) if given by telegraph or cable, when delivered to the telegraph company with charges prepaid, or (v) if given by telex, telecopy, facsimile or fax, when sent. Any notice, request, demand, direction or other communication delivered or sent as specified above shall be directed to the following persons: To CITY: Director of Finance City of National City 1243 National City Blvd National City, CA 91950 To CONSULTANT: Mia Corral, Senior Vice President and Relationship Manager Chandler Asset Management, Inc. 6225 Lusk Boulevard San Diego, CA 92121 Notice of change of address shall be given by written notice in the manner specified in this Section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to constitute receipt of the notice, demand, request, or communication sent. Any notice, request, demand, direction or other communication sent by cable, telex, telecopy, facsimile or fax must be confirmed within forty- eight (48) hours by letter mailed or delivered as specified in this Section. 22. CONFLICT OF INTEREST AND POLITICAL REFORM ACT OBLIGATIONS. During the term of this Agreement, the CONSULTANT shall not perform Standard Agreement Revised May 2016 8 City of National City and Chandler Asset Management, Inc. services of any kind for any person or entity whose interests conflict in any way with those of the City of National City. The CONSULTANT also agrees not to specify any product, treatment, process, or material for the Engagement in which the CONSULTANT has a material financial interest, either direct or indirect, without first notifying the CITY of that fact. The CONSULTANT shall at all times comply with the terms of the Political Reform Act and the National City Conflict of Interest Code. The CONSULTANT shall immediately disqualify itself and shall not use its official position to influence in any way any matter coming before the CITY in which the CONSULTANT has a financial interest as defined in Government Code Section 87103. The CONSULTANT represents that it has no knowledge of any financial interests that would require it to disqualify itself froany matter on which it might perform services for the CITY. fljG If checked, the CONSULTANT shall comply with all of the reporting requirements of the Political Reform Act and the National City Conflict of Interest Code. Specifically, the CONSULTANT shall file a Statement of Economic Interests with the City Clerk of the City of National City in a timely manner on forms which the CONSULTANT shall obtain from the City Clerk. The CONSULTANT shall be strictly liable to the CITY for all damages, costs or expenses the CITY may suffer by virtue of any violation of this Paragraph 22 by the CONSULTANT. 23. PREVAILING WAGES. State prevailing wage rates may apply to work performed under this Agreement. State prevailing wages rates apply to all public works contracts as set forth in California Labor Code, including but not limited to, Sections 1720. 1720.2. 1720.3, 1720.4, and 1771. Consultant is solely responsible to determine if State prevailing wage rates apply and, if applicable, pay such rates in accordance with all laws, ordinances. rules, and regulations. 24. MISCELLANEOUS PROVISIONS. A. Computation of Time Periods. If any date or time period provided for in this Agreement is or ends on a Saturday. Sunday or federal, state or legal holiday, then such date shall automatically be extended until 5:00 p.m. Pacific Time of the next day which is not a Saturday. Sunday or federal, state, or legal holiday. B. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which. together, shall constitute but one and the same instrument. C. Captions. Any captions to, or headings of, the sections or subsections of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. D. No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon. or obligate any of the parties hereto, to any person or entity other than the parties hereto. E. Exhibits and Schedules. The Exhibits and Schedules attached hereto are hereby incorporated herein by this reference for all purposes. To the extent any exhibits or Standard Agreement 9 City of National City and Revised May 2016 Chandler Asset Management, Inc. schedules or provisions thereof conflict or are inconsistent with the terms and conditions contained in this Agreement, the terms and conditions of this Agreement shall control. F. Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. G. Waiver. The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof. H. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. I. Audit. If this Agreement exceeds ten -thousand dollars ($10,000), the parties shall be subject to the examination and audit of the State Auditor for a period of three (3) years after final payment under the Agreement, per Government Code Section 8546.7. J. Entire Agreement. This Agreement supersedes any prior agreements, negotiations and communications, oral or written, and contains the entire agreement between the parties as to the subject matter hereof. No subsequent agreement, representation, or promise made by either party hereto, or by or to an employee, officer, agent, or representative of any party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. K. Successors and Assigns. This Agreement shall be binding upon and shal I inure to the benefit of the successors and assigns of the parties hereto. L. Subcontractors or Subconsultants. The City is engaging the services of the CONSULTANT identified in this Agreement. The CONSULTANT shall not subcontract any portion of the work, unless such subcontracting was part of the original proposal or is allowed by the City in writing. In the event any portion of the work under this Agreement is subcontracted, the subconsultant(s) shall be required to comply with and agree to, for the benefit of and in favor of the City, both the insurance provisions in Section 17 and the indemnification and hold harmless provision of Section 15 of this Agreement. M. Construction. The parties acknowledge and agree that (i) each party is of equal bargaining strength, (ii) each party has actively participated in the drafting, preparation and negotiation of this Agreement, (iii) each such party has consulted with or has had the opportunity to consult with its own, independent counsel and such other professional advisors as such party has deemed appropriate, relative to any and all matters contemplated under this Agreement, (iv) each party and such party's counsel and advisors have reviewed this Agreement, (v) each party has agreed to enter into this Agreement following such review and the rendering of such advice, and (vi) any rule or construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first above written. Standard Agreement [Signature Page to Follow] 10 City of National City and Revised May 2016 Chandler Asset Management, Inc. CITY OF NATIONAL CITY CHANDLER ASSET MANAGEMENT, INC. By: roti,",.. By: on Morrison, Mayor (Ns e) M'Qa Yi,v n . c.KssELL (Print) c Ev (Title) APPROVED AS TO FORM: 11 George Eiser (Name) Interim City Attorney By: I, I C.0 IL t'e-rt.Av 0 (Print) �1 (Title) Exhibit "A" CHANDLER ASSET MANAGEMENT, INC. SCOPE OF SERVICES OTHER TERMS AND CONDITIONS 1. Scope of Services. CHANDLER ASSET MANAGEMENT, INC. ("CONSULTANT") shall provide investment management and investment advisory services for the CITY OF NATIONAL CITY ("CITY") on all funds authorized by the CITY to be managed by the CONSULTANT. Other servcices to be provided to the CITY by the CONSULTANT include, but are not limited to the following: a. developing and implementing sound investment strategies which will maximize the portfolio's performance within the parameters of the adopted investment policy and California government codes; b. providing technical and fundamental market research, including yield curve analysis; c. providing credit analysis of investment instruments in the portfolio; d. providing monthly investment reports for the portfolio detailing holdings, composition and sector analysis, return, weighted average maturity, and daily transaction activity; e. providing the CITY with on-line access to its current investment account information; f. providing semi-annual and annual performance reports, as needed; g. reviewing safekeeping and custodial procedures and agreements; h. at a minimum, meeting with CITY staff on a quarterly basis to review the investment portfolio and investment performance; i. at a minimum, delivering semi-annual presentations to the City Council of the City of National City on the performance of the CITY'S portfolio; j. as needed, advising the CITY on recommended changes to its investment policy based upon legislative changes and other relevant market conditions and attending the City Council meeting in which the annual update to the investment policy is presented, if requested by the CITY; k. assisting the CITY in analyzing its cash flow requirements to determine the amount of funds to be invested; 1. assisting the CITY in determining its investment risk tolerance and appropriate portfolio benchmark; m. providing other services as agreed upon. 2. Fees. The CITY shall compensate the CONSULTANT an amount calculated on the average market value of the CITY'S assets under managment by the CONSULTANT, including accrued interest, in accordance with the following schedule: Assets under Management Annual Asset Management Fee First $10 million 0.10 of 1% (10 basis points) Next $30 million 0.08 of 1% (8 basis points) Assets in excess of $40 million 0.06 of 1% (6 basis points) The fees expressed above do not include custody fees the CITY may incur for third party custodial services. Fees shall be prorated to the effective date of termination on the basis of actual days elapsed, and any unearned portion of prepaid fees shall be refunded. The CITY is not required to pay any start-up or closing fees; there are not penalty fees. Fees shall be charged monthly in arrears and debited directly for the CITY'S third party custody account. 3. CITY Representative. In its capacity as investment manager, the CONSULTANT shall receive all instructions, directions, and other communications on the CITY'S behalf regarding the CITY'S account from the Director of Finance ("Representative"). The CONSULTANT is hereby authorized to rely and act upon all such instructions, directions, and communications from the Representative or any agent designated by the Representative. 4. Investment Policy. In investing and reinvesting the CITY'S assets, the CONSULTANT shall comply with the CITY' S investment policy attached hereto as "Attachment 1." 5. Autority of CONSULTANT. The CONSULTANT is hereby granted full discretion to invest and reinvest all assets under its management in any type of security it deems appropriate, subject to the instructions given or guidelines set by the Representative. 6. Electronic Delivery. From time to time, the CONSULTANT may be required to deliver certain documents to the CITY, such as account information, notices, and required disclosures. The CITY hereby consents to the CONSULTANT'S use of electronic means, such as e-mail, to make such delivery. This delivery may include notification of the availability of such document(s) on a website, and the CITY agrees that such notifications will constitute "delivery." The CITY further agrees to provide the CONSULTANT with the CITY'S e-mail address(es) and to keep this information current at all times by promptly notifying the CONSULTANT of any change in e-mail address(es). CITY e-mail addresses: MRoberts a NationalCityCA.gov; LDeese@NationalCityCA.gov. 7. Proxy Voting. The CONSULTANT will vote proxies on behalf of the CITY unless otherwise instructed. The CONSULTANT has adopted and implemented written policies and procedures and will provide the CITY with a description of the proxy voting procedures upon request. The CONSULTANT will provide information regarding how the CTTY'S proxies were voted upon request. 8. Custody of Securities and Funds. The CONSULTANT shall not have custody or possession of the funds or securities that the CITY has placed under its management. The CITY shall appoint a custodian to take and have possession of its assets. The CITY recognizes the importance of comparing statements received from the appointed custodian to statements received from the CONSULTANT. The CITY recognizes that the fees expressed above do not include fees the CITY will incur for custodial services. 9. Valuation. The CONSULTANT will value securities held in portfolios managed by the CONSULTANT no less than monthly. Securities or investments in the portfolio will be valued in a manner determined in good faith by the CONSULTANT to reflect fair market value. 10. Investment Advice. The CITY recognizes that the opinions, recommendations, and actions of the CONSULTANT will be based on information deemed by it to be reliable, but not guaranteed to or by it. Provided that the CONSULTANT acts in good faith, the CITY agrees that the CONSULTANT will not in any way be liable for any error in judgment or for any act or omission, except as may otherwise be provided for under the Federal Securities laws or other applicable laws. 11. Payment of Commissions. The CONSULTANT may place buy and sell orders with or through such brokers or dealers as it may select. It is the policy and practice of the CONSULTANT to strive for the best price and execution and for commissions and discounts which are competitive in relation to the value of the transaction and which comply with Section 28(e) of the Securities and Exchange Act. Nevertheless, it is understood that the CONSULTANT may pay a commission on transactions in excess of the amount another broker or dealer may charge, and that the CONSULTANT makes no warranty or representation regarding commissions paid on transactions hereunder. 12. Other Clients. It is further understood that the CONSULTANT may be acting in a similar capacity for other institutional and individual clients, and that investments and reinvestments for the CITY' S portfolio may differ from those made or recommended with respect to other accounts and clients, although though the investment objectives may be the same or similar. Accordingly, it is agreed that the CONSULTANT will have no obligation to purchase or sell for the CITY' S account any securities which it may purchase or sell for other clients. 13. Receipt of Bochure and Privacy Policy. Receipt of Brochure and Privacy Policy. The CITY has received the disclosure statement or "brochure" also known as Part 2A of Form ADV, required to be delivered pursuant to Rule 204-3 of the Investment Advisers Act of 1940 (Brochure). The CITY has received a copy of the CONSULTANT'S Privacy Policy. Attachment 1 CITY COUNCIL POLICY CITY OF NATIONAL CITY TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 I. INTRODUCTION The City of National City's investment program will conform with federal, state, and other legal requirements, including California Government Code Sections 16429.1-16429.4, 53600- 53609 and 53630-53686. The following investment policy addresses the methods, procedures and practices which must be exercised to ensure effective and judicious fiscal and investment management of the City's funds. It is the policy of the City to invest public funds in a manner that will provide a market rate of return, given its requirements for preserving principal and meeting the daily cash flow demands of the City. All investments will comply with this Investment Policy and governing laws. This Investment Policy replaces any previous Investment Policy or Investment Procedures of the City. II. SCOPE This Investment Policy applies to all the City's financial assets and investment activities with the following exceptions: A. Proceeds of debt issuance shall be invested in accordance with the City's general investment philosophy as set forth in this policy; however, such proceeds are invested in accordance with permitted investment provisions of their specific bond indentures. Pooling of Funds: Except for cash in certain restricted and special funds, the City will consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles. III. GENERAL OBJECTIVES The overriding objectives of the investment program are to preserve principal, provide sufficient liquidity, and manage investment risks. Page 1 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 1. Safety: Safety of principal is the foremost objective of the investment program. Investments will be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The objective will be to mitigate credit risk and interest rate risk. 2. Liquidity: The investment portfolio will remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. 3. Return: The investment portfolio will be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints for safety and liquidity needs. IV. PRUDENCE, INDEMNIFICATION, AND ETHICS A. Prudent Investor Standard: Management of the City's investments is governed by the Prudent Investor Standard as set forth in the California Government Code 53600.3: "...all governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the City, that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the City. Within the limitations of this section and considering individual investments as part of an overall strategy, investments may be acquired as authorized by law." B. Indemnification: The Director of Finance or City Manager designee hereinafter designated as Financial Services Officer and other authorized persons responsible for managing City funds, acting in accordance with written procedures and the Investment Policy and exercising due diligence, will be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported within 30 days and appropriate action is taken to control adverse developments. C. Ethics: Officers and employees involved in the investment process will refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Page 2 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23,1990 AMENDED: December 15, 2015 V. DELEGATION OF AUTHORITY A. Authority to manage the City's investment program is derived from the California Government Code Section 53600 et seq. The City Council is responsible for the City's cash management, including the administration of this Investment Policy. Management responsibility for the cash management of City funds is hereby delegated to the Director of Finance and/or Financial Service Officer. The Director of Finance and/or Financial Services Officer will be responsible for all transactions undertaken and will establish a system of procedures and controls to regulate the activities of subordinate employee. B. The City may engage the services of one or more external investment managers to assist in the management of the City's investment portfolio in a manner consistent with the City's objectives. Such external managers may be granted discretion to purchase and sell investment securities in accordance with this Investment Policy. Such managers must be registered under the Investment Advisers Act of 1940. VI. AUTHORIZED FINANCIAL INSTITUTIONS, DEPOSITORIES, AND BROKER/DEALERS A list will be maintained of financial institutions and depositories authorized to provide investment services. In addition, a list will be maintained of approved security broker/dealers selected by conducting a process of due diligence described in the investment procedures manual. These may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (uniform net capital rule). A. The City's Director of Finance and/or Financial Services Officer will determine which financial institutions are authorized to provide investment services to the City. Institutions eligible to transact investment business with the City include: 1. Primary government dealers as designated by the Federal Reserve Bank; 2. Nationally or state -chartered banks; 3. The Federal Reserve Bank; and 4. Direct issuers of securities eligible for purchase. B. Selection of financial institutions and broker/dealers authorized to engage in transactions with the City will be at the sole discretion of the City. Page 3 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 C. All financial institutions which desire to become qualified bidders for investment transactions (and which are not dealing only with the investment adviser) must supply the Director of Finance and/or Financial Services Officer with a statement certifying that the institution has reviewed the California Government Code Section 53600 et seq. and the City's Investment Policy. D. Selection of broker/dealers used by an external investment adviser retained by the City will be at the sole discretion of the investment adviser. E. Public deposits will be made only in qualified public depositories as established by State law. Deposits will be insured by the Federal Deposit Insurance Corporation, or, to the extent the amount exceeds the insured maximum, will be collateralized in accordance with State law. VII. DELIVERY, SAFEKEEPING AND CUSTODY, AND COMPETITIVE TRANSACTIONS A. Delivery -versus -payment: Settlement of all investment transactions will be completed using standard delivery -vs. -payment procedures. B. Third party safekeeping: To protect against potential losses by collapse of individual securities dealers, and to enhance access to securities, interest payments and maturity proceeds, all securities owned by the City will be held in safekeeping by a third party bank custodian, acting as agent for the City under the terms of a custody agreement executed by the bank and the City. C. Competitive transactions: All investment transactions will be conducted on a competitive basis which can be executed through a bidding process involving at least three separate brokers/financial institutions or through the use of a nationally recognized trading platform. VIII. AUTHORIZED AND SUITABLE INVESTMENTS All investments will be made in accordance with Sections 53600 et seq. of the Government Code of California and as described within this Investment Policy. Permitted investments under this policy will include: 1. Municipal Bonds. These include bonds of the City, the state of California, any other state, and any local Agency within the state of California. The bonds will be registered in the name of the City or held under a custodial agreement at a bank. The bonds shall be rated at the time of purchase within the 4 highest general classifications established by a rating Page 4 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 service of nationally recognized expertise in rating bonds of states and their political subdivisions. a. No more than 5% per issuer. b. No more than 30% of the total portfolio may be invested in municipal bonds. 2. U.S. Treasury and other government obligations for which the full faith and credit of the United States are pledged for the payment of principal and interest. There are no limits on the dollar amount or percentage that the City may invest in U.S. Treasuries. 3. Federal Agency or United States government -sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government -sponsored enterprises. There are no limits on the dollar amount or percentage that the City may invest in government -sponsored enterprises. 4. Banker's acceptances provided that: a. They are issued by institutions with short term debt obligations rated "Al" or higher, or the equivalent, by at least two nationally recognized statistical -rating organization (NRSRO); and have long-term debt obligations which are rated "A" or higher by at least two nationally recognized statistical rating organization; b. The maturity does not exceed 180 days; and; c. No more than 40% of the total portfolio may be invested in banker's acceptances and no more than 5% per issuer. 5. Federally insured time deposits (Non-negotiable certificates of deposit) in state or federally chartered banks, savings and loans, or credit unions, provided that: a. The amount per institution is limited to the maximum covered under federal insurance; and; b. The maturity of such deposits does not exceed 5 years. Page 5 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 6. Certificate of Deposit Placement Service (CDARS) a. No more than 30% of the total portfolio may be invested in a combination of certificates of deposit including CDARS. b. The maturity of CDARS deposits does not exceed 5 years. 7. Negotiable certificates of deposit (NCDs), provided that: a. They are issued by institutions which have long-term obligations which are rated "A" or higher by at least two nationally recognized statistical rating organizations; and/or have short term debt obligations rated "A 1" or higher, or the equivalent, by at least two nationally recognized statistical rating organizations; b. The maturity does not exceed 5 years; and; c. No more than 30% of the total portfolio may be invested in NCDs and no more than 5% per issuer. 8. Commercial paper provided that: a. The maturity does not exceed 270 days from the date of purchase; b. The issuer is a corporation organized and operating in the United States with assets in excess of $500 million; c. They are issued by institutions whose short term obligations are rated "A 1" or higher, or the equivalent, by at least two nationally recognized statistical rating organization; and whose long-term obligations are rated "A" or higher by at least two nationally recognized statistical rating organization; and; d. No more than 25% of the portfolio is invested in commercial paper and no more than 5% per issuer. 9. State of California Local Agency Investment Fund (LAIF), provided that: a. The City may invest up to the maximum permitted amount in LAIF; and; b. LAIF's investments in instruments prohibited by or not specified in the City's policy do not exclude it from the City's list of allowable investments, provided that the fund's reports allow the Director of Finance or Financial Services Officer to adequately judge the risk inherent in LAIF's portfolio. Page 6 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 10. Local government investment pools. a. San Diego County Investment Pool 11. Corporate medium term notes (MTNs), provided that: a. Such notes have a maximum maturity of 5 years; b. Are issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States; c. Are rated "A" category or better by at least two nationally recognized statistical rating organization; and; d. Holdings of medium -term notes may not exceed 30% of the portfolio and no more than 5% per issuer. 12. Mortgage pass -through securities and asset -backed securities, provided that such securities: a. Have a maximum stated final maturity of 5 years; b. Be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by at least two nationally recognized statistical rating organization; c. Be rated in a rating category of "AA" or its equivalent or better by at least two nationally recognized statistical rating organization. d. Purchase of securities authorized by this subdivision may not exceed 20% of the portfolio. 13. Money market mutual funds that are registered with the Securities and Exchange Commission under the Investment Company Act of 1940: a. Provided that such funds meet either of the following criteria: 1. Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations; or, 2. Have retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations authorized by California Government Page 7of16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 b. Code Section 53601 (a through j) and with assets under management in excess of $500 million. Purchase of securities authorized by this subdivision may not exceed 20% of the portfolio. 14. Supranationals, provided that: a. Issues are US dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter -American Development Bank. b. The securities are rated "AA" or higher by a NRSRO. c. No more than 30% of the total portfolio may be invested in these securities. d. No more than 10% of the portfolio may be invested in any single issuer. e. The maximum maturity does not exceed five (5) years. IX. PORTFOLIO RISK MANAGEMENT A. The following are prohibited investment vehicles and practices: 1. State law notwithstanding, any investments not specifically described herein are prohibited, including, but not limited to futures and options. 2. In accordance with Government Code Section 53601.6, investment in inverse floaters, range notes, or mortgage derived interest -only strips is prohibited. 3. Investment in any security that could result in a zero interest accrual if held to maturity is prohibited. 4. Trading securities for the sole purpose of speculating on the future direction of interest rates is prohibited. 5. Purchasing or selling securities on margin is prohibited. 6. The use of reverse repurchase agreements, securities lending or any other form of borrowing or leverage is prohibited. Page 8 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 7. The purchase of foreign currency denominated securities is prohibited. B. Mitigating credit risk in the portfolio Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. The City will mitigate credit risk by adopting the following strategies: 1. The diversification requirements included in Section IX are designed to mitigate credit risk in the portfolio; 2. No more than 5% of the total portfolio may be invested in securities of any single issuer, other than the US Government, its agencies and enterprises; 3. The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to improve the quality, liquidity, or yield of the portfolio in response to market conditions or the City's risk preferences; and, 4. If securities owned by the City are downgraded by either Moody's or S&P to a level below the quality required by this Investment Policy, it will be the City's policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. a. If a security is downgraded, the Director of Finance and/or Financial Services Officer will use discretion in determining whether to sell or hold the security based on its current maturity, the economic outlook for the issuer, and other relevant factors. b. If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported monthly to the City Council. C. Mitigating market risk in the portfolio Market risk is the risk that the portfolio value will fluctuate due to changes in the general level of interest rates. The City recognizes that, over time, longer -term portfolios have the potential to achieve higher returns. On the other hand, longer -term portfolios have higher volatility of return. The City will mitigate market risk by providing adequate liquidity for short-term cash needs, and by making longer -term investments only with funds that are not needed for current cash flow purposes. The City further recognizes that certain types of securities, including variable rate securities, securities with principal paydowns prior to maturity, and securities with embedded options, will affect the market risk profile of the Page 9of16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 portfolio differently in different interest rate environments. The City, therefore, adopts the following strategies to control and mitigate its exposure to market risk: 1. The City will maintain a minimum of three months of budgeted operating expenditures in short term investments to provide sufficient liquidity for expected disbursements; 2. The maximum percent of callable securities (does not include "make whole call" securities as defined in the Glossary) in the portfolio will be 20%; 3. The maximum stated final maturity of individual securities in the portfolio will be five years, except as otherwise stated in this policy; and; 4. The duration of the portfolio will at all times be approximately equal to the duration (typically plus or minus 20%) of a Market Benchmark Index selected by the City based on the City's investment objectives, constraints and risk tolerances. The City's current Benchmark will be documented in the investment procedures manual. X. INVESTMENT OBJECTIVES (PERFORMANCE STANDARDS AND EVALUATION) A. Overall objective: The investment portfolio will be designed with the overall objective of obtaining a total rate of return throughout economic cycles, commensurate with investment risk constraints and cash flow needs. B. Specific objective: The investment performance objective for the portfolio will be to earn a total rate of return over a market cycle which is approximately equal to the return on the Market Benchmark Index as described in the City's investment procedures manual. XI. PROCEDURES AND INTERNAL CONTROLS A. Procedures: The Director of Finance and/or Financial Services Officer will establish written investment policy procedures in a separate investment procedures manual to assist investment staff with day-to-day operations of the investment program consistent with this policy. Such procedures will include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Director of Finance and/or Financial Services Officer. B. Internal Controls: The Director of Finance and/or Financial Services Officer is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse. The internal control structure will be Page 10 of 16 TITLE: Investments POLICY #203 ADOPTED: October 23, 1990 AMENDED: December 15, 2015 designed to provide reasonable assurance that these objectives are met. Internal controls will be described in the City's investment procedures manual. XII. REPORTING A. Monthly reports: In accordance with Government Code section 53646, a local agency treasurer who has been delegated authority to invest or reinvest funds of the local agency by the legislative body must submit a monthly report to the legislative body accounting for transactions made during the reporting period. B. Quarterly reports: Quarterly investment reports will be submitted by the Director of Finance and/or Financial Services Officer to the City Council, at an agendized meeting, consistent with the requirements contained in Government Code section 53646, including but not limited to the following information: 1. Type of investment 2. Name of issuer and/or financial institution 3. Date of purchase 4. Date of maturity 5. Current market value for all securities 6. Rate of interest 7. Purchase price of investment 8. Other data as required by the City C. Annual reports: The Investment Policy will be reviewed and adopted at least annually to ensure its consistency with the overall objectives of preservation of principal, liquidity, and return, and its relevance to current law and financial and economic trends. Related Policy References Ca. Government Code Sections: 16429.1 — 16429.4, and 53600 — 53686 Investment Advisors Act of 1940 Securities and Exchange Commission Rule #15C3-1 Appendix I attached: "Authorized Personnel" Appendix II attached: "Glossary of Investment Terms" Prior Policy Amendments December 16, 2014 December 10, 2013 January 10, 2012 Page 11 of 16 Appendix I Authorized Personnel The following positions are authorized to transact investment business and wire funds for investment purposes on behalf of the City of National City: City Manager Director of Administrative Services Director of Finance Financial Services Officer Page 12 of 16 Appendix II GLOSSARY OF INVESTMENT TERMS Agencies. Shorthand market terminology for any obligation issued by a government - sponsored entity (GSE), or a federally related institution. Most obligations of GSEs are not guaranteed by the full faith and credit of the US government. Examples are: FDIC. The Federal Deposit Insurance Corporation provides insurance backed by the full faith and credit of the US government to certain bank deposits and debt obligations. FFCB. The Federal Farm Credit Bank System provides credit and liquidity in the agricultural industry. FFCB issues discount notes and bonds. FHLB. The Federal Home Loan Bank provides credit and liquidity in the housing market. FHLB issues discount notes and bonds. FHLMC. Like FHLB, the Federal Home Loan Mortgage Corporation provides credit and liquidity in the housing market. FHLMC, also called "FreddieMac" issues discount notes, bonds and mortgage pass -through securities. FNMA. Like FHLB and FreddieMac, the Federal National Mortgage Association was established to provide credit and liquidity in the housing market. FNMA, also known as "FannieMae," issues discount notes, bonds and mortgage pass -through securities. GNMA. The Government National Mortgage Association, known as "GinnieMae," issues mortgage pass -through securities, which are guaranteed by the full faith and credit of the US Government. Page 13 of 16 PEFCO. The Private Export Funding Corporation assists exporters. Obligations of PEFCO are not guaranteed by the full faith and credit of the US government. TVA. The Tennessee Valley Authority provides flood control and power and promotes development in portions of the Tennessee, Ohio and Mississippi River valleys. TVA currently issues discount notes and bonds. Asked. The price at which a seller offers to sell a security. Average life. In mortgage -related investments, including CMOs, the average time to expected receipt of principal payments, weighted by the amount of principal expected. Banker's acceptance. A money market instrument created to facilitate international trade transactions. It is highly liquid and safe because the risk of the trade transaction is transferred to the bank which "accepts" the obligation to pay the investor. Benchmark. A comparison security or portfolio. A performance benchmark is a partial market index, which reflects the mix of securities allowed under a specific investment policy. Bid. The price at which a buyer offers to buy a security. Broker. A broker brings buyers and sellers together for a transaction for which the broker receives a commission. A broker does not sell securities from his own position. Callable. A callable security gives the issuer the option to call it from the investor prior to its maturity. The main cause of a call is a decline in interest rates. If interest rates decline since an issuer issues securities, it will likely call its current securities and reissue them at a lower rate of interest. Callable securities have reinvestment risk as the investor may receive its principal back when interest rates are lower than when the investment was initially made. Certificate of Deposit (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs may be marketable. Page 13 of 16 Collateral. Securities or cash pledged by a borrower to secure repayment of a loan or repurchase agreement. Also, securities pledged by a financial institution to secure deposits of public monies. Collateralized Mortgage Obligations (CMO). Classes of bonds that redistribute the cash flows of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities. Commercial paper. The short-term unsecured debt of corporations. Cost yield. The annual income from an investment divided by the purchase cost. Because it does not give effect to premiums and discounts which may have been included in the purchase cost, it is an incomplete measure of return. Coupon. The rate of return at which interest is paid on a bond. Credit risk. The risk that principal and/or interest on an investment will not be paid in a timely manner due to changes in the condition of the issuer. Current yield. The annual income from an investment divided by the current market value. Since the mathematical calculation relies on the current market value rather than the investor's cost, current yield is unrelated to the actual return the investor will earn if the security is held to maturity. Dealer. A dealer acts as a principal in security transactions, selling securities from and buying securities for his own position. Debenture. A bond secured only by the general credit of the issuer. Delivery vs. payment (DVP). A securities industry procedure whereby payment for a security must be made at the time the security is delivered to the purchaser's agent. Derivative. Any security that has principal and/or interest payments which are subject to uncertainty (but not for reasons of default or credit risk) as to timing and/or amount, or any security which represents a component of another security which has been separated from other components ("Stripped" coupons and principal). A derivative is also defined as a financial instrument the value of which is totally or partially derived from the value of another instrument, interest rate or index. Discount. The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker's acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality. Diversification. Dividing investment funds among a variety of investments to avoid excessive exposure to any one source of risk. Duration. The weighted average time to maturity of a bond where the weights are the present values of the future cash flows. Duration measures the price sensitivity of a bond to changes in interest rates. (See modified duration). Federal funds rate. The rate of interest charged by banks for short-term loans to other banks. The Federal Reserve Bank through open -market operations establishes it. Federal Open Market Committee: A committee of the Federal Reserve Board that establishes monetary policy and executes it through temporary and permanent changes to the supply of bank reserves. Haircut: The margin or difference between the actual market value of a security and the value assessed by the lending side of a transaction (i.e. a repo). Page 14 of 16 Leverage. Borrowing funds in order to invest in securities that have the potential to pay earnings at a rate higher than the cost of borrowing. Liquidity: The speed and ease with which an asset can be converted to cash. Make Whole Call. A type of call provision on a bond that allows the issuer to pay off the remaining debt early. Unlike a call option, with a make whole call provision, the issuer makes a lump sum payment that equals the net present value (NPV) of future coupon payments that will not be paid because of the call. With this type of call, an investor is compensated, or "made whole." Margin: The difference between the market value of a security and the loan a broker makes using that security as collateral. Market risk. The risk that the value of securities will fluctuate with changes in overall market conditions or interest rates. Market value. The price at which a security can be traded. Marking to market. The process of posting current market values for securities in a portfolio. Maturity. The final date upon which the principal of a security becomes due and payable. Medium term notes. Unsecured, investment -grade senior debt securities of major corporations which are sold in relatively small amounts either on a continuous or an intermittent basis. MTNs are highly flexible debt instruments that can be structured to respond to market opportunities or to investor preferences. Modified duration. The percent change in price for a 100 basis point change in yields. Modified duration is the best single measure of a portfolio's or security's exposure to market risk. Money market. The market in which short term debt instruments (T-bills, discount notes, commercial paper and banker's acceptances) are issued and traded. Mortgage pass -through securities. A securitized participation in the interest and principal cashflows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security. Mutual fund. An entity which pools the funds of investors and invests those funds in a set of securities which is specifically defined in the fund's prospectus. Mutual funds can be invested in various types of domestic and/or international stocks, bonds and money market instruments, as set forth in the individual fund's prospectus. For most large, institutional investors, the costs associated with investing in mutual funds are higher than the investor can obtain through an individually managed portfolio. Premium. The difference between the par value of a bond and the cost of the bond, when the cost is above par. Prepayment speed. A measure of how quickly principal is repaid to investors in mortgage securities. Prepayment window. The time period over which principal repayments will be received on mortgage securities at a specified prepayment speed. Primary dealer. A financial institution (1) that is a trading counterparty with the Federal Reserve in its execution of market operations to carry out U.S. monetary policy, and (2) that participates for statistical reporting purposes in compiling data on activity in the U.S. Government securities market. Prudent person (man) rule. A standard of responsibility which applies to fiduciaries. In California, the rule is stated as "Investments shall be managed with the care, skill, prudence and diligence, under the circumstances then prevailing, that a prudent person, acting in a like capacity Page 15 of 16 and familiar with such matters, would use in the conduct of an enterprise of like character and with like aims to accomplish similar purposes." Realized yield. The change in value of the portfolio due to interest received and interest earned and realized gains and losses. It does not give effect to changes in market value on securities, which have not been sold from the portfolio. Regional dealer. A financial intermediary that buys and sells securities for the benefit of its customers without maintaining substantial inventories of securities, and that is not a primary dealer. Repurchase agreement (RP, Repo). Short term purchases of securities with a simultaneous agreement to sell the securities back at a higher price. From the seller's point of view, the same transaction is a reverse repurchase agreement. Safekeeping. A service to bank customers whereby securities are held by the bank in the customer's name. Short Term. Less than one (1) year's time. Structured note. A complex, fixed income instrument, which pays interest, based on a formula tied to other interest rates, commodities or indices. Examples include inverse floating rate notes which have coupons that increase when other interest rates are falling, and which fall when other interest rates are rising, and "dual index floaters," which pay interest based on the relationship between two other interest rates - for example, the yield on the ten-year Treasury note minus the Libor rate. Issuers of such notes lock in a reduced cost of borrowing by purchasing interest rate swap agreements. SUPRANATIONAL. A Supranational is a multi -national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries. Total rate of return. A measure of a portfolio' performance over time. It is the internal rate of return, which equates the beginning value of the portfolio with the ending value; it includes interest earnings, realized and unrealized gains, and losses in the portfolio. U.S. Treasury obligations. Securities issued by the U.S. Treasury and backed by the full faith and credit of the United States. Treasuries are considered to have no credit risk, and are the benchmark for interest rates on all other securities in the US and overseas. The Treasury issues both discounted securities and fixed coupon notes and bonds. Treasury bills. All securities issued with initial maturities of one year or less are issued as discounted instruments, and are called Treasury bills. The Treasury currently issues three- and six-month T-bills at regular weekly auctions. It also issues "cash management" bills as needed to smooth out cash flows. Treasury notes. All securities issued with initial maturities of two to ten years are called Treasury notes, and pay interest semi-annually. Treasury bonds. All securities issued with initial maturities greater than ten years are called Treasury bonds. Like Treasury notes, they pay interest semi-annually. Value. Principal plus accrued interest. Volatility. The rate at which security prices change with changes in general economic conditions or the general level of interest rates. Yield to Maturity. The annualized internal rate of return on an investment which equates the expected cash flows from the investment to its cost. Page 16 of 16 A CORDTM Client#: 62001 CHANDAST CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYVY) 10/27/2016 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder Is an ADDITIONAL INSURED, the policy(ies)must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsement(s). PRODUCER Starkweather & Shepley PO Box 549 Providence, RI 02901-0549 401 435-3600 INSURED Chandler Asset Management Inc 6225 Lusk Boulevard San Diego, CA 92121 NAMEAcr Connie Roussel PHONE 401435-3600 jAIG No,41: E-MAIL _Amss. croussel@starshep.com INSURER(S) AFFORDING COVERAGE 1 401431-9657 NAIC INSURER A: Travelers Insurance Company INSURERS: Hartford Ins Group INBURERc: Hartford Group 25674 19682 INSURER D INSURER E : INSURER F : COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY INDICATED. NOTWITHSTANDING CERTIFICATE MAY BE EXCLUSIONS AND CONDITIONS THAT THE POLICIES ANY REQUIREMENT, ISSUED OR MAY PERTAIN, OF SUCH .. OF POLICIES, ACID Y INSURANCE THE r t"!l Y LISTED BELOW HAVE BEEN TERM OR CONDITION OF ANY INSURANCE AFFORDED BY THE LIMITS SHOWN MAY HAVE BEEN ISSUED TO CONTRACT OR POLICIES REDUCED POLICY EFF POLICY THE INSURED NAMED ABOVE FOR THE POLICY PERIOD OTHER DOCUMENT WITH RESPECT TO WHICH THIS DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, BY PAID CLAIMS. INg R LTR TYPE OF INSURANCE R POLICY NUMBER ...,a,�_ {P p�L {M1fpUiJiMYYY) _....... LIMITS A x COMMERCIAL GENERAL X LIABILITY OCCUR 6802C0796051642 09/01/2016 09/01/2017 EACH OCCURRENCE $2 000 000 X GEN'L I CLAIMS -MADE Per Written R i? TEO R, csccllrarac�) $1 000 000 r a Contract MED EXP (Any one person) $ 5,000 APPLIES PERSONAL & ADV INJURY $ 2,000,000 34,000,.000 AGGREGATE LIMIT POLICY JECT OTHER: PER: LOC GENERAL AGGREGATE PRODUCTS - COMP/OP AGG $4,000 000 $ A AUTOMOBILE LIABILITY ANY AUTO ALL OWNED A 111. SCHEDULED MIMI AUTOS BODILY INJURY (Per accident) ,_ $ NON AUTOS DAMAt; PROPERTY E Hjt'artattlenti $ S A x UMBRELLALIAB EXCESS LIAB DED 1 1RETENTON$ © OCCUR CLAIMS -MADE I CUP2C085022 09/01/2016 09/01/2017 EACH OCCURRENCE $5000000 s5,0OO,000 AGGREGATE $ B WORKERS COMPENSATION AND EMPLOYERS' LIABILITY OFF EROF LIETO PE LYI EDEI'N,EYXECUTIVE YN (Mandatory In NH) !T If yyes, describe under DESCRJPTION OF OPERATIONS below 02WECCR2756 09/01/2016 08/02/2016 09/01/2017 j X STATUTF _I FRR_,....__.__ E.L. EACH ACCIDENT $1,000 000 E.L. DISEASE - EA EMPLOYEE 31,000,000 s1,000,000 E.L. DISEASE - POLICY LIMIT C Professional Liab OODCO21984516 08/02/2017 $10,000,000 DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached If more space Is required) The City of National City and its officers, agents, employees and volunteers are named as additional insured on a primary and non-contributory basis as required by written contract or agreement. A waiver of subrogation also applies to all policies. CERTIFICATE H CANCELLA ON City of National City 1243 National City Blvd. National City, CA 91950 ACORD 25 (2014/01) 1 of 1 #S874923/M850621 SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE iiK.►►T MA4. © 1988-2014 ACORD CORPORATION. All rights reserved. The ACORD name and logo are reglstered marks of ACORD CTR COMMERCIAL GENERAL LIABILITY POLICY NUMBER: 680-2C079605-16-42 ISSUE DATE: 06/16/2016 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED -DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE Name of person or organization: NATIONAL CITY, CITY OF 1243 NATIONAL CITY BLVD. NATIONAL CITY CA 91950 WHO 1S AN INSURED (Section 1I) is amended to include as an insured the person or organization shown in the Schedule as an insured but only with respect to liability arising out of your acts or omissions. M1� Nevem 21511111 = m umst 4Il^Ai CG T4 91 11 88 003779 Copyright, Insurance Services Office, Inc., 1984 Page 1 of 1 COMMERCIAL GENERAL LIABILITY THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. XTEND ENDORSEMENT This endorsement modifies insurance provided under the following COMMERCIAL GENERAL LIABILITY COVERAGE PART GENERAL DESCRIPTION OF COVERAGE — This endorsement broadens coverage The following listing is a general coverage description only Limitations and exclusions may apply to these coverages Read all the PRO- VISIONS of this endorsement carefully to determine nghts, duties, and what is and is not covered A. Broadened Named Insured B. Damage To Premises Rented To You Extension • Penis of fire, explosion, lightning, smoke, water • Limit increased to $300,000 C. Blanket Waiver of Subrogation D. Blanket Additional Insured — Managers or Lessors of Premises E. Blanket Additional Insured — Lessor of Leased Equipment F. Incidental Medical Malpractice G. Personal Injury — Assumed by Contract H. Extension of Coverage — Bodily Injury PROVISIONS A. BROADENED NAMED INSURED 1. The Named Insured in Item 1. of the Declara- tions is as follows The person or organization named in Item 1. of the Declarations and any organization, other than a partnership or joint venture, over which you maintain ownership or majority in- terest on the effective date of the policy However, coverage for any such organization will cease as of the date dunng the policy pe- riod that you no longer maintain ownership of, or majonty interest in, such organization 2. WHO IS AN INSURED (Section II) Item 4.a. is deleted and replaced by the following a. Coverage under this provision is afforded only until the 180th day after you acquire or form the organization or the end of the policy period, whichever is earlier, unless reported in writing to us within 180 days 3. This Provision A. does not apply to any per- son or organization for which coverage is ex- cluded by endorsement CO D1 86 11 03 I. Injury to Co -Employees and Co -Volunteer Workers J. Aircraft Chartered with Crew K. Non -Owned Watercraft — Increased from 25 feet to 50 feet L. Increased Supplementary Payments • Cost for bail bonds increased to $2,500 • Loss of earnings increased to $500 per day M. Knowledge and Notice of Occurrence or Offense N. Unintentional Omission O. Reasonable Force — Bodily Injury or Property Damage B. DAMAGE TO PREMISES RENTED TO YOU EXTENSION 1. The last paragraph of COVERAGE A BOD- ILY INJURY AND PROPERTY DAMAGE LI- ABILITY (Section I — Coverages) is deleted and replaced by the following Exclusions c. through n. do not apply to darn - age to premises while rented to you, or tem- porarily occupied by you with permission of the owner, caused by a. Fire, b. Explosion, c. Lightning, d. Smoke resulting from such fire, explosion, or lightning, or e. Water A separate limit of insurance applies to this coverage as described in LIMITS OF INSUR- ANCE (Section III) 2. This insurance does not apply to damage to premises while rented to you, or temporarily Copyright, The Travelers Indemnity Company, 2003 Page 1 of 5 sue0010000011 0.00/01 o 0101111 000010/080 Chmemoomm o� 00011/10,110 U1001010m• 0011011111000 COMMERCIAL GENERAL LIABILITY occupied by you with permission of the owner, caused by. a. Rupture, bursting, or operation of pres- sure relief devices, b. Rupture or bursting due to expansion or swelling of the contents of any building or structure, caused by or resulting from wa- ter, c. Explosion of steam boilers, steam pipes, steam engines, or steam turbines 3. Part 6. of LIMITS OF INSURANCE (Section III) is deleted and replaced by the following Subject to 5. above, the Damage To Prem- ises Rented To You Limit is the most we will pay under COVERAGE A for damages be- cause of "property damage" to any one prem- ises while rented to you, or temporanly occu- pied by you with permission of the owner, caused by fire, explosion, lightning, smoke resulting from such fire, explosion, or light- ning, or water The Damage To Premises Rented To You Limit will apply to all damage proximately caused by the same "occur- rence", whether such damage results from fire, explosion, lightning, smoke resulting from such fire, explosion, or lightning, or water, or any combination of any of these. The Damage To Premises Rented To You Limit will be the higher of a. $300,000, or b. The amount shown on the Declarations for Damage To Premises Rented To You Limit. 4. Under DEFINITIONS (Section V), Paragraph a. of the definition of "insured contract" is amended so that it does not include that por- tion of the contract for a lease of premises that indemnifies any person or organization for damage to premises while rented to you, or temporarily occupied by you with permis- sion of the owner, caused by a. Fire, b. Explosion, c. Lightning, d. Smoke resulting from such fire, explosion, or lightning, or e. Water. 5. This Provision B. does not apply if coverage for Damage To Premises Rented To You of Page 2 of 5 000143 G. D. E. COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages) is excluded by endorsement BLANKET WAIVER OF SUBROGATION We waive any nght of recovery we may have against any person or organization because of payments we make for injury or damage arising out of premises owned or occupied by or rented or loaned to you, ongoing operations performed by you or on your behalf, done under a contract with that person or organization, "your work", or "your products" We waive this nght where you have agreed to do so as part of a written contract, executed by you pnor to loss BLANKET ADDITIONAL INSURED — MANAG- ERS OR LESSORS OF PREMISES WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization (referred to below as "additional insured") with whom you have agreed in a written contract, exe- cuted prior to loss, to name as an additional in- sured, but only with respect to liability arising out of the ownership, maintenance or use of that part of any premises leased to you, subject to the fol- lowing provisions 1. Limits of Insurance. The limits of insurance afforded to the additional insured shall be the limits which you agreed to provide, or the lim- its shown on the Declarations, whichever is less 2. The insurance afforded to the additional in- sured does not apply to: a. Any "occurrence" that takes place after you cease to be a tenant in that premises; b. Any premises for which coverage is ex- cluded by endorsement, or c. Structural alterations, new construction or demolition operations performed by or on behalf of such additional insured 3. The insurance afforded to the additional in- sured is excess over any valid and collectible insurance available to such additional in- sured, unless you have agreed in a written contract for this insurance to apply on a pri- mary or contributory basis BLANKET ADDITIONAL INSURED — LESSOR OF LEASED EQUIPMENT WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization (referred to below as "additional insured") with Copyright, The Travelers Indemnity Company, 2003 CG D1 86 11 03 whom you have agreed in a written contract, exe- cuted prior to loss, to name as an additional in- sured, but only with respect to their liability ansing out of the maintenance, operation or use by you of equipment leased to you by such additional in- sured, subject to the following provisions 1. Limits of Insurance The limits of insurance., afforded to the additional insured shall be the limits which you agreed to provide, or the lim- its shown on the Declarations, whichever is less 2. The insurance afforded to the additional in- sured does not apply to a. Any "occurrence" that takes place after the equipment lease expires, or b. "Bodily injury" or "property damage" aris- ing out of the sole negligence of such ad- ditional insured 3. The insurance afforded to the additional in- sured is excess over any valid and collectible insurance available to such additional in- sured, unless you have agreed in a written contract for this insurance to apply on a pn- mary or contributory basis F. INCIDENTAL MEDICAL MALPRACTICE 1. The definition of "bodily injury" in DEFINI- TIONS (Section V) is amended to include "In- cidental Medical Malpractice Injury" 2. The following definition is added to DEFINI- TIONS (Section V) "Incidental medical malpractice injury" means bodily injury, mental anguish, sickness or dis- ease sustained by a person, including death resulting from any of these at any time, aris- ing out of the rendenng of, or failure to ren- der, the following services a. Medical, surgical, dental, laboratory, x-ray ar nursing service or treatment, advice or instruction, or the related furnishing of food or beverages; b. The furnishing or dispensing of drugs or medical, dental, or surgical supplies or appliances, or c. First aid d. "Good Samantan seances" As used in this Provision F., "Good Samantan ser- vices" are those medical services ren- dered or provided in an emergency and CG D1 86 11 03 COMMERCIAL GENERAL LIABILITY for which no remuneration is demanded or received 3. Paragraph 2.a.(1)(d) of WHO IS AN IN- SURED (Section II) does not apply to any registered nurse, licensed practical nurse, emergency medical technician or paramedic employed by you, but only while performing the services described in paragraph 2. above and while acting within the scope of their em- ployment by you Any "employees" rendering "Good Samantan services" will be deemed to be acting within the scope of their employ- ment by you 4. The following exclusion is added to paragraph 2. Exclusions of COVERAGE A — BODILY INJURY AND PROPERTY DAMAGE LIABIL- ITY (Section I -. Coverages) (This insurance does not apply to) Liability ansing out of the willful violation of a penal statute or ordinance relating to the sale of pharmaceuticals by or with the knowledge or consent of the insured 5. For the purposes of determining the applica- ble limits of insurance, any act or omission, together with all related acts or omissions in the furnishing of the services described in paragraph 2. above to any one person, will be considered one "occurrence" 6. This Provision F. does not apply if you are in the business or occupation of providing any of the services described in paragraph 2. above 7. The insurance provided by this Provision F. shall be excess over any other valid and col- lectible insurance available to the insured, whether primary, excess, contingent or on any other basis, except for insurance pur- chased specifically by you to be excess of this policy, G. PERSONAL INJURY — ASSUMED BY CON- TRACT 1. The Contractual Liability Exclusion in Part 2., Exclusions of COVERAGE B PER- SONAL AND ADVERTISING INJURY LIABIL- ITY (Section 1 — Coverages) is deleted and replaced by the following (This insurance does not apply to ) Contractual Liability "Advertising injury" for which the insured has assumed liability in a contract or agreement This exclusion does not apply to liability for Copyright, The Travelers Indemnity Company, 2003 Page 3 of 5 11 .11.1111116 flrammem4 limmims 11111 0= arrow COMMERCIAL GENERAL LIABILITY damages that the insured would have in the absence of the contract of agreement 2. Subparagraph f. of the definition of "Ensured contract" (DEFINITIONS — Section V) is de- leted and replaced by the following f. That part of any other contract or agree- ment pertaining to your business (includ- ing an indemnification of a municipality in connection with work performed for a municipality) under which you assume the tort liability of another party to pay for "bodily injury,' "property damage" or "per- sonal injury" to a third party or organiza- tion Tort liability means a liability that would be imposed by law in the absence of any contract or agreement 3. This Provision G. does not apply if COVER- AGE B PERSONAL AND ADVERTISING IN- JURY LIABILITY is excluded by endorse- ment H. EXTENSION OF COVERAGE — BODILY IN- JURY The definition of "bodily injury" (DEFINITIONS — Section V) is deleted and replaced by the follow - i ng "Bodily injury" means bodily injury, mental an- guish, mental injury, shock, fright, disability, hu- miliation, sickness or disease sustained by a per- son, including death resulting from any of these at any time I. INJURY TO CO -EMPLOYEES AND CO VOLUNTEER WORKERS 1. Your "employees" are insureds with respect to "bodily injury" to a co -"employee" in the course of the co -"employee's" employment by you, or to your "volunteer workers" while per- forming duties related to the conduct of your business, provided that this coverage for your "employees" does not apply to acts outside the scope of their employment by you or while performing duties unrelated to the conduct of your business 2. Your "volunteer workers" are insureds with respect to "bodily injury" to a co -"volunteer worker" while performing duties related to the conduct of your business, or to your "employ- ees" in the course of the "employee's" em- ployment by you, provided that this coverage for your "volunteer workers" does not apply white performing duties unrelated to the con- duct of your business Page 4 of 5 000144 J. K. L. 3. Subparagraphs 2.a.(1)(a), (b) and (c) and 3.a. of WHO IS AN INSURED (Section 1I) do not apply to "bodily injury" for which Insurance is provided by paragraph 1. or 2. above. AIRCRAFT CHARTERED WITH CREW 1. The following is added to the exceptions con- tained in the Aircraft, Auto Or Watercraft Exclusion in Part 2., Exclusions of COVER- AGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages) (This exclusion does not apply to) Aircraft chartered with crew to any insured 2. This Provision J. does not apply if the char- tered aircraft is owned by any insured 3. The insurance provided by this Provision J. shall be excess over any other valid and col- lectible insurance available to the insured, whether primary, excess, contingent or on any other basis, except for insurance pur- chased specifically by you to be excess of this policy. NON -OWNED WATERCRAFT 1. The exception contained in Subparagraph (2) of the Aircraft, Auto Or Watercraft Exclu- sion in Part 2., Exclusions of COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages) is deleted and replaced by the following (2) A watercraft you do not own that is (a) Fifty feet long or less, and (b) Not being used to carry persons or property for a charge; 2. This Provision K. applies to any person who, with your expressed or implied consent, either uses or is responsible for the use of a water- craft 3. The insurance provided by this Provision K. shall be excess over any other valid and col- lectible insurance available to the insured, whether pnmary, excess, contingent or on any other basis, except for insurance pur- chased specifically by you to be excess of this policy INCREASED SUPPLEMENTARY PAYMENTS Parts b. and d. of SUPPLEMENTARY PAY- MENTS — COVERAGES A AND B (Section I — Coverages) are amended as follows 1. In Part b. the amount we will pay for the cost of bad bonds is increased to $2500 Copyright The Travelers Indemnity Company, 2003 CG D1 86 11 03 2. In Part d. the amount we will pay for Toss of earnings is increased to $500 a day M KNOWLEDGE AND NOTICE OF OCCUR- RENCE OR OFFENSE 1. The following is added to COMMERCIAL GENERAL LIABILITY CONDITIONS (Section IV), paragraph 2. (Duties In The Event of Oc- currence, Offense, Claim or Suit) Notice of an "occurrence" or of an offense which may result in a claim under this insur- ance shall be given as soon as practicable af- ter knowledge of the "occurrence" or offense has been reported to any insured listed under Paragraph 1. of Section II — Who Is An In- sured or an "employee" (such as an insur- ance, loss control or risk manager or adminis- trator) designated by you to give such notice Knowledge by other "empioyee(s)" of an "oc- currence" or of an offense does not imply that you also have such knowledge 2. Notice shall be deemed prompt if given in good faith as soon as practicable to your workers' compensation insurer This applies only if you subsequently give notice to us as soon as practicable after any insured listed under Paragraph 1. of Section II — Who Is An Insured or an "employee" (such as an insur- ance, loss control or risk manager or adminis- trator) designated by you to give such notice discovers that the "occurrence", offense or claim may involve this policy 3. However, this Provision M. does not apply as respects the specific number of days within CG D1 86 11 03 COMMERCIAL GENERAL LIABILITY which you are required to notify us in writing of the abrupt commencement of a discharge, release or escape of "pollutants" which causes "bodily injury" or "property damage" which may otherwise be covered under this policy N. UNINTENTIONAL OMISSION The following is added to COMMERCIAL GEN- ERAL LIABILITY CONDITIONS (Section IV), paragraph 6. (Representations) The unintentional omission of, or unintentional error in, any information provided by you shall not prejudice your rights under this insurance How- ever, this Provision N. does not affect our right to collect additional premium or to exercise our right of cancellation or nonrenewal in accordance with applicable state insurance Taws, codes or regula- tions O. REASONABLE FORCE — BODILY INJURY OR PROPERTY DAMAGE The Expected Or Intended Injury Exclusion in Part 2., Exclusions of COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY (Section I — Coverages) is deleted and replaced by the following (This insurance does not apply to ) Expected or Intended Injury or Damage "Bodily injury" or "property damage" expected or intended from the standpoint of the insured This exclusion does not apply to "bodily injury" or "property damage" resulting from the use of rea- sonable force to protect persons or property Copyright, The Travelers Indemnity Company, 2003 Page 5 of 5 UMBRELLA THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS This endorsement modifies insurance provided under the following: COMMERCIAL EXCESS LIABILITY (UMBRELLA) INSURANCE The following is added to Paragraph 11., OUR RIGHT a. "Bodily injury" or "property damage" caused by an TO RECOVER FROM OTHERS., of SECTION IV — "occurrence" that takes place; or CONDITIONS.: If the insured has agreed in a contract or agreement to waive that insured's right of recovery against any person or organization, we waive our right of recovery against such person or organization, but only for payments we make because of: of UM 04 88 07 08 012026 b. "Personal injury" or "advertising injury" caused by an "offense" that is committed: subsequent to the execution of the contract or agree- ment. CD 2008 The Travelers Companies, Inc. Includes the copyrighted material of Insurance Services Office. Inc. with its permission. Page 1 of 1 COMMERCIAL AUTO THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. AUTO COVERAGE PLUS ENDORSEMENT This endorsement modifies insurance provided under the following: BUSINESS AUTO COVERAGE FORM GENERAL DESCRIPTION OF COVERAGE — This endorsement broadens coverage. However, coverage for any injury, damage or medical expenses described in any of the provisions of this endorsement may be excluded or limited by another endorsement to the Coverage Part, and these coverage broadening provisions do not apply to the extent that coverage is excluded or limited by such an endorsement. The following listing is a general cover- age description only. Limitations and exclusions may apply to these coverages. Read all the provisions of this en- dorsement and the rest of your policy carefully to determine rights, duties, and what is and is not covered. A. BLANKET ADDITIONAL INSURED B. EMPLOYEE HIRED AUTO C. EMPLOYEES AS INSURED D. SUPPLEMENTARY PAYMENTS — INCREASED LIMITS E. TRAILERS — INCREASED LOAD CAPACITY F. HIRED AUTO PHYSICAL DAMAGE G. PHYSICAL DAMAGE — TRANSPORTATION EXPENSES — INCREASED LIMIT A. BLANKET ADDITIONAL INSURED The following is added to Paragraph A.1., Who Is An Insured, of SECTION II — COVERED AUTOS LIABILITY COVERAGE: Any person or organization who is required under a written contract or agreement between you and that person or organization, that is signed and executed by you before the "bodily injury" or "property damage" occurs and that is in effect during the policy period, to be named as an addi- tional insured is an "insured" for Covered Autos Liability Coverage, but only for damages to which this insurance applies and only to the extent that person or organization qualifies as an "insured" under the Who Is An Insured provision contained in Section II. B. EMPLOYEE HIRED AUTO 1. The following is added to Paragraph A.1., Who Is An Insured, of SECTION 11 — COV- ERED AUTOS LIABILITY COVERAGE: An "employee" of yours is an "insured" while operating a covered "auto" hired or rented under a contract or agreement in an "em- ployee's" name, with your permission, while CA T4 20 02 16 H. AUDIO, VISUAL AND DATA ELECTRONIC EQUIPMENT — INCREASED LIMIT I. WAIVER OF DEDUCTIBLE — GLASS J, PERSONAL PROPERTY K. AIRBAGS L. AUTO LOAN LEASE GAP M. BLANKET WAIVER OF SUBROGATION performing duties related to the conduct of your business. 2. The following replaces Paragraph b. in B.S., Other Insurance, of SECTION IV — BUSI- NESS AUTO CONDITIONS: b. For Hired Auto Physical Damage Cover- age, the following are deemed to be cov- ered "autos" you own: (1) Any covered "auto" you lease, hire, rent or borrow; and (2) Any covered "auto" hired or rented by your "employee" under a contract in an "employee's" name, with your permission, while performing duties related to the conduct of your busi- ness. However, any "auto" that is leased, hired, rented or borrowed with a driver is not a covered "auto". C. EMPLOYEES AS INSURED The following is added to Paragraph A.1., Who Is An Insured, of SECTION II — COVERED AUTOS LIABILITY COVERAGE: * 2015 The Travelers Indemnity Company. All rights reserved. Page 1 of 3 Includes copyrighted material of Insurance Services Office, Inc. with its permission. wommorm • MeE o1=11.1M w " o FIES 4011.161.1. 003677 COMMERCIAL AUTO Any "employee" of yours is an "insured" while us- ing a covered "auto" you don't own, hire or borrow in your business or your personal affairs. D. SUPPLEMENTARY PAYMENTS — INCREASED LIMITS 1. The following replaces Paragraph A.2.a.(2) of SECTION II — COVERED AUTOS LIABILITY COVERAGE: (2) Up to $3,000 for cost of bail bonds (in- cluding bonds for related traffic law viola- tions) required because of an "accident" we cover. We do not have to furnish these bonds. 2. The following replaces Paragraph A.2.a.(4) of SECTION II — COVERED AUTOS LIABILITY COVERAGE: (4) All reasonable expenses incurred by the "insured" at our request, including actual loss of earnings up to $500 a day be- cause of time off from work. E. TRAILERS — INCREASED LOAD CAPACITY The following replaces Paragraph C.1. of SEC- TION I — COVERED AUTOS: 1. "Trailers" with a load capacity of 3,000 pounds or less designed primarily for travel on public roads. F. HIRED AUTO PHYSICAL DAMAGE The following is added to Paragraph A.4., Cover- age Extensions, of SECTION iII — PHYSICAL DAMAGE COVERAGE: Hired Auto Physical Damage Coverage If hired "autos" are covered "autos" for Covered Autos Liability Coverage but not covered "autos" for Physical Damage Coverage, and this policy also provides Physical Damage Coverage for an owned "auto", then the Physical Damage Cover- age is extended to "autos" that you hire, rent or borrow subject to the following: (1) The most we will pay for "loss" to any one "auto" that you hire, rent or borrow is the lesser of: (a) $50,000; (b) The actual cash value of the damaged or stolen property as of the time of the "loss"; or (c) The cost of repairing or replacing the damaged or stolen property with other property of like kind and quality. Page 2 of 3 (2) An adjustment for depreciation and physical condition will be made in determining actual cash value in the event of a total "loss". If a repair or replacement results in better than like kind or quality, we will not pay for the amount of betterment. (4) A deductible equal to the highest Physical Damage deductible applicable to any owned covered "auto". This Coverage Extension does not apply to: (a) Any "auto" that is hired, rented or bor- rowed with a driver; or (b) Any "auto" that is hired, rented or bor- rowed from your "employee". G. PHYSICAL DAMAGE — TRANSPORTATION EXPENSES — INCREASED LiMiT The following replaces the first sentence in Para- graph A.4.a., Transportation Expenses, of SECTION III — PHYSICAL DAMAGE COVER- AGE: We will pay up to $50 per day to a maximum of $1,500 for temporary transportation expense in- curred by you because of the total theft of a cov- ered "auto" of the private passenger type. H. AUDIO, VISUAL AND DATA ELECTRONIC EQUIPMENT — INCREASED LIMIT Paragraph C.1.b. of SECTION 111 — PHYSICAL DAMAGE COVERAGE is deleted. I. WAIVER OF DEDUCTIBLE — GLASS The following is added to Paragraph D., Deducti- ble, of SECTION III — PHYSICAL DAMAGE COVERAGE: No deductible for a covered "auto" will apply to glass damage if the glass is repaired rather than replaced. J. PERSONAL PROPERTY The following is added to Paragraph A.4., Cover- age Extensions, of SECTION 111 — PHYSICAL DAMAGE COVERAGE: Personal Property Coverage We will pay up to $400 for "loss" to wearing ap- parel and other personal property which Is: (1) Owned by an "insured"; and (2) In or on your covered "auto". This coverage only applies in the event of a total theft of your covered "auto". No deductibles apply to Personal Property cover- age. (3) (5) ® 2015 The Travelers indemnity Company. All rights reserved. CA T4 20 02 15 Includes copyrighted material of insurance Services Office, Inc. with its permission. K. AIRBAGS The following is added to Paragraph B.3., Exclu- sions, of SECTION HI — PHYSICAL DAMAGE COVERAGE: Exclusion 3.a. does not apply to "loss" to one or more airbags in a covered "auto" you own that in- flate due to a cause other than a cause of "loss" set forth in Paragraphs A.1.b. and A.1.c., but only: a. b. c. If that "auto" is a covered "auto" for Compre- hensive Coverage under this policy; The airbags are not covered under any war- ranty; and The airbags were not intentionally inflated. We will pay up to a maximum of $1,000 for any one "loss". L. AUTO LOAN LEASE GAP The following is added to Paragraph A.4., Cover- age Extensions, of SECTION III — PHYSICAL DAMAGE COVERAGE: Auto Loan Lease Gap Coverage for Private Passenger Type Vehicles In the event of a total "loss" to a covered "auto" of the private passenger type shown in the Schedule or Declarations for which Physical Damage Cov- erage is provided, we will pay any unpaid amount due on the lease or loan for such covered "auto" less the following: (1) The amount paid under the Physical Damage Coverage Section of the policy for that "auto"; and CAT4200215 COMMERCIAL AUTO (2) Any; (a) Overdue lease or loan payments at the time of the "loss"; (b) Financial penalties imposed under a lease for excessive use, abnormal wear and tear or high mileage; (c) Security deposits not returned by the les- sor, (d) Costs for extended warranties, Credit Life Insurance, Health, Accident or Disability Insurance purchased with the loan or lease; and (e) Carry-over balances from previous loans or leases. M. BLANKET WAIVER OF SUBROGATION The following replaces Paragraph A.5., Transfer Of Rights Of Recovery Against Others To Us, of SECTION IV — BUSINESS AUTO CONDI- TIONS: 5. Transfer Of Rights Of Recovery Against Others To Us We waive any right of recovery we may have against any person or organization to the ex- tent required of you by a written contract exe- cuted prior to any "accident" or "loss", pro- vided that the "accident" or "loss" arises out of the operations contemplated by such con- tract. The waiver applies only to the person or organization designated in such contract. cs'v 2015 The Travelers Indemnity Company. All rights reserved. Page 3 of 3 Includes copyrighted material of Insurance Services Office, Inc. with its permission. THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT - CALIFORNIA Policy Number: 02 WEC CR2756 Endorsement Number: Effective Date: 09 / 01 / 16 Effective hour is the same as stated on the Information Page of the policy. Named Insured and Address: CHANDLER ASSET MANAGEMENT, INC 6225 LUSK BLVD SAN DIEGO, CA 92121 We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.) You must maintain payroll records accurately segregating the remuneration of your employees while engaged in the work described in the Schedule. The additional premium for this endorsement shall be 2 % of the California workers' compensation premium otherwise due on such remuneration. SCHEDULE Person or Organization Job Description BLANKET WAIVER OF SUBROGATION BLANKET WAIVER OF SUBROGATION Countersigned by Authorized Representative Form WC 04 03 06 (1) Printed in U.S.A. Process Date: 07/17/16 Policy Expiration Date: 09/01/17 RESOLUTION NO. 2016 — 186 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH CHANDLER ASSET MANAGEMENT, INC., FOR INVESTMENT MANAGEMENT AND INVESTMENT ADVISORY SERVICES FOR A THREE-YEAR TERM WITH AN OPTION TO EXTEND FOR TWO ADDITIONAL ONE-YEAR TERMS WHEREAS, the City desires to employ a consultant to provide investment management and investment advisory services for a term of three -years; and WHEREAS, the City has determined that Chandler Asset Management, Inc., ("Chandler") is an investment advisor registered with the Securities and Exchange Commission ("SEC") under the Investment Advisers Act of 1940, and is qualified by experience and ability to perform the services desired by the City; and WHEREAS, Chandler is willing to perform such services for a period of three years with an option to extend for two additional one-year terms. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of National City hereby authorizes the Mayor to execute an Agreement with Chandler Asset Management, Inc., for investment management and investment advisory services for a three- year term with an option to extend for two additional one-year terms. Said Agreement is on file in the office of the City Clerk. PASSED and ADOPTED this 15th day of November, 2016. ATTEST: Mich: -I R. Dalia, City Ierk APPROVED AS TO FORM: George H. Eiser, III Interim City Attorney on Morrison, Mayor Passed and adopted by the Council of the City of National City, California, on November 15, 2016 by the following vote, to -wit: Ayes: Councilmembers Cano, Mendivil, Morrison, Rios, Sotelo-Solis. Nays: None. Absent: None. Abstain: None. AUTHENTICATED BY: RON MORRISON Mayor of the City of National . ity, California // City CI-rk of the City of Nonal City, California By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2016-186 of the City of National City, California, passed and adopted by the Council of said City on November 15, 2016. City Clerk of the City of National City, California By: Deputy CITY OF NATIONAL CITY, CALIFORNIA COUNCIL AGENDA STATEMENT MEETING DATE: November 15, 2016 AGENDA ITEM NO. 12 ITEM TITLE: Resolution of the City Council of the City of National City authorizing the Mayor to execute an agreement with Chandler Asset Management, Inc. ("Chandler") for investment management and investment advisory services for a three-year term with two additional one-year options. PREPARED BY: Mark Roberts, Director of Finance PHONE: 619-336-4265 EXPLANATION: See attached staff report. DEPARTMENT: Financei,� APPROVED BY: Lir�/std feezi FINANCIAL STATEMENT: ACCOUNT NO. NA APPROVED: Liyi-444X Finance APPROVED: MIS ENVIRONMENTAL REVIEW: This is not a project and, therefore, not subject to environmental review. ORDINANCE: INTRODUCTION: FINAL ADOPTION: STAFF RECOMMENDATION: Adopt the resolution, authorizing the Mayor to execute the agreement with Chandler Asset Management, Inc. for investment management and investment advisory services for a three-year term with two additional one-year options. BOARD / COMMISSION RECOMMENDATION: NA ATTACHMENTS: 1. Chandler Asset Management, Inc. Agreement 2. Resolution CALIFORNIA NATIONAL . CCTV` INCORPORATED City Council Staff Report November 15, 2016 ITEM Resolution of the City Council of the City of National City authorizing the Mayor to execute an agreement with Chandler Asset Management, Inc. ("Chandler") for investment management and investment advisory services for a three-year term with two additional one-year options. BACKGROUND Prior to February 29, 2012, management of the investment of the City's surplus funds was performed internally (i.e., by City staff) with investments placed in investment pools and short - to medium -term securities. Following a request for proposals ("RfP") process, on November 15, 2011, the City Council approved an agreement with Chandler to provide investment management services to the City for a two-year term with three additional one-year options. The agreement includes an annual investment management fee of an annual rate of 0.06% (6 basis points) based upon the average daily balance of assets under Chandler's direct management with the provision the rate schedule would increase, as follows, upon an increase of the federal funds target rate by the Federal Open Market Committee (FOMC): Assets under Management First $20M Next $40M Assets in excess of $60M Annual Investment Management Fee 0.10% (10 basis points) 0.08% (8 basis points) 0.06% (6 basis points) $20 million dollars was transferred for management by Chandler on February 29, 2012. An additional $2 million dollars was transferred to the Chandler portfolio on April 29, 2015. The FOMC increased the federal funds target rate 0.25% from a range of 0-0.25% to a range of 0.25-0.50% on December 16, 2015, as a result increasing Chandler's fee to 0.10% (10 basis points) on $20 million dollars of the City's assets under its management and 0.08% (8 basis points) on the remaining portion of approximately $2.5 million dollars it manages (including investment earnings and accrued interest). In anticipation of the expiration of the third amendment to the Chandler agreement on November 15, 2016, the City issued an RfP for investment management and advisory services on September 1, 2016. Page 2 Resolution of the City Council of the City of National City authorizing the Mayor to execute an agreement with Chandler Asset Management, Inc. ("Chandler") for investment management and investment advisory services for a three-year term with two additional one-year options. November 15, 2016 CURRENT INVESTMENT PORTFOLIO The City's surplus funds investment portfolio currently is divided into three portions, each of which is managed separately by Chandler, the California Local Agency Investment Fund (LAIF), and the County of San Diego Pooled Money Fund ("San Diego County Pool"). As of September 30, 2016, the surplus funds investment portfolio totalled $58,686,526, comprising the following investments: LAIF Chandler San Diego County Pool Total $31,054,631 22,541,845 5,090,050 $58,686,526 REQUEST FOR PROPOSALS PROCESS As noted above, the City issued an RfP for investment management and advisory services on September 1, 2016. The RfP was sent to several investment management firms and was posted on the City's website and the California Society of Municipal Finance Officers (CSMFO) website. Responses to the RfP were due by 5:00 pm on September 22, 2016. The City received seven (7) proposals in response to the RfP. The firms submitting proposals, listed in alphabetical order, are: Chandler Asset Management, Inc.; Dana Investment Advisors, Inc.; Garcia Hamilton & Associates, LP; HighMark Capital Management, Inc.; LM Capital Group, LLC; Multi -Bank Securities, Inc.; Vanguard Institutional Advisory Services. Staff reviewed all proposals, and those firms whose proposals were considered most responsive to the RfP and deemed best suited to provide the services desired were invited for panel interviews. The four (4) firms selected to advance, in alphabetical order, are: Chandler Asset Management, Inc.; Dana Investment Advisors, Inc.; HighMark Capital Management, Inc.; LM Capital Group, LLC. The interview panel included the following members: Mitch Beauchamp, City Treasurer; Stacey Stevenson, Deputy City Manager; Mark Roberts, Director of Finance; Tim McDermott, Director of Finance / Treasurer, City of Santee; Lauren Warren, Director of Finance / Treasurer, City of Vista. Page 3 Resolution of the City Council of the City of National City authorizing the Mayor to execute an agreement with Chandler Asset Management, Inc. ("Chandler") for investment management and investment advisory services for a three-year term with two additional one-year options. November 15, 2016 In order to rank the firms and provide a recommendation to the City Council, the interview panel considered: • relevant experience with California municipal governments; • commitment of key members of the firm to the City's portfolio; • demonstrated knowledge of the work/services required; • proposed investment management and investment advisory methodology; and • cost of services. After reviewing and considering each proposal, the panel unanimously selected Chandler as the highest-ranking firm. CHANDLER ASSET MANAGEMENT (from submitted proposal) Founded in 1988, Chandler is an SEC -registered, woman -owned corporation headquartered in San Diego which specializes in the management of fixed -income portfolios for the public sector. As of June 30, 2016, Chandler managed more than $12.4 billion in assets for clients across the United States, including almost $9.8 billion for 122 public agencies. In addition, more than $9.7 billion of the total assets under its management are those of California clients — 389 as of June 30th. RECOMMENDATION Staff recommends the City Council authorize the Mayor to execute the agreement with Chandler Asset Management, Inc. for investment management and investment advisory services for a three-year term with two additional one-year options. FISCAL IMPACT Chandler's annual investment management fees will be based upon the average balance of assets under its direct management, in accordance with the following schedule: Assets under Management First $10M Next $30M Assets in excess of $40M Annual Investment Management Fee 0.10% (10 basis points) 0.08% (8 basis points) 0.06% (6 basis points) These fees do not include custody fees the City may incur for third party custodial services; however, these fees are minimal. The fees are all inclusive for the services Chandler will provide, including: • management of the City's investment portfolio; • review of the City's investment policy for recommended changes based upon legislative changes and other relevant market conditions; • meeting with City staff at least quarterly to review the investment portfolio and investment performance; Page 4 Resolution of the City Council of the City of National City authorizing the Mayor to execute an agreement with Chandler Asset Management, Inc. ("Chandler") for investment management and investment advisory services for a three-year term with two additional one-year options. November 15, 2016 • developing and implementing investment strategies intended to maximize the portfolio's performance; • providing monthly investment reports for the portfolio; • providing City staff with on-line access to its current investment account information; • providing semi-annual and annual performance reports, as needed. The fees will be deducted from the investment portfolio's assets. Taking into account the City's current Chandler investment portfolio balance, the fee schedule's "blended" rate (i.e., the effective rate resulting after application of the fee rates to the portfolio's balance according to the schedule) represents a slight reduction in comparison to the current Chandler fee schedule. The following table illustrates this difference based upon assets under Chandler management as of September 30, 2016. Current Fee Proposed Fee Balance Rate Balance Rate $ 20,000,000 0.10% $ 20,000 $ 10,000,000 0.10% $ 10,000 $ 2,541,845 0.08% $ 2,033 $ 12,541,845 0.08% $ 10,033 $ 22,541,845 $ 22,03.3 $ 22,541,845 $ 20,033 As noted above, the balance of the City's assets currently managed by Chandler is $22,541,845, and at this level of investment, the approximate annual fiscal impact will be $20,000; however, since the fee is calculated on a percentage basis, it will fluctuate over time, increasing as the (Chandler -managed) portfolio balance increases and decreasing should the balance decrease. The future amount(s) to be invested with Chandler will be dependent on cash flow analysis(es) which will be conducted by City staff. ATTACHMENTS Attachment 1 — Chandler Asset Management, Inc. Agreement Attachment 2 — Resolution RESOLUTION NO. 2016 — RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH CHANDLER ASSET MANAGEMENT, INC., FOR INVESTMENT MANAGEMENT AND INVESTMENT ADVISORY SERVICES FOR A THREE-YEAR TERM WITH AN OPTION TO EXTEND FOR TWO ADDITIONAL ONE-YEAR TERMS WHEREAS, the City desires to employ a consultant to provide investment management and investment advisory services for a term of three -years; and WHEREAS, the City has determined that Chandler Asset Management, Inc., ("Chandler") is an investment advisor registered with the Securities and Exchange Commission ("SEC") under the Investment Advisers Act of 1940, and is qualified by experience and ability to perform the services desired by the City; and WHEREAS, Chandler is willing to perform such services for a period of three years with an option to extend for two additional one-year terms. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of National City hereby authorizes the Mayor to execute an Agreement with Chandler Asset Management, Inc., for investment management and investment advisory services for a three- year term with an option to extend for two additional one-year terms. Said Agreement is on file in the office of the City Clerk. PASSED and ADOPTED this 15th day of November, 2016. Ron Morrison, Mayor ATTEST: Michael R. Dalla, City Clerk APPROVED AS TO FORM: George H. Eiser, III Interim City Attorney CITY OF NATIONAL CITY Office of the City Clerk 1243 National City Blvd., National City, California 91950-4397 619-336-4228 Michael R. Dalla, CMC - City Clerk November 22, 2016 Ms. Mia Corral Chandler Asset Management, Inc. 6225 Lusk Blvd. San Diego, CA 92121 Dear Ms. Corral, On November 15th, 2016, Resolution No. 2015-186 was passed and adopted by the City Council of the City of National City, authorizing execution of an Agreement with Chandler Asset Management. We are enclosing for your records a certified copy of the above Resolution and a fully executed original Agreement. Sincerely, Michael R. Dalla,'CMC City Clerk Enclosures