HomeMy WebLinkAbout2022 CON Chandler Asset Management - Investment Advisory ServicesAGREEMENT
NT
BY AND BETWEEN
THE CITY OF NATIONAL CITY
AND
CHANDLER ASSET MANAGEMENT, INC.
THIS AGREEMENT ENT is entered into on this 2nd day of August, 2022, by and between the
CITY OF NATIONAL CITY, a municipal corporation (the "CITY"), and CHANDLER ASSET
MANAGEMENT, T, INC., a California corporation (the "CONSULTANT").
RECITALS
WHEREAS, the CITY desires to employ a CONSULTANT T to provide investment
management and investment advisory services, as outlined in the attached Exhibit "A."
WHEREAS, the CITY has determined that the C TS LTANT is a 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 To DO MUTUALLY AGREE AS
FOLLOWS:
1. ENGAGEMENT OF CONSULTANT. The CITY agrees to engage the
CONSULTANT T to perform investment management and advisory services, and the
CONSULTANT T 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 T or under direct supervision of the CONSULTANT.
T.
2. EFFECTIVE DATE AND LENGTH OF AGREEMENT. This Agreement will
become effective on August 2, 2022. The duration of this Agreement is for the period ofNovember
16, 2021 through June 30, 2023.
3. SCOPE OF SERVICES. The CONSULTANT shall provide investment
management and investment advisory services in compliance with the City's Investment Policy
attached hereto as "Exhibit B". The C TS TLTANT shall provide services as set forth in the
Exhibit "A".
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. PROJECT COORDINATION AND SUPERVISION. VISION. The Director of
Administrative Services hereby is designated as the Project Coordinator for the CITY and will
monitor the progress and execution of this Agreement. The CONSULTANT T shall assign a single
Project Director to provide supervision and have overall responsibility for the progress and
execution of this Agreement for the CONSULTANT. T. Mia Corral Brown thereby is designated as
the Project Director for the CONSULTANT.
5. COMPENSATION AND PAYMENT. The compensation for the
CONSULTANT shall be based on monthly billings covering actual work performed. Billings shall
include labor classifications, respective rates, hours worked and also materials, if any. 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 SULTANT 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 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. ACCEPTAWLITY 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 orr the compensation payable to the CONSULTANT TT in this
Agreement, the CITY or the CONSULTANT T shall give to the other written notice. Within ten(10)
business days, the CONSULTANT T 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.
SULTANT.
7. DISPOSITION AND OWNERSHIP OF DOCUMENTS. The Memoranda,
Reports, Maps, Drawings, Plans, Specifications, and other documents prepared by the
CONSULTANT SULTANT for this project, whether paper or electronic, shall: 1 be free from defects;(2)
become the property of the CITY for use with respect to this project; and shall be turned over
to the CITY upon completion of the project, or any phase thereof, as contemplated by this
Agreement.
Contemporaneously with the transfer of documents, the CONSULTANT hereby
assigns to the CITY, and CONSULTANT T 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 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
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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 project other than what was
expressly agreed upon within the Scope of Services of this project, unless otherwise mutually
agreed.
8. INDEPENDENT CONTRACTOR. Both parties hereto in the performance ance 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
SUBC NSULTANT S shall require the S T C TSULTANT 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 set forth in this Agreement. The CONSULTANT, or the CONSULTANT'S agents,
servants, or employees are not in any manner agents, servants, or employees of the CITY. The
CONSULTANT and its agents, servants, and employees are wholly independent from the CITY
and CONSULTANT'S obligations to the CITY are solely 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 of its
SUC NSULTANT S , shall obtain and maintain a current City ofNational City business license
prior to and during performance of any work pursuant to this Agreement.
11. LICENSES, SES, 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. CONSULTANT must promptly produce a copy of any such
license, permit, or approval to CITY upon request. The CONSULTANT represents and covenants
that the CONSULTANT shall, at its sole cost and expense, keep in effect atall times during the
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term of this Agreement, any license, permit, or approval which is legally required for the
CONSULTANT to practice its profession.
12. STANDARD ARD OF RE.
A. The CONSULTAI T, 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 ofthe public from risk of
harm arising out of the nature of the work andlor 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 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 project the
C NS TANT 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 T warrants that all products,
materials, processes or treatments identified in the project documents prepared for the CITY are
reasonably commercially available. Any failure by the CONSULTANT to use due diligence under
this sub -section will render the CONSULTANT liable to the CITY for any increased costs that
result from the CITY' S later inability toobtain the specified items or any reasonable substitute
within a price range that allows for project completion 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.
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 ally
part of the information that (i) has been disclosed in publicly available sources of information; (ii)
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is, through no fault of the CONSULTANT, hereafter disclosed in publicly available sources of
information; (iii) is already in the possession of the CONSULTANT T without any obligation of
confidentiality; or (iv) has been or is hereafter rightfully disclosed to the CONSULTANT T 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 m or corporation.
CONSULTANT T shall be liable to CITY for any damages caused by breach of this
condition, pursuant to the provisions of Section 15.
15. INDEMNIFICATION AND HOLD HARMLESS. To the maximum extent
provided by law, 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 negligence, recklessness, or willful misconduct in the
performance of this Agreement. 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.
15. INDEMNIFICATION AND HOLD HARMLESS. To the maximum extent
provided by law, 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. 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. EMPLOYEE PAYMENTS AND INDEMNIFICATION.
16.1 PERS Eligibility . Indemnification. If CONTRACTOR' s employee(s) providing
services under this Agreement claims, or is determined by a court of competent jurisdiction or the
California Public Employees Retirement System ("PERS") to be eligible for enrollment in PERS
of the CITY, CONTRMTOR shall indemnify, defend, and hold harmless CITY for the payment
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of any employer and employee contributions for PERS benefits on behalf of the employee as well
as for payment of any penalties and interest on such contributions which would otherwise be the
responsibility of the CITY.
CONTRACTOR'S employees providing service under this Agreement shall not:
(1) qualify for any compensation and benefit under PERS; 2 be entitled to any benefits under
PERS; enroll in PERS as an employee of CITY; receive any employer contributions paid
by CITY for PERS benefits; or be entitled to any other PERS-related benefit that would ,accrue
to a CITY employee. CONTRACTOR's employees hereby waive any claims to benefits or
compensation described in this Section 16. This Section 16 applies to CONTRACTOR
notwithstanding any other agency, state or federal policy, rule, regulation, law or ordinance to the
contrary.
16.2 Limitation of CITY Liability. The payment made to CONTRACTORCONTIUkCTOR under this
Agreement shall be the full and complete compensation to which CONTRACTOR and
CONTRACTOR' s officers, employees, agents, and subcontractors are entitled for performance of
any work under this Agreement, Neither CONTRACTOR nor CONTRACTOR's officers,
employees, agents, and subcontractors are entitled to any salary or wages, or retirement, health,
leave or other fringe benefits applicable to CITY employees. The CITY will not make any federal
or state tax withholdings on behalf of CONTRACTOR. The CITY shall not be required to pay any
workers' compensation insurance on behalf of CONTRACTOR.
16.3 JndenmLflcati.on for Employee Payments. CONTRACTOR agrees to defend and
indemnify the CITY for any obligation, claim, suit, or demand for tax, retirement contribution
including any contribution to PERS, social security, salary or wages, overtime payment, or
workers' compensation payment which the CITY may be required to make on behalf of(1)
CONTRACTOR, 2 any employee of CONTRACTOR, or any employee of CONTRACTOR
construed to be an employee of the CITY, for work performed under this Agreement. This is a
continuing obligation that survives the termination of this Agreement.
17. 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 Labor Code and all amendments
thereto; and all similar State or federal acts or laws applicable; and shall indemnify, and hold
harmless the CITY and its officers, employees, and volunteers 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, broughtor recovered against the
CITY or its officers, employees, or volunteers, for or on account of any liability under any of said
acts which may be incurred by reason of any work to be performed by the CONSULTANT under
this Agreement.
18. INSURANCE. The CONSULTANT, at its sole cost and expense, shall purchase
and maintain, and shall require its SU CONSULTANTS , when applicable, to purchase and
maintain throughout the term of this Agreement, the following insurance policies:
A. If checked, Professional Liability Insurance (errors and omissions)
with minimum limits of $1,000,000 per occurrence.
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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. 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 "project" or "location". The "project" 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 SULTANT shall execute a Declaration to that effect. Said
Declaration shall be provided to CONSULTANT T by CITY.
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 days prior
written notice to the CITY's Risk Manager, at the address listed in subsection G below, of
cancellation or material change.
F. If required insurance coverage is provided on a "claims made" rather than
"occurrence" fonn, 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.
shall be:
G. The Certificate Holder for all policies of insurance required by this Section
City of National City
co Risk Manager
1243 National City Boulevard
National City, CA 1 0-4 97
H. Insurance shall be written with only insurers authorized to conduct business
in California that hold a current policy holder's alphabetic and financial size category rating of not
less than A:VII according to the current est's Key Rating Guide, or a company of 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 List of Approved
Surplus Line Insurers ("LASLI") and otherwise meet rating requirements.
I. 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
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CITY'S Risk Manager. If the CONSULTANT does not keep all insurance policies required by
this Section 18 in full force and effect at all times during the term of this Agreement, the CITY
may treat the failure to maintain the requisite insurance as a breach of this Agreement and terminate
the Agreement as provided herein.
J. All deductibles and self -insured retentions in excess of $10,000 must be
disclosed to and approved by the CITY. CITY reserves the right to modify the insurance
requirements of this Section 18, including limits, based on the nature of the risk, prior experience,
insurer, coverage, or other special circumstances.
�4 If the CONSULTANT maintains broader coverage or higher limits (or both)
than the minimum limits shown above, the CITY shall be entitled to the broader coverage or higher
limits (or both) maintained by the CONSULTANT. Any available insurance proceeds in excess of
the specified minimum limits of insurance and coverage shall be available to the CITY.
19. LEGAL FEES. If any party brings a suit or action against the other party arising
from any breach of any ofthe covenants or agreements or any inaccuracies in any of the
representations and warranties on the part of the other party arising out ofthis 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 attorney'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.
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 r 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 T 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,
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.
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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 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 days (tell (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 Administrative Services
Finance Department
City of National City
1243 National City Boulevard
National City, CA 91950-4397
To CONSULTANT:
Mia Corral, Senior 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 commimication sent. Any notice, request, demand, direction or other communication sent by
cable, telex, telecopy, facsimile or fax must be confirmed within forty-eight hours by letter
mailed or delivered as specified in this Section.
22. CONFLICT OF INTEREST AND POLITICAL REFORM ACT
-lIlR.rala/ I 1 1
OBLIGATIONS. During the term of this Agreement, the CONSULTANT SULTAI T shall not perform
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 project 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 T shall immediately disqualify itself and shall not use its official
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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 from any matter on which it might perform services for the CITY.
T1 If checked, the CONSULTANT T shall comply with all of the reporting
requirements of the Political Reform Act and the National City Conflict ofInterest 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 Section 22 by the CONSULTANT.
T.
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, 17203,
1720., 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. ADMINISTRATIVE ATIV PROVISIONS.
A. Computation f Time Periods. If any date r 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
S atur lay, Sunday or federal, state, or legal holiday.
B. Counterparts. This Agreement may be executedin multiple counterparts,
each of which shall be deemed an original, but all of which, together, shall constitute but one and
the same instrment.
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, 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.
Fa 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. Assignment & Assumption ofRights. CONSULTANT T shall not assign this
Agreement, in whole or in part, to any other party without first obtaining the written consent of
CITY.
H. 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.
Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. The venue for any legal action arising under
Standard Agreement
Revised January 2021
Page 10 of 12
City oft National City and
Chandler Asset
Management, Inc
this Agreement shall be in either state or federal court in the County of San Diego, State of
California,
J. 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 years
after final payment under the Agreement, per Government Code Section 8546.7.
K. 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.
L. Successors and ss . This Agreement shall be binding upon and shall
inure to the benefit of the successors and assigns of the parties hereto.
M. Subcontractors or Subconsultants. The CITY is engaging the services of the
CONSULTANT identified in this Agreement. The CONSULTANT SULTAI T 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 subeonultants 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 18 and the indemnification and hold harmless
provision of Section 15 of this Agreement.
N. 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.
Standard Agreement
Revised January 2021
Page 11 of 1
City of National City and
Chandler Asset
Management, Inc
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year first above written.
CITY OF NATION CITY
By:
lejand a #t 171104 Mayor
APPROVED AS TO FO
Standard Agreement
Revised January 2021
CHANDLER SSlT, INC.
By:
By:
'age 12 of 12
(Naj
arm) Cla -e
(Print)
CO
(Title)
(Print)
(Title)
C i ty of National City and
Chandler Asset
Management, Inc
Exhibit "A"
CHANDLER ASSET MANAGEMENT, INC.
SCOPE OF SERVICES
OTHER TERMS AND CONDITIONS
I. Lesm 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;
in. 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%
basis
points)
Assets in excess of
$40
million
0.06 of 1%
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 ally 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, r, the CONSULTANT shall
receive all instructions, directions, and other communications on the CITY'S behalf
regarding the CITY'S account from the Director of A mi tr ti e S rvi s
("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. InvestmentPolicy. In investing and reinvesting the CITY'S assets, the CONSULTANT
shall comply with the CITY' S investment policy attached hereto as "Attachment f ."
5. AutoritvASONSULTANT. The CONSULTANT T 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 addresses.
CITY e-mail addresses: M en .an Ln t .icy .g ;
Rbarrera n ,tl i ., ov
7. Proxy Voting. The CONSULTANT will vote proxies on behalf of the CITY unless
otherwise instructed. The CONSULTANT T 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 T will provide information regarding how the CITY'S
proxies were voted upon request.
. 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 l by it to be reliable, but not
guaranteed to or by it¢ Provided that the CONSULTANT NT 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 ederal Securities laws
or other applicable laws.
11. Payment of Commissions. ions. 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 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.
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY #203
ADOPTED: October 23, 1990
AMENDED: June 21, 2022
I. INTRODUCTION
The City of National City's investment program will conform to federal, state, and other legal
requirements, including California Government Code Sections 1 42 .1-1 4 .4, 00-
09, 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:
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 a 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.
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 _
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY #203
ADOPTED: October 23, 1990 AMENDED: June 21, 2022
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 California Government Code Section 0. :
"...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 Administrative Services Director 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.
V. DELEGATION OF AUTHORITY
A. Authority to manage the City's investment program is derived from California
Government Code Section 53600 et seq. The City Council is responsible for the City's cash
management, ent, including the administration of this Investment Policy. Management
responsibility for the cash management of City funds is hereby delegated to the
Administrative Services Director and/or Financial Services Officer.
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY
ADOPTED: October 23, 1990 AMENDED: DED: June 21, 2022
The Administrative Services Director or designee 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 f 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 CI L INSTITUTIONS, DEPOSITORIES, AND BROKERIDEALERS
S
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 I c -1 (uniform net capital rule).
A. The City's Administrative Services Director or designee will determine which financial
institutions are authorized to provide investment services to the City. Institutions eligible to
transact investment business with the City include:
I . 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.
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
Administrative Services Director or designee with a statement certifying that the institution
has reviewed 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.
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE:Investments POLICY #203
ADOPTED: October 23, 1
AMENDED: June 21, 2022
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
TS
All investments will be made in accordance with California Government Code Section 53600
et seq. 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
municipality, 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,
a. Are rated in the category of "A" or better by at least two nationally recognized
statistical rating organizations; and
b. No more than 5% per issuer.
c. No more than 30% of the total portfolio may be invested in municipal bonds,
2, US 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 US Treasuries.
3. Federal Agency or United States government -sponsored enterprise obligations,
participations, or other instruments, including those issued by or fully guaranteed as to
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments
POLICY #203
► PTED: October 23, 1990
AMENDED: June 21, 2022
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
organizations N1 SI o ; and have long-term debt obligations which are rated "A"
or higher by at least two nationally recognized statistical rating organizations;
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 um covered under federal
insurance; and
b. The maturity of such deposits does not exceed 5 years.
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 s 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
"" or higher by at least two nationally recognized statistical rating organizations;
and/or have short term debt obligations rated "Al" 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.
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE:Investments POLICY #203
ADOPTED: October 23, 1990
8. Commercial paper, provided that:
AMENDED: June 21, 2022
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 "-1" or
higher, or the equivalent, by at least two nationally recognized statistical rating
organizations; and whose long-term obligations are rated "A" or higher by at least
two nationally recognized statistical rating organizations; 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 L 1F , 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 Administrative Services Director or Financial Services
Officer or designee to adequately judge the risk inherent in LAIF's portfolio.
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 organizations; and
d. Holdings of medium -term notes may not exceed 30% of the portfolio and no more
than 5% per issuer.
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE:Investments
POLICY #203
ADOPTED: October 23, 1990 AMENDED: June 22022
12. Mortgage pass -through securities, asset -backed securities, and collateralized
mortgage bli ati ns,[A aJ provided that such securities:
a. Have a maximum stated final maturity of 5 years.
b. Be rated in a rating category of "AA" or its equivalent or better by a nationally
recognized statistical rating organization.
Cr 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 Code Section 53601 (a through j) and with assets under
management in excess of $500 million.
b. 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
erican
Development Bank.
b. The securities are rated in a category of "" 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.
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY #203
ADOPTED: October 23, 1990 AMENDED: June 21, 2022
e. The maximum maturity does not exceed five years.
IX. PORTFOLIO LIO 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 California 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. Under a provision sunsetting on January I , 2026, securities backed by
the U,S. Government that could result in a zero- or negative -interest accrual if held
to maturity are permitted . [A]
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.
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, except as noted in Section VIII of this Investment Policy;
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
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY #203
ADOPTED: October 23, 1990 AMENDED: June 21, 2022
4. if securities owned by the City are downgraded by either l oody'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 Administrative Services Director or designee 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 pay -downs prior to
maturity, and securities with embedded options, will affect the market risk profile of the
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 um 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)
1
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE. Investments POLICY #203
ADOPTED: October 23, 1990 AMENDED: June 21, 2022
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.
D. 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 theCity's investment procedures manual.
XI. PROCEDURES AND INTERNAL L CONTROLS
OLS
A. Procedures: The Director of Administrative Services or designee 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 fo.r 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 Administrative Services or designee.
B. Internal Controls: The Director of Administrative Services or designee 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 designed to provide reasonable assurance that these objectives are
met. Internal controls will be in the City's investment procedures manual.
XII. REPORTING #i D REVIEW
A. Monthly reports: The Director of Finance and/or Financial Services Officer 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 Administrative
Services Director or designee to the City Council, at an agendized meeting. Consistent with
the requirements contained in California Government Code Section 53646, information in
the quarterly investment reports shall include, but not be limited to, the following:
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
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: I n estments POLICY 2
ADOPTED: October 23, 1990 ►M E fDEI : June 21, 2022
C. Annual Policy review: The Investment Policy will be reviewed at least annually and, as
necessary, adopted, 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
CaliforniaGovernment Code Sections: 16429.1 - 16429.4, and 53600 —53609 and 0-53686
Investment Company Act of 1940
Investment Advisers Act of 1940
Securities and Exchange Commission Rule 1 C -1
Appendix I attached: 'Authorized Personnel"
Appendix II attached: "Glossary of Investment Terms"
Prior Policy Amendments
October 23, 1990 — Established Policy
May 9, 1995 (Resolution No. 9-2 Updated Policy and Inclusion in the Policy Manual and
Amend policy adopted October 23, 1990
August 6, 1996 (Resolution No. 96-130)
August 2, 1997 (Resolution No. 97-110)
October 6, 1998 (Resolution No. 98-136)
September , 1999 (Resolution No. 99-130)
October 2, 2001 (Resolution No. 2001-151)
October 1, 2002 (Resolution No. 2002-149)
October 7, 2003 (Resolution No. 2003-139)
June 7, 2005 (Resolution No. 2005-118)
October 4, 2005 (Resolution No. 2005-215)
August 21, 2007 (Resolution No. 2007-202)
February 19, 2008 (Resolution No. 2008-37)
February 195 2008 (Resolution No. 2008-38) CDC
January 10, 2012 (Resolution No. 2012-09)
December 10, 2013 (Resolution No. 2013-189)
December 16, 2014 (Resolution No. 2014-172)
December er 15, 2015 (Resolution No. 2015-186)
December 6, 2016 (Resolution No. 2016-189)
October 17, 2017 (Resolution No. 2017-203)
November 20, 2018 (Resolution No. 2018-189)
August 18, 2020 (Resolution No. 2020-151)
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: investments POLICY 3
ADOPTED: October 2311990
AMENDED: June 1, 2022
Appendix
A_OhorizefillEersarinel
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
istant City Manager
Financial Services Officer
Director of Administrative Services or designee
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY 2
ADOPTED: October 23, 1990
AMENDED: June 21, 2022
Appendix II
GLOSSARY OF INVESTMENT TERMS
Agencies; Shorthand market terminology for any obligation issued by a government -
sponsored entity psp, 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 "Freddie Mac" issues discount
notes, bonds and mortgage pass -through securities.
FNMA. Like FHLB and Freddie Mac, the Federal National Mortgage Association was
established to provide credit and liquidity in the housing market. FNMA, also known
as "Fannie Mae," issues discount notes, bonds and mortgage pass -through securities.
GNMA. The Government National Mortgage Association, known as "Ginnie Mae,"
issues mortgage pass -through securities, which are guaranteed by the full faith and
credit of the US Government.
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.
Asset -Backed Securities. Securities supported by pools of installment loans or leases or
by pools of revolving lines of credit.
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
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY #203
ADOPTED: October 23, 1990
AMENDED: June 21, 2022
rate of interest. Callable securities have reinvestment risk as the investor may receive its
principal back when rates are lower than when the investment was initially made.
Certificate of Deposit (CD). A time deposit with a specific maturity evidenced by
certificate. Large denomination CDs may be marketable.
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 co, 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
time[y 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 . 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
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments
ADOPTED: October 23, 1990
POLICY #203
AMENDED: June 21, 2022
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 gh 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 .nigrghaor difference between the actual market_ alue of a security and the
value assessed by the lending side of a transaction i.e. a repo).
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.
Local Agency Investment Fund (LAIF). A voluntary investment fund managed by the
California State Treasurer's Office open to government entities and certain non-profit
organizations in California.
Local Government Investment Pool. Investment pools including the Local Agency
Investment Fund L IF , county pools, joint powers authorities JP s . These funds are not
subject to the same SEC rules applicable to money market mutual funds.
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 portfolios 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
cash flows from a specified pool of mortgages. Principal and interest payments made on the
mortgages are passed through to the holder of the security.
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: Investments POLICY #203
ADOPTED: October 23, 1990 AMENDED: June 21, 2022
Municipal securities. Securities issued by state and local agencies to finance capital and
operating expenses.
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.
Nationally Recognized Statistical Rating Organization rRSRO. A credit rating agency
the United States Securities and Exchange Commission uses for regulatory purposes.
Credit rating agencies provide assessments of an investment's risk. The issuers of
investments, especially debt securities, pay credit rating agencies to provide them with
ratings. The three most prominent NRSROs are Fitch, S&P, and Moody's.
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 US monetary policy, and that
participates for statistical reporting purposes in compiling data on activity in the US
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 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 I years' 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
CITY COUNCIL POLICY
CITY OF NATIONAL CITY
TITLE: I nvestments POLICY
ADOPTED: October 23, 1990 AMENDED: June 217 2022
floating rate notes which have coupons that increase when other interest rates are falling,
and which fail 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. 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's 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.
US Treasury obligations. Securities issued by the US 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" ent" 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.