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HomeMy WebLinkAboutCAG2021-070 - Original - PFM Asset Management, LLC - Financial Invetment Advising - 02/25/2021ApprovalOriginator:Department: Date Sent:Date Required: Authorized to Sign: Director or Designee Mayor Date of Council Approval: Grant? Yes No Type:Review/Signatures/RoutingDate Received by City Attorney: Comments: Date Routed to the Mayor’s Office: Date Routed to the City Clerk’s Office:Agreement InformationVendor Name:Category: Vendor Number:Sub-Category: Project Name: Project Details: Agreement Amount: Start Date: Basis for Selection of Contractor: Termination Date: Local Business? Yes No* Business License Verification: Yes In-Process Exempt (KCC 5.01.045) If meets requirements per KCC 3.70.100, please complete “Vendor Purchase-Local Exceptions” form on Cityspace. Notice required prior to disclosure? Yes No Contract Number: Agreement Routing Form For Approvals, Signatures and Records Management This form combines & replaces the Request for Mayor’s Signature and Contract Cover Sheet forms. (Print on pink or cherry colored paper) Visit Documents.KentWA.gov to obtain copies of all agreementsadccW22373_1_20 Budget Account Number: Budget? Yes No Dir Asst: Sup/Mgr: Dir/Dep: rev. 200821 FOR CITY OF KENT OFFICIAL USE ONLY (Optional) * Memo to Mayor must be attached 1 INVESTMENT ADVISORY AGREEMENT THIS AGREEMENT, entered into as of the 25th day of February, 2021 (the “Agreement”), by and between CITY OF KENT, WASHINGTON, a Washington municipality (hereinafter the "Client"), and PFM ASSET MANAGEMENT LLC, a Delaware limited liability company with an office in Portland, Oregon (hereinafter the "Advisor"). W I T N E S S E T H WHEREAS, the Client has funds available for investment purposes (the “Initial Funds”) for which it intends to conduct an investment program; and WHEREAS, the Client desires to avail itself of the experience, sources of information, advice, assistance and facilities available to the Advisor; to have the Advisor undertake certain duties and responsibilities; and to perform certain services as investment advisor on behalf of the Client, as provided herein; and WHEREAS, the Advisor is willing to provide such services on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agreed as follows: 1.SERVICES OF ADVISOR. The Client hereby engages the Advisor to serve as investment advisor under the terms of this Agreement with respect to the Initial Funds and such other funds as the Client may from time to time assign by written notice to the Advisor (collectively the "Managed Funds"), and the Advisor accepts such engagement. In connection therewith, the Advisor will provide investment research and supervision of the Managed Funds investments and conduct a continuous program of investment and evaluation of the Managed Funds assets. The Advisor shall continuously monitor investment opportunities and evaluate investments of the Managed Funds. The Advisor shall furnish the Client with statistical information and reports with respect to investments of the Managed Funds. The Advisor shall place all orders for the purchase, sale, loan or exchange of portfolio securities for the Client’s account with brokers or dealers recommended by the Advisor and/or the Client, and to that end the Advisor is authorized as agent of the Client to give instructions 2 to the custodian designated by the Client (the “Custodian”) as to deliveries of securities and payments of cash for the account of the Client. In connection with the selection of such brokers and dealers and the placing of such orders, the Advisor is directed to seek for the Client the most favorable execution and price, the determination of which may take into account, subject to any applicable laws, rules and regulations, whether statistical, research and other information or services have been or will be furnished to the Advisor by such brokers and dealers. Both the Client and the Advisor agree on the following explicit roles in the conduct of investment decisions, and Advisor’s authority to implement those decisions. The Advisor shall have no discretionary authority under this Agreement. The Advisor shall make investment recommendations to the Client, in accordance with the Client’s written Investment Policy Statement. The Client agrees to evaluate the Advisor’s recommendations, and to either accept, reject, or modify the investment recommendations. The Client is not limited to the Advisor’s recommendations in the choice of investment decisions regarding the investments for the Managed Funds or the allocation of the Managed Funds among those recommended investments, and Advisor may assist in the implementation of some or all investment decisions, without responsibility, however, for assuring compliance with the Investment Policy Statement as to investments directed by the Client that have not been recommended by the Advisor. The Client authorizes the Advisor to follow any written instructions provided by the agent designated by the Client for communicating those instructions with regard to investments and allocation of investments within the Managed Funds. Such written instructions may be sent by first class mail, fax, electronic mail or otherwise. The Custodian shall have custody of cash, securities and other assets of the Client. The Advisor shall not take possession of or act as custodian for the cash, securities or other assets of the Client and shall have no responsibility in connection therewith. Authorized investments shall include only those investments which are currently authorized by the Investment Policy Statement, state investment statutes and applicable covenants and as supplemented by such other written instructions as may from time to time be provided by the Client to the Advisor. The Advisor shall be entitled to rely upon the Client’s written advice with respect to anticipated drawdowns of Managed Funds. The Advisor will observe the instructions of the Client with respect to broker/dealers who are approved to execute transactions involving the Managed Funds and in the absence of such instructions will engage broker/dealers which the Advisor reasonably believes to be reputable, qualified and financially sound. 3 2. COMPENSATION. (a) For services provided by the Advisor pursuant to this Agreement, the Client shall pay the Advisor an annual fee, in monthly installments, based on the daily net assets under management according to the schedule below: Average Assets Under Management Fees Initial $25 million 10 basis points (0.10%) Next $25 million Next $50 million Above $100 million 8 basis points (0.08%) 7 basis points (0.07%) 6 basis points (0.06%) “Daily net assets” is defined to include the amortized value of securities, accrued interest and cash or any money market fund balance. The minimum annual fee is $25,000, to be applied in equal monthly installments. (b) The Advisor will bill the Client monthly for service performed under this Agreement, said bill to include a statement indicating the basis upon which the fee was calculated. The Client shall pay to the Advisor the amount payable pursuant to this Agreement not later than on the 30th day of the month following the month during which the Advisor's statement was rendered. (c) Assets invested by the Advisor under the terms of this Agreement may from time to time be invested in (i) a money market mutual fund managed by the Advisor or (ii) a local government investment pool managed by the Advisor (either, a “Pool”), or in individual securities. Average daily net assets subject to the fees described in this section shall not take into account any funds invested in the Pool. Expenses of the Pool, including compensation for the Advisor and the Pool custodian, are described in the relevant prospectus or information statement and are paid from the Pool. (d) If and to the extent that the Client shall request the Advisor to render services other than those to be rendered by the Advisor hereunder, such additional services shall be compensated separately on terms to be agreed upon between the Advisor and the Client. 4 3. EXPENSES. (a) The Advisor shall furnish at its own expense all necessary administrative services, office space, equipment, clerical personnel, telephone and other communication facilities, investment advisory facilities, and executive and supervisory personnel for managing the Managed Funds. (b) Except as expressly provided otherwise herein, the Client shall pay all of its own expenses including, without limitation, taxes, commissions, fees and expenses of the Client’s independent auditors and legal counsel, if any, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, and fees and expenses of the Custodian. 4. REGISTERED ADVISOR; DUTY OF CARE. The Advisor hereby represents it is a registered investment advisor under the Investment Advisers Act of 1940, as amended. The Advisor shall immediately notify the Client if at any time during the term of this Agreement it is not so registered or if its registration is suspended. The Advisor agrees to perform its duties and responsibilities under this Agreement with reasonable care. The federal securities laws impose liabilities under certain circumstances on persons who act in good faith. Nothing herein shall in any way constitute a waiver or limitation of any rights which the Client may have under any federal securities laws. The Client hereby authorizes the Advisor to sign I.R.S. Form W-9 on behalf of the Client and to deliver such form to broker-dealers or others from time to time as required in connection with securities transactions pursuant to this Agreement. 5. ADVISOR’S OTHER CLIENTS. The Client understands that the Advisor performs investment advisory services for various other clients which may include investment companies, commingled trust funds and/or individual portfolios. The Client agrees that the Advisor, in the exercise of its professional judgment, may give advice or take action with respect to any of its other clients which may differ from advice given or the timing or nature of action taken with respect to the Managed Funds. The Advisor shall not have any obligation to purchase, sell or exchange any security for the Managed Funds solely by reason of the fact that the Advisor, its principals, affiliates, or employees may purchase, sell or exchange such security for the account of any other client or for itself or its own accounts. 5 6. TERM. This Agreement may be terminated by the Client any time, on not less than thirty (30) days’ written notice to the Advisor. The Advisor may terminate this Agreement immediately upon any material breach of its terms by the Client, or at any time after one year upon thirty (30) days’ written notice to the Client. 7. FORCE MAJEURE. The Advisor shall have no liability for any losses arising out of the delays in performing or inability to perform the services which it renders under this Agreement which result from events beyond its control, including interruption of the business activities of the Advisor or other financial institutions due to acts of God, acts of governmental authority, acts of war, terrorism, civil insurrection, riots, labor difficulties, or any action or inaction of any carrier or utility, or mechanical or other malfunction. 8. DISCIPLINARY ACTIONS. The Advisor shall promptly give notice to the Client if the Advisor shall have been found to have violated any state or federal securities law or regulation in any final and unappealable judgment in any criminal action or civil suit in any state or federal court or in any disciplinary proceeding before the Securities and Exchange Commission (“SEC”) or any other agency or department of the United States, any registered securities exchange, the Financial Industry Regulatory Authority, or any regulatory authority of any State based upon the performance of services as an investment advisor. 9. INDEPENDENT CONTRACTOR. The Advisor, its employees, officers and representatives shall not be deemed to be employees, agents (except as to the purchase or sale of securities described in Section 1), partners, servants, and/or joint ventures of the Client by virtue of this Agreement or any actions or services rendered under this Agreement. 6 10. BOOKS. The Advisor shall maintain records of all transactions in the Managed Funds. The Advisor shall provide the Client with a monthly statement showing deposits, withdrawals, purchases and sales (or maturities) of investments, earnings received, and the value of assets held on the last business day of the month. The statement shall be in the format and manner that is mutually agreed upon by the Advisor and the Client. The Advisor shall provide the Client with the necessary data to complete the Deposits and Investments Footnote in the Client’s CAFR as required in GASB 40 and GASB 72. The data shall include market and book values sorted and subtotaled by investment type and maturity by years and include the percentage of the portfolio. The Advisor will also provide a list of securities sorted by type, and percentage of the portfolio and include ratings by Moody’s and S&P. In addition, the Advisor will provide the Fair Value Measurements by security as required in GASB 72. As accounting standards change, the Advisor shall provide the data in accordance with updated accounting standards issued by GASB, and communicated by the Client to the Advisor. The Advisor shall provide such information to the City no later than February 28 of each year, and the Client agrees to provide the format needed for such information no later than February 1 of each year. 11. THE ADVISOR’S BROCHURE AND BROCHURE SUPPLEMENT. The Advisor warrants that it has delivered to the Client prior to the execution of this Agreement the Advisor's current SEC Form ADV, Part 2A (brochure) and Part 2B (brochure supplement). The Client acknowledges receipt of such brochure and brochure supplement prior to the execution of this Agreement. 12. MODIFICATION. This Agreement shall not be changed, modified, terminated or discharged in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assigns. 13. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding on the Advisor and its successors and assigns, provided, however, that the rights and obligations of the Advisor may not be assigned without the consent of the Client. 7 14. NOTICE. Written notices required under this Agreement shall be sent by regular mail, certified mail, overnight delivery or courier, and shall be deemed given when received at the parties’ respective addresses shown below. Either party must notify the other party in writing of a change in address. Client’s Address City of Kent, Washington 220 4th Ave. S. Kent, WA 98032 Attn: Finance Department Advisor’s Address With copy to: PFM Asset Management LLC PFM Asset Management LLC 650 NE Holladay Street 1735 Market Street Suite 1600 43rd Floor Portland, OR 97232 Philadelphia, PA 19103 Attn: Luke Schneider Attn: Controller 15. APPLICABLE LAW. This Agreement shall be construed, enforced, and administered according to the laws of the State of Washington. The Advisor and the Client agree that, should a disagreement arise as to the terms or enforcement of any provision of this Agreement, each party will in good faith attempt to resolve said disagreement prior to filing a lawsuit. 16. EXECUTION AND SEVERABILITY. Each party to this Agreement represents and warrants that the person or persons signing this Agreement on behalf of such party is authorized and empowered to sign and deliver this Agreement for such party. The invalidity in whole or in part of any provision of this Agreement shall not void or affect the validity of any other provision. 8 17.PARTICIPATION IN AGREEMENT. With the consent of the Advisor, this Agreement may be extended for use to other Washington public agencies and other similar eligible entities. Any such use by other such entities must be in accordance with applicable Washington state law, including RCW 39.34.030, and any ordinance, charter or procurement rules and regulations of such respective entity. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their authorized representatives as of the date set forth in the first paragraph of this Agreement. PFM ASSET MANAGEMENT LLC By: Name: Title: CITY OF KENT, WASHINGTON By: Name: Title: Dana Ralph Mayor 17. PARTICIPATION IN AGREEMENT. With the consent of the Advisor, this Agreement may be extended for use to other Washington public agencies and other similar eligible entities. Any such use by other such entities must be in accordance with applicable Washington state law, including RCW 39,34.030, and any ordinance; charter or procurement rules and regulations of such respective entity. IN WITNESS WHEREOF, the parties hereto have caused this Agrccmcnt to be executed by their authorized representatives as of the date set forth in the first paragraph of this Agreement. PFM ASSET MANAGEMENT LLC $V: Name : n i i Title: ;n 5Nre-c�pv CITY OF KENT, WASHINGTON By iE� . Manic! Tana Ralph Title; Mayor__