rfp - cdn.ymaws.com€¦ · web view16/10/2009 · proposal documents shall be emailed to...

FINANCE

Notice Requesting Proposals for

INVESTMENT ADVISORY SERVICES

The Beach Cities Health District is requesting proposals for Investment Advisory Services for portfolio management.

All proposals must be delivered or received by email by November 13, 2009 at 3:00 PM, addressed to [email protected] or delivered to Steve Groom, Finance Director, Beach Cities Health District, 514 N. Prospect Ave., Redondo Beach, CA 90277.

Proposals received after the date and time specified above will not be considered.

Proposals shall be submitted using the format provided in this package.

Parties interested in obtaining a copy of this Request for Proposal (RFP) may do so by calling (310) 374-3426 ext. 210, by faxing their request to (310) 374-3426 or e-mailing [email protected]. Please include the following information: name of firm address contact person telephone number, facsimile number and e-mail address Request For Investment Advisory Services Proposal RFP

514 N Prospect, 3rd Floor of 20Redondo Beach, CA 90277 (310) 374-3426 ext. 210 (fax) [email protected]

mailto:[email protected]



Investment Advisor RFPOctober 16, 2009

TABLE OF CONTENTSSection Page

A. Description of Work 3

B. About the District 4

C. General Terms and ConditionsProposal Requirements 5Contract Award and Execution 6Criteria for Evaluation and Selection 7

D. Special Terms and ConditionsContract Term 8Proposal Content 8Proposal Review and Award Schedule 8Required Deliverable Products 9

E. Insurance Requirements 11

F. Proposal Submittal Forms 13Proposer QuestionnaireReferencesStatement of Past Contract Disqualifications

G. Investment Policy

H. Treasurer’s Report of June 30, 2009

of 20


Section ADESCRIPTION OF WORK

The Beach Cities Health District (BCHD, the District) is soliciting proposals from investment Advisory firms for portfolio management services for approximately $20 million in operating and capital funds (non-pension funds). The portfolio is currently managed, leaving an amount sufficient for liquidity in the California Local Agency Investment Fund (LAIF).

The Investment Advisor shall be a registered Investment Advisor as defined and regulated by the Securities and Exchange Commission (SEC) and shall be registered in the state. The Investment Advisor shall be either independent of any financial institution or securities brokerage firm or shall fully disclose any relationships with such financial institution and/or securities brokerage firm relevant to the firm’s relationship with the entity.

Specific services, although not all-inclusive, to be performed are as follows:

1. Manage the District’s portfolio with discretionary authority.2. Assist the District with cash flow/maturity analysis.3. Provide credit analysis of investment instruments in portfolio.4. Provide monthly/quarterly/annual reporting District funds under management.5. Attend quarterly meetings (in person or via teleconference) with District CEO and

Finance Director; annual meetings (more frequent if needed) with Board of Directors’ Finance Committee.

6. Evaluate market risk and develop strategies that minimize the impact on the portfolio.

7. Provide assurance of portfolio compliance with applicable policies and laws.8. Establish an appropriate performance benchmark.9. Ensure that the portfolio structure matches the District’s objectives.10. Review the District’s Investment Management Plan and make recommendations

for change as appropriate.

Investment practices and procedures must comply with state law and the District’s Investment Policy. The investment advisory firm will be expected to perform to the Prudent Expert Standard.

In determining individual investment placements, the following factors shall be considered in priority order: safety first, liquidity second and yield third.

The District's primary investment objective is to achieve a reasonable rate of return on public funds while minimizing the potential for capital losses arising from market changes or issuer default. Although the generation of revenues through interest earnings on investments is an appropriate District goal, the primary consideration in the investment of District funds is capital preservation in the overall portfolio. As such, the District's yield objective is to achieve a reasonable rate of return on District investments rather than the maximum generation of income, which could expose the District to unacceptable levels of risk.

of 20


Section B - ABOUT THE DISTRICT

The District serves a population of approximately 123,000, the citizens of Hermosa Beach, Manhattan Beach and Redondo Beach, California. The annual budget is around $11 million per year, with $2.7 million coming from user fees, $2.5 million in Property Taxes, $2.2 million in Lease revenue, $2.1 million in Investment Interest, and $1.2 million in partnership revenue. Historically, 100% of interest revenue is committed to budgeted expenditures, in other words, spent not saved.

The District has an elected Board of Directors of five members, elected to staggered four-year terms. The Board has a Finance committee comprised of two members of the Board and six to eight community members with financial or banking expertise. The Board Secretary-Treasurer chairs this Committee and one of the community members is a rotation of the City Treasurer from Hermosa Beach, Manhattan Beach or Redondo Beach. The Committee is responsible to advise and make recommendations to the Board regarding budget oversight; audit review; investment policies and business plan development.

The District’s Investment Policy, reviewed annually by the Board, is attached to this document as an addendum.

Monthly Investment Reports are provided to the Board and the most recent is attached to this document as an addendum.

The monthly liquidity of the District has historically been very stable and predictable. Property Tax receipts occur in April and December. Summer months are highest for youth-related user fees, January is the highest for medical fitness gym memberships. Capital projects follow a fairly rigid payment schedule. Consequently, the portfolio can be segmented for planning purposes fairly easily, with $3 – 4 million left in LAIF, a conservative 6 months’ liquidity. A further analysis of potential unplanned events has been done twice, in 2007 and in 2009, for review by the CEO and Finance Committee. Currently, the District is going through a campus master planning process, contemplating the addition of parking structures and additional buildings on campus. This process is just completing the first phase of evaluating the campus for potential design options.

The portfolio consists primarily of government-sponsored enterprise agency bonds, corporate medium term notes, and LAIF. The district has not purchased CDs or Treasuries in recent years, believing that there is no additional safety to be gained at the sacrifice of yield to justify the purchase of either in stead of agencies.

of 20


Section C - GENERAL TERMS AND CONDITIONS

PROPOSAL REQUIREMENTS

Requirement to Meet All Provisions. Each individual or firm submitting a proposal shall meet all of the terms, and conditions of the Request for Proposals (RFP) specifications package. By virtue of its proposal submittal, the proposer acknowledges agreement with and acceptance of all provisions of the RFP specifications.

Proposal Submittal. Each proposal must be submitted in the format described in the RFP specifications and accompanied by any other required submittals or supplemental materials. Proposal documents shall be emailed to [email protected] as either a PDF (preferred) or Word document, or delivered to Steve Groom, Finance Director, Beach Cities Health District, 514 N. Prospect Ave., Redondo Beach, CA 90277. No FAX submittals will be accepted.

Proposal Format. Please format your response to this request in the order a indiceted in the Propsers Questionnaire to facilitate comparisons between respondents.

Insurance Certificate. Each proposal must include a certificate of insurance showing:a. The insurance carrier and its A.M. Best rating.b. Scope of coverage and limits.c. Deductibles and self-insured retention.

The purpose of this submittal is to generally assess the adequacy of the proposer’s insurance coverage during proposal evaluation; as discussed under paragraph 12 below, endorsements are not required until contract award. The District’s insurance requirements are detailed in Section E.

Proposal Withdrawal and Opening. A proposer may withdraw its proposal, without prejudice prior to the time specified for the proposal opening, by submitting a written request to the Director of Finance for its withdrawal. No proposal received after the time specified or at any place other than that stated in the "Notice Requesting Proposals" will be considered.

Submittal of One Proposal Only. No individual or business entity of any kind shall be allowed to make or file, or to be interested in more than one proposal, except an alternative proposal when specifically requested; however, an individual or business entity that has submitted a sub-proposal to a proposer submitting a proposal, is not thereby disqualified from submitting a sub-proposal or from quoting prices to other Advisors submitting proposals.

Communications. All timely requests for information submitted in writing will receive a written response from The District. Telephone communications with District staff are not encouraged, but will be permitted. However, any such oral communication shall not be binding on the District.

of 20



CONTRACT AWARD AND EXECUTION

Proposal Retention and Award. The District reserves the right to retain all proposals for a period of 60 days for examination and comparison. The District also reserves the right to waive non-substantial irregularities in any proposal, to reject any or all proposals, to reject or delete one part of a proposal and accept the other, except to the extent that proposals are qualified by specific limitations. See the "special terms and conditions" in Section C of these specifications for proposal evaluation and contract award criteria.

Competency and Responsibility of Advisor. The District reserves full discretion to determine the competence and responsibility, professionally and/or financially, of Advisors. Advisors will provide, in a timely manner, all information that the District deems necessary to make such a decision.

Contract Requirement. The proposer to whom award is made (Advisor) shall execute a written contract with The District within ten (10) calendar days after notice of the award has been sent by mail to it at the address given in its proposal. The contract shall be made in the form adopted by the District.

Business License & Tax. The Advisor must have a valid business license and tax certificate, if applicable, before execution of the contract.

of 20


CRITERIA FOR EVALUATION AND SELECTION

Proposals will be evaluated by an interdepartmental review committee based on the following criteria: Understanding of the work required by the District and the overall investment

program objectives. Responses to proposer questionnaire. Proposed approach to managing the portfolio. Quality, clarity and responsiveness of the proposal. Demonstrated competence and professional qualifications necessary for

successfully performing the work required by The District. Recent experience in successfully managing portfolios of similar sized California

government investment portfolios. References. Background and related experience of the specific individuals to be assigned to this

account. Proposed compensation.

Scorecard evaluation will be weighted as follows:

20% Experience of the firm in providing services to public sector entities of similar size and with similar investment objectives;

20% Responses from references; professional experience and qualifications of the individuals assigned to the account

20% Reporting capabilities

20% Portfolio advisement and management resources, investment philosophy and recommended approach to management of the investment portfolio

10% Responsiveness to the RFP, communicating an understanding of the overall program and services required

10% Fees

As reflected above, contract award will not be based solely on price, but on “lowest responsible bidder,” a combination of factors as determined to be in the best long-term interest of the District.

After evaluating the proposals and discussing them further with the finalists or the tentatively selected Advisor, the District reserves the right to further negotiate the proposed work and/or method and amount of compensation.

The District reserves the right to conduct personal interviews of any proposer prior to selection. The District will not be liable for any cost incurred by the proposer in connection with such interview (i.e., travel, accommodations, etc.)

of 20


Section D - SPECIAL TERMS AND CONDITIONS

1. Contract Term. The term of the contract shall be for a period of one year at which time the performance of the firm will be evaluated. Upon mutual agreement at that time, the contract may be extended by the District Chief Executive Officer for another two years.

2. Proposal Content. Your proposal must include the following information:a. Submittal Forms

i. Proposal submittal ii. Responses to proposer questionnaire iii. Certificate of insuranceiv. References from at least three firms for whom you have provided similar

servicesv. Statement of any past contract disqualificationsvi. Any additional information about your firm that will assist us in the selection

process

Note: For ease of electronic preparation, proposer may prepare their own proposal submittal forms as long as they contain the same information in a similar format.

b. Proposal Length and Formati. Proposals should not exceed 30 pages, including supplemental materials.

3. Proposal Review and Award Schedule. The following is an outline of the anticipated schedule for proposal review and contract award:

Issue RFP 10/16/2009Receive proposals 11/13/2009Complete proposal evaluation 11/20/2009Conduct finalist interviews 12/04/2009Finalize staff recommendation 12/11/2009Award contract 12/18/2009Execute contract 12/31/2009Start work 01/01/2010

4. Ownership of Materials. All original documents and other materials prepared by or in possession of the Advisor as part of the work or services under these specifications shall become the permanent property of the District, and shall be delivered to the District upon demand.

5. Release of Reports and Information. Any reports, information, data, or other material given to, prepared by or assembled by the Advisor as part of the work or services under these specifications shall be the property of District and shall not be made available to any individual or organization by the Advisor without the prior written approval of the District.

of 20


6. Copies of Reports and Information. If the District requests additional copies of reports, drawings, specifications, or any other material in addition to what the Advisor is required to furnish in limited quantities as part of the work or services under these specifications, the Advisor shall provide such additional copies as are requested, and District shall compensate the Advisor for the costs of duplicating of such copies at the Advisor's direct expense.

7. Required Deliverable Products. The Advisor will be required to provide:a. Monthly reports that include the following:

i. Summary of Portfolio Holdings. A listing of all securities held at the end of the month categorized by type of security, maturity and institution.

ii. Investment Performance Report. At a minimum the performance report should show total returns for the period compared to the established benchmark.

iii. Maturity/Duration Indicators. The monthly report should include portfolio duration and average maturity statistics to help monitor interest-rate risk.

iv. Transaction Summary. A summary of completed transactions for the month.

v. Mark-to-Market Report. The monthly report should show the cost and market value for each security in the portfolio.

b. When computers have been used to produce materials submitted to the District as a part of the work scope, the Advisor must provide the corresponding computer files to the District, compatible with the following programs whenever possible unless otherwise directed by the project manager:

i. Word Processing Microsoft Wordii. Spreadsheets Microsoft Excel

8. Attendance at Meetings and Hearings. As part of the work scope and included in the contract price is attendance by the Advisor as many "working" meetings with staff as necessary in performing work scope tasks.

9. Alternative Proposals. The proposer may submit an alternative proposal (or proposals) that it believes will also meet the District's project objectives but in a different way. In this case, the proposer must provide an analysis of the advantages and disadvantages of each of the alternatives, and discuss under what circumstances The District would prefer one alternative to the other(s). If an alternative proposal is submitted, the maximum length of the proposal may be expanded proportionately by the number of alternatives submitted.

10.Services to Other Clients. It is understood that the Advisor performs investment management services for other clients. It is understood that the Advisor shall not have any obligations to purchase or sell for the District account any security which the Advisor, its principals, affiliates or employees may purchase or sell for its or their own account or for the account of any other client, if in the Advisor’s good faith opinion such transaction or investment appears unsuitable, impractical or undesirable for the District account.

11.Allocation of Brokerage. Where the Advisor places orders for the execution of portfolio transactions for the District account, the Advisor may allocate such

of 20


transactions to such brokers and dealers for execution on such markets, at such prices and at such commission rates as in the good faith judgment of the Advisor will be in the best interest of the District. The Advisor shall receive no soft dollar benefit for any transaction placed on behalf of the District.

12.Safekeeping. All securities owned by the District shall be held in safekeeping by a third party bank trust department acting as agent for the District under the terms of a custody agreement executed by the bank and the District. All securities will be received and delivered using standard delivery versus payment (DVP) procedures.

of 20


Section E - INSURANCE REQUIREMENTS

The Advisor shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property which may arise from or in connection with the performance of the work hereunder by the Advisor, its agents, representatives, employees or subcontractors.

Minimum Scope of Insurance. Coverage shall be at least as broad as:

1. Insurance Services Office Commercial General Liability coverage (occurrence form CG 0001).2. Insurance Services Office form number CA 0001 (Ed. 1/87) covering Automobile Liability, code 1 (any auto).3. Workers' Compensation insurance as required by the State of California and Employer's Liability Insurance.4. Errors and Omissions Liability insurance as appropriate to the consultant's profession.

Minimum Limits of Insurance. Advisor shall maintain limits no less than:

1. General Liability: $1,000,000 per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit.2. Automobile Liability: $1,000,000 per accident for bodily injury and property damage.3. Employer's Liability: $1,000,000 per accident for bodily injury or disease.4. Errors and Omissions Liability: $1,000,000 per occurrence.

Deductibles and Self-Insured Retentions. Any deductibles or self-insured retentions must be declared to and approved by The District. At the option of The District, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects The District, its officers, officials, employees and volunteers; or the Advisor shall procure a bond guaranteeing payment of losses and related investigations, claim administration and defense expenses.

Other Insurance Provisions. The general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions:

1. The District, its officers, officials, employees, agents and volunteers are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the Advisor; products and completed operations of the Advisor; premises owned, occupied or used by the Advisor; or automobiles owned, leased, hired or borrowed by the Advisor. The coverage shall contain no special limitations on the scope of protection afforded to The District, its officers, official, employees, agents or volunteers.

of 20


2. For any claims related to this project, the Advisor's insurance coverage shall be primary insurance as respects The District, its officers, officials, employees, agents and volunteers. Any insurance or self-insurance maintained by The District, its officers, officials, employees, agents or volunteers shall be excess of the Advisor's insurance and shall not contribute with it.3. The Advisor's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability.4. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days' prior written notice by certified mail, return receipt requested, has been given to The District.

Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII.

Verification of Coverage. Advisor shall furnish The District with a certificate of insurance showing maintenance of the required insurance coverage. Original endorsements effecting general liability and automobile liability coverage required by this clause must also be provided. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. All endorsements are to be received and approved by The District before work commences.

of 20


PROPOSER QUESTIONNAIRE

FIRM BACKGROUND AND ORGANIZATION

1. Describe the organization, date founded, and ownership of your firm. If your firm experienced a material change in organizational structure, ownership or management during the past three years, describe the change.

2. Describe any other business affiliations (subsidiaries, join ventures, “soft dollar” arrangements with brokers). Describe your firm’s policy on soft dollars.

3. Describe your firm’s sources of revenue, categorized by retail and institutional accounts.

4. Is your firm a registered investment Advisor under the Investment Advisor’s Act of 1940, as amended?

5. Describe any SEC, NASD, or regulatory censure or litigation involving your firm or its employees within the past three years.

6. Did you, or will you, pay a finder’s fee to any third party for business related to this account? Specify the recipients of any fee.

EXPERIENCE

7. Describe your firm’s experience in managing fixed income portfolios for governmental entities.

8. What is your firm’s experience in developing policies and portfolio management guidelines for government portfolios?

9. Does your firm act as a broker or as a primary dealer in securities or receive any other form of additional compensation (including soft dollars) for the client transactions aside from the direct fee paid by clients?

10. Provide the number and types of accounts, total asset value, and composition of portfolios currently being managed by your firm.

STAFFING

11. Identify and provide background information on the key person or personnel who take the most active role(s) in the administration and management of the firm.

12. Identify the investment professionals (portfolio manager, analysts, and researchers) employed by your firm, by classification, and specify the average number of accounts handled by portfolio managers. Are there any established limits on accounts or assets under management?

of 20


13. Provide resumes and biographical information on the investment professionals that will be directly involved in the decision-making process for the portfolio. Include the number of years at your firm, total years of experience, and professional licenses and designation. Include the number of accounts managed and any limits on this.

14. Describe your firm’s training and education efforts to keep portfolio managers informed of developments relevant to government investment managers.

15. Has there been any turnover of professional staff in the firm in the last three years assigned to public sector clients?

ASSETS UNDER MANAGEMENT

16. Summarize your institutional investment assets under management by category as shown below for your latest reporting period.

17. Summarize your assets under management (institutional only) over the past five years and average assets per client.

18. Provide relevant performance statistics on a comparable portfolio and compare with industry averages or benchmarks for the last one, three, five, ten year period and/or since inception. Note whether these performance statistics are reported based on GIPS (Global Investment Performance Standards) formerly known as AIRM (Association for Investment Management and Research).

19. How many accounts have you gained in the last 12 months? How many accounts have been lost in the last 12 months and why?

INVESTMENT MANAGEMENT APPROACH AND DISCIPLINE

20. Briefly describe your firm’s investment management philosophy, including your approach to managing governmental portfolios.

21. Describe the mechanics of how your firm proposes to execute transactions on behalf of he District

22. How frequently do you formulate and review fixed income strategy? How is that carried out and who is involved?

23. What are the primary strategies for adding value to portfolios (e.g. Market timing, credit research, trading)?

24. How are portfolios managed (e.g. by team or individual manager)? What is the back-up when the manager is away?

25. What oversight is provided to portfolio managers?

of 20


26. Describe your firm’s in-house technical and research capabilities. Are outside sources used by the firm on a regular basis? Describe your credit review process. Does your firm assign credit research to specialists?

27. What percentage of your research is conducted in-house? Describe your research capability.

28. What technical analysis do you use?

29. What role does interest-rate forecasting play in your portfolio management strategy?

30. How will you handle fluctuating cash flows and the cash forecasting process?

31. Describe on ongoing daily investment procedures proposed for The District including procedures for trades, security choice, controls, etc., and how you will provide liquidity.

32. How frequently would you suggest your staff meet with The District’s staff? Who will attend these meetings?

REPORTING

33. Describe the investment accounting and reporting system used by your firm.

34. Describe the frequency and format of reports that you would provide to The District staff. Send a sample.

35. What performance benchmarks do you propose for this portfolio? Provide recommendations regarding performance benchmarks for a portfolio similar to that of The District’s. What experience has the firm had in developing benchmarks for public operating portfolios?

FEES

36. Provide the complete fee schedule that would apply to this account. Are fees charged in arrears?

37. What additional expenses not covered through the fee structure will be expected in order to implement your investment Advisor services?

ADDITIONAL INFORMATION

38. Provide a copy of your firm’s most recent ADV Part II as on file with the SEC.

39. Describe your firm’s business continuity plan and how often it is updated.

40. Provide any changes in terms and conditions from those set forth in this RFP that your firm requests or requires to be included in an agreement for this service.

of 20


41. Briefly describe any additional feature, services, attributes or conditions which The District should consider in selection your firm.

of 20


REFERENCES

Number of years engaged in providing the services included within the scope of the specifications under the present business name: .

Describe fully the last three contracts performed by your firm that demonstrate your ability to provide the services included with the scope of the specifications.

Please include: Customer Name Contact Individual Telephone & FAX number Street Address District, State, Zip Code Description of services provided including contract amount, when provided and

project outcome

The District reserves the right to contact each of the references listed for additional information regarding your firm's qualifications.

of 20


STATEMENT OF PAST CONTRACT DISQUALIFICATIONS

The Advisor shall state whether it or any of its officers or employees who have a proprietary interest in it, has ever been disqualified, removed, or otherwise prevented from bidding on, or completing a federal, state, or local government project because of the violation of law, a safety regulation, or for any other reason, including but not limited to financial difficulties, project delays, or disputes regarding work or product quality, and if so to explain the circumstances.

The staff of the Advisor who will be responsible for carrying out this Agreement have not, within the last two years, been convicted of any crime or pleaded nolo contendere or agreed to any consent decree with respect to any matter involving breach of trust or fiduciary duty or securities law violations.

of 20


Section G. Investment Policy

of 20


Section H. Treasurer’s Report of June 30, 2009

of 20

rfp - cdn.ymaws.com€¦ · web view16/10/2009 · proposal documents shall be emailed to...

Documents