2009-27066 ResoRESOLUTION NO. 2009-27066
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH,
FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY MANAGER PERTAINING TO
THE RANKING OF PROPOSALS PURSUANT TO REQUEST FOR PROPOSALS (RFP) NO. 11-
08/09, FOR INVESTMENT ADVISORY SERVICES; AUTHORIZING THE ADMINISTRATION TO
ENTER INTO NEGOTIATIONS WITH THE TOP-RANKED PROPOSER, MBIA MUNICIPAL
INVESTORS SERVICE CORPORATION; AND SHOULD THE ADMINISTRATION NOT BE
SUCCESSFUL IN NEGOTIATING AN AGREEMENT WITH THE TOP-RANKED PROPOSER,
AUTHORIZING NEGOTIATIONS WITH THE SECOND-RANKED PROPOSER, PFM ASSET
MANAGEMENT LLC; AND FURTHER AUTHORIZING THE MAYOR AND CITY CLERK TO
EXECUTE AN AGREEMENT, UPON CONCLUSION OF SUCCESSFUL NEGOTIATIONS.
WHEREAS, Request for Proposals (RFP) No. 11-08/09 for Investment Advisory Services
was issued on December 22, 2008 with an opening date of January 30, 2009; and
WHEREAS, the objective of this RFP is to select a qualified firm to provide investment
advisory services to manage and direct the City's investments; and
WHEREAS, apre-proposal conference to provide information to the consultants submitting
a response was held on January 15, 2009; and
WHEREAS, BidNet issued bid notices to 37 prospective proposers, BidSync (Formerly
known as RFP Depot) issued bid notices to 24 prospective porposers, and 24 proposers were
notified via mail, a-mail, and fax circulation, which resulted in the receipt of seven (7) proposals;
and
WHEREAS, the City Manager via Letter to Commission (LTC) No. 084-2009, appointed an
Evaluation Committee ("the Committee") consisting of the following individuals:
• Jim Sutter, Internal Auditor, Internal Audit;
• Ricardo Montalbano, Financial Advisor to the City of Miami Beach, RBC Dain Rauscher;
• Susan Kirkland, Property Owner and Leadership Academy Graduate;
• Tony Rodriguez, Resident, Budget Advisory Committee member and Smith Barney Senior;
Vice President -Wealth Management Financial Advisor;
• Georgie Echert, Assistant Director, Finance Department; and
WHEREAS, on April 17, 2009, the Committee convened and a quorum was attained; and
WHEREAS, the Committee discussed the proposers' qualifications, experience, price and
competence, and ranked the proposers being evaluated accordingly; and
WHEREAS, a motion was presented and unanimously approved by the Committee to
recommend the first ranked proposer, MBIA Municipal Service Corporate, and should the
Administration not be successful in negotiating an Agreement with the top-ranked proposer,
authorizing negotiations with the second-ranked proposer, PFM Asset Management LLC; and
WHEREAS, the City Manager concurs with the Committee's recommendation.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, the Mayor and City Commission of the City of Miami
Beach, Florida, accept the recommendation of the City Manager pertaining to the ranking of
proposals pursuant to Request for Proposals (RFP) No. 11-08/09, for Investment Advisory
Services; authorizing the Administration to enter into negotiations with the top-ranked proposer,
MBIA Municipal Service Corporat ;and should the Administration not be successful in negotiating
an Agreement with the top-ranked proposer, authorizing negotiations with the second-ranked
proposer, PFM Asset Management LLC; and further authorizing the Mayor and City Clerk to
execute an agreement upon conclusion of successful negotiation by the Administration.
PASSED AND ADOPTED THIS 13th DAY OF May 2009.
ATTEST:
CITY CLERK OR
Robert Parcher Matti Herrera Bower
T:\AGENDA\2009\May 13\Consent\RFP-11-08-09 Investment Advisory - Resolution.doc
APPROVED AS TO
FORM & LANGUAGE
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COMMISSION ITEM SUMMARY
Condensed Title:
Accept The City Manager's Recommendation Pertaining To The Ranking of Proposals Pursuant to
Request For Proposals (RFP) No. 11-08/09, For Investment Advisory Services; ;Authorizing the
Administration To Enter Into Negotiations With The Top-Ranked Proposer, MBIA Municipal Investors
Service Corporation; And Should The Administration Not Be Successful In Negotiating An Agreement With
The Top-Ranked Proposer, Authorizing Negotiations With The Second-Ranked Proposer, PFM Asset
Management LLC; And Further Authorizing The Mayor and City Clerk To Execute An Agreement Upon
Conclusion Of Successful Negotiation By The Administration.
Key Intended Outcome Supported:
Improve the City's overall financial health and maintain overall bond rating.
Supporting Data (Surveys, Environmental Scan, etc.): N/A
Issue:
Shall the City Commission approve the City Manager's recommendation?
Item Summary/Recommendation:
On December 10, 2008, the Mayor and City Commission approved the issuance of Request for Proposals
(RFP) No. 11-08/09 for Investment Advisory Services.
RFP No. 11-08/09 was issued on December 22, 2008 with an opening date of January 30, 2009. Apre-
proposalconference to provide information to the consultants submitting a response was held on January
15, 2009.The contract term will be for five (5) years, with five (5) one (1) year renewal options at the sole
option and discretion of the City.
BidNet issued bid notices to 37 prospective proposers, BidSync (Formerly known as RFP Depot) issued
bid notices to 24 prospective proposers, and 24 proposers were notified via mail, a-mail, and fax
circulation, which resulted in the receipt of seven (7) proposals.
The City Manager via Letter to Commission (LTC) No. 084-2009, appointed an Evaluation Committee ("the
Committee") which convened on April 17, 2009. The Committee members were provided with
presentations and Performance Evaluation Surveys from all proposers.
A motion was presented by Georgie Echert and unanimously approved by all Committee members to
recommend the first ranked proposer, MBIA Municipal Service Corporate for potential award for
Investment Advisory Services. As a result of this RFP, the overall cost for investment management to the
City will be decreased. MBIA proposes a reduced fee based on assets under management to cap fees at 5
basis points for all assets. This would result in savings of approximately $17,500 annually, if the City
selects the Fixed Fee Schedule Option.
ACCEPT THE CITY MANAGER'S RECOMMENDATION.
Adviso Board Recommendation:
N/A
Financial Information:
Source of Amount Account Approved
Funds: 1 Fees for such services are
competitive and would be paid
from additional investment
earnings.
0 2
OBPI Total
Financial Im act Summa : N/A
City Clerk's Office Legislative Tracking:
Sign-Offs• / ,~' ,
De a ment Director A i Mana er i Mana er
GL PDW JMG
T:WGENDA\20~ ay 13\Consent\RFP-11-08-09 Investment Advisory - Summary.doc
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m MIAMIBEACH
City of Miami Beath, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the 'ty Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: May 13, 2009
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE CITY
MANAGER PERTAINING TO THE RANKING OF PROPOSALS PURSUANT TO
REQUEST FOR PROPOSALS (RFP) NO. 11-08/09, FOR INVESTMENT ADVISORY
SERVICES; AUTHORIZING THE ADMINISTRATION TO ENTER INTO
NEGOTIATIONS WITH THE TOP-RANKED PROPOSER, MBIA MUNICIPAL
INVESTORS SERVICE CORPORATION; AND SHOULD THE ADMINISTRATION
NOT BE SUCCESSFUL IN NEGOTIATING AN AGREEMENT WITH THE TOP-
RANKED PROPOSER, AUTHORIZING NEGOTIATIONS WITH THE SECOND-
RANKED PROPOSER, PFM ASSET MANAGEMENT LLC; AND FURTHER
AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AN AGREEMENT,
UPON CONCLUSION OF SUCCESSFUL NEGOTIATIONS.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
FUNDING
Funds for such services will be paid from additional investment earnings.
KEY INTENDED OUTCOME SUPPORTED
Improve the City's overall financial health and maintain overall bond rating.
ANALYSIS
The Administration proposed that the City issue a Request for Proposals (RFP) to select a
qualified firm to provide investment advisory services to manage and direct the City's
investments. The successful firm would manage and direct the investment of excess funds in
accordance with the City's investment objectives as set forth in City of Miami Beach's
Investment Policy. The key objectives of the City's investment policy are safety of capital,
sufficient liquidity to meet requirements and attaining market-average rates of return. Excess
funds are defined as funds not required to meeting short term expenditures of the City.
Currently, funds available for investment consist of approximately $400 million which include:
$225 million from operating funds, $114 million from various bond proceeds, and $66 million
from the Miami Beach Redevelopment Agency (RDA).
Commission Memorandum -RFP#11-08-09 For Investment Advisory Services
May 13, 2009
Page 2
Fees for such services are competitive and would be paid from additional investment earnings.
The contract term will be for five (5) years, with five (5) one (1) year renewal options at the sole
option and discretion of the City.
Scope of Services
• The City expects its investment advisor to be highly experienced, a leader and
innovator in the management of investments, and able to provide comprehensive
investment advisory services. The firm selected as the investment advisor and its
affiliates will be restricted from selling to the City, or buying from the City, any securities
to or from that firm's own inventory or account.
• The investment advisor will also be restricted from placing into the City's portfolio any
securities for which it, or an affiliate, is the issuer. Investment advisors will not provide
custodial services or security safekeeping.
• All City investments, except for swap agreements must be held in an independent
custodial account.
• Provide full-time management on a daily basis of the City's investment portfolio
pursuant to the specific stated investment objectives and the City's Investment Policy.
• Place all orders for the purchase and sale of securities, communicate settlement
information to City staff and assist in coordinating security settlement.
• Serve as a general resource to City staff for information, advice and training regarding
fixed income securities, investment and yield curve analysis.
• Work with City staff to develop cash flow projections to ensure that the investment
strategy is consistent with the City's cash requirements.
• Provide monthly statements detailing investment activity, earnings, the value of the
investment portfolio, a portfolio return, mark to market valuation, and weighted average
maturity, accrued interest by investment type, rating of investment by Standards &
Poor's and Moody's.
• The selected investment advisor must maintain accurate reports including portfolio
composition showing diversity of investments and compliance with applicable
investment policies of the City of Miami Beach and State of Florida Statutes.
• Develop and implement investment strategies for the Advisory Account that will seek to
enhance portfolio performance under current and future market conditions within the
parameters of the City's investment policy and cash flow needs.
• Obtain and document competitive prices for securities transactions.
• Provide semi-annual and annual portfolio performance reports.
• Review and update the City's investment policy and written investment procedures.
• Perform due diligence reviews of current and proposed broker/dealers.
• Monitor the creditworthiness of the City's depository and custodian bank and
investments in the portfolio.
• Provide client training on investment management subjects.
• Attend meetings with the City's finance staff and governing body upon request; and
• Provide arbitrage calculations and reports on the investment of bond proceeds.
On December 10, 2008, the Mayor and City Commission approved the issuance of Request for
Proposals (RFP) No. 11-08/09 for Investment Advisory Services.
Commission Memorandum -RFP#11-08-09 For Investment Advisory Services
May 13, 2009
Page 3
RFP No. 11-08/09 was issued on December 22, 2008 with an opening date of January 30,
2009. Apre-proposal conference to provide information to the consultants submitting a
response was held on January 15, 2009.
BidNet issued bid notices to 37 prospective proposers, BidSync (Formerly known as RFP
Depot) issued bid notices to 24 prospective proposers, and 24 proposers were notified via mail,
e-mail, and fax circulation, which resulted in the receipt of following seven (7) proposals:
1. First Southwest Asset Management
2. Stableriver Capital Management
3. American Beacon Advisors, Inc
4. Southeastern Advisory Services Inc
5. Western Asset Management
6. MBIA Municipal Investors Service Corporation
7. PFM Asset Management, LLC
The City Manager via Letter to Commission (LTC) No. 084-2009, appointed an Evaluation
Committee ("the Committee") consisting of the following individuals:
• Jim Sutter, Internal Auditor, Internal Audit
• Richard Montalbano, Financial Advisor to the City of Miami Beach, RBC Dain Rauscher
• Susan Kirkland, Property Owner and Leadership Academy Graduate
• Tony Rodriguez, Resident, Budget Advisory Committee member and Smith Barney
Senior Vice President -Wealth Management Financial Advisor.
• Georgie Echert, Assistant Director, Finance Department
On April 17, 2009, the Committee convened and a quorum was attained. Georgie Echert,
Finance Department Assistant Director, addressed the Committee and provided general
information on the scope of services. The Committee members were also provided with
presentations and Performance Evaluation Surveys from all proposers:
The following Evaluation Criteria was used to evaluate and rank the groups or individuals
1. Firms overall experience, qualifications and technical ability- 15 points
2. Firms experience in managing fixed income assets for state and local governments
-15 points
3. Performance of managed portfolios that closely match the City's portfolio in size and
governed by similar investment policies - 30 points
4. Demonstrate the ability to meet objectives outlined in Scope of Services - 20
points
5. Accessibility, availability and professional qualifications of the individuals who would
be assigned to manage the City's portfolio - 20 points
The Committee discussed their individual perceptions of the proposers' qualifications,
experience, price and competency, and ranked the proposers being evaluated accordingly.
A motion was presented by Georgie Echert and unanimously approved by all Committee
members to recommend the first ranked proposer, MBIA Municipal Service Corporate for
potential award for Investment Advisory Services.
Commission Memorandum -RFP#11-08-09 For Investment Advisory Services
May 13, 2009
Page 4
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~F~'Fts#'1`1~~109 ~~SI`~ LOW
INV~'#NfENT~IkiJYI'$ORY Jim Richard SUSan Tony Georgie AGGREGATE
.9EfVICES ':`"'~~~ Sutter Montalbano Kirkland Rodri uez Echert TOTALS TOTALS
FIRST SOUTHWEST
ASSET MANAGEMENT 73 4 75 4 52 4 40 4 50 6 22
STABLERIVER CAPITAL
MANAGEMENT 67 6 80 3 62 3 40 4 75 3 19
AMERICAN BEACON
ADVISORS, INC 69 5 55 6 41 5 30 7 55 4 27
SOUTHEASTERN
ADVISORY SERVICES, INC 30 7 0 7 0 7 60 3 20 7 31
WESTERN ASSET
MANAGEMENT 76 3 60 5 39 6 70 2 55 4 20
MBIA MUNICIPAL SERVICE
CORPORATED 95 1 95 1* 91 1 95 1 95 1 5
PFM ASSET
MANAGEMENT LLC 91 2 95 2 * 88 2 40 4 90 2 12
* The Committee Member made the determination on ranking although he had the same
score for both companies
.'RFP No. 11-08-09 #'s 1 #'s 2 #'s 3 #'s 4 #'s 5 #'s 6 #'s 7)
FIRST SOUTHWEST
ASSET MANAGEMENT 4 1
STABLERIVER CAPITAL
MANAGEMENT 3 1 1
AMERICAN BEACON
ADVISORS, INC 1 2 1 1
SOUTHEASTERN
ADVISORY SERVICES, INC 1 4
WESTERN ASSET
MANAGEMENT 1 1 1 1 1
MBIA MUNICIPAL SERVICE
CORPORATED 5
PFM ASSET
MANAGEMENT LLC 4 1
RANKING ORDER
1. MBIA MUNICIPAL INVESTORS SERVICE CORPORATION
2. PFM ASSET MANAGEMENT LLC
3. STABLERIVER CAPITAL MANAGEMENT
4. WESTERN ASSET MANAGEMENT
5. FIRST SOUTHWEST ASSET MANAGEMENT
6. AMERICAN BEACON ADVISORS, INC
7. SOUTHEASTERN ADVISORY SERVICES, INC
Commission Memorandum - RFP#11-08-09 For Investment Advisory Services
May 13, 2009
Page 5
MBIA MUNICIPAL INVESTORS SERVICE CORPORATION ("MBIA")
MBIA is a leading provider of investment management services to the public sector. MBIA has
met the investment needs of public entities by designing and implementing customized, safe,
and effective management programs since 1990. MBIA focuses on providing short and
intermediate term fixed income portfolio management services.
MBIA has nearly 18 years of experience in managing fixed income assets including, but not
limited to, corporate obligations such as loan participations, commercial paper, asset backed
securities, collateralized mortgages obligations, corporate notes, variable rate demand notes
and guaranteed investment contracts for 247 governmental agencies or units, as of December
31, 2008.
MBIA manages over $17 billion of domestic fixed income assets for public organizations, and
$43.6 billion in total fixed income assets, not including its own funds, as of December 31, 2008.
MBIA will share its proven understanding of the related issues and constrains of the arbitrage
regulations and laws. Since 1999, MBIA has partnered with Willdan Financial Services to
provide its clients with arbitrage rebate reporting and to verify that its investment program
remains in compliance with Section 148 of the IRS Tax Code.
Within the State of Florida, MBIA provides investment advisory services to City of Pompano
Beach, City of Coral Springs, City of Naples, and City of Fort Lauderdale.
MBIA is also the current investment advisor to the City. The Administration is very pleased with
the services provided by MBIA during the recent past years. MBIA's staff is always readily
available to provide current updates and propose revisions to the City's investment policies.
MBIA has recommended improving the City's investment policy, continually modeled and
updated the City's cash flows and actively managed the City's pooled investments, reserve
funds, and bond proceeds. The program implemented by MBIA has benefited the City by
annually generating an additional 46 basis points of excess performance over industry
standard performance benchmarks. This outperformance has allowed the City to realize $56
million in interest earnings over the last five (5) years.
The City's relationship managers, Mr. Tight, Vice President and Regional Director, Mr. Grady,
Regional Director, and Ms. Cleary, Regional Director, located in Orlando will be responsible for
coordinating all services supporting portfolio management. Together, Mr. Tight, Mr. Grady, Ms.
Cleary and Mr. Waud, lead portfolio manager, will function as an extension of the City's staff,
providing support and expertise expected of an independent investment advisor including
technical analysis, treasury management support, and investment portfolio strategies based on
cash flow needs and market conditions. Ms. Emily J. Ferguson, Client Services Manager, will
work closely with the City on projects such as initial account set-up and reviewing the
investment policy, when needed. Finally, Mr. Rohit Sood, Vice President, will oversee the City's
accounting and reporting functions.
Commission Memorandum -RFP#11-08-09 For Investment Advisory Services
May 13, 2009
Page 6
As a result of this RFP, the overall cost for investment management to the City will be
decreased since MBIA proposes to reduce fee based on assets under management and to cap
fees at 5 basis points for all assets.
MBIA's current fees are .06 of 1 % on first $175 million of asset value and .05 of 1 % on any
amount over $175 million. Therefore, the current annual fees based on a $400 million portfolio
are $217,500.00.
MBIA's response to this RFP proposes two types of fees:
Fixed Fees Schedule Option: .05 of 1 % on asset value. The Fixed Fees Schedule Option
based on a $400 million portfolio will result in annual fees totaling $200, 000.
Performance Based Option: .03 of 1
outperform benchmark by 10 by or 20 by
million portfolio will result in a minimu
280,000.00 respectively.
on asset value plus .02 of 1 % of asset value if
.The Performance Based Option based on a $400
m and maximum annual fees of $120,000.00 and
CONCLUSION
The Administration recommends that the Mayor and City Commission adopt a Resolution
accepting the recommendation of the City Manager pertaining to the ranking of proposals
pursuant to Request for Proposals (RFP) No. 11-08/09, for Investment Advisory Services;
Authorizing the Administration to enter into negotiations with the top-ranked proposer, MBIA
Municipal Investors Service Corporation; and should the Administration not be successful in
negotiating an Agreement with the top-ranked proposer, authorizing negotiations with the
second-ranked proposer, PFM Asset Management LLC; and further Authorizing the Mayor and
City Clerk to execute an agreement upon conclusion of successful negotiation by the
Administration.
T:\AGENDA\2009\May 13\Consent\RFP-11-08-09 Investment Advisory - Memo.doc