C7B-Accept Recommendation Investment Advisory ServicesCOMMISSION ITEM SUMMARY
Condensed Title:
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 FIRMS, PURSUANTTO REQUEST
FOR PROPOSALS NO. 2014.091-SW FOR INVESTMENT ADVISORY SERVICES.
Ensure Expenditure Trends Are Sustainable Over The Long Term
Su Data (Surveys, Environmental Scan, etc: N/A
Item Summary/Recommendation :
The City requires the services of an investment advisor to manage and direct the City's investments. The investment advisor
is to 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 lnvestment Policy. The key objectives of the City's investment policy are safety of capital, sufflcient liquidity
to meet requirements and attaining market-average rates of retum. Excess funds are defined as funds not required to
meeting short term expenditures of the City. Cunently, funds available for investment consist of approximately $522 million
which include: $346 million from operating funds, $103 million from various bond proceeds, and $73 million from the Miami
Beach Redevelopment Agency (RDA).
Through RFP 2014-091-SW, the City of Miami Beach, Florida (the "City") has sought proposals from firms interested in
providing the City with investment advisory services to manage and direct the City's investments as detailed herein.
On December 11, 2013, the Mayor and City Commission approved the issuance ofRequest for Proposals (RFP) No. 2014-
091 for an lnvestment Advisory Services. The RFP was issued on February 6, 201 4, with an opening date of March25,2Q14.
The solicitation was advertised and notices were released to prospective proposers. The RFP resulted in proposalsfrom the
following six (6) firms:
After proposer's presentations and interviews, the Committee discussed the proposers' qualifications, experience, and
competence, and further scored the proposers accordingly. The Committee was instructed to score each proposal pursuant
to the evaluation criteria established in the RFP. The final rankings are as follows:
1 . First Southwest
2. Davidson Fixed lncome Management
2. Public Trust Advisors, LLC
4. PFM Asset Management LLC
5. Cutwater Asset Management
6. Russell lnvestments
After reviewing all the submissions and the Evaluation Committee's rankings of proposals received, the City Manager
exercised his due diligence and is recommending that the Mayor and the City Commission enter into negotiations with First
Southwest, the top-ranked firm. Should negotiations with the top-ranked firm be successful, the City Manager recommends
negotiating with the firms tied as second-ranked, Davidson Fixed lncome Management and Public Trust Advisors, LLC.
CONCLUSION
The Administration recommends that 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.
2014-091-SW for investment advisory services; further authorizing the Administration to enter into negotiations with thetop-
ranked flrm, First Southwest; and should the administration not be successful in negotiating an agreement with the top-
ranked proposer, authorizing negotiations with the second-ranked proposers (tie), Davidson Fixed lncome Management and
Public Trust Advjsors, LLC; and further authorizing the mayor and city clerk to execute an agreement upon conclusion of
successful negotiations by the administration.
RECOMMENDATION
the Resolution
Financial lnformation:
Source of
Funds:
Financial I
1 4\May\Procurement\Award RFP 20 1 1-SW lnvestment Advisory Svs SUMNIARY.doc
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DATE{D MIAAAIBEACH c7B125
E MIAMI BEACH
City of Miomi Beoch, 'l 700 Convenlion Center Driye, Miomi Beoch, Florido 33139, www.miomibeochfl.gov
COMMISSION MEMORANDUM
TO: Mayor Philip Levine and Members the City
FROM: Jimmy L. Morales, City Manager
DATE: May 21 ,2014
SUBJECT: RESOLUTION OF THE MAYOR CIry COMMISSION OF THE CIry OF MIAMI
MANAGER PERTAINING TO THE RANKING OF FIRMS, PURSUANT TO REQUEST
FOR PROPOSALS (RFP) NO. 2014-091.SW FOR TNVESTMENT ADVTSORY
SERVICES.
ADMINISTRATION RECOMMENDATION
Adopt the resolution.
KEY INTENDED OUTCOME SUPPORTED
Ensure Expenditure Trends Are Sustainable Over The Long Term
ANALYSIS
The City requires the services of an investment advisor to manage and direct the City's
investments. The investment advisor is to 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
lnvestment 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 sho( term expenditures of the City.
Currently, funds available for investment consist of approximately $522 million which include:
$346 million from operating funds, $103 million from various bond proceeds, and $73 million
from the Miami Beach Redevelopment Agency (RDA).
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. lnvestment advisors will not provide custodial services or
security safekeeping. All City investments, except for swap agreements must be held in an
independent custodial account. 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, through the City Manager.
The City requires that the selected lnvestment Advisor, at a minimum, provide the following
services:
126
City Commission Memorandum - lnvestment Advisory Services
May 21 , 2014
Page 2 of 5
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 lnvestment 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.
Provide arbitrage calculations and reports on the investment of bond proceeds.
MATURITY AND LIQUIDITY REQUIREMENTS
The City selects investments whose terms compliment the need to make the majority of
expenditures set forth below.
1. Biweekly Payrolls
2. Periodic Debt Service Payments
3. Capital Project Needs
For each expenditure event, investments are selected whose maturities occur at a date close to
the date that funds will be needed. lnvestments also are selected based on the highest yield for
the pa(icular type of investment. ln the case of capital projects, in which the exact date that
expenditures will need to be made is unknown, the City selects several investments with varying
maturities so that monies are available each month to cover all capital expenditures. Any
unused capital investment funds are then placed in investments of one year or more to
maximize return potential.
127
City Commission Memorandum - lnvestment Advisory Services
May 21 , 2014
Page 3 of 5
Through RFP 2014-091-SW, the City of Miami Beach, Florida (the "City") has sought proposals
from firms interested in providing the City with investment advisory services to manage and
direct the City's investments as detailed herein.
RFQ PROCESS
On December 11, 2013, the Mayor and City Commission approved the issuance of Request for
Proposals (RFP) No. 2014-091 for an lnvestment Advisory Services. The RFP was issued on
February 6, 2014, with an opening date of March 25, 2014.Ihe solicitation was advertised and
notices were released to prospective proposers. The RFP resulted in proposals from the
following six (6) firms:
1. Cutwater Asset Management
2. Davidson Fixed lncome Managemenl
3. First Southwest
4. PFM Asset Management LLC
5. Public Trust Advisors, LLC
6. Russell lnvestments
On April 3, 2014, the City Manager via Letter to Commission (LTC) No. 1 1 1 -2014 appointed an
Evaluation Committee (the "Committee") consisting of the following individuals:
r Jim Goldsmith, Resident ". Sanford Honivitz, Resident. Georgie Echert, Finance Department, City of Miami Beach. James Sutter, lnternal Audit, City of Miami Beach. Julie Santamaria, RBC Capital Markets
* Jim Goldsmith was unable to participate due to prior commitments he could not reschedule.
The Evaluation Committee (the "Committee") convened on April 17, 2014, to consider proposals
received and interview the proposers. The Committee was provided with information relative to
the City's Cone of Silence and Government in the Sunshine Law, general information on the
scope of services, reference responses, and additional pertinent information from all responsive
proposers.
After proposer's presentations and interviews, the Committee discussed the proposers'
qualifications, experience, and competence, and further scored the proposers accordingly. The
Committee was instructed to score each proposal pursuant to the evaluation criteria established
in the RFP. The final rankings are as follows:
Georgie
Echert
Sanford
Horwitz
Julie
Santam aria
James
Sutter
Low
Aggregate
Totals /
Rank
First Southwest 96 (1 84 (1)90 (1)93 (1)4n\
Davidson Fixed lncome
Manaqement 82 (3)81 (2)78 (3)85 (2)10 (2) tie
Public Trust Advisors, LLC 86 (2)75 (3)84 (2)83 (3)10 (2) tie
PFM Asset Manaoement LLC 7e (4)66 (4)71 (4)80 (4)16 (4)
Cutwater Asset Manaqement 78 (5)66 (4\68 (5)77 (5)19 (5)
Russell lnvestments 62 (6)40 (6)56 (6)59 (6)24 (6)
128
City Commission Memorandum - lnvestment Advisory Servrces
May 21 , 2014
Page 4 of 5
LOCAL PREFERENCE: The City, through the Procurement Division, will assign an additional
five (5) points to Proposers which are a Miami Beach-based vendor as defined in the City's
Local Preference Ordinance. Please note that no proposer was eligible for local's preference.
VETERANS PREFERENCE: The City, through the Procurement Division, will assign an
additional five (5) points to Proposers which are a small business concern owned and controlled
by a veteran(s) or a service-disabled veteran business enterprise, as defined in the City's
Veterans Preference Ordinance. Please note that no proposer was eligible for Veteran's
preference.
ln determining responsiveness and responsibility of the firms, the Department of Procurement
Management verified compliance with the minimum requirements established in the RFP,
financial capacity as contained in the Dun & Bradstreet Supplier Qualifier Report, and past
performance through client references submitted by each proposer.
Public Trust Advisors. LLC, has a long history of serving the City of Miami Beach in their prior
role as investment advisor and fiduciary for the City's investment program. From 2003 - 2012
members of the Public Trust Executive team in close pa(nership with City's Finance team and
staff implemented and managed a fully customized investment program based on the City's
unique cash flows, risk tolerances and investment objectives. Public Trust has more than 20
years of extensive experience providing investment and treasury management services.
Current and recent clients include Town of Davie, City of Fort Lauderdale, City of Aventura and
Broward County Schools.
First Southwest has been providing quality financial services to local government clients since
1946. First Southwest has been working exclusively with conservative governmental investors
and actively managed $6.8 billion for dozens of local governments. ln addition, they served as
the investment advisor for an additional $5.6 billion, participating in strategy development,
market and economic analysis, and selection of prudent security alternatives. First Southwest
currently provides services for Miami-Dade County, Miami-Dade Schools and the Miami-Dade
Expressway Authority in addition to other municipalities.
Cutwater Asset Manaoement is the current lnvestment Manager for the City of Miami Beach.
Cutwater has a proven track record of providing similar services to public sector entities
nationwide for over 20 years. With over $23.9 billion in flxed income assets under
management as of December 31,2013, including $8.5 billion for'121 public sector clients,
Cutwater is uniquely qualified to continue managing funds for the City of Miami Beach. ln
addition to the City of Miami Beach, Cutwater currently provides services for the City of
Pompano Beach, Florida, the City of Aventura and Leon County, Florida.
PFM Asset Manaqement LLC has over thirty (30) years of dedicated quality investment advisory
services to state and local governments. As of December 31, 201 3, they currently manage or
advise on $91.8 billion in total assets. Their experienced staff, analytical capabilities,
accounting and reporting services, and risk management systems will be leveraged to support
the high demands and standards of the City of Miami Beach. Currently, PFM provides similar
services for the City of Doral, City of Hallandale Beach, Broward Schools and Hillsborough
County, Florida.
129
City Commission Memorandum - lnvestment Advisory Servrces
May 21 , 2014
Page 5 of 5
Davidson Fixed lncome Manaoement has offices in Palm Beach Gardens and has over 25
years of publicfunds experience in the state of Florida. With over 1,000 employees and a 75
year company history, Davidson Companies states they are able to provide the foundation,
financial strength, and stabilityto the Cityof Miami Beach. DFIM was founded in 1986 as an
SEC Registered lnvestment Advisor providing fixed income investment advisory, consulting and
management services to institutional investors. Some of the current clients of DFIM include
Citrus County Schools in Florida, City of Deltona, Florida, City of North Lauderdale, Florida and
the City of Tamarac, Florida.
Russell lnvestments has over 30 years working with public entities as an investment advisor
and is uniquely qualified to provide strategic advice and asset management services to the City
of Miami Beach. Russell is unique in that they are one of a few firms that offer strategic advice,
asset management, and implementation services all under one roof. Russell began providing
investment consulting services in '1 969 and currently manages more than $53.7 billion in fixed
income assets for their clients. Some of Russell's current clients are the MBTA Police
Association Retirement Plan, Louisiana Sherriff's' Pension and Relief Fund and the City of
Boynton Beach Police Retirement Fund.
CIry MANAGER'S DUE DILIGENCE
After reviewing all the submissions and the Evaluation Committee's rankings of proposals
received, the City Manager exercised his due diligence and is recommending that the Mayor
and the City Commission authorize the Administration to enter into negotiations with First
Southwest, the top-ranked firm. Should negotiations with the top-ranked firm not be successful,
the City Manager recommends negotiating with the firms tied as second-ranked, Davidson
Fixed lncome Management and Public Trust Advisors, LLC.
CONCLUSION
The Administration recommends that the Mayor and City Commission of the City of Miami
Beach, Florida accept the recommendation of the City Manager pertaining to the ranking of
proposals, pursuant to Request for Proposals (RFP) No. 2014-091-SW for lnvestment Advisory
Services; further authorizing the Administration to enler into negotiations with the top-ranked
firm, First Southwest; and should the Administration not be successful in negotiating an
agreement with the top-ranked proposer, authorizing negotiations with the second-ranked
proposers (tie), Davidson Fixed lncome Management and Public Trust Advisors, LLC; and
further authorizing the Mayor and City Clerk to execute an agreement upon conclusion of
successful negotiations by the Administration.
Lr-rr,rrrl$%H,rno
T:\AGENDA\2014\May\Procurement\Award RFP 2014-091-SW lnvestrnent Advisory Svs MEMO.docx
130
RESOLUTION NO.
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CIry OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE
CIry MANAGER PERTAINING TO THE RANKING OF PROPOSALS,
PURSUANT TO REQUEST FOR PROPOSALS (RFP) NO. 2014-091-SW, FOR
INVESTMENT ADVISORY SERVICES; AUTHORIZING THE
ADMINISTRATION TO ENTER INTO NEGOTIATIONS WITH THE TOP-
RANKED PROPOSER, FIRST SOUTHWEST; AND SHOULD THE
ADMINISTRATION NOT BE SUCCESSFUL IN NEGOTIATING AN
AGREEMENT WITH THE TOP.RANKED PROPOSER, AUTHORIZING
NEGOTIATIONS WITH THE SEGOND-RANKED PROPOSERS (TIE),
DAVIDSON FIXED INCOME MANAGEMENT AND PUBLIC TRUST
ADVISORS, LLC; AND FURTHER AUTHORIZING THE MAYOR AND
GITY GLERK TO EXEGUTE AN AGREEMENT UPON CONCLUSION OF
SUCCESSFUL NEGOTIATIONS BY THE ADMINISTRATION.
WHEREAS, on January 15, 2014, the Mayor and City Commission authorized the
issuance of RFP 2014-091-SW for lnvestment Advisory Services; and
WHEREAS, on February 6,2014, RFP 2014-091-SW was issued with an opening date
of March 25,2014; and
WHEREAS, a pre-proposal conference to provide information to prospective proposers
was held on February 19,2014; and
WHEREAS, forty (40) proposers were notified via The Public Group and Outlook email,
which resulted in the receipt of six (6) proposals; and
WHEREAS, on April 3,2014, the City Manager via Letter to Commission (LTC) No. 1'11-
2014, appointed an Evaluation Committee (the "Committee"), which convened on April 17,
2014,1o consider proposals received and interview the proposers; and
WHEREAS, the Committee was provided an overview of the project, information relative
to the City's Cone of Silence Ordinance and the Government Sunshine Law; general information
on the scope of services, references, and a copy of each proposal; and engaged in a question
and answer session after the presentation of each proposer; and
WHEREAS, the Committee was instructed to score and rank each proposal pursuant to
the evaluation criteria established in the RFP; and
WHEREAS, the Committee's ranking of the firms submitting proposals was as follows:1)
First Southwest; 2) Davidson Fixed lncome Management and Public Trust Advisors, LLC (tied);
4) PFM Asset Management, LLC; 5) Cutwater Asset Management; 6) Russell lnvestments, and
WHEREAS, after reviewing all the submissions and the Evaluation Committee's
rankings of proposals received, the City Manager exercised his due diligence and is
recommending that the Mayor and the City Commission authorize the Administration to enter
into negotiations with First Southwest, the top-ranked firm, and should negotiations with the top-
ranked firm not be successful, the City Manager recommends negotiating with the firms tied as
second-ranked, Davidson Fixed lncome Management and Public TrustAdvisors, LLC.
131
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City Commission hereby accept
the recommendation of the City Manager pertaining to the ranking of proposals, pursuant to
Request for Proposals (RFP) No. 2014-091-SW for lnvestment Advisory Services; further
authorizing the Administration to enter into negotiations with the top-ranked proposer, First
Southwest; and should the Administration not be successful in negotiating an agreement wlth
the top-ranked proposer, authorizing negotiations with the second-ranked proposers (tie),
Davidson Fixed lncome Management and Public Trust Advisors, LLC; and further authorizing
the Mayor and City Clerk to execute an agreement upon conclusion of successful negotiations
by the Administration.
PASSED AND ADOPTED this
ATTEST:
day of 2014.
Rafael Granado, City Clerk Philip Levine, Mayor
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APPBOVED ASTO
FOHM & LANGUAGE
& FOR EXECUTION
(+
132