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HomeMy WebLinkAboutItem 11 - Financial Advisory Services MEMO TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: BRUNO RUMBELOW, CITY MANAGER MEETING DATE: DECEMBER 17, 2024 SUBJECT: APPROVAL FOR THE AWARD OF AN ANNUAL CONTRACT FOR FINANCIAL ADVISORY SERVICES RECOMMENDATION: City Council to consider approval for the award of an annual contract for financial advisory services with Valley View Consulting, LLC for the Fiscal Services Department. FUNDING SOURCE: Funds are available in the General Fund (Fiscal Services Department) for an amount not to exceed $50,000.00. BACKGROUND: The purpose of this contract is to receive expertise advisement on the City's investable funds in accordance with the Public Funds Investment Act (PFIA). Advisory services include cash flow projections, updated strategies, recommendations on investments, and alternatives, given the changes in market and economic conditions, quarterly reporting, and annual policy review. These services are recommendations only and the firm will have no controlling or transactional authority over City funds. Advisory fees are calculated on the investment portfolio balances which fluctuate throughout the year. Staff estimates that fees should not surpass $50,000 per year. It is anticipated that increased investment earnings resulting from the services will, at a minimum, offset additional cost. Staff received quotes and/or demonstrations from three advisory firms and believes that Valley View Consulting, LLC will provide the best value of service for which the City is currently seeking. Their contract covers two years through December 31, 2026 with one or two-year optional renewal terms, and may terminate at any point in the contracted period for any cause with written notice. It is recommended that the City award the financial advisory services contract for two years to Valley View Consulting, LLC. Staff recommends approval. AGREEMENT BY AND BETWEEN THE CITY OF GRAPEVINE, TEXAS AND VALLEY VIEW CONSULTING, L.L.C. It is understood and agreed that the City of Grapevine (the Investor)will have money available for investment (the Investable Funds) and Valley View Consulting, L.L.C. (the Advisor) has been requested to provide professional services to the Investor with respect to the Investable Funds. This agreement (the Agreement) constitutes the understanding of the parties with regard to the subject matter hereof. 1. This Agreement shall apply to any and all Investable Funds of the Investor from time to time during the period in which this Agreement shall be effective. 2. The Advisor agrees to provide its professional services to direct and coordinate all programs of investing as may be considered and authorized by the Investor. 3. The Advisor agrees to perform the following duties, as requested: a. Assist the Investor in developing cash flow projections, b. Suggest appropriate investment strategies to achieve the Investor's objectives, c. Advise the Investor on market conditions, general information and economic data, d. Analyze risk/return relationships between various investment alternatives, e. Attend occasional meetings as requested by the Investor, f. Assist in the selection,purchase, and sale of investments. The Advisor shall not have discretionary investment authority over the Investable Funds and the Investor shall make all decisions regarding purchase and sale of investments. The eligible investments are listed in the Investor's Investment Policy, g. Advise on the investment of bond funds as to provide the best possible rate of return to the Investor in a manner which is consistent with the proceedings of the Investor authorizing the investment of the bond funds or applicable federal rules and regulations, h. Assist the Investor in creating investment reports in compliance with State legislation and the Investor's Investment Policy, i. Assist the Investor in creating monthly portfolio accounting reports, and j. Assist the Investor in selecting a primary depository services financial institution. 1 4. The Investor agrees to: a. Compensate the Advisor for any and all services rendered and expenses incurred as set forth in Appendix A attached hereto, b. Provide the Advisor with the schedule of estimated cash flow requirements related to the Investable Funds, and will promptly notify the Advisor as to any changes in such estimated cash flow projections, c. Allow the Advisor to rely upon all information regarding schedules, investment policies and strategies, restrictions, or other information regarding the Investable Funds as provided to it by the Investor and that the Advisor shall have no responsibility to verify, through audit or investigation, the accuracy or completeness of such information, d. Recognize that there is no assurance that recommended investments will be available or that such will be able to be purchased or sold at the price recommended by the Advisor, and e. Not require the Advisor to place any order on behalf of the Investor that is inconsistent with any recommendation given by the Advisor or the policies and regulations pertaining to the Investor. 5. In providing the investment services in this Agreement, it is agreed that the Advisor shall have no liability or responsibility for any loss or penalty resulting from any investment made or not made in accordance with the provisions of this Agreement,except that the Advisor shall be liable for its own gross negligence or willful misconduct; nor shall the Advisor be responsible for any loss incurred by reason of any act or omission of any broker, selected with reasonable care by the Advisor and approved by the Investor, or of the Investor's custodian. Furthermore,the Advisor shall not be liable for any investment made which causes the interest on the Investor's obligations to become included in the gross income of the owners thereof. 6. The fee due to the Advisor in providing services pursuant to this Agreement shall be calculated in accordance with Appendix A attached hereto,and shall become due and payable as specified. Any and all expenses for which the Advisor is entitled to reimbursement in accordance with Appendix A attached hereto shall become due and payable at the end of each calendar quarter in which such expenses are incurred. 7. This Agreement shall expire December 31, 2026, with the option of the Investor to extend the Agreement for additional one or two-year terms. Provided, however, the Investor or Advisor may terminate this Agreement upon thirty(30)days written notice to the other party. In the event of such termination, it is understood and agreed that only the amounts due to the Advisor for services provided and expenses incurred to and including the date of termination will be due and payable. No penalty will be assessed for termination of this Agreement. In the event this Agreement is terminated, all investments and/or funds held by the Advisor shall be returned to the Investor as soon as practicable. In addition, the parties hereto agree that upon termination of this Agreement the Advisor shall have no continuing obligation to the Investor regarding the investment of funds or performing any other services contemplated herein. 2 8. The Advisor reserves the right to offer and perform these and other services for various other clients. The Investor agrees that the Advisor may give advice and take action with respect to any of its other clients, which may differ from advice given to the Investor. The Investor agrees to coordinate with and avoid undue demands upon the Advisor to prevent conflicts with the performance of the Advisor towards its other clients. 9. The Advisor shall not assign this Agreement without the express written consent of the Investor. 10. By initialing the appropriate line, Investor acknowledges that: 1) X_ Investor was provided a written copy of Form ADV Part 2 not less than 48 hours prior to entering into this written contract, or 2) Investor received a written copy of Form ADV Part 2 at the time of entering into this contract and has the right to terminate this contract without penalty within five business days after entering into this contract. 3) _ Investor is renewing an expiring contract and has received in the past, and offered annually, a written copy of Form ADV Part 2. When accepted by the Investor, it, together with Appendix A attached hereto, will constitute the entire Agreement between the Investor and Advisor for the purposes and the consideration herein specified. Respectfully submitted, Richard G. Long, Jr. Manager, Valley View Consulting, L.L.C. This agreement is hereby agreed to and executed on behalf of the City of Grapevine, Texas. By City of Grapevine Date: 3 APPENDIX A FEE SCHEDULE AND EXPENSE ITEMS In consideration for the services rendered by Advisor in connection with the investment of the Investable Funds for the Investor, it is understood and agreed that its fee will be a tiered annual fee equal to: Average Quarter End Book Value Annual Fee First $100 million 0.030% (3 basis points) Next $100 million (above $100 million up to $200 million) 0.020% (2 basis points) Balances over $200 million 0.010% (1 basis points) For example: $200 million Average Book Value quarterly fee = $12,500.00 or annual fee = $50,000.00. A fiscal year annual cap of$75,000.00 will apply. Fees will be billed quarterly in arrears. In the event a flexible repurchase agreement or other similar investment option is utilized, the Advisor shall receive a normal and customary fee within the guidelines of the Internal Revenue Service, in lieu of the Agreement Fee. Said fee includes all costs of services related to this Agreement, and all travel and business expenses related to attending regularly scheduled occasional meetings. With pre-trip Investor approval, the Advisor may also request reimbursement for special meeting or event travel and business expenses. The obligation of the Advisor to pay expenses shall not include any costs incident to litigation, mandamus action, test case or other similar legal actions. Any other fees retained by the Advisor shall be disclosed to the Investor. 4