DATE: October 21, 2026
TO: Honorable Mayor and City Councilmembers
FROM: Financial Services Department
TITLE: AMENDMENT 2 TO PROFESSIONAL SERVICES AGREEMENT WITH CHANDLER ASSET MANAGEMENT FOR INVESTMENT ADVISORY SERVICES
RECOMMENDATION
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Staff recommends that the City Council approve Amendment 2 to the Professional Services Agreement (PSA) with Chandler Asset Management, extending the term of the agreement for one year through December 7, 2027, for $240,000 under the total-asset based fee model; appropriate $30,000 of revenue and expenditure from the Investment Clearing Fund, and authorize the City Manager to execute the amendment.
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BACKGROUND AND ANALYSIS
In December 2022, the City Council approved a three-year PSA with Chandler Asset Management for full-time investment management of the City’s investment funds. The Agreement includes the option for two additional one-year extensions.
On November 19, 2025, the City Council approved Amendment 1 to the PSA, extending the term of the agreement through December 7, 2026.
The City’s Treasury Division is responsible for managing the investment portfolio of the City, in accordance with the City’s investment policy and existing California statutes. The investment policy has three investment objectives: (1) safety of principal, (2) liquidity needs, and (3) obtain a reasonable yield within the first two objectives. These investment objectives ensure investment of public funding in a manner that provides a reasonable investment return with maximum security while meeting daily cash flow demands of the city.
With this extension, Chandler would provide full-time investment management as a shared Fiduciary of the City’s investment funds, to ensure liquidity for cash flow needs and enhance the potential for increased earnings. They will ensure that the investment policy complies with California Government Code, encompasses the latest industry best practices, and meets the City’s objectives for ensuring safety and liquidity while optimizing investment return. They will also work with City staff to analyze cash requirements, to optimize the allocation between funds needed for liquidity and funds that can be invested in longer-term investment strategies designed to optimize return. They will serve as a general resource with a proactive, local investment team to guide the City’s investment program into the future.
Chandler’s key contacts to be assigned to the City have decades of public sector investment experience and are active in organizations relevant to public fund investment best practices, including the Government Finance Officers Association (GFOA), the California Society of Municipal Finance Officers (CSMFO), the California Debt and Investment Advisory Commission (CDIAC), and the California Municipal Treasurers Association (CMTA).
Over the term of the agreement, Chandler has been responsive to both City Staff and the Citizen Investment Oversight Committee (CIOC), ensured compliance across all State and Federal investment regulations, and grew the City’s Market value portfolio by 8% or $44.7M from June 2025 to June 2026.
FISCAL IMPACT
The cost of Amendment 2 is $240,000. The annual fee is calculated based on total assets under management per the fee schedule below:
|
Assets Under Management: |
Annual Asset Management Fee: |
|
First $450 million |
0.04 of 1% (4 basis points) |
|
Over $450 million |
0.03 of 1% (3 basis points) |
As such, the estimated annual fee for an actively managed portfolio of $580M would be $240,000; Fees will not be charged on funds in other external pools such as Local Agency Investment Fund (LAIF) or California Asset Management Program (CAMP). Management fees will be charged to the Allocation of Interest business unit 200010102.5405, which has an available balance of $210,000. Staff requests an ongoing budget appropriation of $30,000 to the Allocation of Interest revenue account 200010102.4216.0001 and expenditure account 200010102.5405.
As is the case with banking and transaction fees, these costs will be netted with the interest earnings which are then allocated out to the various funds. A professionally managed investment portfolio could result in additional earnings on the portfolio, and therefore would help offset the cost of the contract as well.
COMMISSION OR COMMITTEE REPORT
Does not apply.
CITY ATTORNEY’S ANALYSIS
The referenced documents have been reviewed by the City Attorney and approved as to form.
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Prepared by: Silvia Twardy, Senior Accountant
Reviewed by: Jill Moya, Financial Services Director
Submitted by: Jonathan Borrego, City Manager
Attachments:
1. Original PSA
2. Amendment 2