CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: Award of Contract for Professional Investment Advisory Services Meeting Date: August 26, 2025
RECOMMENDATION:
It is recommended that the City Council award a contract for professional investment advisory services to Meeder Public Funds, Inc. (“Meeder”) and authorize the Mayor to execute the agreement in a form approved by the City Attorney.
BACKGROUND:
Historically, the city’s investment practices were extremely limited, relying almost exclusively on non-interest-bearing bank accounts and the Local Agency Investment Fund (LAIF). This approach did not reflect prudent cash management practices and left substantial idle cash (around $120 million) uninvested. While LAIF was available and utilized, the city did not fully utilize it (allowed max: $75 million) until very recently (March 2025), resulting in significant lost earnings, particularly during the high-interest environment from 2022 through early 2025.
As part of the FY 2025-26 budget process, staff’s assessment identified the lack of an active investment strategy as a major weakness in the city’s fiscal management. The absence of professional investment oversight reduced opportunities to generate additional revenue and limited the city’s ability to optimize use of idle cash.
To correct this deficiency and align the city with industry best practices, staff issued a Request for Proposals (RFP) on July 17, 2025, seeking qualified firms to provide non-discretionary investment advisory services in accordance with the City’s Investment Policy and California Government Code Sections 53600 et seq. Under the non-discretionary model, the advisor provides recommendations, but the city retains final approval and decision-making authority over all transactions.
DISCUSSION:
The scope of services outlined in the RFP includes:
Portfolio Management – recommend investment strategies and securities consistent with the City’s Investment Policy & State law.
Compliance and Reporting – monitor compliance with policy and prepare monthly, quarterly, and annual performance reports with benchmarks and market commentary.
Cash Flow and Liquidity Analysis – project cash needs and structure maturities accordingly.
Policy Review and Training – recommend annual updates to the Investment Policy and provide staff training.
Other Services – participate in meetings with staff and rating agencies, as needed.
The city received six (6) proposals by the August 4th deadline from:
Chandler Asset Management
Garcia Hamilton & Associates
Government Portfolio Advisors
Meeder Public Funds, Inc.
Optimized Investment Partners
PFM Asset Management (USBAM)
Staff evaluated each proposal using the weighted criteria outlined in the RFP:
Evaluation Factor
Weight
Experience with municipal clients
25%
Qualifications of the team
20%
Methodology and approach
20%
Fee Structure
20%
References and past performance
15%
The evaluation considered each firm’s municipal experience (particularly with California cities), depth of staff expertise, ability to deliver non-discretionary services, approach to balancing safety, liquidity, and yield, competitiveness of fees, and feedback from client references.
After scoring, Meeder Public Funds, Inc. received the highest overall score among the six firms. Below is a summary of the evaluation scores for all proposals received:
Firm
Score
Meeder Public Funds, Inc
90 PFM Asset Management (USBAM)
86 Chandler Asset Management
83 Garcia Hamilton & Associates
82 Government Portfolio Advisors
80 Optimized Investment Partners
75 Staff is recommending Meeder for the following reasons:
Proven municipal experience – Meeder has been serving public agencies for over 30 years, advising more than 400 clients nationwide, including 20+ in California and currently manages more than $155 billion in public fund assets, including $25 billion on behalf of California public entities.
Qualified team – Meeder has a strong staff combination of portfolio managers and former municipal finance officers, which bring both technical expertise and practical public sector experience.
Comprehensive methodology – Meeder’s advisory approach integrates portfolio management, cash flow projections, liquidity management, policy review, compliance monitoring, and benchmark reporting.
Cost-effective – Meeder’s proposed tiered fees of 0.09% (9 basis points) for the first $50 million and 0.04% (4 basis points) for over $50 million is in the low to mid-range of responses, ensuring value without causing a significant cost to the city.
Strong client references – Meeder has earned consistently high satisfaction ratings and has established and maintained long-term relationships with municipal clients.
The agreement establishes an initial three-year term beginning August 26, 2025, with an optional extension of two years.
ALTERNATIVES:
Approve staff recommendation
Disapprove staff recommendation
Provide further direction to staff
FISCAL IMPACT:
The proposed investment management fees with Meeder are tiered as follows: 0.09% (9 basis points) on the first $50 million of assets and 0.04% (4 basis points) on all assets above $50 million. Based on an actively managed portfolio starting at $60 million, the estimated annual cost is approximately $49,000, with additional costs increasing as more assets are added under management. Staff recommends incrementally placing assets under Meeder’s management, which will mitigate risks while enabling performance evaluation over time. Additionally, as long-term interest earnings improve and confidence in the economy strengthens, additional assets may be transferred to Meeder’s management over time.
The fees for the services can be absorbed within the existing operating budget. Costs will be allocated across the various city funds; however, most of the expenses will be borne by the General Fund.
RELATIONSHIP TO STRATEGIC GOALS:
The action recommended in this report aligns with the 2016 Strategic Plan Fiscal Sustainability Guiding Principle 1: demonstrate fiscal responsibility through the establishment of financial policies and budgeting practices that meet the Financial Standards of Excellence requirements.
ATTACHMENTS:
Professional Services Agreement
Resolution – Investment Advisory Services
Prepared by: Alvaro Castellon, Director of Finance
Approved as to Form: Noel Tapia, City Attorney
Respectfully submitted: Ernie Hernandez, City Manager