CITY OF SAN MATEO
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CITY OF SAN MATEO
Agenda Report
City Hall
330 W. 20th Avenue
San Mateo CA 94403
www.cityofsanmateo.org
Agenda Number: 16 Section Name: {{section.name}} Account Number: 10-2011 File ID: {{item.tracking_number}} TO: City Council
FROM: Alex Khojikian, City Manager
PREPARED BY: Finance Department
MEETING DATE: May 19, 2025
SUBJECT:
Investment Advisory Services – Agreement
RECOMMENDATION:
Approve an agreement with Chandler Asset Management for Investment Advisory Services and authorize the Finance Director to execute the agreement in substantially the form presented.
BACKGROUND:
On October 14, 2019, the Finance Department issued a Request for Proposals (RFP) for investment advisory services, posting on the City's website and Public Purchase, an online platform that provides bid notifications for governmental agencies in the procurement process. Through a competitive selection process, Chandler Asset Management, Inc. (“Chandler”) was chosen as the City’s investment advisor.
Chandler has satisfactorily provided investment advisory services for the City since 2020. The City Council approved the original agreement with Chandler on February 18, 2020, for a three-year term, with an option to extend. On July 17, 2023, the Council approved Amendment No. 1, extending the agreement through June 30, 2025.
Over the past five years, Chandler has served as a trusted investment advisor, supporting the City in managing its investment portfolio. Staff has been satisfied with Chandler’s performance, particularly their expertise in fix-income securities. They have consistently outperformed industry benchmarks, demonstrating strong investment returns while adhering to the City’s risk tolerance and investment policy.
Their advisory fee, averaging 5 base points (i.e. 0.05 percent), is highly competitive compared to industry peers offering similar services.
While the agreement technically does not include a not-to-exceed amount, the table below summarizes projected assets under management (AUM), estimated investment earnings and fees over the next three fiscal years, along with the estimated investment advisory fee for each of the next three fiscal years:
Fiscal Year
Estimated
Assets Under
Management
(AUM)
Estimated
Investment
Earnings
Estimated
Investment
Advisory Fee
Fee as % of
AUM
FY 2025-26 $395 million $14 ~ $15 million $195,000 0.05% FY 2026-27 $435 million $15 ~ $17 million $215,000 0.05% FY 2027-28 $475 million $17 ~ $19 million $235,000 0.05%
CITY OF SAN MATEO
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CITY OF SAN MATEO
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Chandler's fees for the next three years will remain a small fraction of overall investment earnings.
Given Chandler’s strong performance, competitive pricing, and the City’s ongoing need for professional investment advisory services, staff recommends entering a new three-year contract with Chandler through June 30, 2028, with an option for a two-year extension. Staff does not recommend issuing a new RFP at this time, as the City is receiving high- quality service at favorable rates under the current agreement.
BUDGET IMPACT:
No additional budget appropriations are required. The Finance Department anticipates that the cost of services will be offset by investment returns for the portion of assets under the firm's management.
ENVIRONMENTAL DETERMINATION:
Approval of this Agreement for investment advisory services is not a project subject to CEQA, because it is a government fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (CEQA Guidelines Section 15378(b)(4).)
NOTICE PROVIDED
All meeting noticing requirements were met.
ATTACHMENTS
Att 1 – Agreement
STAFF CONTACT
Karen Huang, Finance Director
[email protected]
(650) 522-7110