COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Rebecca Campbell, Director of Finance
DATE: July 1, 2025
SUBJECT: Adoption of a Resolution Approving an Amended Agreement with PFM Asset Management LLC for Investment Management Services
Description:
The City Council will consider adopting a Resolution that approves an updated Investment Management Services agreement with PFM Asset Management LLC, effective retroactively June 19, 2025.
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
RECOMMENDATION:
1. Adopt a Reso lution approving an amended agreement for professional services with PFM Asset Management LLC for Investment Management Services; and
2. Authorize City Manager or designee to enter into extensions and modifications consistent with the terms of the agreement.
BACKGROUND:
Since 2012, PFM Asset Management LLC (PFM AM), a division of U.S. Bancorp Asset Management, Inc. has served as the City’s investment advisor, providing comprehensive portfolio management and advisory services. Their responsibilities have inc luded cash flow analysis, investment policy review, performance benchmarking, and discretionary management of the City’s investment portfolio. The City of Santa Maria entered into an agreement with PFMAM on June 19, 2018.
The Department of Finance issued a Request for Proposal (RFP) on December 1, 2023.
It is recommended that the City extend its agreement with PFMAM to continue to serve as the City’s investment advisor.
DISCUSSION:
PFMAM has consistently demonstrated exceptional performance and service quality.
Over the past 10 years, they have generated approximately $8.9 million in incremental earnings over the City’s benchmark. Their active, relative -value-based investment strategy has helped the City navigate various market conditions, including interest rate fluctuations, economic downturns, and global financial disruptions. 2 In addition to the strong performance key highlights of PFMAM’s service include:
Robust Resources: PFMAM manages or advises on over $256.5 billion in assets, including $92.6 billion for 183 California public agencies (of which $28.3 billion is for 71 California Cities).
Experienced Team: The City’s engagement is led by Managing Direct or Monique Spyke, who has over 20 years of experience and deep knowledge of California’s public sector investment landscape.
Customized Strategy: PFMAM has tailored the City’s portfolio to meet its risk tolerance and liquidity needs while prioritizing safety and capital preservation. Regulatory Expertise: The firm maintains full compliance with the California Government Code and the industry’s best -practices, supported by a dedicated compliance team and advanced reporting systems.
Cybersecurity and Continui ty: Backed by U.S. Bancorp, PFM AM benefits from enterprise-level cybersecurity infrastructure and a robust business continuity plan.
Enhanced Service Levels and Investment Options:
Over the years, PFM AM has taken significant steps to enhance the service l evels provided to the city. The PFMAM’s team has provided special attention to city personnel, ensuring they have the support needed to effectively oversee the investment program and liaise with other important stakeholders such as the City’s investment custodian.
Over the past two years PFMAM has worked with the city to increase the efficiency of the investment program and expand investment options. Some of these changes include:
Reinvestment of portfolio cash flow, enabling cash to be reinvested more effectively.
Allowance for the sale of partial lots, providing greater flexibility in managing the investment portfolio.
Removal of match -settle requirements for sales and purchases, streamlining transaction processes.
Approval of the use of asset-backed securities—which is an allowable investment per the City’s investment policy.
These changes have collectively improved the City’s ability to manage its investments and optimize returns.
The extension of the agreement begins June 19, 2025 , for a term of o ne year and may be extended for up to two one-year extensions. This extension with PFMAM will provide consistency and sustainability for operations, while the city implements its new enterprise resource planning (ERP) system over the next year. At the end of the term, options will be evaluated on how to move forward. During this extension , PFMAM will continue to maintain its current fee structure as a percentage of the portfolio funds managed, as outlined in the original 2018 agreement as follows:
3 Annual Fee
$00 - $ 25M 0.10%
$25 - $ 50M 0.08%
$50 - $ 100M 0.07%
$100M ++ 0.06%
The City Attorney’s Office reviewed the agreement.
Impact to the Community
The extension of the agreement will help the fiscal stability of the City of Santa Maria, as PFMAM has proven to be a reliable and high -performing partner in managing the City’s investment portfolio. Their expertise, performance, and commitment to public sector clients make them the ideal advisor to continue supporting the City’s financial goals in order to support the community.
ATTACHMENT(S):
A. Resolution
B. Amendment 5 to the 2018 Original Agreement
C. 2018 Agreement with PFMAM