City Council
Report
City Council Meeting: October 12, 2021
Agenda Item: 3.H
1 of 3
To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue Subject: Approval of First Modification to Professional Services Agreement with RNC Capital Management LLC to provide investment management services Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and execute a first modification to agreement #10366 (CCS) with RNC Genter Capital Management LLC to provide investment management services for the Cemetery and Mausoleum Perpetual Care Funds extending the term of the agreement for an additional nine months for a total term of five years and nine months. Management fees are determined by the value of the assets under management. Based on the value of the portfolio as of June 30, 2021, staff estimates the extension of the term of the contract will result in an additional $78,600 in fees.
Summary
The City currently retains RNC Genter Capital Management LLC (RNC) to provide investment management services for the Cemetery and Mausoleum Perpetual Care Funds. Investment guidelines for the two funds are established by City Council and, due to the investment in equities, retention of an investment manager for these portfolios is required.
Staff recommends a first modification to extend agreement #10366 for an additional nine months. As is standard practice for investment management agreements, fees for this contract are determined as a percentage (0.6%) of the value of the assets under management. Based on the current asset value of the two funds (approximately $17.5 million as of June 30, 2021), it is estimated that fees for the nine-month contract extension period will be approximately $78,600. The revised estimated total for the extended contract is $496,206. The actual fee amount will vary based on the fluctuating value of the assets under management. The nine-month extension would ensure that 2 of 3
staff has enough time to complete a Request for Proposal (RFP) process for investment management services.
Discussion
The City owns and operates the Woodlawn Cemetery and the Mausoleum located on the cemetery grounds. Perpetual Care is sold with each burial plot, crypt or niche. The funds received for perpetual care are deposited into the Cemetery Perpetual Care Fund or Mausoleum Perpetual Care Fund as appropriate. The income from these funds is used to pay for perpetual care costs.
The principal portion of the funds can only be used for investment purposes.
The City’s current five-year agreement with RNC terminates on November 11, 2021. Staff is in the initial steps of conducting an RFP process for investment management services. The City’s restructuring to mitigate the financial challenges caused by the COVID-19 pandemic has reduced staff resources and delayed the RFP process. An extension to the contract is requested to ensure a judicious selection process and allow adequate time for contract negotiation and to transition to a new firm, if required.
Past Council Actions
Meeting Date Description
9/27/2016
(Attachment A)
Award Contract with RNC Capital Management LLC to Provide Investment Management Services
.
Financial Impacts and Budget Actions
Staff seeks authority to extend the term of the agreement with RNC to provide investment management services for the Cemetery and Mausoleum Perpetual Care Funds for an additional nine months. This results in an estimated increase in management fees of $78,600 bringing the total estimated contract amount to $496,200. The increase in the total estimated contract amount of $69,000 annually is a function of both the extension of the contract term as well as the increase in the portfolio value from $11.6 million at 3 of 3
the time of contract execution to the current value of $17.5 million (as of June 30, 2021). Funding is available in the adopted FY 2021-23 Biennial Budget in the Cemetery Fund (Public Works Department). Future year funding is contingent on Council budget approval.
Agreement Modification Request
Agreement
#
Estimated
Expenditures Through
Original Contract
Term
Estimated
Additional Fees from
Term Extension
Dept/CIP Account #
Total Revised
Estimated
Contract Amount
10366 $417,608 $78,600 59500001.552010 $496,208
Prepared By: David Carr, Assistant City Treasurer
Approved Forwarded to Council
Attachments:
A. Staff Report 9/27/2016 - Award Contract with RNC Capital Management LLC to Provide Investment Management Services (Web Link)
B. RNC OAKS FY21-22