AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: SIAMLU COX
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
DAVID CASTRO
MANAGEMENT ANALYST
SUBJECT: REQUEST FOR PROPOSALS FOR INVESTMENT MANAGEMENT AND ADVISORY SERVICES
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Summary:
The City Council will consider approving the release of a Request for Proposals (RFP) to engage a qualified firm for investment management and advisory services. This proposed effort aligns with the City’s strategic goals to diversify its financial resources, including the City Council's recent approval to participate in new investment pools. The goal is to provide professional oversight for a portion of the City's approximately $107 million portfolio to ensure long-term fiscal stability and maximize investment yields while maintaining compliance with regulations and adopted City policies. Staff recommends that the City Council approve the release of the Request for Proposals to begin the selection process for these essential services. Staff would return to a future City Council meeting with a recommendation to award a contract to a qualified firm.
Strategic Plan Goal(s):
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 5 High-Functioning Government: Strengthen internal communication, recruitment, retention, systems, and processes to increase the effectiveness and efficiency of City services.
recommendation
Recommendation:
1. Approve the Request for Proposal (RFP) for Investment Management and Advisory Services and authorize its release.
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Fiscal Impact:
There is no immediate fiscal impact associated with the release of the RFP. The future engagement of an investment advisor would involve professional fees, typically calculated on a percentage of assets under management. Proposed fee structures will be evaluated by staff during the selection process, and a full fiscal analysis, including the impact on net investment yield, will be presented to the City Council when staff recommends a contract award.
Background:
The City of Signal Hill manages an investment portfolio of approximately $107 million in operating funds, investing in both short and long-term instruments to preserve safety, maintain liquidity, and maximize yield. Historically, the City has relied on Wells Fargo Bank, N.A. for core treasury management, commercial card programs, and safekeeping services under a Master Service Agreement. Currently, the City maintains a safekeeping account with Wells Fargo Bank and purchases government securities and certificates of deposit. While these banking services remain essential for daily operations, the City’s investment strategy has primarily utilized State-managed investment pools, including the State’s Local Agency Investment Fund (LAIF), the California Asset Management Program (CAMP), and the California Liquid Asset Securities System (CLASS), to maintain stability and preserve capital.
To further enhance diversification and strengthen professional oversight of the City’s financial assets, the City Council recently approved participation in the California Fixed Income Trust (CalFIT) investment pool. This action expands the City’s available investment options and reflects the City’s continued commitment to prudent financial management and revenue diversification. As the City’s portfolio continues to grow in scope and complexity, staff explored the potential of engaging a professional investment advisor to actively manage a designated portion of the portfolio while maintaining strict adherence to the California Government Code and the City’s Statement of Investment Policy. This proposed approach would enhance oversight, support strategic diversification, and position the City to optimize performance while preserving safety and liquidity.
Analysis:
Staff identified the opportunity to further diversify and increase interest income by engaging discretionary investment advisory services to support active management of a designated portfolio segment while ensuring continued compliance with statutory and policy requirements. To ensure the City’s investment program aligns with the highest standards of municipal finance, staff has evaluated the proposed engagement against the nationally recognized guidelines of the Government Finance Officers Association (GFOA); these best practices provide a benchmark for governance, risk management, and oversight in municipal investment programs.
According to GFOA best practices, professional investment advisors provide several key benefits to local agencies:
• Risk-Based Management: Professional advisors provide a multi-faceted approach to managing credit risk and maturity analysis.
• Portfolio Optimization: An advisor will assist in determining the optimal balance between liquid funds for unplanned expenditures and long-term investments to maximize yield.
• Fiduciary Oversight: The selected firm will act in a fiduciary capacity, ensuring all trades and strategies prioritize the safety and liquidity of City funds
The proposed RFP outlines a scope of services that includes monthly reporting to the City Council and an annual review of the City’s Investment Policy to reflect changing economic conditions and ensure compliance with evolving State laws. Engaging investment management and advisory services provides the City with access to experienced professionals and advanced strategies that can increase investment returns and identify new opportunities to further diversify its investment portfolio. These firms have dedicated professionals who consistently review and optimize the City’s portfolio, using advanced software to extract the latest data and analysis. While the City could purchase similar technology, effectively using it would require significant additional resources. Advisory firms already employ experts who use these systems efficiently to provide these services. By leveraging the resources of investment management and advisory services firms, the City can diversify investments, strengthen its financial position, and build a more resilient foundation for long-term growth.
Scope of Services: The draft RFP outlines a comprehensive scope of work for the selected firm, which includes:
• Discretionary Portfolio Management: Daily management and execution of trades for a designated core segment of the City’s approximately $107 million investment portfolio.
• Strategic Reporting: Provision of monthly performance reports and presentations to the City Council.
• Policy Compliance: Annual review and update recommendations for the City’s Investment Policy to ensure compliance with the California Government Code.
• Market Analysis: Continuous monitoring of economic conditions and credit-worthiness of investment holdings.
Staff has prepared the RFP documents (Attachments A, B, C, and D) and seeks to release the RFP by March 2026.
The proposed RFP schedule will be set as follows:
1. RFP Issue Date: March 1, 2026
2. Proposal Due Date: March 31, 2026
3. In-Person Oral Interviews: April 10, 2026
4. Anticipated Contract Award: April 21, 2026
Conclusion:
Staff recommends that the City Council approve the release of the Request for Proposals for investment management and advisory services. By engaging a professional fiduciary, the City would modernize its investment approach, improve financial oversight, and ensure the City’s portfolio is managed with the highest degree of safety and efficiency. This investment in professional services would strengthen the City’s internal financial processes and support the City Council's goal of long-term financial resilience. After evaluating the proposals and assessing the qualified firms, staff would return to the City Council for additional direction.
Reviewed for Fiscal Impact:
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Siamlu Cox
Administrative Services Officer/Finance Director
Attachments:
A. Investment Management and Advisory Services - Request for Proposal (RFP)
B. City of Signal Hill - Statement of Investment Policy
C. City Of Signal Hill - Professional Services Agreement for Investment Management and Advisory Services
D. City of Signal Hill - Schedule of Investments for December 2025