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HomeMy WebLinkAbout25D - AGMT 457 COMP PLAN SVCSREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: MARCH 5, 2019 TITLE: APPROVE AN AGREEMENT WITH BENEFIT FINANCIAL SERVICES GROUP FOR PLAN AND INVESTMENT ADVISORY SERVICES PERTAINING TO THE 457 DEFERRED COMPENSATION PLAN {STRATEGIC PLAN NO. 7,41 CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: ❑ As Recommended ❑ As Amended ❑ Ordinance on 11' Reading ❑ Ordinance on 2nd Reading, ❑ Implementing Resolution ❑ Set Public Hearing For CONTINUED TO FILE NUMBER Authorize the City Manager and Clerk of the Council to execute an agreement with Benefit Financial Services Group ("BFSG") for plan and investment advisory services ("services") pertaining to the 457 Deferred Compensation Plan for an initial three-year term beginning March 5, 2019 through December 31, 2022 for an annual not -to -exceed amount of $28,000, with a provision for a two-year extension exercisable by the City Manager and the City Attorney for an annual not -to -exceed amount of $28,000 for a total aggregate of $140,000 (including extension), subject to non -substantive changes approved by the City Manager and the City Attorney. DISCUSSION The City of Santa Ana offers full-time employees a 457 Deferred Compensation Plan ("plan" or "457 plan"), which was established in 1973, with the adoption of City Resolution 73-021, along with a corresponding US Internal Revenue Service approval. The plan is a voluntary deferral program that is separate and distinct from the CaIPERS pension system. Specifically, the establishment of this plan, pursuant to regulations in §457 of the Internal Revenue Code, provides participants an opportunity to supplement their CalPERS retirement by allowing them to defer a portion of their own current earnings on a pre-tax and/or after tax basis. Currently, the 457 Plan is administered through the Finance & Management Services Agency; and, as of January 31, 2018, the Plan holds $111.9 million in Plan Assets for 1,164 participants. Resolution 73-021 also established an oversight Committee to be appointed by the City Manager. The oversight of the Plan is now provided by the Plan Administrative and Investment Committee and the fiduciary responsibility lies within the Committee ("Committee"), which is comprised of the Executive Director of Finance, the Assistant Finance Director, the Treasury Manager and the Budget Analyst. Oversight activities conducted by the Committee include, but are not limited to: quarterly performance review of investments, analysis of investment options, maintaining and 25D-1 Agreement with Benefit Financial Services Group 457 Deferred Compensation Plan March 5, 2019 Page 2 revising, when necessary, the Plan's Investment Policy Statement, and ensuring the Plan's cost effectiveness. In addition, the Committee has utilized a third party consultant to assist in monitoring the plan and also to provide independent investment advice and analysis. As a best practice, staff issues Request for Proposals ("RFP") for every aspect of the plan every seven years. Most recently (October 2018), staff recommended and the City Council approved the selection of Prudential as the new plan provider and recordkeeper after a thorough competitive bidding process. The City Council also authorized staff to issue an RFP for Plan and Investment Advisory services related to the 457 Plan. Request for Proposals On November 21, 2018, staff issued an RFP for the aforementioned services. Four proposals were received and were evaluated by the Committee based on the following criteria: 1) Relevant Experience (30 pts); 2) Proposed Work Plan (30 pts); 3) Cost Proposal (30 pts); and 4) References (10 pts) The firms were ranked accordingly, as follows: Rank Firm 1 Benefit Financial Services Group "BFSG" 2 Has Group 3 Sa eView Advisory Group 4 Qualified Plan Advisors BFSG's proposal met and exceeded the Committee's requirements and needs in all areas. BFSG's strong qualifications, highly relevant experience, proactive and innovative service model and highly competitive fees will provide the best value for the plan and its participants. BFSG has extensive experience in assisting 457 Committees across Orange County and the state of California. STRATEGIC PLAN ALIGNMENT Approval of this item allows the City to meet Goal #7 Team Santa Ana, Objective #4 (Establish employee compensation that attracts and retains a highly qualified workforce). FISCAL IMPACT There is no fiscal impact associated with this action. All administrative fees pertaining to the services will be borne by the plan participants. Internal Revenue Code permits administrative reimbursement from plan assets, which will be utilized to offset fiduciary, advisory, participant education and staffing costs related to the management of the 457 Plan. Although the fees will be 25D-2 Agreement with Benefit Financial Services Group 457 Deferred Compensation Plan March 5, 2019 Page 3 reimbursed from plan assets, for illustrative purposes, the fees for these services per participant total to approximately $23.91 annually. Kat n Downs, CPA Executive Director Finance and Management Services Agency Exhibit: 1. BFSG Agreement AC 25D-3 25D-4 EXHIBIT 1 AGREEMENT TO PROVIDE INDEPENDANT INVESTMENT ADVISORY SERVICES PERTAINING TO THE CITY'S 457 DEFERRED COMPENSATION PLAN THIS AGREEMENT is made and entered into this 5th day of March, 2019 by and between Benefit Financial Services Group, LLC, a California Limited Liability Corporation and SEC registered investment advisor and wholly-owned, indirect subsidiary of Focus Financial Partners ("BFSG" or "Consultant"), and the City of Santa Ana, a charter city and municipal corporation organized and existing under the Constitution and laws of the State of California ("City"). RECITALS A. The City desires to retain a consultant having special skill and knowledge in monitoring investments and providing independent investment advice pertaining to the City's 457 Deferred Compensation Plan ("Plan') to assist the City's Plan Administrative and Investment Committee ("Committee") with oversight of the Plan. B. On November 21, 2018, City issued a Request for Proposal ("RFP") No. 18-102 for independent investment advisory services pertaining to the Plan. There were four proposals submitted in response and those proposals were evaluated by the Committee. Consultant was selected as the most qualified vendor. C. Consultant represents that it is able and willing to provide the requested independent investment advisory services to assist the Committee in monitoring the Plan as outlined in Consultant's proposal dated December 19, 2018 and submitted in response to City's RFP. D. In undertaking the performance of this Agreement, Consultant represents that it is knowledgeable in its field and that any services performed by Consultant under this Agreement will be performed in compliance with such standards as may reasonably be expected from a professional consulting firm in the field. NOW THEREFORE, in consideration of the mutual and respective promises, and subject to the terms and conditions hereinafter set forth, the parties agree as follows: 1. SCOPE OF SERVICES Consultant shall perform independent investment advisory services to assist Committee in monitoring the Plan as set forth in the scope of services, attached hereto as Exhibit A and as outlined in Consultant's proposal dated December 19, 2018 submitted in response to City's RFP incorporated by reference as though fully set forth herein in its entirety. 2. COMPENSATION a. City agrees to pay, and Consultant agrees to accept as total payment for its services pursuant to this Agreement, a flat fee of $28,000 a year. The total sum to be expended under this Agreement shall not exceed $281,000 annually. For the term of this Pagel of 9 25D-5 Agreement, ;the tofalzt�iot �q ex,eed amountrrincluding any optional extensions, shall be tom, N. b. Payment by City shall be made within 45 days (forty-five) days following receipt of proper invoice evidencing work performed, subject to City accounting procedures. Payment need not be made for work which fails to meet the standards of performance set forth in the Recitals which may reasonably be expected by City. kl YaR131 This Agreement shall commence on the date first written above for a term of three years expiring on December 31, 2022 unless terminated earlier in accordance with Section 15, below. This Agreement also includes one optional two-year extension exercisable by the City with the approval of the Consultant pursuant to a writing executed by the City Manager and approved as to form by the City Attorney. 5. INDEPENDENT CONTRACTOR Consultant shall, during the entire term of this Agreement, be construed to be an independent contractor and not an employee of the City. This Agreement is not intended nor shall it be construed to create an employer-employee relationship, a joint venture relationship, or to allow the City to exercise discretion or control over the professional manner in which Consultant performs the services which are the subject matter of this Agreement; however, the services to be provided by Consultant shall be provided in a manner consistent with all applicable standards and regulations governing such services. Consultant shall pay all salaries and wages, employer's social security taxes, unemployment insurance and similar taxes relating to employees and shall be responsible for all applicable withholding taxes. 6. OWNERSHIP OF MATERIALS This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). Consultant shall require all subcontractors to agree in writing that City is granted a non-exclusive and perpetual license for any Documents & Data the subcontractor prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data. Consultant makes no such representation and warranty in regard to Documents & Data which were provided to Consultant by the City. City shall not be limited in any way in its use of the Documents and Data at any time, provided that any such use not within the purposes intended by this Agreement shall be at City's sole risk. Page 2 of 9 25D-6 7. INSURANCE Prior to undertaking performance of work under this Agreement, Consultant shall maintain and shall require its subcontractors, if any, to obtain and maintain insurance as described below: a. Commercial General Liability Insurance. Consultant shall maintain commercial general liability insurance naming the City, its officers, employees, agents, volunteers and representatives as additional insured(s) and shall include, but not be limited to protection against claims arising from bodily and personal injury, including death resulting therefrom and damage to property, resulting from any act or occurrence arising out of Consultant's operations in the performance of this Agreement, including, without limitation, acts involving vehicles. The amounts of insurance shall be not less than the following: single limit coverage applying to bodily and personal injury, including death resulting therefrom, and property damage, in the total amount of $1,000,000 per occurrence, with $2,000,000 in the aggregate. Such insurance shall (a) name the City, its officers, employees, agents, and representatives as additional insured(s); (b) be primary and not contributory with respect to insurance or self-insurance programs maintained by the City; and (c) contain standard separation of insureds provisions. b. Business automobile liability insurance, or equivalent form, with a combined single limit of not less than $1,000,000 per occurrence. Such insurance shall include coverage for owned, hired and non -owned automobiles. C. Worker's Compensation Insurance. In accordance with the provisions of Section 3700 of the Labor Code, Consultant, if Consultant has any employees, is required to be insured against liability for worker's compensation or to undertake self- insurance. Prior to commencing the performance of the work under this Agreement, Consultant agrees to obtain and maintain any employer's liability insurance with limits not less than $1,000,000 per accident. d. Professional liability (errors and omissions) insurance, with a combined single limit of not less than $1,000,000 per claim with $2,000,000 in the aggregate. e. The following requirements apply to the insurance to be provided by Consultant pursuant to this section: i. Consultant shall maintain all insurance required above in full force and effect for the entire period covered by this Agreement. ii. Certificates of insurance shall be furnished to the City upon execution of this Agreement and shall be approved by the City. iii. Certificates and policies shall state that the policies shall not be canceled or reduced in coverage or changed in any other material aspect without thirty (30) days prior written notice to the City. iv. Consultant shall supply City with a fully executed additional insured endorsement. f. If Consultant fails or refuses to produce or maintain the insurance required by this section or fails or refuses to furnish the City with required proof that insurance has Page 3 of 9 25D-7 been procured and is in force and paid for, the City shall have the right, at the City's election, to forthwith terminate this Agreement. Such termination shall not affect Consultant's right to be paid for its time and materials expended prior to notification of termination. Consultant waives the right to receive compensation and agrees to indemnify the City for any work performed prior to approval of insurance by the City. 8. INDEMNIFICATION Consultant agrees to defend, and shall indemnify and hold harmless the City, its officers, agents, employees, contractors, special counsel, and representatives from liability: (l) for personal injury, damages, just compensation, restitution, judicial or equitable relief arising out of claims for personal injury, including death, and claims for property damage, which may arise from the negligent operations of the Consultant, its subcontractors, agents, employees, or other persons acting on its behalf which relates to the services described in section 1 of this Agreement; and (2) from any claim that personal injury, damages, just compensation, restitution, judicial or equitable relief is due by reason of the terms of or effects arising from this Agreement. This indemnity and hold harmless agreement applies to all claims for damages, just compensation, restitution, judicial or equitable relief suffered, or alleged to have been suffered, by reason of the events referred to in this Section or by reason of the terms of, or effects, arising from this Agreement. The Consultant further agrees to indemnify, hold harmless, and pay all costs for the defense of the City, including fees and costs for special counsel to be selected by the City, regarding any action by a third party challenging the validity of this Agreement, or asserting that personal injury, damages, just compensation, restitution, judicial or equitable relief due to personal or property rights arises by reason of the terms of, or effects arising from this Agreement. City may make all reasonable decisions with respect to its representation in any legal proceeding. Notwithstanding the foregoing, to the.extent Consultant's services are subject to Civil Code Section 2782.8, the above indemnity shall be limited, to the extent required by Civil Code Section 2782.8, to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant. V�Role) t7-111 Consultant shall keep records and invoices in connection with the work to be performed under this Agreement. Consultant shall maintain complete and accurate records with respect to the costs incurred under this Agreement and any services, expenditures, and disbursements charged to the City for a minimum period of three (3) years, or for any longer period required by law, from the date of final payment to Consultant under this Agreement. All such records and invoices shall be clearly identifiable. Consultant shall allow a representative of the City to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement during regular business hours. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to this Agreement for a period of three (3) years from the date of final payment to Consultant under this Agreement. Page 4 of 9 25D-8 10. CONFIDENTIALITY If Consultant receives from the City information which due to the nature of such information is reasonably understood to be confidential and/or proprietary, Consultant agrees that it shall not use or disclose such infonmation except in the performance of this Agreement, and further agrees to exercise the same degree of care it uses to protect its own information of like importance, but in no event less than reasonable care. "Confidential Information" shall include all nonpublic information. Confidential information includes not only written information, but also information transferred orally, visually, electronically, or by other means. Confidential information disclosed to either party by any subsidiary and/or agent of the other party is covered by this Agreement. The foregoing obligations of non-use and nondisclosure shall not apply to any information that (a) has been disclosed in publicly available sources; (b) is, through no fault of the Consultant disclosed in a publicly available source; (c) is in rightful possession of the Consultant without an obligation of confidentiality; (d) is required to be disclosed by operation of law; or (e) is independently developed by the Consultant without reference to information disclosed by the City. 11. CONFLICT OF INTEREST CLAUSE Consultant covenants that it presently has no interests and shall not have interests, direct or indirect, which would conflict in any manner with performance of services specified under this Agreement. 12. DISCRIMINATION Consultant shall not discriminate because of race, color, creed, religion, sex, marital status, sexual orientation, age, national origin, ancestry, or disability, as defined and prohibited by applicable law, in the recruitment, selection, training, utilization, promotion, termination or other employment related activities. Consultant affirms that it is an equal opportunity employer and shall comply with all applicable federal, state and local laws and regulations. 13. EXCLUSIVITY AND AMENDMENT This Agreement represents the complete and exclusive statement between the City and Consultant, and supersedes any and all other agreements, oral or written, between the parties. In the event of a conflict between the terms of this Agreement and any attachments hereto, the terms of this Agreement shall prevail. This Agreement may not be modified except by written instrument signed by the City and by an authorized representative of Consultant. The parties agree that any terns or conditions of any purchase order or other instrument that are inconsistent with, or in addition to, the terms and conditions hereof, shall not bind or obligate Consultant or the City. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which is not embodied herein. Page 5 of 9 25D-9 14. ASSIGNMENT Inasmuch as this Agreement is intended to secure the specialized services of Consultant, Consultant may not assign, transfer, delegate, or subcontract any interest herein without the prior written consent of the City and any such assignment, transfer, delegation or subcontract without the City's prior written consent shall be considered null and void. Nothing in this Agreement shall be construed to limit the City's ability to have any of the services which are the subject to this Agreement performed by City personnel or by other consultants retained by City. 15. TERMINATION This Agreement may be terminated by the City upon thirty (30) days written notice of termination. In such event, Consultant shall be entitled to receive and the City shall pay Consultant compensation for all services performed by Consultant prior to receipt of such notice of termination, subject to the following conditions: a. As a condition of such payment, the Executive Director of the Finance and Management Services Agency may require Consultant to deliver to the City all work product(s) completed as of such date, and in such case such work product shall be the property of the City unless prohibited by law, and Consultant consents to the City's use thereof for such purposes as the City deems appropriate. b. Payment need not be made for work which fails to meet the standard of performance specified in the Recitals of this Agreement. 16. WAIVER No waiver of breach, failure of any condition, or any right or remedy contained in or granted by the provisions of this Agreement shall be effective unless it is in writing and signed by the party waiving the breach, failure, right or remedy. No waiver of any breach, failure or right, or remedy shall be deemed a waiver of any other breach, failure, right or remedy, whether or not similar, nor shall any waiver constitute a continuing waiver unless the writing so specifies. 17. JURISDICTION -VENUE This Agreement has been executed and delivered in the State of California and the validity, interpretation, performance, and enforcement of any of the clauses of this Agreement shall be determined and governed by the laws of the State of California. Both parties further agree that Orange County, California, shall be the venue for any action or proceeding that may be brought or arise out of, in connection with or by reason of this Agreement. 18. PROFESSIONAL LICENSES Consultant shall, throughout the term of this Agreement, maintain all necessary licenses, permits, approvals, waivers, and exemptions necessary for the provision of the services hereunder and required by the laws and regulations of the United States, the State of California, the City of Santa Ana and all other governmental agencies. Consultant shall notify the City immediately and Page 6 of 9 25D-10 in writing of its inability to obtain or maintain such permits, licenses, approvals, waivers, and exemptions. Said inability shall be cause for termination of this Agreement. 19. MISCELLANEOUS PROVISIONS a. Each undersigned represents and warrants that its signature herein below has the power, authority and right to bind their respective parties to each of the terms of this Agreement, and shall indemnify City fully, including reasonable costs and attorney's fees, for any injuries or damages to City in the event that such authority or power is not, in fact, held by the signatory or is withdrawn. b. All Exhibits referenced herein and attached hereto shall be incorporated as if fully set forth in the body of this Agreement. 20. NOTICE Any notice, tender, demand, delivery, or other communication pursuant to this Agreement shall be in writing and shall be deemed to be properly given if delivered in person or mailed by first class or certified mail, postage prepaid, or sent by fax or other telegraphic communication in the manner provided in this Section, to the following persons: To City: Clerk of the City Council City of Santa Ana 20 Civic Center Plaza (M-30) P.O. Box 1988 Santa Ana, CA 92702-1988 Fax: 714- 647-6956 With courtesy copies to: Executive Director of Finance and Management Services City of Santa Ana 20 Civic Center Plaza (M-17) P.O. Box 1988 Santa Ana, CA 92702 Fax: 714-647-5414 Sonia R. Carvalho City Attorney City of Santa Ana 20 Civic Center Plaza (M-29) P.O. Box 1988 Santa Ana, California 92702 Fax: 714- 647-6515 25D-11 Page 7 of 9 To Consultant: Darren Stewart, J.D. Vice President and Secretary 2040 Main Street Suite 150 Irvine, CA 92614 A party may change its address by giving notice in writing to the other party. Thereafter, any communication shall be addressed and transmitted to the new address. If sent by mail, communication shall be effective or deemed to have been given three (3) days after it has been deposited in the United States mail, duly registered or certified, with postage prepaid, and addressed as set forth above. If sent by fax, communication shall be effective or deemed to have been given twenty-four (24) hours after the time set forth on the transmission report issued by the transmitting facsimile machine, addressed as set forth above. For purposes of calculating these time frames, weekends, federal, state, County or City holidays shall be excluded. IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year first above written. ATTEST: NORMA MITRE Acting Clerk of the Council APPROVED AS TO FORM: SONIA R. CARVALHO City Attorney By: Laura A. Rossini Senior Assistant City Attorney RECOMMENDED FOR APPROVAL: KATHYRN DOWNS, CPA Executive Director Finance and Management Services Agency CITY OF SANTA ANA STEVEN MENDOZA Acting City Manager BENEFIT FINANCIAL SERVICES GROUP Darren Stewart Vice President and Secretary Page 8 of 9 25D-12 EXHIBIT A SCOPE OF SERVICES 25D-13 Appendix ATTACHMENT 1 SCOPE OF WORK Introduction and Background The City of Santa Ana's full-time employee 457 Deferred Compensation Plan ("Plan") was established in 1973, with the adoption of City Resolution 7-21. Currently, the City's 457 Deferred Compensation Plan holds approximately $114 million in Plan Assets for 1,171 participants and is administered through the Finance & Management Services Agency. The Committee is comprised of the Executive Director of Finance, the Assistant Finance Director, the Treasury Manager and the Budget Analyst. The Committee recently transitioned the record keeping aspect of its 457 (b) Plan to Prudential on 10/1/2018. As such, the Committee is soliciting a firm that will work hand-in-hand with the Committee and Prudential in order to assist in the comprehensive management of the Plan. In addition, the Committee is considering adding a self-directed brokerage account to allow certain participants to invest in Mutual Funds outside of the Plan's official investment lineup. Description of Work The City of Santa Ana is seeking highly qualified firms to provide plan administration, investment and communication related services for the city's current 457 Deferred Compensation Retirement Plan. Such services include but are not limited to the following: Administrative: • Plan Design Compliance • Regulatory/technical guidance • Prepare annual Plan Provider cost analysis • Assist in the development of Request for Proposals for Plan Provider, when the RFP is needed • Assist in ensuring best practices are met in the interest of the participants Investment: • Conduct up to four quarterly reviews of investment options • Conduct due diligence on current investment options and make recommendations on alternative options • Assist in implementing fund changes and transitions • Maintain and revise the Investment Policy Statement for the Plan • Attend on-site meetings and provide recorded minutes for each meeting/conference call • Ensure best practices are met in the review & evaluation of investment options Communication: • Assist the Committee with developing marketing and education strategies for participants • Assist the Committee with developing marketing & education materials • Provide educational seminars that will supplement the seminars conducted by the Plan Provider Of