HomeMy WebLinkAbout25M - AGMT - 3RD AMNDMNT GREAT-WEST FINANCIALREQUEST •'
COUNCIL • Illi:
r -
CITY COUNCIL MEETING DATE:
CLERK OF COUNCIL USE ONLY:
SEPTEMBER 19, 2017
TITLE:
ADOPT THE THIRD AMENDMENT WITH
APPROVED
❑
GREAT -WEST FINANCIAL FOR
❑
RECORDKEEPING AND COMMUNICATION
❑
❑
SERVICES PERTAINING TO THE 457
DEFERRED COMPENSATION PLAN WITH
O
SUPPORTING INVESTMENT & FIDUCIARY
PLAN ADVISORY SERVICES WITH
BENEFIT FINANCIAL SERVICES GROUP
{STRATEGIC PLAN NO. 7,4) �—
RECOMMENDED ACTION
As Recommended
As Amended
Ordinance on 1s'Reading
Ordinance on 2ndReading
Implementing Resolution
Set Public Hearing For
CONTINUED TO
FILE NUMBER
1) Authorize the City Manager and Clerk of the Council to execute a third amendment with Great -
West Financial, for recordkeeping and communication services pertaining to the 457 deferred
compensation plan for a three month period beginning October 1, 2017 through December 31,
2017, subject to non -substantive changes approved by the City Manager and City Attorney.
2) 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 pertaining to the
457 deferred compensation plan for a three month period beginning September 19, 2017
through December 31, 2017 for an amount not to exceed $10,000, subject to non -substantive
changes approved by the City Manager and City Attorney.
DISCUSSION
The City of Santa Ana's full-time employee 457 Deferred Compensation plan ("plan" or "457 plan") was
established in 1973, with the adoption of City Resolution 7-21, along with a corresponding US Internal
Revenue Service approval. The plan is a voluntary deferral program that is separate and distinct from
the CalPERS 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 current earnings and associated taxes until
retirement or separation.
The plan is administered through the Finance & Management Services Agency and as of June 30,
2017 maintains plan assets approximating $106.9 million with 1,172 participants. Great West Financial
("Great -West"), the Plan Sponsor, operating under its subsidiary Empower, has been engaged to
provide administrative, recordkeeping and communication services for the plan, including: providing
the portfolio structure (36 highly diversified options: mutual funds, bond funds, and fixed asset funds),
25M-1
Agreement with Great -West Financial & BFSG
September 19, 2017
Page 2
ensuring plan compliance with federal regulations, and offering various participant services (i.e.,
educational seminars, on-site consultation, & website services). In addition, included in this third
amendment are additional participant services that Great -West will now automate and manage,
including: Qualified Domestic Relationships Orders (QDRO), unforeseen emergency distributions, and
distributions due to separation.
In 2014, the City retained the services of Benefit Financial Services Group (BFSG) in order to enhance
employee's investment experience. City finance staff in conjunction with BFSG, negotiated with Great -
West to change the plan structure and thus enabling participants with greater fund transparency, better
access, and varied investment options. The negotiated agreement allowed for greater expansion of
fund selection and flexibility than provided under the former annuity -based contract. As a result of these
efforts, employees participating in the plan experienced significantly reduced management, fund and
participant fees.
The terms, conditions and services that were negotiated by the City in 2014 will remain in full effect.
The current plan and fee structure will remain unchanged and new services will be added within this
amendment.
Moreover, plan and fund -level detailed quarterly and annual reports are the required fiduciary
foundation for proper plan management, required plan participant education and plan transparency as
required by federal statutes. BFSG will assist the City with fiduciary requirements as well as plan
monitoring and investment analysis and recommendations as it relates to the 457 deferred
compensation plan.
The extension is requested in order for staff to evaluate the existing Plan structure including
recordkeeping and advisory services. Additionally, during the extension time period Staff will also
evaluate the plan holistically to determine the best investment and plan options to offer plan members.
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 felated to the management of the 457 Plan.
Executive Director
Finance and Management Services Agency
AC
Exhibits: 1. Agreement with Great -West Financial
2. Agreement with Benefit Financial Services Group
25M-2
Amendment No. 3
Attached to and Forming part of
AGREEMENT FOR RECORDKEEPING AND COMMUNICATION SERVICES
§457 Deferred Compensation Plan
GROUP #98280-01
THIS AMENDMENT NO. 3 is entered into by and between Great -West Life & Annuity Insurance
Company ("Great -West'), and/or any successor, assign or affiliate, and the City of Santa Ana ("the
Plan Sponsor") with respect to the services to be provided by Great -West to the City of Santa Ana 457
Deferred. Compensation Plan (hereinafter referred to as the "Plan").
Effective September 22, 2014,.Great-West and the Plan Sponsor entered into the Agreement for
Recordkeeping and Communication Services ("Agreement'), under which Great -West provides certain
recordkeeping-and:communicatiomservices for the Plan Sponsor with respect to the Plan; and
Effective December 10, 2015, Great -West and the Plan Sponsor entered into Amendment No.1
("Amendment No. 1") . to the Agreement, to renew the Agreement; and
Effective October 10, 2016, Gfeat-West hand the Plan Sponsor entered into Amendment NO -2
("Amendment No.2") to the Agreement, to renew the Agreement; and
Effective August 1, 2017, the term of the agreement was extended by Plan Sponsor and Great -West;
and
Great -West and the Plan Sponsor have agreed that it would be mutually beneficial to amend the
Agreement to include additional services.
NOW THEREFORE, in consideration of the covenants and conditions herein contained, and other
good and valuable consideration as herein provided, the parties agree to amend the Agreement as
follows:
1. Section IX Agreement Term and Termination is amended to extend the term of the Agreement
up to and including December 31, 2017.
2. Section II.M. of the Agreement shall be deleted in its entirety and all subsequent sections shall
be re -numbered accordingly.
3. A new Section I. shall be added to the end of Section III. as follows:
"I. Qualified Domestic Relations Orders
Plan Sponsor's approved model form of QDRO for the Plan is attached to this Agreement. Plan
Sponsor hereby instructs and authorizes Great -West to treat as qualified each QDRO received
by Great -West in good order using the model QDRO form, or a form that is similar in all material
respects to the model QDRO form. Plan Sponsor instructs Great -West to process the QDRO,
without Plan Sponsor's further approval, by establishing a separate account for the Alternate
Payee or making a lump sum distribution to the Alternate Payee. Plan Sponsor instructs Great -
West to send a copy of each QDRO confirmation or rejection letter to Plan Sponsor.
Exhibit 1
City of Santa Ana Service Agreement Amend No 3
25M-3
Plan Sponsor further instructs Great -West to process, without Plan Sponsor's further approval,
all requests, received in good order and in a manner acceptable to Great -West, for distributions
from Alternate Payee accounts established before or after the Effective Date. Plan Sponsor
instructs Great -West to calculate any Alternate Payee's QDRO amount based solely on the
Participant's account records on Great -West's recordkeeping system, and to reject any QDRO
that specifies a valuation date prior to the Effective Date.
Plan Sponsor agrees to make determinations with respect to any orders received that are not
materially similar to the model QDRO form for reasons other than the inclusion of a valuation
date that precedes the Effective Date."
4. A new Section J. shall be added to the end of Section III. as follows:
"J Distributions Due to Unforeseeable Emergencies
Plan Sponsor hereby instructs land authorizes Great -West to process, without Plan
Sponsor's further approval, all Participant requests, received in good order and in a manner
acceptable � totGreat-West.ifor i distributions due to unforeseeable emergency resulting in a
severe financial hardship to the Participant or Beneficiary that cannot be alleviated by any other
means.available to the Participant. Great -West shall only process such requests if they meet
the safe harbor defined, in the Treasury Regulations, as described below. Plan Sponsor further
instructs Great -West to rely on any and all representations made by a Participant in a request.
The following situations shall qualify for a distribution under this section:
1. An illness or accident of the Participant or Beneficiary, the Participant's or Beneficiary's
spouse, or the Participant's or Beneficiary's dependent (as defined in Code §152, and for
taxable years beginning on or after January 1, 2005, without regard to §152(b)(1), (b)(2) and
(d)(1)(B)):
2. Loss of the Participant's or Beneficiary's property due to casualty;
3. The following extraordinary and unforeseeable circumstances, if they arise as a result of
events beyond the control of the Participant or Beneficiary:
a) The imminent foreclosure of or eviction from the Participant's or Beneficiary's primary
residence;
b) The need to pay for medical expenses, including nonrefundable deductibles, as well as
the cost of prescription drug medication; and
c) The need to pay for the funeral expenses of a spouse or a dependent (as defined in
Code §152, and for taxable years beginning on or after January 1, 2005, without regard to
§152(b)(1), (b)(2) and (d)(1)(B)) of Participant or Beneficiary.
Except in extraordinary circumstances, the following are examples of situations that shall NOT
qualify for a distribution under this section:
1. Purchase of real estate;
2. Payment of college tuition;
3. Unpaid rent or mortgage payments, except in the event of imminent foreclosure
or eviction;
4. Unpaid utility bills;
5. Loan repayments;
City of Santa Ana Service Agreement Amend No 3
25M-4
5.
J
6. Personal bankruptcy (except when resulting directly and solely from illness,
f bl circumstances beyond
casualty loss or other similar extraordinary and un oreseea e
the Participant's or Beneficiary's control);
7. Payment of taxes, interest or penalties; or
8. Marital separation or divorce.
Plan Sponsor will make determinations with respect to any unforeseeable emergency
distribution request that does not clearly fall within the guidelines set forth above.
In the event of any changes to applicable
Treasury Regulations, Great -West may revise
time and without further notice to Plan Sponsor
in effect until revoked by either party.
law, including the safe harbor defined in the
this authorization and instruction from time to
This authorization and instruction shall remain
In order to receive this service, ,Plan Sponsor must also utilize Great -West's beneficiary
recordkeeping and deferral recordkeeping services.
For each , Participant receiving an unforeseeable emergency distribution, Plan
Sponsor instructs Great -West to notify Plan Sponsor to suspend elective deferrals for the period
required by the Plan, if any. Great -West is instructed to deny any request where the
unforeseeable emergency event ,occurred prior to the Effective Date, or more than one year
prior to the date the request is received. Great -West may contact Plan Sponsor for direction
when unusual situations arise. For each request that is denied or that cannot be processed due
to its failure to satisfy an unforeseeable emergency event, Plan Sponsor instructs Great -West to
notify the Participant to contact' Plan Sponsor if the Participant wishes to appeal the
determination."
Anew Section K. shall be added to the end of Section III. as follows:
"K Distributions Due to Severance from Employment for Reasons Other than Death or Disability
Plan Sponsor hereby instructs and authorizes Great -West to process, without Plan
Sponsor's further approval, Participant requests for distribution due to severance of
employment for any reason other than death or disability, provided such requests are received
in good order and in a manner acceptable to Great -West.
In order to receive this service, Plan Sponsor must also utilize Great -West's vesting tracking
service, if the Plan has a vesting schedule. If Plan Sponsor has not provided a Participant's
termination date or other required information, Plan Sponsor instructs Great -West to route the
request to Plan Sponsor for approval before processing the distribution. For spousal consent
purposes, Plan Sponsor instructs Great -West to rely on the marital status specified by the
Participant in the request form."
In all other respects the Agreement shall remain in full force and effect.
This Amendment No. 3 will take effect on September 30, 2017 (the "Effective Date") upon being
executed by both the Plan Sponsor and Great -West.
City of Santa Ana Service Agreement Amend No 3
[Signature page to follow]
25M-5
IN WITNESS WHEREOF, the parties have caused this Amendment No. 3 to the Agreement to be
executed, in duplicate, by their respective officers and agents thereunto duly authorized.
For The City of Santa Ana
Signature: _See attached signature page Date
Name:
Title:
For Great -West Life & Annuity Insurance Company
Signature:
Name:
Title:
City of Santa Ana Service Agreement Amend No 3
25M-6
Date
ATTEST:
MARIA HUIZAR
Clerk of the Council
APPROVED AS TO FORM:
SONIA R. CARVALHO
City Attorney
Laura A. Rossini
Senior Assistant City Attorney
RECOMMENDED FOR APPROVAL:
CITY OF SANTA ANA
CYNTHIA J. KURTZ
Interim City Manager
FRANCISCO GUTIERREZ
Executive Director of Finance and Management Agency
25M-7
Plan Sponsor's approved model form of Qualified Domestic Relations Order ("QDRO")
This is a Model Qualified Domestic Relations Order ("Model QDRO") that has been preapproved by Great -West for use by
the Plan for outsourced Qualified Domestic Relations Order ("QDRO") services. Although this Model QDRO conforms
with Federal QDRO requirements, it may need to be revised for state and/or local law andlor the specific requirements of the
Plan itself. Further, the format of the Qualified Domestic Relations Order may vary depending upon the rules of the court in
which the Participant obtains the Domestic Relations Order. For these reasons, this Model QDRO should be used only by
the Plan after consultation with the Plan's counsel. Any revisions to the Model QDRO must be submitted to Great -West for
approval for use with our outsourced QDRO services. Nothing contained in this Model QDRO shall be construed as tax or
legal advice.
It is recommended that a proposed version of this, order be submitted to Great -West with the body of the order filled in prior
to entry of this order for puiposes of your obtaining Great -West's preapproval of the proposed order.
Proposedand entered orders should be remitted to the Plan Recordkeeper as follows:
Great -West Retirement Services®
P.O. Box 173764
Denver, CO 80217-3764
Fax # (866) 745-5766
...............COURT, CITY OF ..................... COUNTY OF .............................
STATE OF .................................
IN RE THE MARRIAGE OF:
No
Petitioner, )
and )
Respondent QUALIFIED DOMESTIC RELATIONS ORDER
AND NOW, this day of 20_, based on the findings set forth below,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
Parties: The parties hereto were husband and wife, and a divorce action is in this Court at the above number. This
Court has personal jurisdiction over the parties. The parties were married on and divorced on
2. Participant Information: The name, last known address, social security number and date of birth of the plan
"Participant" are:
a. Name:
b. SSN:
C. Address:
d. Date ofB_irtlt:
3. Alternate Payee Information: The name, last known address, social security number and date of birth of the
"Alternate Payee" are:
a. Name:
City of Santa Ana Service Agreement Amend No 3
25M-8
b. SSN:
e. Address:
d. Date of Birth:
The Alternate Payee is the Participant's former spouse. The Alternate Payee shall have the duty to notify the Plan
Administrator and/or Recordkeeper of any changes in nailing address subsequent to the entry of this Order.
4. Plan Name. The name of the Plan to which this Order applies is the City of Santa Ana 457 Deferred Compensation.
Plan. (hereafter referred to as "Plan"). Any changes in the Plan Administrator, Plan Sponsor, or name of the Plan
shall not.affect Alternate Payee's rights as stipulated under this Order.
5. Effect of this Order as a Qualified Domestic Relations Order: This Order creates and recognizes the existence
of an Alternate Payee's right to receive a portion of the Participant's benefits payable under an employer-sponsored
defined contribution plan that is qualified under Section 457 of the Internal Revenue Code (the "Code"). It is
intended to constitute a Qualified Domestic Relations Order ("QDRO") under Section 414(p) of the Code.
6. Pursuant to State Domestic Relations Law: This Order is entered pursuant to the authority granted in the
applicable domestic relations laws of
.. 7. Provisions of Marital Property Rights:, -This Order relates to the provision of marital property rights as a result of
the Order of Divorce between the Participant and the Alternate Payee.
8. Amount of Alternate Payee's Benefit: ThistOrder assigns to the Alternate Payee an amount equal to [choose either
option 8Al or 8A2 below]:
8AI S of the Participant's Total Account Balance under the Plan as of the date this Order is processed.
OR
8A2 $ (dollars and cents) or _% (percent)] of the Participant's Total Account Balance accumulated
under the Plan as of I (or the closest valuation date thereto). The Alternate Payee's
benefit herein awarded shall be credited With any investment income (or losses) attributable thereon from the
aforesaid valuation date (or the closest valuation date thereto), until the date of transfer of the Alternate Payee's
share to the Alternate Payee.
(Note to drafting attorney: The Plan's current recordkeeper is not able to determine the value of the Participant's
account balance and any investment earnings and/or losses prior to The parties will need to
arrive at a dollar figure or percentage of benefits payable to the Alternate Payee as of a date that is no earlier than
The Plan's current recordkeeper can determine the account value and calculate any earnings
and/or losses from through the date assets are transferred or distributed to the Alternate Payee.
Keep in mind that if you must adjust the valuation date forward and a percentage is awarded to the Alternate Payee
in this section, you should consider whether to adjust the Alternate Payee's awarded percentage to account for any
additional contributions (and any gains/losses accruing thereon) made by or for the Participant to the account after
the originally intended valuation date.)
Such Total Account Balance shall be determined after the account is reduced by the outstanding balance of the
Participant's account reduction loan(s), if any, as of the valuation date specified above, such that the Account
Balance shall not include the outstanding balance of any account reduction loan(s) as of the valuation date. The
obligation to repay any Participant Plan loan(s) from and after the date of this Order remains solely with the
Participant. Such Total Account Balance shall include all amounts maintained under all of the various accounts
and/or sub -accounts established on behalf of the Participant, including rollover and transfer contributions.
The Alternate Payee's portion of the benefits described above shall be allocated on a pro rata basis first from all of
the core accounts and/or core investment options maintained under the Plan on behalf of the Participant other than
life insurance or Self -Directed Brokerage ("SDB"), if any. The Plan shall redeem amounts from a life insurance
contract, if any. issued for the Participant under the Plan only to the extent necessary to obtain the amount that this
order awards to the Alternate Payee. If there are any SDB investments, and if the balance in the core investments is
insufficient to satisfy the judgment, Participant must initiate a transfer of the amount needed to satisfy the judgment
From the SDB into the core investments. If participant fails to initiate such a transfer, or if the transfer is
City of Santa Ana Service Agreement Amend No 3
25M-9
insufficient to satisfy the judgment, one hundred percent (100%) of the SDB Money Market Fund will be
transferred to the core investments. If the balance is still insufficient to satisfy the judgment, the entire SDB
account may be liquidated and transferred to the core investments.
Unless the Alternate Payee elects an immediate lump sum distribution by the Plan at the time this Order is
submitted to, and approved by, the Plan, such benefits shall also be segregated and separately maintained in a
nonforfeitable Account(s) established on behalf of the Alternate Payee. This Accounl(s) will initially be established
proportionately in the sante core investment options as the Participant account. Alternate Payee may make
subsequent investment selections as and when permitted under the terns of the Plan. Alternate Payee's account
shall experience gains and or losses according to the investment experience of the investment options in which
Alternate Payee's share is invested.
9. Commencement Date and Form of Payment to Alternate Payee: If the Alternate Payee so elects on an
appropriate form, the benefits shall be paid to the Alternate Payee as soon as administratively feasible following the
date this Order is approved as a QDRO by the Plan. Benefits will be payable to the Alternate Payee in any form or
permissible option otherwise available to participants under the terms of the Plan, except a joint and survivor
annuity. The Alternate Payee will be responsible for paying any applicable withdrawal charges imposed under any
investment account(s) with respect to his or her share under the plan.
' 10. 'Alternate Payee's Rights and Privileges: tOn and after thedate that this Order is deemed to be a QDRO, but
before the. Alternate Payee receives a total distribution under the Plan, the Alternate Payee shall be entitled to all of
the rights and election privileges that are'afforded to Plan beneficiaries, including, but not limited to, the rules
regarding the right to designate a beneficiary for death benefit purposes and the right to direct Plan investments,
only to the extent permitted under the provisions of the Plan.
11. Death of Alternate Payee: In the event ofthe Alternate Payee's death prior to receiving the full amount of benefits
assigned under this Order and under the benefit option chosen by the Alternate Payee. such Alternate Payee's
beneficiary(ies), as designated on the 'appropriate form provided to the Plan or, in the absence of a beneficiary
designation, the remainder of any unpaid benefits under the terms of this Order shall be paid in accordance with the
terms of the Plan.
12. Death of Participant: Should the Participant predecease the Alternate Payee, such Participant's death shall in no
way affect the Alternate Payee's right to the portion of the benefits as stipulated herein.
13. Savings Clause: This Order is not intended, and shall not be construed in such a manner as to require the Plan:
a. to provide any type or form of benefits or any option not otherwise provided under the Plan;
b. to provide increased benefits to the Alternate Payee;
c. to pay any benefits to the Alternate Payee which are required to be paid to another alternate payee under
another order previously determined to be a QDRO: or
d. to make any payment or take any action which is inconsistent with any federal or state law, rule, regulation
or applicable judicial decision.
14. Certification of Necessary Information: All payments made pursuant to this Order shall be conditioned on the
certification by the Alternate Payee and the Participant to the Plan of such information as the Plan may reasonably
require from such parties.
15. Continued Qualified Status of Order: It is the intention of the parties that this QDRO continue to qualify as a
QDRO, as it may be amended from time to time, and that the Plan shall reserve the right to reconfirm the qualified
slams of the Order at the time benefits become payable hereunder.
16. Tax Treatment of Distributions Made Under This Order: For purposes Sections 402(x)(1) and 72 of the Code,
or any successor Code section, any Alternate Payee who is the spouse or former spouse of the Participant shall be
treated as the distributee of any distribution or payments made to the Alternate Payee under the terns of this Order,
and as such, will be required to pay the appropriate federal income taxes on such distribution.
City of Santa Ana Service Agreement Amend No 3
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17. Parties Responsibilities in Event of Error: In the event that the Plan inadvertently pays the Participant any
benefits that are assigned to the Alternate Payee pursuant to the terms of this Order, the Participant shall
immediately reimburse the Alternate Payee to the extent that the Participant has received such benefit payments by
paying such amounts directly to the Alternate Payee within ten (I0) days of receipt.
In the event that the Plan inadvertently pays the Alternate Payee any benefits that are to remain the sole property of
the Participant pursuant to the terns of this Order, if the Participant has experienced a distributable event under the
terns of the Plan, the Alternate Payee shall immediately reimburse the Participant to the extent that the Alternate
Payee has received such benefit payments by paying such amounts directly to the Participant within ten (10) days of
receipt. If the Participant has not experienced a distributable event under the terms of the Plan, the Alternate Payee
shall immediately return such overpayment to the Plan within ten (10) days of receipt.
18. Effect of Plan Termination: In the event of a Plan termination, the Alternate Payee shall be entitled to receive his
or her portion of the Participant's benefits as stipulated herein in accordance with the Plan's ternimation provisions
for participants and beneficiaries.
19. Continued Jurisdiction: The Court retains jurisdiction over this matter to amend this Order to establish or maintain
- — — its status as�a qualified domestic relations order, as amended and the original intent of the parties as stipulated
herein. ' The 'Court'shall also retain jurisdiction to enter such further orders as are necessary to enforce the
assignment of benefits to the Alternate Payee as set forth herein.
20. Fee: A processing fee of $250.00 shall be charged one-half ($125.00) against the Alternate Payee's share/account
and one-half ($125.00) against the Participant's remaining account. In the event that the Alternate Payee is awarded
100% of the. Participant's account balance as of the date this Order is processed pursuant to this Order, the entire
processing fee shall be charged to the Alternate Payee's account/share. If there are not sufficient funds in either
party's account to pay that party's respective share of the fee, the difference shall be charged to the other party.
BY THE COURT:
..............................................
JUDGE
.................................................
Petitioner
.................................................
Respondent
City of Santa Ana Service Agreement Amend No 3
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Important Note: Service Agreement Amendments, Pricing Change Agreements, and other contractual
documents must be duly executed by both parties prior to the effective date of the changes.
Backdating contracts or funding agreements is In violation of our corporate governance and regulatory
requirements. Changes cannot be implemented prior to the date all documents are fully executed,
even if that requires the effective date to be postponed. There are no exceptions to the rule that the
effective date must follow the date all documents are executed.
25M-12
AGREEMENT TO PROVIDE FIDUCIARY AND INVESTMENT
ADVISORY SERVICES PERTAINING TO THE
457 DEFERRED COMPENSATION PLAN
THIS AGREEMENT is made and entered into this 19th day of September, 2017 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 in providing
fiduciary advice in Plan and Investment Advisory services with the expertise to provide
quarterly investment analysis, recommendations, and reports pertaining to the City's 457
Deferred Compensation Plan including the design, solicitation and implementation of
customized solutions for deferred contribution plan and defined benefit plans. BFSG will
assist the City in the transition, monitoring of plan asset fund transfers and deposits from
the current structure with the City's 457 Plan Provider and Record -keeper to new modern
fund portfolio structure and subsequent Plan Provider Request for Proposal.
B. Consultant represents that it is able and willing to provide such services to the City.
C. 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 Fiduciary and Investment Advisory Services as set forth in the Scope of
Services, attached hereto as Exhibit A, and incorporated by reference.
2. COMPENSATION
a. City agrees to pay, and Consultant agrees to accept as total payment for its services, a
fee of $5,000 per quarter. The total sum to be expended under this Agreement shall
not exceed $10,000 during the term of this Agreement.
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.
Exhibit 2 Page l of 9
25M-13
3. TERM
This Agreement shall commence on the date first written above for a three (3) month term
through -December 31, 2017, unless terminated earlier in accordance with Section 15, below.
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.
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
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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
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: (1) 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 I of this Agreement; and (2)
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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.
9. RECORDS
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.
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 information 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.
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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
terms 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.
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 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
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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, not 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
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:
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25M-18
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
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.
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25M-19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the date and year first
above written.
ATTEST:
Maria D. Huizar
Clerk of the Council
APPROVED AS TO FORM:
SONIA R. CARVALHO
City Attorney
By:rl�cWi(LA.Qta , fIk-
LauraoA. Rossini
Senior Assistant City Attorney
RECOMMENDED FOR APPROVAL:
FRANCISICO GUTIERREZ
Executive Director
Finance and Management Services Agency
CITY OF SANTA ANA
Cynthia J. Kurtz
Interim City Manager
BENEFIT FINANCIAL
SERVICES GROUP
Darren Stewart
Vice President and Secretary
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25M-20
EXHIBIT A
SCOPE OF SERVICES
25M-21
BENEFIT FINANCIAL SERVICES GROUP
EXHIBIT A
FIDUCIARY ADVISORY SERVICES:
Prepare up to four Quarterly Investment Analysis Reviews for 457 Deferred Compensation Plan and meet
with Plan Administrator Committee and Plan Investment Committee up to four times providing
comprehensive Plan investment advisory and investment services.
1) Said Quarterly Review shall include, but not limited to:
• Market overview addressing the major markets, indices, sectors and the economic statistics
affecting them;
• In-depth portfolio summary, including fund and benchmark returns, style analysis and
overall portfolio return;
• Analyze the Plan asset allocation by fund and underlying sector. The fund line-up will also
be analyzed to determine the amount of overlap that may be occurring;
• Detailed quantitative and qualitative examination of each mutual fund investment option
within the Plan, including performance numbers versus the category and index, manager
style drift, risk/return, standard deviation, Sharpe Ratio, expense ratio, upside and
downside capture and fund allocation;
• Review City's Investment Policy to ensure it meets the needs of the City and that the
investments and processes outlined within are being adhered;
• Recommend possible fund alternatives when in conjunction with the Investment
Committee, it is determined a change in fund line-up is necessary;
2) Perform fund searches as needed and make "watch list" recommendations
3) Assist in fund change implementations and update transitions
4) Prepare annual cost analysis and negotiate with vendor to potentially lower overall costs and
recapture any excess revenues on behalf of Plan if applicable
5) Maintain and revise the Investment Policy Statement and Committee Charter as needed
6) Attend on-site meetings, and provide recorded minutes for each meeting or conference call
7) Assist in development of Request for Proposal for Plan Provider
25M-22