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HomeMy WebLinkAboutResolution No. 2008-43Suggested by: Administration CITY OF KENAI RESOLUTION NO. 2008-43 A RESOLUTION OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, AWARDING A PROFESSIONAL SERVICES CONTRACT TO ALASKA PERMANENT CAPITAL MANAGEMENT INC. TO MANAGE THE AIRPORT PERMANENT FUND INVESTMENTS. WHEREAS, Ordinance 2326-2008 requires the Finance Director to contract out the management of the Airport Permanent Fund investments with one or more professional investment managers with experience handling institutional endowment investments; and, WHEREAS, Alaska Permanent Capital Management Inc. is an established professional money management firm located in Anchorage which has the necessary expertise and experience to manage the Airport Permanent Fund investments; and, WHEREAS, the proposed. fee is .30% per annum of the market value of the funds invested up to $10 million and .25% per annum of the market value of the funds invested between $10 million and $90 million and, WHEREAS, the fee is approximately $48,500 annually; and, WHEREAS, the Administration recommends the award of this contract. NOW, THEREFORE, BE I"I RESOLVED BY THE COUNCIL OF THE CI'i'Y OF KENAI, ALASKA, that the City Administration is authorized to execute a contract with Alaska Permanent Capital Management Inc. to manage the investments of the Airport Permanent fund according to the asset allocation set by resolution of the City Council. Performance shall be reviewed quarterly against the target allocations and the benchmarks set by Council. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of July 2008. ~ CJ ~~~ ~/~~~./ PAT PORTER, MAYOR AT//T~~EST: l~ v/ ~''~ Carol L. Freas, City Clerk Approved by Finance: (07/10/2008) hl <,~~~-~ _~_ ttieuyof KENA~ SKA gf'L '~1/i~~a~e u~it~t a Past, Ga~ rvit~i a Fr~tr~re ~~ 210 Fidalgo Avenue, Kenai, Alaska 99611-7794 ,, Telephone: 907-283-7535 /FAX: 907-283-3014 , ~ I I' i 1992 MEMO: TO: City Council FROM: Rick Koch DATE: July 10, 2008 SUBJECT: Resolution 2008-43, Professional Services Contract for Management of Airport Permanent Fund Investments The administration recommends Council approval of the above referenced Resolution. Alaska Permanent Capital Management presently manages over $ 2.2 billion in Alaskan accounts, maintains a strong track record of performance atld is highly regarded in the industry. The Ciry's former Finance Director, Larry Sermnens has worked with this firm during his tenure with the Alaska Retirement Management Board and they have exhibited strong performance. This is an exciting change to the mamier in which we manage the assets of the Kenai Municipal Airport. An investment strategy designed to produce increased rehuns over time is the appropriate strategy for a permanent fund, and one which we believe will provide increased returns to the airport as a component of an overall strategy designed to make the airporC financially self surficient. Thank you for your attention in this matter. PROFESSIONAL, SERVICES AGREEIYIENT Dated: THIS AGREEMENT made effective on the above-written date between City of Kenai, hereinafter "CLIENT" and Alaska Permanent Capital Management Company, hereinafter "INVESTMENT MANAGER." 1. Services of INVESTMENT MANAGER (a) This Agreement is for professional services to CLIENT. The INVESTMENT MANAGER shall perform the professional services described in Exhibit A, which is attached hereto and by reference made a part hereof. (b) The INVESTMENT MANAGER shall at the INVESTMENT MANAGER'S own expense furnish to CLIENT a copy of all information requested by CLIENT for review of the INVESTMENT MANAGER's services while in progress. (c) CLIENT shall provide the INVESTMENT MANAGER access in a timely manner, to those records, personnel and other items necessary for the INVESTMENT MANAGER to perform the services described in Exhibit A. 2. Compensation CLIENT shall compensate the INVESTMENT MANAGER for the services described in Exhibit A in the amounts and in the manner set forth in Exhibit B, which is attached ro rh;s ab eernent and by reference made a part hereof The IN~IESTMENT MANAGER shall receive no other compensation in connection with the purchase, sale or exchange of any investment for CLIENT and will not accept, or knowingly permit any of its officers or employees or any member of their immediate families to accept, any compensation, bonuses, commissions, rebates, discounts, gifts or any other thing of value from any other person or party in connection with any such purchase, sale or trade, provided that the receipt by the INVESTMENT MANAGER of research reports and materials or statistical data from a securities broker shall not be deemed to violate this provision. 3. General Provisions (a) Independent Contractor. The INVESTMENT MANAGER is an independent contractor. It is neither an employee, partner nor joint venture with CLIENT. (b) No Assignment. The INVESTMENT MANAGER may neither assign this agreement or any rights thereunder nor delegate any of its duties without first obtaining the written consent o£CLIENT. Page I of 9 (c} Insurance. The INVESTMENT MANAGER shall procure and maintain insurance coverage in such amounts as set forth in Exhibit B. The INVESTMENT MANAGER shall provide to CLIENT, upon request, certificates indicating .such insurance is in effect. The insurance shall be in effect upon the date of execution of this agreement and shall be effective through the term of this agreement. (d) Indemnity. To the fullest extent permitted by law, the INVESTMENT MANAGER shall indemnify, defend and hold harmless CLIENT from and against all claims, damages, losses and expenses, including but not limited to attorneys' fees, caused in whole or in part by any failure of the INVESTMENT MANAGER to comply with fiduciary standards or by any other breach of this Agreement by the .INVESTMENT MANAGER. The obligations of the INVESTMENT MANAGER described in this paragraph shall not extend to the liability of CLIENT, its agents or employees, arising out of the giving of or the failure to give directions or instructions by the custodian, its agents or employees provided such giving or failure to give is the primary cause of the injury or damage. The federal securities laws impose liabilities under certain circumstances on persons who act in good faith and therefore nothing herein shall in any way constitute a wavier or limitation of any rights which the undersigned may have under federal securities laws. (e) Ownership of Documents. All work. products prepazed by the INVESTMENT MANAGER in fulfilling its duties under this agreement shall be and remain the property of CLIENT and CLIENT shall have the right to use such products for any purpose without any further claim on the part of the INVESTMENT MANAGER for additional compensation. In the event that CLIENT uses the INVESTMENT MANAGER's work products for other than this project, CLIENT hereby agrees to hold the IPv JESTMENT ivSANAGER harmless from any claims arising therefrom. CLIENT may retain a copy of any work product prepared by the INVESTMENT MANAGER in fulfilling its duties under this agreement for CLIENT'S records. (f) Termination. CLIENT may terminate this agreement in whole or in part whenever for any reason CLIENT determines that such termination is in its best interest. Such termination shall be effected by personal delivery or by sending to the INVESTMENT MANAGER by certified mail notice of termination specifying the extent to which performance of work under this agreement is terminated. In the event of any termination, the INVESTMENT MANAGER shall be paid for services rendered to the date of termination. The date of termination shall be no earlier than the fifteenth calendar day after the INVESTMENT MANAGER'S receipt of the notice of termination. (g) Law and Venue. This agreement shall be governed by the laws of the State of Alaska. Venue for any legal proceeding relating to this contract shall be Anchorage, Alaska. Page 2 of 9 (h) Payment of Taxes. The INVESTMENT MANAGER shall not be responsible for the provision or payment of insurance, taxes or costs incurred by subcontractors or personnel not on the INVESTMENT MANAGER'S payroll. (i) Term. This agreement shall commence on , 200_ and shall be subject to termination in accordance with Section 3.(f) of this Agreement. (k) Notice. Unless otherwise provided herein, any notices or other communications required or permitted by this agreement to be delivered to CLIENT or the INVESTMENT MANAGER shall be in writing and shall be considered delivered when personally delivered to the party to whom it is addressed, or in lieu of such personal delivery, when deposited in the United States mail, certified, postage prepaid, addressed to CLIENT or the INVESTMENT MANAGER at the address set forth below: City of Kenai Attn: Finance 1Director 210 Fidatgo Avenue Kenai, AK 99611 Alaska Permanent Capital Management Company 900 West 5th Avenue, Suite 601 Anchorage, Alaska 99501-2029 (k) Entire Agreement. This agreement constitutes the entire agreement between CLIENT and the INVESTMENT MANAGER. It supersedes all prior oral and written understandings and agreements. It may be amended, supplemented, modified or canceled only by a duly executed written instrument. It shall bind CLIENT and the INVESTMENT MANAGER, its successors, executors, administrators, assigns and legal representatives. (1) Benefits. Nothing contained in this agreement shall be construed to give any rights or benefits hereunder to anyone .other than to CLIENT and to the INVESTMENT MANAGER. (m} Consultants. CLIENT reserves the right to enter into separate agreements directly with any INVESTMENT MANAGER for any services. 4. Form ADV II. CLIENT acknowledges receiving the INVESTMENT MANAGER's Form ADV Part II at least 48 hours prior to signing this contract. 5. Special Provisions. Any special provisions applicable to this agreement are set forth in Exhibit C. DATED the day and year written on Page 1. Page 3 of 9 City of Kenai By: Date: By: Date: AYaska Permanent Capital i'Ianagement Company By: Evan D. Rose Chairman and CEO Date: Page 4 of 9 EXHIBIT A The work which the INVESTMENT MANAGER is required to perform for this project consists of the following: 1. Appointment CLIENT hereby appoints the INVESTMENT MANAGER as INVESTMENT MANAGER of all securities and cash received by it from or for the account of CLIENT. The INVESTMENT MANAGER agrees to act in that capacity with regard to such securities and cash as a fiduciary, and upon the terms and conditions set forth. The INVESTMENT MANAGER shall advise CLIENT in the investment and reinvestment of assets of CLIENT and shall have full authority to make purchases and sales of securities for the account of CLIENT, subject to the provisions of Section 3 below. 2. Investment Account 2.1. Custody. Exclusive responsibility for the custody and safekeeping of the cash and securities under this agreement shall remain with the custodian and safekeeping agent (the "Custodian") to be designated in writing by CLIENT. All transactions, cash and securities, unless otherwise specifically agreed in writing by CLIENT, will be held in and transacted through an account held with the Custodian. CLIENT acknowledges and accepts responsibility in selecting a custodian. INVESTMENT MANAGER is not responsible for custodian's processes, procedures, safeguarding of client information or errors, and client hereby indemnifies INVESTMENT MANAGER for any losses associated with custodian actions. The INVESTMENT MANAGER agrees to cooperate with CLIENT and the Custodian, including but not limited to: (a) timely reporting of all transactional information to the Custodian; (b) reconciling security holdings and cash balances of the INVESTMENT MANAGER with similar reports by the Custodian; (c) cooperating in the identification and remedy of failed transactions; and (d) responding in a timely manner to all reasonable requests for information by the Custodian. Page 5 of 9 3. Services to be Perfformed 3.1. The INVESTMENT MANAGER is responsible for providing investment services to CLIENT and other funds as may be designated by CLIENT. In this capacity, the INVESTMENT MANAGER shall invest and reinvest the cash and securities from time to time allocated to it hereunder and deposited in the account, without distinction between principal and interest. The INVESTMENT MANAGER shall act as CLIENT'S fiduciary, and will discharge its duties with respect to the investments solely in the interest of CLIENT. 4. The INVESTMENT MANAGER will manage and invest the assets in a appropriate and prudent'manner in compliance with CLIENT'S Investment Policy. The performance of the INVESTMENT MANAGER will be measured against fixed income and equity indexes as outlined in CLIENT'S Investment Policy. 5. Authorization The INVESTMENT MANAGER is hereby authorized to invest or reinvest or dispose of any cash, either U. S. or non-U. S., or securities held in the Account and invest the proceeds of any disposition in accordance with section 3 above. 6. BrokeraEe and Commissions In carrying out its functions hereunder, the INVESTMENT MANAGER will use its best efforts to obtain prompt execution of orders at the most favorable prices reasonably obtainable and in doing so will consider a number of factors, including the overall direct net economic result to CLIENT, the financial strength and stability of the broker, the efficiency with which the transaction is effected, the ability to effect the transaction at all where a large block is involved, the availability of the broker to stand ready to execute possible difficult transactions in the future and other matters involved in the receipt of "brokerage and research services" as defined in and in compliance with Section 28(e) of the Securities Exchange Act of 1934, as amended, and regulations thereunder. 7. Rule of Prudence. In performing its services, the INVESTMENT MANAGER will follow the Prudent Man Rule. When evaluating investments, the INVESTMENT MANAGER will give appropriate consideration to the 1) composition and diversification of the portfolio, 2) liquidity of the portfolio, and 3) projected return of the portfolio. 8. Instructions All instructions given by the INVESTMENT MANAGER to the Custodian shall be in writing, signed by an authorized representative of the INVESTMENT MANAGER; provided, however, that the Custodian may accept oral instructions from the INVESTMENT MANAGER, subject to confirmation in writing within ten (10) business days. Fax or email transmissions may be used when acceptable to both parties. Page 6 of 9 9. Reports by the INVESTMENT MANAGER The INVESTMENT MANAGER shall deliver to CLIENT, or any person or persons designated by CLIENT: (a) monthly statements in such form as may be reasonably .directed by CLIENT or its designated agent. Such statements are to be delivered to CLIENT within 15 calendar days following month end, and shall include: (1) a listing of all cash and securities in the Account and their respective cost and market values in U. S. dollars as of the close of business on the last business day of each month; (2) a listing in chronological order of each purchase and sale transaction for the Account during the month; (3) a listing of transactions resulting in realized capital gains or losses in U. S. dollars during the month; (b) quarterly statements with investment performance and a narrative of economic analysis to include the INVESTMENT MANAGER's outlook for the next quarterly period. 10. Appearances The IlWESTMENT MANAGER will make a presentation to CLIENT at least annually and will be available to make additional presentations as CLIENT may desire. il. Representation of the INVESTMENT MANAGER The INVESTMENT MANAGER represents and warrants: (a) that it is an "investment advisor" as defined in the Investment Advisors Act of 1940, as amended; (b) that it has completed, obtained and performed all registrations, filings, approvals, authorizations, consents or examinations required by any government or governmental authority for acts contemplated by this Contract; and 12. Inspection CLIENT may, at reasonable times, inspect the INVESTMENT MANAGER's facilities and activities that are related to the performance of this contract, and audit the INVESTMENT MANAGER'S services. 13. Miscellaneous This Contract may not be amended or modified except by an instrument in writing signed by each of the parties hereto. The headings in this Contract are for convenience only and shall not expand, limit or otherwise affect the meaning hereof. The Contract may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. Page 7 of 9 EXHIBIT B (I} Comnensation. CLIENT shall pay to the INVESTMENT MANAGER as compensation for services the INVESTMENT MANAGER rendered in accordance with the terms of this agreement as follows: .30 of 1% annually on market value of assets under management up to $10,000,000 .25 of 1% annually on market value of assets under management over $10,000,001 Payable monthly, in arrears, and based on the month-end account market value, which includes accrued interest. The INVESTMENT MANAGER utilizes IDC pricing service to determine market value. (2) Reimbursables. Reimbursables shall include hotel and travel expenses outside of Anchorage, Alaska should such additional travel be requested and authorized in writing by CLIENT. The INVESTMENT MANAGER shall submit actual invoices for ail reimbursable expenses for which the INVESTMENT MANAGER seeks reimbursement hereunder. (3) Manner of Payment. CLIENT shall make payments to the INVESTMENT MANAGER as follows: The INVESTMENT MANAGER shall submit monthly invoices for services rendered. The invoice shall itemize the manner ih which the billing is calculated. Payment will be made by CLIENT by check or electronic payment. The INVESTMENT MANAGER does not have the authority to direct payment to itself from the investment account. (4) Insurance. The INVESTMENT MANAGER shall maintain the following insurance in accordance with Paragraph 3(c) of this agreement: (a) Professional Liability (b) General Liability (c) Statutory Workers' Compensation Protection Limit $5,000,000 aggregate $2,000,000 general aggregate $1,000,000 each accident Page 8 of 9 EXHIBIT C Proxy Voting INVESTMENT MANAGER, as a matter of policy and as a fiduciary to CLIENT, has responsibility for voting proxies for portfolio securities consistent with the best economic interests of CLIENT. INVESTMENT MANAGER maintains written policies and procedures as to the handling, research, voting and reporting of proxy voting and makes appropriate disclosures about our firm's proxy policies and practices. Due to the nature of our business and the types of securities held in CLIENT portfolios, INVESTMENT MANAGER votes proxies for all securities held in CLIENT accounts, including mutual funds, ETF, and debt instruments. INVESTMENT MANAGER does not vote proxies for individual equities. Individual securities are held in a CLIENT'S account as an accommodation to CLIENT, and are neither part of INVESTMENT MANAGER'S overall management strategy nor an appropriate focus for research. CLIENT are notified that we do not vote proxies for these types of securities and that we will arrange for CLIENT to receive these proxies directly should they choose to vote these proxies itself. Our policy and practice includes the responsibility to monitor corporate actions, receive and vote CLIENT proxies and disclose any potential conflicts of interest as well as making information available to CLIENT about the voting of proxies for their portfolio securities and maintaining relevant and required records. At any time, CLIENT may request INVESTMENT MANAGER's Proxy Policy and a record of proxies voted for their account. Page 9 of 9