REQUEST FOR PROPOSALS INVESTMENT MANAGEMENT SERVICES Alameda Corridor Transportation Authority

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1 REQUEST FOR PROPOSALS INVESTMENT MANAGEMENT SERVICES Alameda Corridor Transportation Authority The Alameda Corridor Transportation Authority (ACTA) is soliciting proposals from firms interested in providing investment management services for ACTA funds. The average daily balance of the invested assets is approximately $220 million, consisting of bond funds, debt reserve and debt service funds, and operating funds. The investment of Alameda Corridor Transportation Authority funds is guided by the applicable State statutes and the Alameda Corridor Transportation Authority s investment policy. A copy of the Alameda Corridor Transportation Authority s Investment Policy is attached (as Appendix A) for your information. Background The Alameda Corridor Transportation Authority is a joint powers authority created in 1989 to oversee the design and construction of the Alameda Corridor Project. The ACTA Governing Board is a seven-member board representing the Cities of Los Angeles and Long Beach, the Ports of Los Angeles and Long Beach and the Los Angeles County Metropolitan Transportation Authority. The Alameda Corridor project is a 20-mile grade separated rail line that connects the Ports of Los Angeles and Long Beach to the transcontinental rail network in Los Angeles, thus consolidating 90 miles of rail operations into a single high capacity route. It has created a faster and more efficient way to distribute cargo throughout the United States, and to move U.S. exports to overseas markets. The Alameda Corridor opened for operations on April 15, 2002, and ACTA has and will continually administer the Maintenance and Operations of the Alameda Corridor. Scope of Required Services ACTA intends to select one or more investment managers for separate accounts that will consist of remaining bond construction proceeds, debt reserve funds, debt service funds (although the 1999 Series A and Series C principal and interest payments are invested in a forward purchase agreement), occasional grant funds, and any remaining operating funds (after satisfying debt service deposit requirements) from collection of fees charged to the Union Pacific and Burlington Northern Santa Fe Railroads. These funds must be invested in compliance with California law and ACTA s investment policy (included as Appendix A). ACTA proposes that the term of the contract for investment advisory and management services be for an initial period of five years with the option to renew for two consecutive two year periods at the discretion of ACTA. A proposed draft agreement is attached as Appendix B. 1

2 Specific responsibilities of the selected investment manager will include, but not be limited to the following: Assist the Authority in the execution of an investment strategy for each investment portfolio. Manage, on a daily basis, investments of ACTA s funds assigned to it pursuant to the specific investment objectives of the portfolio. Review cash flow projections developed by ACTA staff and its consultants to ensure that planned investments are consistent with cash requirements and cash flow projections. Provide monthly reports in a time frame required by the California Government Code. Monthly reports must include a mark-to-market valuation, a beginning balance, date, amount and description of each transaction, ending balance, investment earnings accrued, and investment earnings earned. For bond proceeds, reports must be kept in a manner that allows ACTA to prepare, or have prepared on its behalf, arbitrage rebate calculations. Maintain accurate records of all investments. These records must be available for periodic review and audit at any time, if necessary, by ACTA or other entities to whom ACTA has granted an audit right. Prepare quarterly performance reports and be available for performance review meetings at least quarterly, if required. Assist in preparation and presentation of an annual report to the ACTA Board. Proposer must meet all of the following minimum requirements in order to be considered by ACTA for the position of Investment Advisor and Manager: 1. The firm must manage a minimum of $1.0 billion in total domestic assets. 2. The firm must have a minimum of ten years experience in managing fixed income assets. 3. The firm must have a minimum of five years experience in managing fixed income assets for municipal entities. 2

3 Questions regarding this Request For Proposals should be directed to the following person no later than 5 p.m. Pacific Standard time on January 27, Sandy Doe Contracts Manager Alameda Corridor Transportation Authority One Civic Plaza, Suite 350 Carson, CA CRITERIA FOR SELECTION 1. Understanding of scope of assignment. 2. Experience and qualifications of firm and individuals assigned. 3. Recommended approach to management of the Alameda Corridor Transportation Authority s portfolio. 4. Familiarity with Federal arbitrage restrictions and state investment and reporting requirements. 5. Fees. SELECTION TIMETABLE Date: Proposals are due before 3:00 p.m. Pacific Standard time, February 8, Date: Interviews, if needed, will be at ACTA s offices during the week of: March 22, Date: ACTA Governing Board approval is anticipated on: April 8,

4 FORMAT FOR PROPOSALS Please format your response to this RFP in the following manner: I. Organization A. Describe organization, date founded, ownership and other business affiliations. Specify the number of years your organization has provided investment management services. B. Describe your firm s revenue sources (e.g., investment management, institutional research, etc.) and comment on your firm s financial condition. C. Describe any significant developments in your organization within the past three years (changes in ownership, new business ventures). Do you expect any changes in the near future? D. Describe any SEC censure, litigation or other regulatory compliance issues involving your organization, any officer, or employee occurring at any time during the last five years. E. Please identify the types of accounts managed by your firm (government, non-profit, pension, endowment/foundation, corporate, etc.). F. State the amount of professional/errors and omissions insurance coverage your firm carries. G. Please identify the location from which ACTA s funds will be managed. II. Personnel A. Identify the number of professionals employed by your firm, by classification. B. Provide an organization chart showing function, positions and titles of the investment professionals in your organization. C. Provide biographical information on investment professionals, including number of years at your firm that will be involved in the decision-making process for our portfolio. Identify the person who will be the primary portfolio manager assigned to the Alameda Corridor Transportation Authority s account. D. Please describe your firm s compensation policies for investment professionals. 4

5 III. Assets Under Management A. Summarize your institutional investment management asset totals by category for your latest reporting period in the following table: Operating Pension Bond Other Funds Funds Funds Funds Governmental $ $ $ $ Other Institutional $ $ $ $ B. Provide the number of accounts whose portfolios consist of bond proceeds. C. List in the following table the percentage by market value of aggregate assets under management for your latest reporting period. U.S. Treasury securities Federal Agency obligations Corporate securities rated AAA-AA Corporate securities rated A Corporate securities rated BBB or lower Other D. In the past 10 years, has anything happened to a portfolio that you were responsible for that required disclosure to the governing board? E. Has your firm purchased or held any corporate security, within the past five years, that was subsequently downgraded, during the period while it was held, to below the minimum credit rating standards required for purchase under the California Government Code? If so, please list in a schedule the credits involved and explain each such circumstance. F. Provide data on account and asset changes over the past five years. Indicate the number of accounts added and the number of accounts lost. G. List your five largest clients. Identify the type(s) of fund(s) managed and the contact name(s) for each. IV. Philosophy/Approach A. A. Describe your firm s investment philosophy for public clients. Briefly describe your firm s investment management philosophy regarding average duration, maturity, investment types, credit quality and yield. 5

6 B. Please describe the maturity concentration, quality and sectors of current accounts similar to the Alameda Corridor Transportation Authority. C. What are the primary strategies for adding value to portfolios (e.g., market timing, credit research, trading)? D. Describe the process you would recommend for establishing the investment objectives and constraints for ACTA. E. Do you have or would you recommend there be policy restrictions with respect to maturity, sector, quality, etc. which differ from ACTA s Investment Policy? F. Describe your firm s trading methodology. G. Describe your firm s investment decision-making process in terms of structure, oversight committees, meeting frequency, responsibilities, integration of research with portfolio management, etc. H. Provide a list of your firm s approved brokers/dealers. How are brokers/dealers selected? What process(es) do you have in place to monitor brokers/dealers performance after they have been approved? I. Describe your capabilities for tracking and reporting arbitrage in compliance with the Tax Act of V. Portfolio Management A. Are portfolios managed by teams or one individual? B. What is the average number of accounts handled per manager? C. Who will be the primary ACTA contact? Will this individual be the primary manager of ACTA s funds? D. How frequently are you willing to meet with us? E. Describe procedures used to ensure that portfolios comply with client investment objectives, policies and bond resolutions. 6

7 VI. Fees A. Please describe your firm s fee proposal. B. Is there a minimum monthly fee? C. Please provide a statement of fees for such additional services as arbitrage rebate related services. D. Are fees charged when there is not activity in the account? VII. References Please provide three client references, indicating duration of the relationship, client name, address and phone number. VIII. Performance Reporting (include sample copies of your reports as a proposal appendix) A. Please describe how you typically report performance. B. Are you willing to develop reporting procedures in line with our needs and objectives (i.e., monthly, so as to conform to State reporting requirements to management and governing bodies)? C. Are confirmations of investment transactions sent directly by the broker/dealer to the client? IX. Insurance Requirements Summarize coverage, errors and omissions, employee dishonesty, professional liability insurance, or other fiduciary coverage your firm carries. X. Agreement A form of service agreement is attached (as Appendix B). Please identify any terms or conditions with which your firm is unable to comply, or affirm that your firm is able to execute the agreement as presented. 7

8 XI. Submittal of Proposals Six copies of your proposal shall be submitted in a sealed envelope bearing the caption: [ ACTA Proposal for Investment Advisory Services ] and addressed to: Sandy Doe Contracts Manager Alameda Corridor Transportation Authority One Civic Plaza, Suite 350 Carson, CA Proposals shall be typed on 8 ½ x 11 paper, the pages numbered and a cover letter signed by an officer authorized to bind the proposer. Proposals for investment management services should not exceed 15 typewritten pages. Responses should be concise, clear, complete, and provide a straightforward description of the proposer s capabilities to accomplish the tasks in the RFP. Proposals may be delivered in person, by messenger, delivery service, or by mail. The 3 p.m. Pacific Standard time deadline cannot be extended for failure on the part of a delivery or messenger service or for delays in the U.S. Mail. Any proposal received after the deadline will be returned unopened. Notwithstanding this, ACTA reserves the right to extend the deadline and reserves the right to determine the timeliness of all submissions. Proposals should be verified before submission. The Alameda Corridor Transportation Authority will not be responsible for errors or omissions on the part of the proposer in preparation of a proposal. The Alameda Corridor Transportation Authority reserves the right to reject any and all proposals, to waive any irregularities, or informalities in the proposals, and to negotiate modifications to any proposal. ACTA will not be responsible for the cost of preparing an RFP or attending a selection interview, if necessary. 8