HomeMy WebLinkAbout2025-10-21 Finance Committee Agenda PacketFINANCE COMMITTEE
Regular Meeting
Tuesday, October 21, 2025
Community Meeting Room & Hybrid
5:30 PM
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participate in the meeting is located at the end of the agenda. The meeting will be broadcast on
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Meeting ID: 992 2730 7235 Phone: 1(669)900-6833
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1 October 21, 2025
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CALL TO ORDER
PUBLIC COMMENT
Members of the public may speak in-person ONLY to any item NOT on the agenda. 1-3 minutes depending on
number of speakers. Public Comment is limited to 30 minutes. Additional public comments, if any, will be heard at the
end of the agenda.
ACTION ITEMS
1.Review Risk Management and Insurance Program, Including Funding Status of the
General Liability Fund and Recommend the City Council Approve Amendments in the FY
2026 General Liability Fund Budget; CEQA Status - Not a Project
2.Investment Advisory Services Overview
FUTURE MEETINGS AND AGENDAS
Members of the public may not speak to the item(s)
ADJOURNMENT
2 October 21, 2025
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PUBLIC COMMENT INSTRUCTIONS
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teleconference, or by phone.
1.Written public comments may be submitted by email to city.council@cityofpaloalto.org.
2.For in person public comments please complete a speaker request card located on the
table at the entrance to the Council Chambers and deliver it to the Clerk prior to
discussion of the item.
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listed below. When you wish to speak on an agenda item hit *9 on your phone so we
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please limit your remarks to the agenda item and time limit allotted.
CLICK HERE TO JOIN Meeting ID: 992-2730-7235 Phone: 1-669-900-6833
Americans with Disability Act (ADA) It is the policy of the City of Palo Alto to offer its public
programs, services and meetings in a manner that is readily accessible to all. Persons with
disabilities who require materials in an appropriate alternative format or who require auxiliary
aids to access City meetings, programs, or services may contact the City’s ADA Coordinator at
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service.
3 October 21, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.
California Government Code §84308, commonly referred to as the "Levine Act," prohibits an
elected official of a local government agency from participating in a proceeding involving a
license, permit, or other entitlement for use if the official received a campaign contribution
exceeding $500 from a party or participant, including their agents, to the proceeding within the
last 12 months. A “license, permit, or other entitlement for use” includes most land use and
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procedures and have a value over $50,000. A “party” is a person who files an application for, or
is the subject of, a proceeding involving a license, permit, or other entitlement for use. A
“participant” is a person who actively supports or opposes a particular decision in a proceeding
involving a license, permit, or other entitlement for use, and has a financial interest in the
decision. The Levine Act incorporates the definition of “financial interest” in the Political Reform
Act, which encompasses interests in business entities, real property, sources of income, sources
of gifts, and personal finances that may be affected by the Council’s actions. If you qualify as a
“party” or “participant” to a proceeding, and you have made a campaign contribution to a
Council Member exceeding $500 made within the last 12 months, you must disclose the
campaign contribution before making your comments.
4 October 21, 2025
Materials submitted after distribution of the agenda packet are available for public inspection at www.paloalto.gov/agendas.
Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: October 21, 2025
Report #:2507-4955
TITLE
Review Risk Management and Insurance Program, Including Funding Status of the General
Liability Fund and Recommend the City Council Approve Amendments in the FY 2026 General
Liability Fund Budget; CEQA Status - Not a Project
RECOMMENDATION
Staff recommends that the Finance Committee review the report and recommend the City
Council amend Fiscal Year 2026 Budget Appropriation for the General Liability Fund within the
Mid-Year Report.
EXECUTIVE SUMMARY
For more than 40 years, the City has managed liability risk by participating in the Authority for
California Cities Excess Liability (ACCEL) risk pool. This shared pool approach, supported by the
City’s low number of claims and strong funding practices, has helped maintain a balanced
budget, even when a few larger claims arose. Careful cost control and responsible planning
continue to protect the City’s General Fund, public services, and capital projects.
Today, public agencies, especially those that operate utilities, face challenges such as rising
costs, large court verdicts, and a decline in insurers willing to take on their risk. These
challenges have prompted risk pools like ACCEL to raise insurance premium deposits for
member cities to fund higher reserves for future claims against them.1 Member cities, such as
Palo Alto, are also seeing an increase in the exposures the City must insure due to its payroll
growth, and how these factors affect insurance costs.2 Furthermore, the City’s broker estimates
insurance costs will continue to rise 15–25% each year through FY2028. These sustained
increases may push annual costs to over $9 million for excess liability insurance in the General
Liability Fund.
1 Reserves are money that is set aside to pay for insurance claims that have already happened but are not fully
paid yet or claims that may still be reported in the future.
2 Exposures are the people, property, or activities that could be harmed or cause a loss, and that an insurance
policy protects.
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To prepare for these rising costs, City staff will:
Propose using available fund balances to offset Fiscal Year 2026 increased expenses and
keep enough reserves for future claims; and
Propose a 20% increase in revenue and expenses for the General Liability Insurance
Fund for Fiscal Years 2027 and 2028 within the Long Range Financial Forecast.
Propose rebalancing the Workers’ Compensation and General Liability Funds to help
offset the projected 20% increase in liability costs and support future budget
sustainability across all funds. Continue following actuarial guidelines to maintain
appropriate reserves to fund liability and workers compensation claims.
BACKGROUND
The City of Palo Alto runs a comprehensive risk management and insurance program to protect
City employees, property, and public funds. Under the municipal code, the City Manager has
the authority to obtain and maintain insurance coverage.5 The City follows a careful and
conservative approach to funding its General Liability Insurance Fund. For the past several
years, the City has maintained a funding level of 85%. This is the top recommended range for
public entities.
Because Palo Alto is a full-service city with its own electric, gas, water, wastewater, and fiber
utilities, it faces more risks than most cities of its size. To manage this, the City has been a
member of the ACCEL risk pool for over 40 years. ACCEL is a risk pool, also known as a joint
powers group, which was formed in the 1980s when insurance was expensive and difficult to
obtain. By pooling liability risk with 12 other cities, the City can share costs, gain more stable
coverage, and use collective buying power in the insurance market.6 This model has
consistently provided the City with broader protection and lower long-term costs than if it
purchased insurance alone. Importantly, when the City recently experienced two larger claims,
ACCEL covered the costs above the City’s self-insurance, thereby allowing the City to avoid
using additional city funds.
To help run the risk pool and guide member cities, ACCEL works with Alliant Insurance Services.
Alliant Insurance Services serves as the administrator for ACCEL—the board of 13 cities votes
on this role. Alliant helps run the program, manages brokerage services, and provides expert
advice on renewals and coverage. Alliant also helps the pool buy excess liability insurance from
the commercial market.7 This partnership enables ACCEL and its members to strike a balance
between sound financial protection and affordable costs, while addressing the challenges of
5 Palo Alto Municipal Code 2.28.170 Insurance -
https://codelibrary.amlegal.com/codes/paloalto/latest/paloalto_ca/0-0-0-61670
6 ACCEL member cities are Anaheim, Bakersfield, Burbank, Modesto, Monterey, Mountain View, Ontario, Palo Alto,
Salinas, Santa Barbara, Santa Cruz, Santa Monica, and Visalia.
7 Excess liability insurance is extra coverage that pays after regular insurance is used up, helping protect against
very large claims or lawsuits.
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public sector insurance. While ACCEL and Alliant focus on regional risk-sharing, the City also
organizes its own risk management responsibilities within its departments.
ANALYSIS
City Risk Management
11. Above that, the City
participates in the ACCEL risk-sharing pool with 12 other cities, which provides an additional
$9.0 million in
coverage.
Through ACCEL
and commercial
insurance
companies, the
City maintains an
additional $55.0
million in excess
liability insurance.
The City has a
total of $65.0
million in liability
insurance.
11 General Liability covers accidents and incidents that result in bodily injury, property damage, medical expenses
and personal/advertising injury; SIR means the City chooses to retain the risk, rather than transfer it to an
insurance company, which would be very costly.
$70.0M $65.0M $65.0M
$60.0M
$60.0M $55.0M $55.0M $55.0M
$50.0M
$40.0M
$30.0M
$20.0M
$15.0M
Excess
Insurers
Layer #1
Excess
Insurers
Layer #1
Excess
Insurers
Layer #1
Excess
Insurers
Layer #1
Excess
Insurers
Layer #1
Excess
Insurers
Layer #1
$10.0M
$5.0M
$1.0M
2021 2022 2023 2024 2025 2026
Fiscal Year Fiscal Year
ACCEL
Pooled Layer
City Self-Insured Retention
Excess
Insurers
Additional
Layers
Av
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l
a
b
l
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L
i
m
i
t
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Table 1: Historical Limits of Liability Insurance available to the City through different layers
ACCEL
Pooled Layer
ACCEL
Pooled Layer
ACCEL
Pooled Layer
ACCEL
Pooled Layer
ACCEL
Pooled Layer
Excess
Insurers
Additional
Layers
Excess
Insurers
Additional
Layers
Excess
Insurers
Additional
Layers
Excess
Insurers
Additional
Layers
Excess
Insurers
Additional
Layers
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This layered strategy effectively covers the types of claims the City typically faces. Most claims
are handled well within the City’s $1.0 million retention, pooled coverage and excess insurance.
By maintaining $65.0 million in total coverage, the City balances the need for financial
safeguards to avoid excessive costs associated with rare, catastrophic claims. This approach
protects the City’s various funds, including the General and Enterprise Funds, while supporting
the long-term stability of a full-service city.
13. For earthquake risk, the City pays
the first $1.0 million of damages but does not buy separate earthquake insurance, as the cost is
high and the coverage is limited. Additionally, the City carries $50.0 million in Airport and
Terrorism insurance, $2.0 million in Pollution and Foreign Travel insurance, and $1.0 million in
Crime insurance14. These additional insurance coverages are standard for local governments,
providing protection for critical services and addressing risks such as property damage, cyber
incidents or specialized exposures.
13 Cyber risk is the chance of hacking, data theft, or system damage; Business interruption insurance helps replace
lost income and pay expenses if a disaster forces the City to close and pause services temporarily; Breach response
is fast action to handle and fix a data hack.
14 Foreign travel insurance protects city staff and council members when they travel abroad to a sister city,
covering emergencies like illness, accidents, or lost belongings.
Table 2: Insurance coverage limits carried by the City in Fiscal Year 2026
$1.5B $1.25B
$1.0B
$500.0M
$250.0M
$100.0M $65.0M $65.0M
$50.0M $50.0M
$50.0M
$10.0M
$5.0M
$4.0M
$3.0M
$2.0M $2.0M $2.0M
$2.0M
$1.0M $1.0M
$1.0M
$0
General and
Excess
Liability
Automobile
Liability Property Cyber
Liability Earthquake Pollution
Liability Crime Terrorism Foreign
Travel Airport
Fiscal Year
Co
v
e
r
a
g
e
L
i
m
i
t
s
Insurance Coverages
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While the City maintains broad insurance coverage, it must also navigate external market forces
that are driving up costs and reshaping how all public agencies manage risk.
Risk Management and Current Trends
17.
18. For Fiscal Year 2026, the Board voted to maintain higher reserves given the
economic landscape at the time. All of the reserve increases have kept the ACCEL pool
financially stable; however, they have also inevitably increased insurance premium costs for
each member city. Alongside these broad trends, the City’s own claims history and payroll size
also influence its share of costs.
19 . The City’s ex-
mod has remained below 1.0 for many years, ranging from 0.80-0.86. This is lower than the
national average and one of the lowest in the ACCEL risk pool. A low ex-mod shows that the
City’s strong safety and risk management practices are effective.
17 “Nuclear verdicts” are court cases where the jury awards more than $10 million, or where settlements are far
higher than the actual damages - The Rise of “Nuclear” Outcomes in Public Entity Civil Liability Actions
18 An actuary is a professional who studies data and risk to predict how likely certain events are and how much
they might cost. The City and ACCEL rely on actuaries to determine how much money to set aside for future claims,
so they stay protected and the budget in balanced.
19 The Experience Modification Rate is a factor that increases or decreases general liability insurance premiums,
based on the City‘s claims history. Below 1.0 means claims are lower, therefore insurance costs are lower. Above
1.0 means claims and costs are higher.
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Only in the last three years has the City faced two large claims, resulting in higher insurance
costs. These costs are applied through assessment fees23. The City was allocated $230K in
assessment fees for Fiscal Year 2026. Early forecasts show sustained increases in allocated
assessment fees over the next two fiscal years.
24. Currently, the City has the third largest payroll in the ACCEL pool, mainly due to the
City operating its own utilities. This means the City has more staff than many other cities of its
size. In Fiscal Year 2026, payroll grew by more than 20% due to cost-of-living adjustments and
staffing increases. Recruitment process improvements resulted in filling vacancies and a
corresponding increase in payroll expenses. This growth raises both the City’s exposure and its
share of insurance costs.
FISCAL/RESOURCE IMPACT
In Fiscal Year 2026, the General Liability Insurance Fund started with a $2.2 million balance
after setting aside $5.1 million for excess liability insurance costs. However, the actual cost for
Fiscal Year 2026 was $1.5 million higher, increasing the total excess liability insurance costs to
$6.6 million. To offset this increase, City staff recommends:
Preparing for a 20% yearly increase in excess liability costs through FY 2028. A 20%
yearly increase for Excess Liability insurance is derived from what the City’s insurance
broker and municipal risk pools are currently seeing across California. Recent renewals
for cities of similar size have shown premium increases ranging from 15% to over 25%.
By using 20%, we are aligning with those current market trends and choosing a
conservative approach with the goal of “avoiding a shortfall” or “achieving a balanced
budget”.
Using available fund balances to cover increased insurance expenses in Fiscal Year 2026.
Staff recommends appropriating $0.9 million from the General Liability Fund Ending
Fund Balance to increase funding for liability claims to $1.5 million as part of the FY 2026
Mid-Year Review to fund up to the first $1.0 million of each claim through its Self-
Insured Retention (SIR) and cover the costs of a settlement that is anticipated to be paid
out in FY 2026. The remaining fund balance in the General Liability Insurance Fund
would be approximately $1.2 million.
Following actuarial recommendations for reserves to pay for future claims within the
City’s Self-Insured Retention layer.
23 Assessments are additional payments the city must make to its insurance pool, ACCEL, when the cost of claims
exceeds expectations. These fees help cover the gap so that all claims can still be paid.
24 See footnote 2
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The projected excess liability expenses, as shown in Graph 1 below, may impact the long-range
financial forecast (LRFF) and will be incorporated into the upcoming LRFF development. Prior
forecasts reflected an average increase in excess liability expenses of 5%.
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
APPROVED BY: Lauren Lai, Administrative Services Director
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Finance Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Administrative Services
Meeting Date: October 21, 2025
Report #:2506-4819
TITLE
Investment Advisory Services Overview
RECOMMENDATION
Staff recommend that the Finance Committee receive and discuss an overview of the
investment advisory services to be performed by Chandler Asset Management.
BACKGROUND
Departments periodically review operations to identify opportunities to improve service
delivery and performance. Recently this was completed through a review of the Printing and
Mail functions overseen by the Administrative Services Department. In December 20231, Baker
Tilly also completed an audit of the City’s investment portfolio management and made two
recommendations that identified risk in the in-house staffing and key person risk that the City
could face in this often unseen but critical area. A blend of leveraging staff knowledge with a
professional, specialized firm addresses this audit recommendation and augments City
resources to better support and ensure service delivery continuity in an increasingly complex
economic and investment market.
As of August 31, 2025, the City investment portfolio, including Local Agency Investment Fund
(LAIF), is $541 million (market value), with purchase yield of 2.46%, weighted average maturity
of 3.03 years, Federal callable holdings of 60% portfolio, and the longest maturity of 9.64 years.
Earlier this year, staff recommended and via the FY 2026 Adopted Budget Council approved to
transition the City’s investment management from an in-house function to a specialized asset
portfolio management firm based on the size of the City’s investment portfolio and to leverage
the expertise of a professional firm in areas such as cash flow forecasting, investment advisory
and strategy services, and investment policy updates, along with active investment
management. After a formal procurement process, the City Council awarded a three-year
1 December 12, 2023, Policy & Services Committee, Item #5:
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=12186
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contract for investment management services to Chandler Asset Management, Inc. in June
2025.3 The City’s Section 115 Pension Trust Fund (Pension Trust) and its Retiree Medical Trust
Fund are managed separately by specialized firms.
As part of the FY 2026 budget adoption, City Council referred to Finance Committee the
workplan to review investment services.
ANALYSIS
This report provides an overview of the investment management services and deliverables
Chandler will be providing the City over the course of its contract and summarizes Chandler’s
initial observations and recommendations.
Investment Advisory Services - Implementation
Investment
Policy Review
Objective: Ensure that the City’s Investment Policy is aligned with State Law, Council
priorities, and objectives of how safety, liquidity, and yield are attained.
•Identify areas where the City’s Investment Policy can be updated to add significant
value, while mitigating credit and market risk.
Cash Flow
Analysis
Objective: Provide liquidity for the City’s operations, while reducing the costly effect of
maintaining shorter maturity investments.
•Understand budgetary needs on cash and liquidity requirements to structure effective
investment strategy based on patterns of cash use.
•Create buffer to help cover unexpected circumstances.
Develop
Investment
Strategy
Objective: Develop a customized investment strategy that is specific to the City’s financial
goals, within the context of State Code-mandated objectives of safety, liquidity, and yield.
•Identify appropriate benchmarks that reflect the risks undertaken and have similar
weighted average duration and credit profile as the portfolio.
•Aim to diversify allocation of the City’s portfolio, which is allocated relatively high in
Agency and Municipal sectors.
•To obtain a competitive return for short-term investments, review and present options
for alternative liquid investments, other than LAIF or money market savings accounts.
Active
Investment
Management
Objective: Constrain duration to a target by rebalancing through tactical sales before
maturity in order to 1) mitigate market risk and 2) capture inefficiencies in the bond market
that translate into higher return
•Provide credit analysis and assess risk of portfolio investments
•Work with the City’s third-party custodian (US Bank) for safekeeping. Chander does not
act as a custodian of assets in the account or have possession of any such assets.
•Provide detailed monthly and quarterly reports to Council of investment portfolio
activity.
Within the initial three months, Chandler promptly made insightful observations and
recommendations including cashflow analysis, banking and custodial arrangements, active
asset management strategy and investment policy. In accordance with rules, regulations and
policies, Staff has implemented some of these recommendations, except updating the City
investment policy which will be brought before the Finance Committee and Council in the
3 City Council, June 17, 2025: https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=83500
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annual process (spring 2026). Below is a summary of the recommendations implemented to
date.
Cash Flow Analysis and Liquidity
Chandler recommended bifurcating investment program between funds needed for short-term
cash needs versus longer-term funds not immediately needed. Further, utilize a combination of
LAIF and other solutions for short-term cash with income focused. While for longer-term funds,
implement a total return strategy with income and fair value focus.
Banking and Custodial Arrangements
Chandler recommended automation of daily sweeps on bank and custodial accounts to
eliminate manual daily transfers while optimizing interest earnings on idle funds. Previously,
Staff made daily manual transfers of interest payments and maturing funds between City bank
accounts. With banking account “sweep” services, these transfers are automated to streamline
City process and enabling investment earnings on idle funds.
Implement Active Management Investment Strategies
After Chandler reviewed State regulation, City investment policy, City investment asset
portfolio, and the City’s current investment management strategy. The City’s current
investment strategy and practices addressed safety, liquidity, and yield by purchasing higher
credit quality securities and positioning maturities so that they come due at a regular pace,
providing regular income. As of June 30, 2025, the City’s current portfolio duration is 2.81
years5, with majority of the City’s investments maturing in the one-year range (36.2% of the
portfolio) and over five years (24.9% years).
Chandler recommended the “Short Bond Strategy”, an active management strategy wherein
the majority of managed portfolio funds will range between one and five years yield-to-
maturity and average 2.5 years in duration rather than majority of investments having
maturities within one year and over five years.
Consistent with City investment policy, Staff will review and approve any sales before maturity
prior to transacting by Chandler. Staff has implemented the Investment Management Audit
recommendation to have a formal review and approval process for investment activities. With
the implementation of a clearly defined investment strategy and management directives,
Chandler is authorized to transact all reinvestments are and will occur in accordance with City
policy and California government code.
5 City Council, August 18, 2025, Investment Activity Report for the Fourth Quarter, Fiscal Year 2025, PDF p. 7:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83543&dbid=0&repo=PaloAlto
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Review and Update of City Investment Policy
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
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Investment Management Services
CITY OF PALO ALTO
There has been no lawsuit or litigation resulting from any public project undertaken by Chandler or from any
other type of project where claims or settlements were paid by Chandler or its insurers within the last five
years. We do not use subcontractors.
3.3 QUALIFICATIONS OF THE FIRM
This Section of the Proposal shall include a brief description of the Proposer’s and any sub-Proposer’s
qualifications and previous experience on similar or related projects. Separately complete and upload the
required attachment provided as "Qualifications of Firm Relative to City's Needs", provide descriptions of
pertinent project experience with other public municipalities and private sector entities, including a
summary of the work performed, the total project cost, the percentage of work the firm was responsible
for, the period over which the work was completed, and the name, title, and phone number of clients to be
contacted for references. Give a brief statement of the firm’s adherence to the schedule and budget for the
project.
This Section of the Proposal shall include information regarding any relationships with firms and/or
individuals that may submit proposals in response to the RFPs being developed.
Qualifications and Experience
Chandler’s fixed income and local government expertise is broad, spanning over 35 years and working with.
We have extensive experience working with over 200 public agencies including cities, counties, states, special
districts, and joint powers authorities, and over 165 public agencies in California as of December 31, 2024.
Moreover, Chandler has extensive experience in the area of northern California, in our capacity as the
investment adviser and manager for many of City of Palo Alto’s neighbors, including Cities of San Mateo,
Sunnyvale, South San Francisco, and also the City’s risk pool, Authority for California Cities Excess Liability
(ACCEL). Our expertise ranges from engagements in which Chandler is brought onboard to manage day-to-
Investment Management Support
Investment Management
Service and Communication
Attachment A - 1
Attachment A
Item 2
Attachment A - Chandler's
background, qualifications
and engagement team
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day operating portfolios, to engagements in which Chandler was hired to build an investment program that
did not previously exist. We are ready to offer guidance and support to staff with a disciplined, long-term
investment approach that aims to mitigate risks, provide competitive returns, and support the City’s
objectives.
Chandler’s founder, Kay Chandler and CFO, Martin Cassell, both worked at the County of San Diego as
investment officers, and an assigned contact for the City, Carlos Oblites, is the former Finance Director for
Central Marin Sanitation Agency. Chandler’s entire staff is committed to the public sector and understands
the specific needs and challenges public entities face due to their role and responsibility for effectively
managing their investment funds. Chandler’s experienced team of professionals are experts in the standards
of short and intermediate-duration fixed income management and utilize considerable analytical resources to
enhance the investment management practices of our clients. We work closely with our clients to address
specific investment objectives and risk tolerances as they relate to overall sound financial management, while
maintaining the focus and discipline to help guide portfolios through challenging market cycles. Our clients
select us as their investment manager because of our:
•Investment and credit review processes designed to work towards ensuring that our clients’ funds are
safe
•Expertise in State Codes that govern the investment of public funds
•Track record in establishing or expanding investment programs that support the budgetary goals of
our clients
•Ability to manage fixed income portfolios through changes in the interest rate cycle to the benefit our
clients
•Extensive experience serving public agencies. The combined experience of the Firm’s senior
shareholders as investment officers within large public agencies has shaped their perspectives in
leading a Firm with a focus on the management of public funds, and assistance of a public entity’s
staff in fulfilling their fiduciary duty to their constituents.
As a fiduciary, we work with clients on every aspect of the investment program, including overseeing that the
investment program supports the City’s financial goals. We also focus on analysis of risk and return,
investment policy development and review, and cash flow analysis and forecasting. All of the proprietary
tools and processes the Firm has developed are in response to public agencies’ unique investment objectives,
constraints, and requirements for adherence to state codes or statutes. Moreover, our portfolio management,
market research, credit analysis process, accounting, and reporting resources are extensive, and scalable to
meet additional needs. We also assist with models for accounting and journal entry, and work with clients
individually during onboarding and beyond to help them set up their internal accounting templates
Chandler manages portfolios that are comprised mostly of U.S. fixed income universe that align with our
clients’ objectives of safety, liquidity and return. In California, these are assets that are permitted by State
Code 53601 and 53635. The composition of Chandler’s portfolios includes high quality, short-term
investment-grade, U.S. dollar denominated securities including but not limited to U.S. Treasuries, Federal
Agencies, municipal bonds, negotiable CDs, corporate notes, supranational securities, asset-backed securities,
mortgage-backed securities, and commercial paper.
As of December 31, 2024, we managed $27.3 billion for California public agencies including $13 billion for
California cities, many of whom have investment policies and objectives similar to the City. Several of those
public agency clients have investment portfolios similar in size to the City. The following is a representative
list of the public agency clients we serve, with California cities in bold:
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background, qualifications
and engagement team
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Sample listing of the Firm’s public agency clients as of 12/31/2024 shown in alphabetical order. This list includes discretionary and non-
discretionary clients that have given permission to be listed. It is not known whether the listed clients approve or disapprove of Chandler
or the services provided. *Denotes consulting relationship only.
Attachment A - 3
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and engagement team
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The list includes Northern California clients as of 12/31/2024 listed alphabetically and only includes clients that have given permission to be listed. It is
not known whether the clients listed approve or disapprove of Chandler Asset Management and the investment advisory services provided. Includes
discretionary and non-discretionary relationships.
We have uploaded the required attachment "Qualifications of Firm Relative to City's Needs". In addition, for
your convenience, we are listing our references below:
Client Contact
Information Work Provided Dates of AUM*
City of Sunnyvale
456 W. Olive Avenue
Sunnyvale, CA 94086
Matt Paulin
Finance Director
(408)730-7380
mpaulin@sunnyvale.ca.gov
Discretionary
Management of
operating funds
2018 -
present $821 M
City of South San Francisco
400 Grand Avenue
P.O. Box 711
South San Francisco, CA 94080
Karen Chang
Finance Director
karen.chang@ssf.net
(650)829-6614
Discretionary
management of
operating funds
2009 -
present $280 M
City of San Mateo
330 W 20th Avenue
San Mateo, CA 94403
Finance Director
khuang@cityofsanmateo.org
(650)522-7110
Discretionary
management of
operating funds
2020 -
present $313 M
City of Dublin
100 Civic Plaza
Dublin, CA 94568
Administrative Services Director
(925)833-6648
jay.baksa@dublin.ca.gov
Discretionary
management of
operating funds
2013 -
present $301 M
* As of December 31, 2024
Attachment A - 4
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background, qualifications
and engagement team
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Investment Program Development
Our process for developing investment programs is innovative. We focus on the following areas of investment:
•Policy Development—Building investment policies that improve oversight, comply with State Code,
and afford flexibility.
•Cash flow Analysis—Identifying cash needs to meet the without sales before maturity and generating
strategies for both long-term and short-term funds.
•Strategy Development—Taking careful measure of the City’s earnings requirements and risk
tolerance to develop strategies that serves the City in any interest rate environment.
•Daily Management of Funds—Doing the heavy lifting of identifying opportunities, assessing security-
level risk, positioning duration, diversifying sectors, issuers, and maturities, and executing trades in
an efficient manner.
For the City, William Dennehy II, CFA, Co-Chief Investment Officer, and Aaron Nail, CFA, Portfolio Manager,
will collaborate with Carlos Oblites to provide daily management of the City’s funds, credit analysis, risk
mitigation, opportunity identification, and rebalancing.
We would also like to highlight the work we have done with the City’s neighbors including Cities of Sunnyvale,
Cupertino, San Mateo, South San Francisco, and Milpitas, as well as other regional cities such as Cities of
Dublin, Pleasanton, San Rafael, Monterey, and many others:
•Collaborated with city staff to strengthen investment policies
•Introduced capabilities to expand the investment offerings to increase diversification
•Provided efficient execution where lower prices/higher yields are achieved by taking advantage of our
network of 45+ broker/dealer relationships to shop around
• Assisted in the preparation of staff reports and other documents to communicate investment
outcomes to policy makers and other stakeholders, saving staff time
•Acted in a consultative capacity to help position investment programs to support broader financial
objectives
We are proud of our tenured relationship working with local governments in Northern California, across the
state, and nationwide.
3.6 PROJECT STAFFING
This Section of the Proposal shall discuss how the Proposer would propose to staff this project. Key project
team members shall be identified by name, title and specific responsibilities on the project. An
organizational chart for the project team and resumes for key Proposer personnel shall be included. Key
personnel will be an important factor considered by the review committee. Changes in key personnel may
be cause for rejection of the proposal.
The engagement will be managed by a tenured team of senior investment management and client service
professionals. Carlos Oblites, Senior Portfolio and Investment Pool Strategist will be responsible for the overall
management of the engagement. He will be supported by William Dennehy II, CFA, Co-Chief Investment
Officer, Aaron Nail, CFA Portfolio Manager, Aneil Murthy, Senior Relationship Manager, and Stacey Alderson,
CTP, Client Service Director. Carlos and Neil are based in the Firm’s Oakland and Marin County offices and will
serve as a local resource to the City. The Firm’s executive management team, additional investment
management professionals, operations, compliance, client service, and reporting professionals will serve the
City from our headquarters in San Diego. The engagement team profiles are provided below. Full professional
biographies are in the Appendix.
Attachment A - 5
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and engagement team
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Contact Name and Title Role in Engagement Education
Investment Management
Carlos Oblites
Senior Portfolio and
Primary Investment Contact and Engagement Lead
•Implements portfolio strategies
•Monitors alignment with client objectives and
policies
•Expertise in policy development and state legal
requirements
B.A. History, University of
California, Santa Barbara,
M.B.A., San Francisco State
University
Series 65 Registration
William Dennehy II, CFA
Co-Chief Investment Officer
Primary Portfolio Manager
•Co-leads the investment team
•Implements portfolio strategies
•Co-Chair of Credit Committee and Economic and
Market Analysis Committee
B.S. Business Administration,
California State University,
Chico; Chartered Financial
Analyst (CFA®)
Industry Tenure: 33 years | Firm Tenure: 14 years
Aaron Nail, CFA
Portfolio Manager
Portfolio Manager
•Assists with implementation of portfolio strategies
•Member of the Sector Committee and Credit
Committee
B.S. Finance, University of
North Carolina,
Chartered Financial
Analyst (CFA®)
Series 7 and 63 Licenses
Engagement Management & Client Service
Aneil Murthy
Sr. Relationship Manager
Client Service Lead
•Assists with onboarding process
•Oversees client communication
•Coordinates project deliverables
B.A. Political Science, University
of Connecticut
M.B.A., Post University
Series 7, 63, 65 Registration
CFA Certificate in ESG Investing
Industry Tenure: 16 years | Firm Tenure: 5 years
Stacey Alderson, CTP
Client Service Director
Client Service Contact
•Reporting requirements and Client Portal
•Schedules training and educational
presentations
B.B.A. Accounting, University of
Montevallo; Certified Treasury
Professional (CTP®)
Industry Tenure: 27 years | Firm Tenure: 11 years
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Contact Name and Title Role in Engagement Education
Compliance & Oversight
Nicole Dragoo, JD
Chief Executive Officer
Leads the Firm’s vision, oversight, and strategy
•Responsible for company culture, overall client
experience and achieving growth goals.
B.A. Business Economics, J.D.,
University of San Diego
Industry Tenure: 25 years | Firm Tenure: 24 years
Michael Rasmussen, JD
Chief Compliance Officer and
General Counsel
Oversees Firm’s compliance program
•Responsible for regulatory compliance, legal
matters, trade compliance, and Code of Ethics
B.S. Legal Studies, J.D., Nova
Southeastern University
Series 7, 14, 24, 51, 63, 65
Registrations
Industry Tenure: 12 years | Firm Tenure: 2 year
Carlos Oblites, Senior Portfolio Strategist and Investment Pool Strategist, is responsible for building and
maintaining client relationships with public agencies along with participating actively in the portfolio
management process. Carlos has 30 years of investment and financial experience, focused largely on
managing short-term fixed income and pension strategies for governmental and institutional non-profit
clients. Carlos currently serves as Co-Chair of the firm’s Multi Asset Class Committee. He also serves as a
member of the Government Finance Officers Association’s (GFOA) Committee on Retirement and Benefits
Administration (CORBA), which tracks new industry practices, regulatory and legislative developments, and
issues best practices to assist public pension and personnel officers effectively manage state and local
retirement funds and employee benefits. Prior to joining Chandler, Carlos served as the Administrative
Services Manager at Central Marin Sanitation Agency (CMSA) and was responsible for all aspects of the
Agency’s financial, human resources, administrative support, and information systems activities. He also has
significant expertise in serving California public agencies through his roles as Director at PFM Asset
Management, and as a Principal at Wells Capital Management.
Carlos holds a Bachelor of Arts degree in History from the University of California, Santa Barbara, and earned
a master’s degree in business administration from San Francisco State University.
William (Bill) Dennehy II, CFA, Co-Chief Investment Officer and Portfolio Manager, will provide oversight of
the City’s portfolios. Bill is on the Firm’s Executive Committee and Co-Chairs both the Economic and Market
Analysis Committee and the Credit Committee and is also a member of the Multi-Asset Class Committee. He
has over 30 years of experience working in various disciplines across the capital markets in New York, Chicago,
and most recently San Diego. Prior to his time at Chandler, Bill spent ten years working at Northern Trust
Global Investments, focusing on both investment-grade, high-quality total return strategies, and quantitative
investment strategies with a model-driven investment philosophy. Of particular emphasis during Bill’s thirteen
years at Chandler, has been collaborating with clients to expand their investment mandates to identify more
creative and robust investment solutions to meet client goals.
Attachment A - 7
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Aneil (Neil) Murthy, Senior Relationship Manager, joined Chandler in 2020. He has over a decade of
experience in finance servicing public agency and institutional clients. Neil’s area of focus is on the
development of client relationships in the public sector, and he serves as a relationship manager for existing
clients throughout California.
Prior to joining Chandler, Neil was a Relationship Manager for BNY Mellon Corporate Trust’s Public-Not-For-
Profit segment and was dedicated exclusively to California. Neil’s responsibilities included ensuring
satisfaction for the bank’s high value clients and seeking out new opportunities. In this role, Neil serviced
California cities, counties, special districts, and transportation authorities, and gained a broad understanding
of the specific investment needs and financial challenges these entities face. Neil also worked for The Hartford
Financial Services and served in a variety of client facing roles.
Neil is a graduate of the University of Connecticut with a Bachelor of Arts in political science and earned a
Master of business administration from Post University. Neil holds the FINRA Series 65 registration.
Stacey Alderson, CTP, Client Service Director, will provide support in serving the City and its staff. She oversees
the daily responsibilities of the client service team including client communication, client reporting, and
review/processing of client requested account activity. Stacey collaborates with all departments at Chandler
to respond to account-related questions and changes, as well as coordinates the onboarding process of new
client accounts.
Stacey began working in the financial services industry in 1998 through positions in both banking and asset
management. She earned her Bachelor of Arts in business administration with an emphasis in accounting from
the University of Montevallo. Stacey has received the designation as a Certified Treasury Professional (CTP®)
from the Association for Financial Professionals.
Nicole Dragoo, JD, the Firm’s Chief Executive Officer, joined the Firm in 2001 in an operations role and leads
the Executive committee, provides oversight of all aspects of the Firm and is responsible for the Firm’s
strategy, culture and administration of resources. She is passionate about cultivating a culture of shared
success by building a diverse and talented team of people dedicated to being stewards of the assets and
communities entrusted to us. Over her tenure Nicole has led the expansion of the operations, compliance,
legal and administrative functions as the Firm has grown. From 2008 to 2021, she served in the roles of Chief
Operating and Chief Compliance Officer and as President from 2021-2022.
Nicole earned her BA from the University of San Diego in business economics and her J.D. from the University
of San Diego School of Law. She is a member of the State Bar of California, the American Bar Association, the
San Diego County Bar Association, and the Southern California Compliance Group.
Michael Rasmussen, JD, Chief Compliance Officer/General Counsel, leads the day-to-day compliance
requirements, regulatory filings for the Firm, and Code of Ethics implementation and training. Michael
graduated from Nova Southeastern University Shepard Broad College of Law and is a licensed attorney in
Florida and a registered solicitor in the United Kingdom. He has passed the FINRA Series 7, 14, 24, 51, 63, and
65 examinations and has taught several courses on investment adviser compliance.
All the above professionals are supported by Chandler’s investment management, client service, marketing,
and operations teams to provide comprehensive service.
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The following chart represents the organizational structure specific to the engagement with the City.
City of Palo Alto Engagement Team
3.7 PROPOSAL EXEMPTIONS
This Section of the Proposal shall discuss any exceptions or requested changes that Proposer has to the
City’s RFP conditions, requirements and sample contract. If there are no exceptions noted, it is assumed the
Proposer will accept all conditions and requirements identified in the “Sample Agreement for Services.”
Items not excepted will not be open to later negotiation.
We have reviewed the information provided regarding the Agreement for Professional Services. Please
reference our Proposed Additional Terms for Agreement and Sample Investment Services Contract in the
Appendix.
3.8 PROPOSAL COSTS AND RATES
The fee information is relevant to a determination of whether the fee is fair and reasonable in light of the
services to be provided. Provision of this information assists the City in determining the firm’s
understanding of the project, and provides staff with tools to evaluate (and, if applicable, negotiate) the
cost.
This Section of the Proposal shall include the proposed costs to provide the services desired. The proposal
shall also detail any other relevant cost and price information (such as any change to the fees based on any
options a proposer is able to offer), plus a proposed not-to-exceed amount that would be contained in a
potential agreement with the City. The hourly rates or a schedule of rates may be used for pricing the cost
of additional services outlined in the Scope of Services. Supplementary to this RFP and any submitted
Proposal is the Cost Proposal Attachment provided with this RFP which must be upload electronically as
part of your Proposal.
Attachment A - 9
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background, qualifications
and engagement team
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