sr-022409-1bCity Council Meeting: February 24, 200c9~
Agenda Item: ~ ° B
To: Mayor and City Council
From: Carol Swindell, Director of Finance
Subject: Investment Management Services for the Cemetery and Mausoleum
Perpetual Care Funds
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a contract with RNC Genter Capital Management for investment management
of the Cemetery and Mausoleum Perpetual Care Funds.
Executive Summary
The City owns and operates Woodlawn Cemetery and Mausoleum. A portion of the
sale of each burial plot, crypt, or niche is set aside for perpetual care services and is
deposited into the Cemetery or Mausoleum Perpetual care fund, as appropriate. The
income from these funds is used to pay for perpetual care costs. The principal can only
be used for investment purposes. Investment guidelines, which are set by the City
Council, require retention of an investment manager for these funds since, unlike the
City's investment portfolio, a significant portion of the perpetual care funds are invested
in equities, which require a degree of investment expertise and continuous monitoring
not otherwise available to City staff. Staff recommends the execution of a contract with
RNC Genter Capital Management to provide these services. The term of the contract
will be three years with two one year options to extend. Funds are budgeted in account
37641.555060,
Discussion
RNC Genter Capital Management (RNC) has been the investment manager for the_
Cemetery and Mausoleum Perpetual Care funds since 1992. The contract with RNC
terminates on February 28, 2009. In January 2009, a Request for Proposal (RFP) for
managing the funds was sent to a number of investment managers. The following three
firms responded: RNC Genter Capital Management, The Private Bank (a division of
Wells-Fargo Bank), and Reed Connor and Birdwell, LLC. A selection team consisting of
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members of the Finance and Public Works departments reviewed the proposals and
interviewed all three firms. The firms' estimated fees based on the current portfolio size
($7.1 million) were:
RNC Genter Capital Management $42,600
The Private Bank (Wells Fargo) $56,500
Reed Connor Birdwell $58,250
The selection committee recommends that RNC Capital Management be awarded the
contract based on the firm's experience and expertise as an investment manager and
their knowledge of the portfolio's structure, strategic goals, and socially responsible
investment guidelines. During RNC's tenure as investment manager, the portfolio has
consistently performed at or above benchmarks. Additionally, RNC's proposed fees are
significantly less than those. of the other firms. The proposed contract term is three
years with two one-year options to extend.
Previous Council Actions
Council authorized an investment manager for the perpetual care funds in 1971. As
noted above, Council approved the retention of RNC Capital for these services in
February 1992. The contract was modified in July 2007, March 2008, and December
2008 to extend the term of the contract and increase the contract maximum amount.
Financial Impacts & Budget Actions
The annual fee for the investment management services will be 0.6% of the value of the
portfolio. The value of the account as December 31, 2008 was approximately $7.1
million.
Funds for the investment management of Cemetery and Mausoleum Perpetual Care
Funds are included in the Cemetery Fund budget in account 37641.555060, so no
budget change is required as a result of this action.
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Prepared by:
David R. Carr, Principal Budget Analyst-Investments
Approved: Forwarded to CounciL•
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Director of Finance
Ewell
ager
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Reference Contract No.
9039 (CCS)