REQUEST FOR PROPOSAL

RFP No. 2026-007 Investment Advisory Services and Municipal

Financial Products Advisory Services

Issue Date: February 17, 2026 Closing Date & Time: March 9, 2026, 2:00 P.M. CT Opening Date & Time: March 9, 2026, 2:01 P.M. CT

For Information Contact:

Kasey Gamblin, Purchasing Manager, 254-750-8405, or kaseyg@wacotx.gov

RFP Opening Location:

Purchasing Services Office, 1415 N. 4th Street, Waco, Texas via Zoom Video Conferencing Only (Please see Page 3)

Zoom & Dial-In Information:

Please see Page 3

Purchasing Services Post Office Box 2570 Waco, Texas 76702-2570 Telephone 254 / 750-8060

Fax 254 / 750-8063 waco-texas.com

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services mailto:%20XXX@wacotx.gov mailto:kaseyg@wacotx.gov http://www.waco-texas.com/

EUNA / BONFIRE ELECTRONIC BIDDING

The City of Waco is transitioning to Electronic Bidding, Proposals and Qualification (RFB/RFP & RFQ) submissions. These requests will be managed through the new City’s database system, EUNA / Bonfire.

We ask vendors to register with EUNA / Bonfire to access and respond to any advertisement for bids and services required by the City. Registration is secure and user friendly. Vendors can register at the link below. Once registered, vendors will be able to:

• Register with the City of Waco.

• Receive notifications for bids and services requests from the City.

• Stay updated on changes, addendums, open solicitations.

• Submit bids and proposals electronically.

• Vendors can inquire about the details and requirements of various bidding opportunities.

The City will still accept bids and proposals by mail or drop off. Notifications of changes, addendums and updates will also be available on the City’s website as well as other media outlets the City uses for solicitations.

The City appreciates your participation. If you have questions during the electronic bid/proposal process, please contact the issuing buyer, whose contact information can be found in the solicitation document. You can also contact EUNA / Bonfire with registration or customer support issues.

Website links to assist you: waco-texas.bonfirehub.com/login

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services https://waco-texas.bonfirehub.com/login

ZOOM ACCESS INSTRUCTIONS & ADDITIONAL

INFORMATION

PRE-PROPOSAL

RFP NUMBER:

DATE:

TIME: CENTRAL

QUICK LINK:

MEETING ID:

DIAL IN NUMBER:

PASS CODE:

ADDITIONAL

INFORMATION:

No Pre-Proposal Meeting will be held for this project.

PROPOSAL OPENING

RFP NUMBER: 2026-007

DATE: March 9, 2026 TIME: CENTRAL 2:00 Central QUICK LINK: https://wacotx.zoomgov.com/j/1610789072?pwd=tJrAqZKHKCNl3D5ldb1IkvhbFT3oQh.1

MEETING ID: 161 078 9072

DIAL IN NUMBER:

PASS CODE: 285480

ADDITIONAL

INFORMATION:

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services https://wacotx.zoomgov.com/j/1610789072?pwd=tJrAqZKHKCNl3D5ldb1IkvhbFT3oQh.1

TABLE OF CONTENTS

Register Interest Form I. Schedule for Solicitation for Competitive Sealed Proposal II. Contact with City of Waco III. Definitions IV. Requested Services V. Request For Proposals – Submission and Award Procedures

Appendices A. Scope of Services and Specifications / Pricing Forms

(1) Detailed Scope of Services

(2) City of Waco Investment Policy

B. Contract Requirements

(1) City of Waco General Terms and Conditions

(2) Additional Terms for Service

(3) Insurance & Indemnification Requirements

(4) Sales Tax Information

(5) HB 89 Energy Form

(6) HB 89 Firearms Form

(7) HB 89 Israel Form

(8) HB1295 Information Sheet

(9) Foreign Terrorist Organization Form

(10) Protest Procedure

(11) Registered with the Texas Secretary of State

(12) W-9 Taxpayer Identification Form

(13) Electronic Funds Transfer Authorization (EFT Form)

C. Forms to Complete and Return

(1) Submission of Bid/Proposal and Acknowledgment of Addenda

(2) Business Identification Form

(3) Conflict of Interest Questionnaire (CIQ form)

(4) Disclosure of Relationships with City Council/Officers (City Charter)

(5) HUB Business Certification

(6) Litigation Disclosure

(7) Certification Regarding Debarment

(8) Non-collusion Affidavit

(9) Texas Public Information Act

(10) Drug Free Workplace

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services

RFP No. 2026-007 Investment Advisory Services and Municipal Financial Products

Advisory Services

Please Register for Notification

REGISTER INTEREST

You have received a copy of the above-described Request document. If you would like to register your interest in this project so that you will receive any future notices or addenda concerning the project, please fill in the information requested below and fax this page to 254-750-8063. You may also scan this page and email to: kaseyg@wacotx.gov.

Company/Firm:

Name of Contact Person(s):

Email(s):

Telephone: Fax:

Mailing Address:

It is your responsibility to complete and return this form to the City. Failure to do so will result in your not receiving notices and addenda related to this project from the City of Waco.

Notices and addenda are posted on the City’s website and can be accessed at: waco-texas.com/bids

City of Waco Purchasing Services Post Office Box 2570

Waco, Texas 76702-2570 Telephone 254 / 750-8060

Fax 254 / 750-8063 waco-texas.com

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services mailto:kaseyg@wacotx.gov.

http://www.waco-texas.com/purchasing-rules.asp http://www.waco-texas.com/purchasing-rules.asp http://www.waco-texas.com/

I. SCHEDULE FOR SOLICITATION COMPETITIVE SEALED

PROPOSAL

The proposed schedule of events is tentative and may be modified throughout the selection process at the discretion of the City of Waco.

• Issuance of the RFP February 17, 2026

• Deadline for questions in 5:00 P.M. February 27, 2026

• Proposals due by 2:00 P.M. March 9, 2026

• Proposal Opening at 2:01 P.M. March 9, 2026

• Evaluation of submission Mar. 9 – Apr. 9, 2026

• Interviews or Presentations may be conducted

Tentatively, the final selection decision will be made, and submitters will be notified of award by, April 9, 2026. This schedule is subject to change by the City.

II. CONTACT WITH CITY OF WACO

The contact person for this solicitation process is: Kasey Gamblin, Purchasing Manager who can be reached at:

Email: kaseyg@wacotx.gov Telephone: (254) 750-8405 Fax: (254) 750-8063

Questions concerning the solicitation can be submitted through the City of Waco’s eProcurement portal at waco-texas.bonfirehub.com/login (preferred) or by email to the contact person listed above.

Official Address (if needed) - City of Waco Purchasing Services

Attn: Kasey Gamblin, Purchasing Manager 1415 North 4th Street Waco, Texas 76707

Contact someone other than the Purchasing Agent listed above, or his/her designated representative at the City of Waco concerning this solicitation may be grounds for removal from consideration.

Interpretation, modification, corrections, or changes to the solicitation documents will be made by addenda issued by the City of Waco. Addenda will also be made available through the City of Waco’s eProcurement portal at waco-texas.bonfirehub.com/login or the City of Waco Website at waco-texas.com/bids. Interested professional service providers are encouraged to return the Register Interest form on the previous page.

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services mailto:kaseyg@wacotx.gov https://waco-texas.bonfirehub.com/login https://www.waco-texas.com/Departments/Purchasing/Open-Bid-Opportunities

III. DEFINITIONS

The following definitions apply to this document and the transaction between the City and the selected submitter unless otherwise designated in the context. Terms, which are singular, may include multiple, where applicable and when in the best interests of the City:

(1) “City” means and refers to the City of Waco, Texas.

(2) “Company” or “Firm” means and refers to any submitter, whether such submitter be a sole proprietor, corporation, company, partnership, company, or any other entity legally defined or recognized under the laws of the State of Texas.

(3) “Proposal” or “Submission” or “Submittal” refers to a response submitted to an RFP.

(4) “Project Review Committee” means a committee established by the City to review and score the submitted Proposals. The Committee may be composed of City of Waco staff, City Councilmembers, or their designees, or other individuals selected to serve on the committee by the City.

(5) “RFP” means and refers to this Request for Proposals.

(6) “Selected submission” means and refers to the submission sent to the City of Waco by the

Selected Firm.

(7) “Selected Firm” means the firm who is selected by the City and to whom the City Council/City

Manager awards a contract for the services or commodities requested in this solicitation.

(8) “Solicitation” means an RFP issued by the City Waco seeking products or services described in the document.

(9) “Submitter” or “Vendor” or “Proposer” or “Contractor” means a firm that submits a response to a solicitation.

(10) “Contract documents” includes the RFP and all of the Appendices attached to the RFP.

IV. REQUESTED SERVICES/PRODUCTS

A. Scope of Services / Specifications The City of Waco, Texas (the "City") is seeking qualified firms to provide professional advisory services in two distinct but complementary service areas:

Service Area 1: Investment Advisory Services under the Texas Public Funds Investment Act

Service Area 2: Municipal Financial Products (MFP) Advisory Service

Respondents may propose to provide services for one or both service areas. The City reserves the right to engage one firm for both service areas or separate firms for each service area, depending on the qualifications and expertise demonstrated by respondents.

(1) Detailed scope of services, and/or specifications are attached as Appendix A.

(2) A digital version of this document can be obtained from the City of Waco’s eProcurement portal at waco-texas.bonfirehub.com/login or the City of Waco Website at waco-texas.com/bids.

B. Terms Conditions & Requirements In addition to the specifications for the Project, the attached Appendices include the City’s Contract Requirements.

C. Reservations by City:

The City of Waco reserves the right to reject any and all submittals. The issuance of this solicitation does not obligate the City to contract for expressed or implied services. The City of Waco will not reimburse proposers for any costs incurred during the preparation or submittal of responses to this solicitation.

(1) Furthermore, the City expressly reserves the right to:

(a) Waive any defect, irregularity, or informality in any submittal or procedure.

(b) Extend the solicitation closing time and date.

(c) Reissue this solicitation in a different form or context.

(d) Procure any item by other allowable means.

(e) Waive minor deviations from specifications, conditions, terms, or provisions of the solicitation, if it is determined that waiver of the minor deviations improves or enhances the City’s business interests under the solicitation; and/or

(f) Extend any contract when most advantageous to the City, as set forth in this solicitation.

(g) Retain all proposals submitted and to use any ideas in a proposal regardless of whether or not that proposal is selected

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services http://www.waco-texas.com/bids.asp

V. REQUEST FOR PROPOSALS – SUBMISSION AND AWARD

PROCEDURES

A. Requirements

(1) Proposals should be kept to the minimum necessary length to explain the proposer’s attributes and pricing. Typed responses are preferred in Times New Roman, Arial or Calibri font.

Responses must be clear and may be subject to disqualification if illegible.

(a) Qualified firms should submit their qualifications through the City of Waco’s eProcurement portal at waco-texas.bonfirehub.com/login.

B. Completeness of Submission

(1) Proposers are responsible for examining and being familiar with all specifications, drawings, standard provisions, instructions, and terms and conditions of the solicitation and their responses.

(2) The proposer must attach all required forms with each submission copy. Forms must be signed by a representative of the proposer authorized to bind the proposer contractually. The proposer must include a statement identifying any exceptions to this RFP or declare that there are no exceptions taken to the RFP.

C. Response Date and Location

Responses to this solicitation must be received by 2:00 p.m. (Central Time) on March 9, 2026 through the City’s eProcurement portal (Bonfire).

The City will NOT accept a response submitted by facsimile transmission (fax) or by electronic mail (email).

All submissions and accompanying documentation will become the property of the City.

D. Modification to or Withdrawal of Submission Submissions cannot be altered or amended after the submission deadline passes. Submissions may be modified prior to the deadline by providing a written notice to the Purchasing contact person at the address previously stated. To modify a submission prior to the submission deadline:

(1) Submit a written notice of the modification WITHOUT revealing the pricing/cost or terms information. The modification should provide the addition, subtraction, or other modifications so that the final pricing/costs or terms will not be revealed to the City until the sealed proposal is opened.

(2) The written modification may be submitted by electronic transmission (fax or email or personal delivery to Purchasing Agent identified earlier in this document. The written modification must be received by the City prior to the closing time.

(3) If the modification is submitted through an electronic transmission (fax or email), the City must receive an original of the modification document signed by the proposer and submitted to a delivery company (UPS, FedEx, etc.) prior to the proposal closing time. If the original of the modification was not submitted to a delivery company prior to the closing time or is not received within three (3) days after the closing time of the bid, consideration will not be given

RFP 2026-007 Investment Advisory Services and Municipal Financial Products Advisory Services to the modifications provided in the electronic transmission.

A submission may also be withdrawn by providing the notice in person by a representative of the vendor who can provide proof of his authority to act for the proposer. The representative will be required to execute a receipt reflecting the submission is being withdrawn. If a submission is withdrawn before the submission deadline stated herein, the proposer may submit a new sealed proposal provided the new proposal is received prior to the closing date and time deadline stated on page 1. This provision does not change the common law right of a submitter to withdraw a submission due to a material mistake in the submission.

E. Submission Validity Period A submission responding to this RFP signifies the vendor’s agreement that the submission and the content thereof are valid for ninety (90) days following the submission deadline unless otherwise agreed to in writing by all parties. The submission may become part of the contract that is negotiated between the City and the successful proposer.

F. Cost to Develop Submission Costs for developing and assembling submissions in response to this solicitation are entirely the responsibility and obligation of the proposer and shall not be reimbursed in any manner by the City.

G. Evaluation Procedures The proposals will be initially reviewed and evaluated by a Project Review Committee. Each proposal should be as complete and accurate as possible. The City reserves the right to request additional information or clarifications, oral discussions, or presentations in support of the proposal.

H. Vendor Presentation The evaluation by the Project Review Committee will be presented to the City Manager or Executive staff, who will determine whether proposers may be invited to make a formal presentation of their proposal and/or sit for a panel interview. There is no obligation for the City to host interviews in order to make the final selection.

I. Final Selection Based on all information reviewed and presentations/interviews (if conducted), the City Manager or Executive staff shall establish the final ranking of the proposals.

(1) During the evaluation process, the City reserves the right, where it may serve the City’s best interest, to request additional information or clarifications from proposers.

J. Contact Award and Execution The final contract must be awarded and approved by the Waco City Council if the amount of the contract will exceed $100,000.00. If the contract is for less than that amount, depending on the amount, the contract may be executed by the City Manager, an Assistant City Manager, department head or director.

The Recipient, in accordance with the provisions of Title VI of the Civil Rights Act of 1964 (78 Stat. 252, 42 U.S.C. §§2000d to 2000d-4) and the Regulations, hereby notifies all bidders that it will affirmatively ensure that any contract entered into pursuant to this advertisement, disadvantaged business enterprises will be afforded full and fair opportunity to submit bids in response to this invitation and will not be discriminated against on the grounds of race, color, or national origin in consideration for an award.

APPENDIX A

Scope of Services and Specifications / Pricing Form

(1) Detailed Scope of Services

(2) City of Waco Investment Policy

CITY OF WACO, TEXAS

REQUEST FOR PROPOSALS

INVESTMENT ADVISORY SERVICES AND

MUNICIPAL FINANCIAL PRODUCTS ADVISORY SERVICES

1. INTRODUCTION

The City of Waco, Texas (the "City") is seeking qualified firms to provide professional advisory services in two distinct but complementary service areas:

Service Area 1: Investment Advisory Services under the Texas Public Funds Investment Act

Service Area 2: Municipal Financial Products (MFP) Advisory Services

Respondents may propose to provide services for one or both service areas. The City reserves the right to engage one firm for both service areas or separate firms for each service area, depending on the qualifications and expertise demonstrated by respondents.

2. SERVICE AREA 1: INVESTMENT ADVISORY SERVICES

2.1 Purpose and Scope

The City seeks to engage a qualified investment advisor to provide sub-advised discretionary investment advisory services for the City's investment portfolio in full compliance with the Texas Public Funds Investment Act (TFPIA). The selected advisor will serve as a fiduciary to the City and will provide comprehensive oversight, independent analysis, and quarterly reporting on all investment activities.

2.2 General Qualifications for Service Area 1

The investment advisor must demonstrate:

• Registration as a Registered Investment Advisor (RIA) with the U.S. Securities and Exchange Commission or appropriate state securities regulator

• Minimum of five (5) years of experience providing investment advisory services to Texas public entities subject to the TFPIA

• Demonstrated expertise in Texas public funds investment management and TFPIA compliance

• Fiduciary commitment to act solely in the best interest of the City

• Independence from broker-dealers, banks, and investment product providers (no material conflicts of interest)

• Professional staff with relevant certifications (CFA, CFP, or equivalent)

• Experience working with municipalities of comparable size and complexity

2.3 Core Investment Advisory Services

The selected investment advisor shall provide the following services:

A. Investment Strategy and Policy Development

• Review and recommend updates to the City's Investment Policy to ensure compliance with TFPIA and best practices

• Develop and maintain written investment strategies aligned with the City's cash flow needs, risk tolerance, and TFPIA requirements

• Assist in establishing appropriate investment objectives, performance benchmarks, and risk parameters for different fund types

• Provide guidance on permitted investments under TFPIA and the City's Investment Policy

B. Investment Oversight and Due Diligence

• Provide comprehensive oversight of all investment purchases and transactions

• Conduct independent due diligence on proposed investments, including credit analysis and suitability assessment

• Review and approve all investment transactions prior to execution to ensure compliance with TFPIA, the City's Investment Policy, and prudent investment practices

• Monitor ongoing creditworthiness and risk characteristics of existing portfolio holdings

• Evaluate and recommend qualified broker-dealers and financial institutions for the City's authorized list

• Demonstrate a robust methodology for sourcing and selecting securities for the portfolio

• Leverage multiple trading desks, counterparties and sources of liquidity to ensure best execution on the purchase and potential sale of securities

C. Safekeeping and Custody Oversight

• Oversee safekeeping arrangements for all City investments

• Review and recommend custodial service providers

• Assess custodial fee structures and secure competitive pricing

• Verify proper delivery, settlement, and custody of securities

• Reconcile custodial statements with City records

• Ensure all securities are held in the City's name or in a manner that protects the City's ownership interest

• Monitor compliance with collateralization requirements for deposits and repurchase agreements

• Maintain a robust cyber-security program and demonstrate business continuity capabilities

D. Portfolio Management Guidance

• Provide ongoing recommendations for portfolio composition, duration, and diversification

• Assist City staff in developing trade execution strategies

• Monitor market conditions and provide timely market intelligence

• Recommend portfolio adjustments in response to changing market conditions, cash flow needs, or regulatory requirements

• Advise on the timing and structure of specific investment transactions

E. Performance Monitoring and Reporting

• Prepare comprehensive quarterly investment reports for submission to the City Council, including:

• Summary of investment holdings by type, maturity, and book value

• Summary of investment activity during the quarter (purchases, calls, maturities)

• Portfolio performance compared to established benchmarks

• Compliance certification with TFPIA and the City's Investment Policy

• Market value analysis and unrealized gains/losses

• Portfolio characteristics (weighted average maturity, yield, duration)

• Cash flow analysis and liquidity assessment

• Provide written certification that the investments comply with TFPIA and the City's Investment Policy

• Present quarterly investment reports to the City Council or designated committee as required

• Provide ad hoc reports and analysis as requested by City staff or leadership

F. Regulatory Compliance

• Maintain current knowledge of TFPIA requirements and updates

• Ensure all investment activities comply with TFPIA, City Investment Policy, and applicable laws

• Assist with annual Investment Policy review and adoption process

• Support GFOA and Texas Comptroller reporting requirements

• Coordinate with external auditors on investment-related audit matters

• Provide training to City staff and officials on TFPIA requirements and investment best practices

• Alert the City of any regulatory changes that may require adjustments to the Investment

Policy

2.4 TFPIA-Specific Requirements

The investment advisor must demonstrate expertise in all aspects of the Texas Public Funds Investment Act, including but not limited to:

• Authorized investments under TFPIA Section 2256.009

• Investment strategies under TFPIA Section 2256.005(e)

• Qualified broker and investment pool requirements

• Diversification and concentration limits

• Maximum stated maturity limitations

• Collateralization requirements for deposits and repurchase agreements

• Quarterly and annual reporting requirements

• Investment officer and advisor training requirements

• Conflicts of interest and disclosure requirements

2.5 Deliverables for Service Area 1

• Comprehensive quarterly investment reports delivered within 30 days of quarter end

• Annual Investment Policy review and recommended updates

• Presentations to City Council or designated committee as needed

• Ad hoc reports and analysis as requested

• Written compliance certifications

2.6 Compensation for Service Area 1

Respondents shall propose a fee structure that may include:

• Annual retainer fee

• Basis points on assets under advisement

• Hourly rates for specific projects

• Transaction-based fees (if applicable and disclosed)

All fees must be clearly disclosed, and the advisor must confirm that no compensation will be received from third parties in connection with City investments.

3. SERVICE AREA 2: MUNICIPAL FINANCIAL PRODUCTS (MFP)

ADVISORY SERVICES

3.1 Purpose and Scope

The City seeks to engage a qualified independent advisory firm to provide Municipal Financial Products (MFP) Advisory Services. These services are distinct from traditional municipal securities (bond) advisory services and traditional investment advisory services, and encompass specialized investment structuring, hedging, and optimization strategies related to debt-related funds, construction funds, and operational risk management.

3.2 General Qualifications for Service Area 2

The MFP advisor must demonstrate:

• Fiduciary duty to the City with no affiliations with banks, brokers, investment funds, or product providers that would create material conflicts of interest

• Specialized expertise in municipal financial products, including investments of bond proceeds, hedging programs, debt-related fund optimization, and commodity risk advisory

• Registration as a Municipal Advisor with the SEC and MSRB (or applicable exemption with equivalent fiduciary duties)

• For energy commodity advisory: Registration as a Commodity Trading Advisor (CTA) with the CFTC and membership in the National Futures Association (NFA), or equivalent qualification

• For non-bond-proceeds investment advisory: Appropriate registrations (e.g., RIA) when providing investment advisory services outside of municipal securities scope

• Minimum of five (5) years of experience providing MFP advisory services to municipal entities

• Demonstrated ability to coordinate with municipal securities advisors, investment advisors, legal counsel, and trustees

• Professional liability insurance appropriate for the scope of services

3.3 Core MFP Advisory Services

The selected MFP advisor shall provide the following services:

A. Financial Products Advisory

• Develop and implement frameworks enabling City staff to directly select and manage permitted investments, including establishing roles, program partners, processes, and reporting systems

• Structure investments for debt-related funds including project and construction funds, debt service funds, debt service reserve funds, capitalized interest accounts, and refunding escrow accounts

• Match investment maturities to known cash flow schedules to reduce required fund deposits, minimize negative arbitrage, optimize use of proceeds, and maximize project funding availability

• Conduct competitive, IRS-compliant procurement of specialized investment products, including U.S. Treasury securities, U.S. Agency securities, SLGS securities, flexible repurchase agreements, forward delivery agreements, guaranteed investment contracts, and escrow securities for refunding and defeasance transactions

• Assist the City in developing and maintaining a universe of qualified dealers and providers for each product category

• Evaluate and compare investment alternatives including LGIPs vs. direct investments, investment agreements vs. direct securities, cost-benefit analysis, risk-return efficiency assessment, and fee analysis

• Coordinate with all transaction partners including bond counsel, municipal securities advisors, investment advisors, underwriters, dealers, product providers, custodians, trustees, paying agents, escrow agents, and settlement agents

• Identify and resolve issues arising during pricing, execution, or settlement processes

B. Swap and Derivative Advisory

• Provide independent advisory services for interest rate swaps and derivative transactions, including structuring recommendations, competitive pricing and execution support, counterparty credit analysis, documentation review, post-trade compliance monitoring, and fair value calculations

• Provide advisory services for commodity hedging transactions, including natural gas hedging programs, electricity hedging programs, and other commodity risk management as applicable

• Integrate hedging strategies with debt service schedules and budgetary requirements

• Leverage multiple trading desks and counterparties to ensure best execution on swap and derivative transactions

• Seek best execution and competitive commission structures with counterparties

• Maintain robust compliance programs (Dodd Frank, CFTC, SEC, etc.) for complex financial products

C. Trade Maintenance and Compliance Reporting

• Provide ongoing position valuation and analytical support for GASB reporting requirements, including GASB 31, 53, and 72

• Monitor compliance with investment covenants and regulatory requirements

• Maintain comprehensive documentation of all transactions

• Integrate reporting with the City's treasury operations and provide support for external audit purposes

• Provide certifications of fair value for investment and hedging positions

D. Energy Risk Management Advisory

• Provide independent analysis and structuring of financial hedges for energy commodities, including evaluation of hedge instruments and strategies, competitive pricing and market analysis, execution support and transaction management, and post-trade monitoring and reporting

• Evaluate existing or proposed fixed-price supply contracts for energy commodities, including pricing competitiveness assessment, embedded risk analysis, alignment with operational and budgetary needs, and contract structure review

• Develop and conduct competitive procurement processes for fixed-price energy supply contracts, energy hedging instruments, and related energy products and services

• Monitor counterparty risk and seek to diversify exposure when possible

3.4 Online Modeling and Reporting System

Respondents may propose to provide a secure, web-based platform that enables authorized City staff to:

• Create and monitor debt structures, investment portfolios, and hedging positions

• Model fixed income portfolios and generate cash flow projections at individual fund and aggregate levels

• Evaluate cash flow sufficiency against obligations

• Conduct scenario testing for interest rate changes, drawdown schedule adjustments, and debt service variations

• Access dashboards and custom reports showing portfolio performance metrics, risk exposure analysis, upcoming funding requirements, and projected future interest income/expense

• Manage user access with tiered permissions and appropriate security controls

• Export data and reports for Council presentations, audit purposes, and public disclosure

• Integrate with existing City financial systems where feasible

This platform should complement (not replace) other advisory relationships and enable City staff to visualize and evaluate MFP strategies alongside other financial planning activities.

3.5 Specific Service Examples for Service Area 2

The MFP advisor should have demonstrated experience in the following types of engagements:

• Debt Service Fund Optimization: Transitioning from overnight or pooled investments to fixed-maturity securities matched to specific payment dates

• Project and Construction Fund Management: Structuring investment programs that match draw schedules

• Escrow-to-Maturity and Defeasance Portfolios: Designing and procuring securities portfolios for bond refundings

• Investment Program Design: Developing self-directed investment management frameworks

• Swap and Derivative Advisory: Structuring, pricing, and monitoring interest rate management programs

• Energy Risk Management: Analyzing financial hedges for energy commodities

• Portfolio Modeling and Cash Flow Analysis: Using analytical tools to model outcomes

• Training and Capacity Building: Educating City staff on best practices

3.6 Regulatory Compliance and Fiduciary Duties for Service Area 2

The selected MFP advisor must:

• Be registered as a Municipal Advisor with the SEC and MSRB and demonstrate adherence to MSRB Rule G-42 duties

• For energy commodity transactions: Hold registration as a Commodity Trading Advisor (CTA) with the CFTC and NFA membership

• For investments not related to bond proceeds: Hold necessary additional registrations (e.g., RIA)

• Demonstrate experience with IRS regulations governing municipal bond proceeds, arbitrage compliance, and SLGS

• Disclose all conflicts of interest in writing and comply with all applicable regulations

3.7 Deliverables for Service Area 2

• Written analyses and recommendations for proposed strategies and transactions

• Certifications of fair value for investment and hedging positions

• Reporting to support measurement and recognition of positions in financial disclosures

• Periodic presentations to staff, management, and City Council as required

• Support in developing or updating policies, procedures, and resolutions

• Training for City staff on MFP concepts and compliance requirements

• Annual or project-based reviews of debt-related fund strategies and market conditions

• Secure online dashboards and reports (if applicable)

• Comprehensive transaction documentation and compliance records

3.8 Coordination with Other Advisors

The MFP advisor will work collaboratively with the City's other professional advisors, including municipal securities advisors, investment advisors, bond counsel, financial advisors, underwriters, trustees, paying agents, and external auditors. The MFP advisor will not replace these relationships but will ensure coordination and alignment of strategies with the City's overall financial objectives and legal requirements.

3.9 Compensation for Service Area 2

Respondents shall propose a fee structure that may include:

• Annual retainer fees

• Transaction-based fees for specific services

• Hourly rates for consulting services

• Project-based fees for defined engagements

• Compensation structures required by IRS regulations for certain bond-related transactions

All fees must be clearly disclosed. The advisor must confirm that no compensation will be received from third parties in connection with City transactions.

4. GENERAL REQUIREMENTS APPLICABLE TO BOTH SERVICE AREAS

4.1 Independence and Conflicts of Interest

All advisors must:

• Serve as a fiduciary to the City

• Act solely in the best interest of the City

• Disclose all actual and potential conflicts of interest in writing

• Maintain independence from product providers, dealers, and other parties that may benefit from City transactions

• Not receive compensation from third parties related to City transactions unless fully disclosed and approved

4.2 Insurance Requirements

Selected advisors must maintain:

• Professional liability (errors and omissions) insurance of at least $2,000,000

• General liability insurance of at least $1,000,000

• Workers' compensation as required by Texas law

• Evidence of coverage must be provided prior to contract execution

4.3 Term of Engagement

• Initial term: Three (3) years from contract execution

• Renewal options: Two (2) additional one-year terms at the City's discretion

• Either party may terminate with 90 days written notice without cause

• The City reserves the right to terminate immediately for cause

4.4 Texas Law Compliance

All services must comply with applicable Texas law, including but not limited to:

• Texas Public Funds Investment Act (Chapter 2256, Texas Government Code)

• Texas Local Government Code

• Texas Public Information Act

• Texas Constitution (particularly Article XI regarding municipal debt)

• IRS regulations applicable to municipal securities and tax-exempt obligations

• All federal securities laws and regulations applicable to the services provided

5. SUBMISSION REQUIREMENTS

Respondents shall submit qualifications addressing the following elements for each Service Area for which they are proposing:

5.1 Executive Summary

• Brief overview of firm and proposed approach

• Identification of which Service Area(s) the firm is proposing to provide

• Summary of key differentiators

5.2 Firm Background and Qualifications

• Legal name, address, ownership structure, and history

• Description of firm's business model and service focus

• Registrations, licenses, and regulatory status

• Professional certifications of key personnel

• Confirmation of fiduciary status and independence

• Litigation history and regulatory actions (past 10 years)

5.3 Experience and References

• Minimum of five (5) references from Texas municipalities or public entities

• Description of relevant engagements similar in scope to requested services

• Specific experience with TFPIA compliance (Service Area 1)

• Specific experience with municipal financial products (Service Area 2)

• References should include entity name, contact information, scope of services, duration of relationship, and contact person details

5.4 Staff Qualifications and Team Structure

• Resumes of key personnel who would serve the City

• Organizational chart showing reporting relationships

• Professional certifications and training

• Staff continuity and retention information

• Commitment of key personnel to the City's engagement

5.5 Approach and Methodology

• Detailed description of proposed approach to providing requested services

• Work plan and timeline

• Communication protocols and reporting frequency

• Technology platforms and tools (if applicable)

• Quality control procedures

• Examples of deliverables (reports, analyses, presentations)

5.6 Fee Proposal

• Detailed fee structure for proposed services

• All-inclusive pricing with no hidden costs

• Basis for fees (retainer, assets under advisement, hourly, transaction-based)

• Estimate of annual costs based on the City's current portfolio and activity levels

• Payment terms and schedule

• Disclosure of any third-party compensation

5.7 Additional Information

• Any unique qualifications or value-added services

• Information about technology platforms or reporting systems

• Training programs available for City staff

• Transition plan from current arrangements

6. EVALUATION CRITERIA

Qualifications will be evaluated based on the following criteria:

For Service Area 1 (Investment Advisory Services):

• Firm qualifications and TFPIA expertise (35%)

• Experience with Texas public entities (10%)

• Staff qualifications and resources (15%)

• Proposed approach and methodology (35%)

• Fee structure and cost (5%)

For Service Area 2 (MFP Advisory Services):

• Firm qualifications and specialized expertise (25%)

• Experience with municipal financial products (20%)

• Staff qualifications and resources (10%)

• Proposed approach and methodology (30%)

• Fee structure and cost (15%)

City of Waco, Texas Investment Policy and Investment Strategy for FY 2025-26

Policy

The Chief Financial Officer or Designee, of the City of Waco, Texas, is charged with the responsibility to prudently and properly manage any and all funds of the City. Time and demand deposits must be fully collateralized and all transactions appropriately authorized. This policy addresses the procedures, controls, and practices, which must be exercised to ensure sound fiscal management. The statutory foundation for this policy is the Public Funds Investment Act (the “Act”, Texas Government Code Section 2256) and the Public Funds Collateral Act (Texas Government Code Section 2257).

Scope

This policy shall apply to the investment of all financial assets and all funds of the City of Waco (hereinafter referred to as the "City") over which it exercises financial control. The investment income derived from each account shall be distributed to the various City funds in accordance with the existing City Policy. The funds accounted for in the City of Waco Annual Comprehensive Financial Report (ACFR) include:

1. General Fund

2. Special Revenue Funds

3. Debt Service Funds

4. Capital Projects Funds

5. Enterprise Funds

6. Internal Service Funds

7. Agency Funds

The Bond Funds Portfolio includes bond proceeds recorded in Capital Projects, Enterprise, and Internal Service Funds, while the Operating Portfolio includes all other resources in the other funds listed.

Objectives

The City's principal investment objectives are listed in order of priority:

A. Compliance with all Federal, State, and other legal requirements (including but not limited to Chapter 2256 Public Funds Investment Act, as amended and Chapter 2257 Public Funds Collateral Act, as amended, of the Texas Government Code).

B. Safety: Preservation of capital and the protection of investment principal.

C. Liquidity: Maintenance of sufficient liquidity to meet anticipated disbursements and cash flows.

D. Diversification: Maintenance of diversity in market sector and maturity to minimize market risk in a particular sector.

E. Marketability: Ability to liquidate investments before maturity if the need arises.

F. Yield: Attainment of a market rate of return equal to or higher than the performance measure established by the Chief Financial Officer, or Designee.

Responsibility and Control

Delegation of Authority

The ultimate responsibility and authority for investment transactions involving the City resides with Chief Financial Officer, or Designee. The Chief Financial Officer, or Designee, being designated as the City’s Investment Officer(s) in accordance with the Texas Government Code Section 2256.005(f), is charged with executing the day-to-day investment functions for the City following the guidance and recommendations of the City's Budget and Audit Committee. All Investment Officer(s) shall attend certification and recertification courses as prescribed by the Texas Public Funds Investment Act.

Budget and Audit Committee

The City will utilize the Budget and Audit Committee to assist in monitoring the performance and structure of the City's investments. The Budget and Audit Committee shall be responsible for the investment strategy decisions, activities, and the establishment of written procedures for the investment operations consistent with this policy. Monitoring of the portfolio shall be performed by the Budget and Audit Committee no less than quarterly and verified by the City's independent auditor at least annually. The Budget and Audit Committee shall discuss investment reports, investment strategies, and investment and banking procedures.

Investment Advisors

The Chief Financial Officer, or Designee, may in his/her discretion, with Council approval, appoint one or more investment management firm(s) properly registered with the SEC under the Investment Advisors Act of 1940 (15 U.S.C. Section 80b-1 et seq.) to provide for investment and management of its public funds or other funds under its control. The advisory contract made under authority of this subsection may not be for an initial term longer than three years. A renewal or extension of the contract must be made by City Council by resolution.

An appointed investment advisor shall act solely within the guidelines of this Investment Policy to assist the City’s Investment Officers with the management of its funds and other responsibilities including, but not limited to competitive bidding, trade execution, portfolio reporting, and security documentation. At no time shall an investment advisor take possession of securities or funds of the City.

Investment advisors shall adhere to the spirit, philosophy and specific terms of this Policy and shall avoid recommending or suggesting transactions that conflict with this Policy or the standard of prudence established by this Policy. Investment advisors, contracted by the City, shall agree that their investment advice and services shall at all times be provided with the judgment and care, under circumstances then prevailing, as persons paid for their special prudence, discretion and intelligence, in such matters exercised in the management of their client's affairs, not for speculation by the client or production of fee income by the advisor but for investment by the client with emphasis on the probable safety and liquidity of capital while considering the probable income to be derived.

All investment advisors appointed by the City must acknowledge in writing that they have received and reviewed this Investment Policy and have implemented reasonable procedures and controls in an effort to preclude investment transactions that are not authorized by this Investment Policy, except to the extent that this authorization is dependent on an analysis of the makeup of the city's entire portfolio or requires an interpretation of subjective investment standards. The City shall not enter into an investment transaction recommended by an investment advisor prior to receiving the written document described in this paragraph.

Appointment of an investment advisor shall otherwise be according to the City's normal purchasing procedures for procurement of professional services. Any approved investment advisor may be terminated with the approval of the City Council if, in their opinion, the advisor has not performed adequately.

Standard of Care

The standard of care is to be used for managing the City's assets (Texas Government Code Section 2256.006), which states, "Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived." The Investment Officer(s) acting in accordance with written procedures and exercising due diligence shall not be held personally liable for a specific security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. The City’s independent auditor will perform a compliance audit of management controls on investments and adherence to investment policies annually.

In accordance with the Act (Texas Government Code Sections 2256.005 and 2256.008), the Investment Officer(s) shall attend 10 hours of investment training within 12 months of assuming duties and 8 hours not less than once in a two-year period that begins on the first day of the City’s fiscal year and consists of the two consecutive fiscal years after that date. The investment training session shall be provided by an independent source approved by the Budget and Audit Committee. Training must include education in investment controls, security risks, strategy risks market risks, and diversification of investment portfolio in order to ensure the quality and capability of investment management in compliance with the Act.

Investment Portfolio

Authorized Investments

The following are authorized investments for the City and all are authorized and further defined by the Act:

• Obligations, including letters of credit, of the United States or its agencies and instrumentalities (Texas Government Code Section 2256.009(1))

• Direct obligations of this state or its agencies and instrumentalities (Texas Government Code Section 2256.009(2))

• Collateralized mortgage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentality of the United States (Texas Government Code Section 2256.009(3))

• Other obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, this state or the United States or their respective agencies and instrumentalities, including obligations that are fully guaranteed or insured by the Federal Deposit Insurance Corporation or by the explicit full faith and credit of the United States (Texas Government Code Section 2256.009(4))

• Obligations of state, agencies, counties, cities and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than A or its equivalent (Texas Government Code Section 2256.009(5)) with no more than a $5 million investment into any one serial bond

• Fully collateralized certificates of deposit issued by a state or national bank that has its main office or a branch office in Texas and guaranteed and insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, or secured in any other manner and amount provided by law for deposits of the City (Texas Government Code Section 2256.0010)

• Bankers’ acceptances with a stated maturity of 270 days or fewer from the date of its issuance;

and liquidated in full at maturity; and eligible for collateral for borrowing from a Federal Reserve Bank; and accepted by a bank organized and existing under the laws of the United States or any state, if the short-term obligations of the bank, or of a bank holding company of which the bank is the largest subsidiary, are rated not less than A-1 or P-1 or an equivalent rating by at least one nationally recognized credit rating agency (Texas Government Code Section 2256.012)

• Commercial paper with a stated maturity of 365 days or fewer from the date of its issuance, and rated not less than A-1 or P-1 by nationally recognized credit rating agencies or two nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any State (Texas Government Code Section 2256.013) with no more than a $5 million investment into any one issuance/offering

• No-load money market mutual funds registered and regulated by the Securities and Exchange Commission, provides the City with a prospectus and other information required by the Securities Exchange Act of 1934 (15 U.S.