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HomeMy Public PortalAbout075-2019 - Bakertilley - Investment Advisory ServicesPROFESSIONAL SERVICES AGREEMENT THIS AGREEMENT made and entered into this r day of 1-76, , 2019, and referred to as Contract No. 75-2019, by and between the City of Richmond, Indiana, a municipal corporation acting by and through its Board of Public Works and Safety (hereinafter referred to as the "City") and Baker Tilly Investment Services, LLC, 8365 Keystone Crossing, Suite 3 60, Indianapolis, Indiana, 46240-2687 (hereinafter referred to as the "Contractor"). SECTION I. STATEMENT AND SUBJECT OF WORK City hereby retains Contractor to provide professional investment advisory services for the City of Richmond Finance Department. The proposal of Contractor is attached hereto as Exhibit "A", which Exhibit is dated May 7, 2019, consists of four (4) pages, and is hereby incorporated by reference and made a part of this Agreement. Contractor shall perform all work and provide all services described on Exhibit "A." Contractor's standard investment disclosure brochure is also attached hereto as Exhibit "B" and is incorporated herein by reference and made a part of this Agreement. Should any provisions, terms, or conditions contained in any of the documents attached hereto as Exhibits, or in any of the documents incorporated by reference herein, conflict with any of the provisions, terms, or conditions of this Agreement, this Agreement shall be controlling. Contractor shall perform all work herein in a timely manner, conforming to all applicable professional standards. The Contractor shall furnish all labor, material, equipment, and services necessary for the proper completion of all work specified. No performance of services shall commence until the following has been met: I. The City is in receipt of any required certificates of insurance; 2. The City is in receipt of any required affidavit signed by Contractor in accordance with Indiana Code 22-5-1.7--11(a)(2); and` 3. A purchase order has been issued by the Purchasing Department. SECTION II. STATUS OF CONTRACTOR Contractor shall be deemed to be an independent contractor and is not an employee or agent of the City of Richmond. The Contractor shall provide, at its own expense, competent supervision of the work. Contract No. 75-2019 Page 1 of 6 SECTION III. COMPENSATION City shall pay Contractor at the rates listed within Contractor's proposal for performing all work described herein in a satisfactory and proper manner. SECTION IV. TERM OF AGREEMENT This Agreement shall be effective when signed by all parties and shall continue in effect until December 31, 2019. This Agreement shall thereafter automatically continue on a yearly basis unless this Agreement is terminated as set forth below or, alternatively, any yearly term may be terminated by a party at the end of said yearly term by providing the other party with written notice at least ninety (90) days prior to the end of said yearly term. Contractor's annual fee rate mentioned in its Proposal (Exhibit "A") shall be prorated and adjusted accordingly in the event this Agreement is terminated as set forth herein. Notwithstanding the term of this Agreement, City may terminate this Agreement in whole or in part, for cause, at any time by giving at least five (5) working days written notice specifying the effective date and the reasons for termination which shall include but not be limited to the following: a. failure, for any reason of the Contractor to fulfill in a timely manner its obligations under this Agreement; b. submission of a report, other work product, or advice, whether oral or written, by the Contractor to the City that'is incorrect, incomplete, or does not meet reasonable professional standards in any material respect; c. ineffective or improper use of funds provided under this Agreement; d. suspension or termination of the grant funding to the City under which this Agreement is made; or e. unavailability of sufficient funds to make payment on this Agreement. In the event of such termination, the City shall be required to make payment for all work performed prior to the date this Agreement is terminated, but shall be relieved of any other responsibility herein. This Agreement may also be terminated, in whole or in part, by mutual Agreement of the parties by setting forth the reasons for such termination, the effective date, and in the case of partial termination, the portion to be terminated. SECTION V. INDEMNIFICATION AND INSURANCE Contractor agrees to obtain insurance and to indemnify the City for any damage or injury to person or property or any other claims which may arise from the Contractor's conduct or performance of this Agreement, either intentionally or negligently; provided, however, that Page 2 of 6 nothing contained in this Agreement shall be construed as rendering the Contractor liable for acts of the City, its officers, agents, or employees. Contractor shall as a prerequisite to this Agreement, purchase and thereafter maintain such insurance as will protect it from the claims set forth below which may arise out of or result from the Contractor's operations under this Agreement, whether such operations by the Contractor or by any sub --contractors or by anyone directly or indirectly employed by any of them, or by anyone for whose acts the Contractor may be held responsible. Coverage Limits A. Worker's Compensation & Statutory Disability Requirements B. Employer's Liability $100,000 C. Comprehensive General Liability Section 1. Bodily Injury $1,000,000 each occurrence $2,000,000 aggregate Section 2. Property Damage $1,000,000 each occurrence D. Comprehensive Auto Liability Section 1. Bodily Injury $1,000,000 each person $1,000,000 each occurrence Section 2. Property Damage $13000,000 each occurrence E. Comprehensive Umbrella Liability $1,000,000 each occurrence $1,000,000 each aggregate F. Malpractice/Errors & Omissions Insurance $1,000,000 each occurrence $2,000,000 each aggregate SECTION VI. COMPLIANCE WITH WORKER'S COMPENSATION LAW Contractor shall comply with all provisions of the Indiana Worker's Compensation law, and shall, before commencing work under this Agreement, provide the City a certificate of insurance, or a certificate from the industrial board showing that the Contractor has complied with Indiana Code Sections 22-3-2-5, 22-3--5-1 and 22-3-5--2. If Contractor is an out of state employer and therefore subject to another state's worker's compensation law, Contractor may choose to comply with all provisions of its home state's worker's compensation law and provide the City proof of such compliance in lieu of complying with the provisions of the Indiana Worker's Compensation Law. Page 3 of 6 SECTION VII. COMPLIANCE WITH INDIANA E-VERIFY PROGRAM REQUIREMENTS Pursuant to Indiana Code 22-5-1.7, Contractor is required to enroll in and verify the work eligibility status of all newly hired employees of the contractor through the Indiana E-Verify program. Contractor is not required to verify the work eligibility status of all newly hired employees of the contractor through the Indiana E-Verify program if the Indiana E-Verify program no longer exists. Prior to the performance of this Agreement, Contractor shall provide to the City its signed Affidavit affirming that Contractor does not knowingly employ an unauthorized alien in accordance with IC 22-5-1.7-11 (a) (2). In the event Contractor violates IC 22-5-1.7 the Contractor shall be required to remedy the violation not later than thirty (30) days after the City notifies the Contractor of the violation. If Contractor fails to remedy the violation within the thirty (30) day period provided above, the City- shall consider the Contractor to be in breach of this Agreement and this Agreement will be terminated. If the City determines that terminating this Agreement would be detrimental to the public interest or public property, the City may allow this Agreement to remain in effect until the City procures a new contractor. If this Agreement is terminated under this section, then pursuant to IC 22-5-1.7-13 (c) the Contractor will remain liable to the City for actual damages. SECTION VIII. IRAN INVESTMENT ACTIVITIES Pursuant to Indiana Code (IC) 5-22-16.5, Contractor certifies that Contractor is not engaged in investment activities in Iran. In the event City determines during the course of this Agreement that this, certification is no longer valid, City shall notify Contractor in writing of said determination and shall give contractor ninety (90), days within which to respond to the written notice. In the event Contractor fails to demonstrate to the City that the Contractor has ceased investment activities in Iran within ninety (90) days after the written notice is given to the Contractor, the City may proceed with any remedies it may have pursuant to IC 5-22-16.5. In the event the City determines during the course of this Agreement that this certification is no longer valid and said determination is not refuted by Contractor in the manner set forth in IC 5- 22-16.5, the City reserves the right to consider the Contractor to be in breach of this Agreement and terminate the agreement upon the expiration of the ninety (90) day period set forth above. SECTION Imo. PROHIBITION AGAINST DISCRIMINATION A. Pursuant to Indiana Code 22-9-1-10, Contractor, any sub --contractor, or any person acting on behalf of Contractor or any sub --contractor shall not discriminate against any employee or applicant for employment to be employed in the performance of this Agreement, with respect to hire, tenure, terms, conditions or privileges of employment or any matter directly or indirectly related to employment, because of race, religion, color, sex, disability, national origin, or ancestry. B. Pursuant to Indiana Code 5-16-6-1, the Contractor agrees: 1. That in the hiring of employees for the performance of work under this Agreement of any subcontract hereunder, Contractor, any subcontractor, or any person acting on behalf of Contractor or any sub -contractor, shall not discriminate by reason of race, religion, color, sex, national origin or ancestry against any Page 4 of 6 citizen of the State of Indiana who is qualified and available to perform the work to which the employment relates; 2. That Contractor, any sub -contractor, or any person action on behalf of Contractor or any sub --contractor shall in no manner discriminate against or intimidate any employee hired for the performance of work under this Agreement on account of race, religion, color, sex, national origin or ancestry; 3. That there may be deducted from the amount payable to Contractor by the City under this Agreement, a penalty of five dollars ($5.00) for each person for each calendar day during which such person was discriminated against or intimidated in violation of the provisions of the Agreement; and 4. That this Agreement may be canceled or terminated by the City and all money due or to become due hereunder may be forfeited, for a second or any subsequent violation of the terms or conditions of this section of the Agreement. C. Violation of the terms or conditions of this Agreement relating to discrimination or intimidation shall be considered a material breach of this Agreement. SECTION X. MISCELLANEOUS This Agreement is personal to the parties hereto and neither party may assign or delegate any of its rights or obligations hereunder without the prior written consent of the other party. Any such delegation or assignment, without the prior written consent of the other party, shall be null and void. This Agreement shall be controlled by and interpreted according to Indiana law and shall be binding upon the parties, their successors and assigns. This document constitutes the entire Agreement between the parties, although it may be altered or amended in whole or in part at any time by filing with the Agreement a written instrument setting forth such changes signed by both parties. By executing this Agreement the parties agree that this document supersedes any previous discussion, negotiation, or conversation relating to the subject matter contained herein. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. The parties hereto submit to jurisdiction of the courts of Wayne County, Indiana, and any suit arising out of this Contract must be filed in said courts. The parties specifically agree that no arbitration or mediation shall be required prior to the commencement of legal proceedings in said Courts. By executing this Agreement, Contractor is estopped from bringing suit or any other action in any alternative forum, venue, or in front of any other tribunal, court, or administrative body other than the Circuit or Superior Courts of Wayne County, Indiana, regardless of any right Contractor may have to bring such suit in front of other tribunals or in other venues. Any person executing this Contract in a representative capacity hereby warrants that he/she has been duly authorized by his or her principal to execute this Contract. Page 5 of 6 In the event of any breach of this Agreement by Contractor, and in addition to any other damages or remedies, Contractor shall be liable for all costs incurred by City in its efforts to enforce this Agreement, including but not limited to, City's reasonable attorney's fees. In the event that an ambiguity, question of intent, or a need for interpretation of this Agreement arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement at Richmond, Indiana, as of the day and year first written above, although signatures may be affixed on different dates. "CITY" THE CITY OF RICHMOND, INDIANA by and through its Board of Public Works and Safety By: � Vicki Robinson, President Richard Foore, Member By: mily Isimer, Member APPROVED: `—_ • . S yor Date: "CONTRACTOR" BAKER TILLY INVESTMENT SERVICES, LLC 8365 Keystone Crossing, Suite 300 Indianapolis, IN 46240-2687 n, By: Printed: Title: Date: Page 6 of 6 May 7, 2019 Ms. Emily Palmer, Controller City of Richmond 50 North Fifth Street Richmond, IN 47374 Re: Investment Advisory Services for City of Richmond Dear Emily: C'O'bakerrilty INVESTMENT SERVICES Baker Tilly Investment Services, LLG 8355 Keystone Crossing, Ste 300 Indianapolis, IN 46240 United States of America T: + 1 (317) 465 1500 F: +1 (317) 465 1550 bakertilly.com You have requested that Baker Tilly Investment Services, LLC (` `BTIS ") provide the City of Richmond (the "Client") those services more fully set forth in Exhibit A. FPP.q And Co.gt.q Fees charged for work performed related to Investment Advisory Services are set forth in Exhibit A. Billing Procedures You will receive a quarterly statement for the services set forth in Exhibit A. Fees will be based on the calculation method explained in Exhibit A. The account balance is due and payable on receipt of the statement and we reserve the right to charge 1 % interest per month for outstanding unpaid balances over thirty (30) days from the date of billing. once our representation has been concluded or terminated, a final billing will be sent to you. If requested to- provide an estimate of our fees for a given matter, we will endeavor in good faith to provide our best estimate, but unless there is a mutual agreement to a fixed fee, the actual fees incurred on any project may be less than or exceed the estimate. Any questions or errors in any fee statement should be brought to our attention in writing within sixty (60) days of the billing date. Termination Both the Client and BTIS have the right to terminate the engagement at any time after reasonable advance written notice. on termination, all fees and charges incurred prior to termination shall be paid promptly. Baker Tilly Investment Services, LLG is a registered investment adviser and wholly -owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2019 Baker Tilly Investment Services, LLC JEXHIBIT WAGE I OFMLA, Ms. Emily Palmer, Controller Re: Investment Advisory Services May 7, 2019 Page Two Accountants' opinion In performing our engagement, we will be relying on the accuracy and reliability of information provided by Client personnel. We will not audit, review, or examine the information. Please also note that our engagement cannot be relied on to disclose errors, fraud, or other illegal acts that may exist. However, we will inform you of any material errors and any evidence or information that comes to our attention during the performance of our procedures that fraud may have occurred. In addition, we will report to you any evidence or information that comes to our attention during the performance of our procedures regarding illegal acts that may have occurred, unless they are clearly inconsequential. We have no responsibility to identify and communicate significant deficiencies or material weaknesses in your internal control as part of this engagement. The responsibility for auditing the records of the Client rests with the Indiana State Board of Accounts and the work performed by BTIS shall not include an audit or review of the records or the expression of an opinion on financial data. Client Responsibilities It is understood that BTIS will serve in an advisory capacity with the Client. The Client is responsible for management decisions and functions, and for designating an individual with suitable skill, Knowledge or experience to oversee the services we provide. The Client is responsible for evaluating adequacy and results of the services performed and accepting responsibility for such services. The Client is responsible for establishing and maintaining internal controls, including monitoring ongoing activities. The Client shall also be responsible for maintaining or contracting with a custodian or other third party to maintain custody of all fund assets and for authorizing the execution of any buy/sell transactions with a broker/dealer. Representations BTIS represents that it is registered as an investment adviser with the Securities and Exchange Commission under the federal Investment Advisers Act. The Client represents that it is authorized to enter into this Agreement. The Client acknowledges that it has received a disclosure statement as required by Rule 204-3 of the Investment Advisers Act of 1940. No Assignment Without Consent No assignment of this Agreement, as the term "assignment" is defined in the Investment Advisors Act of 1940, shall be made by BTIS without the consent of.the Client. Baker Tilly Investment Services, LLC is a registered investment adviser and wholly -owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly . International Ltd., the members of which are separate and independent legal entities. 0 2019 Baker Tilly Investment Services, LLC RHIB#TA PAGE PF-. Ms. Emily Palmer, Controller Re: Investment Advisory Services May 7, 2019 Page Three Additional Services Exhibit A sets forth the scope of the services to be provided by BTIS. From time -to -time, additional services may be requested by the Client beyond the scope of Exhibit A. BTIS may provide these additional services and be paid at BTIS's customary fees and costs for such services. In the alternative, BTIS and the Client may complete a revised and supplemented Exhibit A to set forth the additional services (including revised fees and costs, as needed) to be provided. In either event, the terms and conditions of this letter shall remain in effect. E-Verify Program BTIS participates in the E-Verify program. For the purpose of this paragraph, the E- Verify program means the electronic verification of work authorization program of the Illegal Immigration Reform and Immigration Responsibility Act of 1996 (P.L. 104--208), Division C, Title IV, s.401(a), as amended, operated by the United States Department of Homeland Security or a successor work authorization program designated by the United States Department of Homeland Security or other federal agency authorized to verify the work authorization status of newly hired employees under the Immigration Reform and Control Act of 1986 (P.L. 99-603). UCAS does not employ any "unauthorized aliens" as that term is defined in 8 U.S.C. 1324a(h)(3). If the foregoing accurately represents the basis upon which we may provide services to the Client, we ask that you execute this letter, in the space provided below setting forth your agreement. Execution of this letter can be performed in counterparts each of which will be deemed an original and all of which together will constitute the same document. If you have any questions, please let us know. Very truly yours, Baker Tilly Investment Services, LLC y � iviesser The undersigned hereby acknowledges and agrees to thq for going letter of engagemen Date: yr City of Ric By Baker Tilly Investment Services, LLC is a registered investment adviser and who subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. 4 2019 Baker Tilly Investment Services, LLC EXIT I B IT .-A PAGE 2 OF Exhibit A. Services Provided and Fees Scope of Services BTIS will provide investment advisory services for the Client's operating funds (the "Funds") as follows: 1. work with the Client to develop a cash flows for the Funds. This analysis will be completed to clearly understand and identify the expenditures to identify core balances available for investment. 2. Based upon cash flows, suggest suitable investments for consideration by the Client. The suggested investments will be evaluated as to safety and risk factors and adhere to the Indiana Public Funds Code and the client's investment policy. 3. Analyze the current marketplace to assist in determining the most appropriate time frames for investing the Funds, taking into consideration liquidity requirements identified in the cash flow analysis. 4. If determined beneficial, assist the Client in competitively bidding investments, evaluate the bids received, summarize the bid results for the Client, and assist with the settlement of the securities. 5. Assist in ongoing analysis of cash flow needs as well as the reinvestment of Funds. Fees An annual fee of .10% (ten basis points) will be charged on all investments held in the trust account related to the Client's Funds. Fees are charged on a quarterly basis and are based on the monthly average cost basis balance of investments outstanding. No compensation will be charged on the basis of a share of capital gains upon or capital appreciation of Funds or any portion of the Funds of the Client. Baker Tilly Investment Services, LLC is a registered investment adviser and wholly -owned subsidiary of Baker Tilly Virchow Krause, LLP, an accounting firm. Baker Tilly Virchow Krause, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Q 2019 Baker Tilly Investment Services, LLC ! B IT PAGE .OF Cc bakertilly INVESTMENT SERVICES Baker Tilly Investment Services, LLC Ten Terrace Court Madison, wI 53718 Telephone: 608-249-6622 8365 Keystone Crossing, Suite 300 Indianapolis, IN 46240 Telephone: 317-465-1500 380 Jackson Street, Suite 300 Saint Paul, MN 55101 Telephone: 651-223-3000 www.bakertilly.com April 4, 2019 This Brochure provides information about the qualifications and business practices of Baker Tilly Investment Services, LLC. If you have any questions about the contents of this brochure, please contact us at 608-240-2541 or Barb.Olson(.bakertilly.com. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission ("SEC") or by any state securities authority. Additional information about Baker Tilly Investment Services, LLC also is available on the SEC's website at www.adviserinfo.sec.gov. You can search this site by a unique identifying number, known as a CRD number. Our firm's CRD number is 300822. Form ADV Part 2A, Item 1 EXHIBIT Form ADV Part 2A, Item 2 Summary of Material Changes since the last annual update Baker Tilly Investment Services, LLC ("Barer Tilly Investment Services"), through its parent company Baker Tilly Virchow Krause, LLP, effective March 1, 2019 joined with Umbaugh Cash Advisory Services, LLC and effective April 1, 2019 joined with Springsted Investment Advisors Incorporated. This brochure has been updated to reflect the changes that resulted from those combinations. We strongly encourage you to review this entire brochure. iJ EXHIBIT �. PAGE Form ADV Part 2A, Item 3 Table of Contents - Page Item 1 Cover Page 1 Item 2 Summary of Material Changes 2 Item 3 Table of Contents 3 Item 4 Investment Advisory Business 4 Item 5 Fees and Compensation 4 Item 6 Performance -Based Fees and Side--By--Side Management 5 Item 7 Types of Clients 5 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss 5 Item 9 Disciplinary Information 7 Item 10 other Financial Industry Activities and Affiliations 7 Item 11 Code of Ethics, Participation or Interest in Client Transactions, Personal Trading 8 Item 12 Brokerage Practices 8 Item 13 Review of Accounts 9 Item 14 Payments for Client Referrals and Other Compensation 9 Item 15 Custody 9 Item 16 Investment Discretion 10 Item 17 Proxy Voting and Securities Class Action Policies 10 Item 18 Financial Information 10 Privacy Notice 3 EEXHIBIT PsG � II Form ADV Part 2A, Item 4 Investment Advisory Business Baker Tilly Investment Services, LLC ("Baker Tilly Investment Services", "the Firm", "we" or "US"), is a registered investment adviser with its principal place of business located in Madison, Wisconsin. Baker Tilly Investment Services was formed in 2019. It is a wholly owned subsidiary of Baker Tilly Virchow Krause LLP ("Baker Tilly"), an accounting firm. Baker Tilly is a partnership where no single partner owns more than 5% of the firm. Investment supervisory services account for the majority of the Firm's advisory services. We provide non --discretionary investment advice with the purpose of helping our clients create and maintain a disciplined approach to investing funds prudently and effectively. As part of this service, we typically have the responsibility to select or make recommendations as to specific securities the client may purchase or sell, and if the client accepts such recommendations, we can assist with arranging or effecting the purchase or sale. We can also assist clients in the analysis of cash flows for bond issue proceeds and operating accounts, market analysis to determine the appropriate time horizon for investments, consultation on investment policies and procedures, portfolio analysis and design and competitive solicitations for investment managers. Baker Tilly Investment Services typically offers these services to government entities only. We may, from time to time, engage third party assistance in interfacing with the client. Any such third party will be compensated solely from within the fees charged by us and will not be permitted in any way to participate directly or indirectly as a bidder. The types of investments that are suitable for each client are usually defined by either a trust indenture or by state public funds law. The types of investments that our government entity clients can utilize include, but are not limited to, U.S. Treasuries, government agency and government sponsored enterprise securities (FNMA, GNMA, FHLMC, FHLB, etc.), state and municipal securities, highly rated commercial paper, AAA rated money market funds, state approved local government investment pools and bank deposit products, such as certificates of deposit and CDARS. Client may impose their own restriction on investments in certain securities or types of securities. As of the date of this brochure, the Firm has no assets under discretionary management and $1,239,456,000 under non -discretionary management. Form ADV Part 2A, Item 5 Fees and Compensation Baker Tilly Investment Services typically charges a 10 basis point annual fee on the average monthly cost basis balance of all assets. The fee is negotiable and fixed fees may be incorporated into the fee structure on a per engagement basis. Fees are billed quarterly on a calendar basis for the preceding period. Engagements under this fee structure may be terminated at any time and a final fee will be charged through the date of termination. Clients may be required to pay custodian fees in cases where a custodial account is established, and fees and expenses related to the portion of funds held in a money market fund. Clients may also incur brokerage and other transaction costs. 4 EEXH:IBIT „� PAGE 4 O�� Baker Tilly Investment Services may also charge an hourly consultation fee for certain services using the following schedule: Senior Officer.........................$2601hour Senior Professional Staff............ $215lhour Professional Staff ..................... $160/hour Associates ............................... $ 751hour Hourly fees will be quoted prior to the execution of the engagement. The fee for consulting services will be determined according to the complexity of the engagement and the areas to be addressed. A quote of the estimated time involved will be given upon signing of the engagement. Fees are paid upon completion of the project unless otherwise agreed upon between the Firm and the client. Engagements under this fee structure may be terminated by either party upon thirty (30) days' written notice. Upon termination, we will bill the client for the amount of work completed. Form ADV Part 2A, Item 6 Performance -Based Fees and Side -By -Side Management We do not charge advisory fees based on a share of the capital gains or capital appreciation of the funds or securities in a client account (so-called performance based fees). We also do not participate in side -by -side management. Form ADV Part 2A, Item 7 Types of Clients We provide investment supervisory services to governmental units including cities and towns, counties, utilities, schools, libraries and others. Client assets include bond proceeds and operating funds. There is not an established minimum balance to start or maintain an engagement with us. Form ADV Part 2A, Item S Methods of Analysis, Investment Strategies, Types of Investments and. Risk of Loss There are several important steps that we take as we formulate our investment advice for clients. First, we talk to our clients about the importance of risk and review eligible investments that might be considered for their portfolios. We make sure they agree with the types of investments to be used. Baker Tilly Investment Services' clients generally use only U.S. Treasuries, government agencies, highly rated commercial paper, highly rated municipal securities, certificates of deposit that are either with a highly rated bank or are fully insured, AAA rated money market mutual fimds and state approved local government investment pools. Next, we develop an understanding of our client's cash flows for the money being invested. whether we are assisting with the investment of operating funds or construction funds, having adequate liquidity to meet our client's expenditure requirements is very important. Once investment types have been agreed upon and we have an understanding of expected cash flows, we then look to the yield curve to determine the best strategy. Most clients require maturities of less than two years, but may invest greater than two years but less than five years 5 EXWUT PAGE OF i � under certain conditions, so we analyze the yield curve in that range. once we have this information, there are several buy and hold strategies that we generally recommend our clients use: Traditional Laddered Approach: we use this approach when the yield curve is upward sloping. Here, we recommend matching securities with the expected cash flow schedule keeping in mind liquidity needs. In this approach, investments will mature in amounts greater than the cash flow estimates to reduce the need to sell a security before it matures. Modified Laddered Approach: This approach is used when the yield curve is downward sloping or humped. In the case of a downward sloping yield curve, our approach would be to recommend investing larger maturities in the short end of the yield curve. In the case of a humped yield curve, our approach would be to recommend matching maturity amounts to cash flows for the part of the yield curve that is upward sloping, and then invest larger amounts at the top of the yield curve. Core Balance Approach: This approach is used for clients with core operating fund balances that can be invested two years or longer. We initially recommend structuring investments to mature at regular intervals up to two years or longer. As investments mature, the proceeds are reinvested in longer term investments, with the goal of eventually having all investments effectively earning longer term interest rates, while also providing liquidity with regular maturities. In certain circumstances we also recommend investment agreements, guaranteed investment contracts, flexible repurchase agreements and forward delivery agreements. The providers of these agreements are well capitalized financial institutions, including banks, primary dealers, credit corporations and insurance companies. The Providers (or the Provider's guarantor) that the company recommends are typically rated in the top three rating categories of S&P, Moody's or other nationally recognized rating agencies. The Providers also must qualify under the requirements of any applicable bond resolution or indenture, state statute or internal investment policy. Investment Agreement: These are contracts with financial institutions ("Providers"). They may pay a fixed or a floating rate and have a stated maturity date. The client can access money in the account as noted in the contract and contract terms can be customized. Guaranteed Investment Contract: The insurance industry has a product called a "Guaranteed Investment Contract" (GIC). It is similar to its "Group Annuity Contract" except it is used for non -qualified funds. A GIC has the same characteristics as an Investment Agreement as described above. Flexible Repurchase Agreement: A Flexible Repurchase Agreement has the same characteristics as an Investment Agreement except that they are written by primary dealers, banks, or other qualifying financial institutions or corporations, and the contract provides for the purchase and sale of securities as collateral for the amount of the investment. The collateral is held by a trustee or third party on behalf of the client. Forward Delivery Agreement: An agreement that delivers securities (typically U.S. Treasuries or Agencies) that mature on a schedule to match cash flow needs. Interest Rate Swaps: The firm serves as an Advisor to clients on interest rate swaps. we do not act as a principal in any swap transaction. n �.Y�rw.. mn. �• yw...i.N 11 �t Investment in securities involves risk of loss, which the client should be prepared to bear. The types of risk present on the securities on which we advise our clients include: Interest Rate Risk: The risk that the value of an investment will change as a result of a change in market interest rates. Credit Risk: The risk that an issuer will be unable to pay interest on or the principal of its debt obligations. Market Risk: The risk that the value of a portfolio will decrease due to external factors, such as political, economic or social events or conditions. Inflation Risk: The risk that the purchasing power of a security or its income is decreased by inflation. Reinvestment Risk:The risk that an investment might be paid back earlier than expected, when there might not be a similarly attractive investment available in which to reinvest. Liquidity Risk: The risk that a given security cannot be converted into cash if needed. Form ADV Part 2A, Item 9 Disciplinary Information We are required to disclose any legal or disciplinary events that are material to a client's or prospective client's evaluation of our advisory business or the integrity of our management. our firm and our management personnel have no reportable disciplinary events to disclose. Form ADV Part 2A, Item 10 Other Financial Industry Activities and Affiliations Baker Tilly Investment Services is a wholly owned subsidiary of Baker Tilly. Baker Tilly is an accounting firm and an independent member of Baker Tilly International. Some management personnel and representatives of Baker Tilly Investment Services are also partners or employees in Baker Tilly. Some of these individuals may be licensed CPAs. Baker Tilly Investment Services may refer clients in need of accounting or tax services to Baker Tilly. If such clients become clients of Baker Tilly, services provided by Baker Tilly are provided under a separate engagement, for separately defined compensation, and are separate and distinct from our services. Baker Tilly may refer some of its clients to us, and we, in turn, may provide investment advisory services as described in Items 4 and 5 of this brochure. There are no referral fee arrangements between us and Baker Tilly for these recommendations. No client is under any obligation to use Baker Tilly for any accounting services and no accounting client is obligated to use investment advisory services of Baker Tilly Investment Services. We disclose this relationship because it presents a potential conflict of interest which clients and prospective clients should be aware of, as it may influence their decision making when evaluating our services. Representatives of Baker Tilly Investment Services may also be securities registered representatives of Baker Tilly Capital, LLC ("BT Capital" or the "broker --dealer"), which is a wholly owned affiliate of Baker Tilly. BT Capital is a limited purpose broker -dealer registered 7 EXHIBIT PAGE '`I bF_L-4. with the SEC and member of the Financial Industry Regulatory Authority ("FINRA") and the Securities Investor Protection Corporation ("SIPC"). Registered representatives of BT Capital may provide services in private investment banking consulting, transactional services and mergers and acquisitions. Some of the investment banking consulting services, for example include marketing of new market tax credits, incentives, financial forecasting and compliance services. BT Capital is also approved to conduct offerings of EB-5 investments. There are a very limited number of registered representatives who are authorized by BT Capital to conduct such offerings. It is possible that clients who will be referred to Baker Tilly Investment Services may separately be clients of BT Capital, although unlikely based on the types of clients we service. We still consider these dual relationships to create conflicts of interest which clients should be aware of. The suitability of securities recommendations and non -securities transactions is supervised and reviewed by principals of BT Capital. Certain representatives of Baker Tilly Investment Services may also be associated with Baker Tilly Municipal Advisors, LLC ("BTMA" or the "Municipal Advisor"), which is also a wholly owned subsidiary of Baker Tilly. BTMA is a municipal advisor registered with the SEC and Municipal Securities Rulemaking Board ("MSRB"). BTMA may be providing advice to state or local governments on municipal financial products or the issuance of municipal securities. This relationship also presents a potential conflict of interest which clients and prospective clients should be aware of when evaluating our services. In addition, supervisory staff of Baker Tilly Investment Services may also be registered with Baker Tilly Financial, LLC ("BT Financial") a registered investment adviser which acts as a solicitor and refers high net worth individuals to third party investment managers for a referral fee. Form ADV Part 2A, Item I 1 Code of Ethics, Participation or Interest in Client Transactions, Personal Trading Baker Tilly Investment Services requires all representatives to sign a Code of Ethics to ensure they may not directly or indirectly benefit from transactions recommended in the accounts. of clients and to prevent conflicts of interest. The Code of Ethics also includes a commitment to placing the interest of clients first at all times, to protect client confidentiality, to remain independent in the investment decision -making process, to ensure investment advice is suitable and to obtain best execution for clients' securities transactions. Our representatives are also required to disclose their personal securities holdings initially and on an annual basis, and securities transactions on a quarterly basis to the Chief Compliance officer, who tests for any actual or potential conflict of interest. We will provide a copy of our Code of Ethics to any client or prospective client upon request. Form ADV Part 2A, Item 12 Brokerage Practices We focus on achieving best execution for our clients, which means seeking the best price for a security in the marketplace by using a competitive bidding process. We generally select the banks and brokers to effect client transactions. For securities with an active secondary market, such as Treasuries and Government Agencies, we attempt to receive three competitive bids. For 8 E?(IilBl - L�: F %� �1F securities with a less active secondary market, such as state and municipal securities and negotiable CDs, we may receive bids from only one or two brokers. We have no soft dollar arrangement with any broker --dealer or bank. We may aggregate trades that require allocation when investing for more than one client, when their needs for type of security and maturity dates match. In addition to determining the highest bid for a given transaction, we also consider the range and quality of services offered by the broker, including timeliness of bids, executing capabilities, accuracy and responsiveness. It is Baker Tilly Investment Services' policy to ensure clients are made whole following a trade error. If we cause a trade error in a client's account that results in a loss, the client's account would be reimbursed. We work with the broker and custodian to resolve any trading errors that are found. Baker Tilly Investment Services is not responsible for any losses due to trade errors by the broker or custodian. Form ADV Part 2A, Item 13 Review of Accounts Portfolio reviews may be performed quarterly, at a minimum, annually for all advisory clients by the investment advisor representative. Maturing investments are reviewed weekly for the potential for reinvestment. Activity and Fund Balance Summaries are furnished to clients quarterly. These summaries are based upon information supplied by the trustee or depository for the funds. Clients generally receive monthly statements from the trustee or depository for their accounts. Client meetings are held at the desire of each client. Form ADV Part 2A, Item 14 Payments for Client Referrals and other Compensation Baker Tilly Investment Services does not pay anyone for referring clients to us, -'and does not receive other compensation for its investment advisory activities, except as described in Item S of this brochure. Form ADV Part 2A, Item 15 Custody Baker Tilly Investment Services does not have actual or consequential custody of clients' assets. Clients are responsible for maintaining or contracting with a trustee or custodian to maintain custody of all fund assets. Such trustee and custodians provide account statements to the client. Clients are strongly urged to carefully review those statements and compare them to the statements provided by us. 0 �XOiI�iT � PAGE a OF. Form ADV Part 2A, Item 16 Investment Discretion Baker Tilly Investment Services provides only non -discretionary investment advice to our clients. We assist clients in the analysis of cash.flows for bond issue proceeds and their operating accounts, and in market analysis to determine the appropriate time horizon for investments. we then have the responsibility to make recommendations as to specific securities the client may purchase or sell, and if the client accepts such recommendations, we will be responsible for arranging or effecting the purchase or sale if designated to do so in the engagement letter. Form ADV Part 2A, Item 17 Proxy Voting and Securities Class Action Policies Baker Tilly Investment Services does not vote proxies on behalf of clients and does not offer consulting services regarding proxy issues or securities class actions. Form ADV Part 2A, Item 18 Financial Information There are no known financial conditions within Baker Tilly Investment Services likely to impair our ability to meet commitments to clients. Neither Baker Tilly Investment Services nor any of its management personnel have been the subject of a bankruptcy in the past ten years. 10 WHAT DOES SAUCER TILLY INVESTMENT SERVICES, LLC DO WITH YOUR PERSONAL INFORMATION? w...... .............. _.._.._........_.......... .................. _..._._...................... _........................ ......... .... _............ _......................._..... ._........... ..................... _....._._...___..._.._.-----.---...... .. _...................... -__ Vi Financial companies choose how they share your personal information. Federal lave gives ... 2 . '` consumers the right to [unit some but not all sharing. Federal lair also requires us to tell you how --- ------- yf fi j j µ we collect, share, and protect your persona[ information. Please read this notice carefully to s understand what we do. 2 The types of personal information we may collect and share depends on the product or service you have with us. This information can include. ■ Tax Identification Number ■ Income ■ Securities positions ■ Risk Tolerance t ■ Investment Experience ■ Account balances ------------- --------- __ - __-__..... _..... ....................... --............... __._....................... ...... ................ ............................................ .... _....._...._................... ..._............................. _._......... ........... ._..__............... ............. _.�._ All financial companies need to share customers' personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers' personal information; the reasons BAKER TILLY INVESTMENT SERVICES, LLC chooses to share; and whether you can limit this sharing. For our everyday business purposes—, such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus _. ..._._ -................................ ...... ..-_._--...................... ............................................ --................ For our marketing purposes— to offer our products and services to you ............................................................................................ .................._..............__-._............................. ..... ____ ..` ........................I For joint marketing with other financial companies For our affiliates' everyday business purposes — information about your transactions and experiences For our affiliates' everyday business purposes — information about your creditworthiness .........................................................._ ....-----................. ....... ........._..............._.__.._._.......... For our affiliates..to market to you _._..._............ _.....--_.--.---........ _....-... _..... _........................ .--..........._........ ..------._.. __._-.....---- For non -affiliates to market to you a YES No .�............... _.... ............... ... ._.._.._......... ........................... _.__...� ..._............_........._ _ _ _............................ � YES NO f i NO WE DON'T SHARE NO VIDE DON'T SHARE t i NO VILE DON'T SHARE - E NO WE DON'T SHARE- ------------------. i ... ..... NO WE DON'T SHARE Call 800-362-7301 or go to www.bakertil[v.com 11 EXHIBIT ?D___.­PX0E page,2 Who is providing this notice? BAKER TILLY INVESTMENT SERVICES, LLC How does BAKER TILLY INVESTMENT To protect your personal information from unauthorized access and SERVICES, LLC protect my personal use, we use security measures that comply with federal law. These information? measures include computer safeguards and secured files and buildings. We restrict access to your personal information to those employees who need it to perform their job responsibilities. How does BAKER TILLY INVESTMENT We collect your personal information, for example, when you SERVICES, LLC collect my personal ®seek investment advice information? ® enter into an agreement with Baker Tilly Investment Services, LLC Why can't l limit all sharing? Federal law gives you the right to limit only ■ sharing for affiliates' everyday business purposes - information about your creditworthiness ■ affiliates from using your information to market to you ® sharing for non --affiliates to market to you State laves and individual companies may give you additional rights to limit sharing. Q................_«_...__....................._.».».........»............................ »..«.« .» .. ___. « w ........................... y.............................. ................................................ ....w...._........................................................................... .......""'........ ................... ..................................... .«........»............................ ................. ..... What happens when I limit sharing for an account I hold jointly with we will stop sharing all information about that account. someone else? Affiliates Companies related by common ownership or control. They can be financial and nonfinancial companies. ■ our affiliates include our parent accounting firm Baker Tilly virchow Krause, LLP (Baker Tilly), other subsidiaries of Baker Tilly, Baker Tilly Municipal Advisors, LLC, a registered municipal advisor, Baker Tilly Capital, LLC, a registered broker -dealer, member FiNRAIS1PC and Baker Tilly Financial, LLC, a registered Investment adviser. } ................... ......... ..»...«.. «..«............««..--«-»«-...-........................... ....w................. ............... ..................... q......................................................... ............................................................................................................------------ ..----------- .........................................................................................----.......----......( Non -affiliates Companies not related by common ownership or control. They can be financial and nonfinancial companies. ■ Non -affiliates with Whom we can snare include issuers of private placements or other financial institutions. Joint marketing A formal agreement between non-affiliated financial companies that together market financial products or services to you. ■ Baker Tilly Investment Services, LLC, does notJoint market 12 EXHIBIT MOE' OF