To: Board of Supervisors
From: Dan Mierzwa, Treasurer-Tax Collector
Report Title: APPROVE and AUTHORIZE the County Treasurer-Tax Collector to Execute an Evergreen Contract with S&P Global Ratings
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
APPROVE and AUTHORIZE the County Treasurer-Tax Collector, or designee, to execute an evergreen contract between the County and S&P Global Ratings (“S&P”), in an annual amount not to exceed $25,000 for the period November 1, 2024 through October 31, 2027, for its credit rating services, as requested by the Treasurer-Tax Collector.
FISCAL IMPACT:
Service fees will be paid out of the investment revenues generated from the County Treasury Pool deposited in the County General Fund.
BACKGROUND:
S&P is a leading credit-rating agency and a nationally recognized statistical-rating organization.
Contra Costa County entered into an agreement with S&P in 2007 to obtain a fund rating for the Contra Costa County Investment Pool. Since then, S&P has been monitoring, assessing, and applying credit ratings to the County Investment Pool, which has been consistently rated AAAf/S1+. It means the Investment Pool has the highest credit rating with the lowest volatility.
To be in compliance with County Administrative Bulletin 600.3 Purchasing, the County must enter into a new agreement with S&P in order for the County Auditor-Controller’s Office to process the invoice payments going forward.
After extensive negotiations between the County and S&P, a new agreement has been reached. This agreement does not contain a term but it will likely be re-negotiated as the October 31, 2027 fee period expiration nears. That is, the agreement is intended to be evergreen with a fee schedule covering the time period of November 1, 2024 through October 31, 2027. If a specified term is included in the agreement and a new agreement is not reached prior to the expiration of that term, then S&P would end its surveillance on that date. As a result, the Investment Pool would lose its credit rating status.
CONSEQUENCE OF NEGATIVE ACTION:
If the agreement is not approved and authorized, the Investment Pool would lose its high credit rating status, currently provided by S&P. As a result, the County and its Investment Pool participants may incur higher borrowing costs.