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SR-6-C (103) e~7T (O~ ?52...5 JUI 2 0 :C'qo !.. ...........: FINANCE MD RB DC F \FINANCE\TREAS\SHARE\BANKRFP\BOACON CounCil Date July 20, 1999 Santa Monica, California To Mayor and City Council From City Staff Subject Recommendation to Authonze the City Manager to Negotiate and Execute a Contract with Bank of America to Provide Banking Services INTRODUCTION ThIS report recommends that the City CounCil authorize the City Manager to negotiate and execute a contract for banking services with Bank of America and approve budget changes necessary to implement the services contract BACKGROUND Prudent fiscal management requires that publiC agencies periodically review bankmg relationshIps to ensure the best available combination of service and prlcmg IS being provided The Clty's current consolidated bankmg relationship has been m place since 1994 DUring thiS period, staff have negotiated various service and pricing Improvements Due to Implementation of the City'S new automated fmanclal management system, which Incorporates a wide range of current and potential electronic financial capabilities, a comprehenSive review of banking servIces avaIlable In the marketplace was necessary 1 JUl 2 0 1999 ~~ A Request for Proposal was therefore sent to seven bankmg institutions with operations readily available to the City Formal proposals were received from the following Bank of America First Federal Bank of California Wells Fargo Bank City National Bank Union Bank of California DISCUSSION The following cnterla were used for the evaluation of proposals 1 ) Ability to meet legal requirements associated with local governments 2) Ability to provide required and desIred services necessary for effICIent and effective City finanCIal operatIons 3) Fmanclal strength and capacity of the banking institution 4) Total cost to the City of Santa MOnica 5) Completeness of proposal An mterdepartmental review committee composed of staff from the City Manager's Office, and Finance and Resource Management departments was established to evaluate the proposals After a thorough review of the proposals, the review committee selected Bank of America and Wells Fargo Bank for further In-depth evaluation, which Included face-to-face mtervlews with key bank staff 2 and reference checks. The review committee unanimously selected Bank of America because of their ability to provide the required and desired services at the lowest cost to the City BUDGET/FINANCIAL IMPACT Under the City's current banking arrangement, bank service fees are paid by the bank earning Interest on a minimal balance malntamed In the City's bank account City staff has determined that the City would benefit by uSing a direct payment method to pay bank fees, thereby allowing the City to Invest the minImal balance at a hIgher mterest Yield than paid by the bank The estimated annual cost for banking services based on Bank of America's proposal IS $120,000 This expense would be more than offset by projected additional annual Interest earnings of approximately $360,000 These new revenues and expenditures will be allocated to all City funds Necessary revenue and expenditure budget adjustments are shown at Attachment I The Imtlal term of the contract WJII be three years With annual optIons to extend for additional periods of one year under the same terms and conditions Bank of America has guaranteed their mitlal umt pnclng at the same level for four years RECOMMENDATION It IS recommended that the City Council authOrize the City Manager to negotiate and execute a contract With Bank of Amenca for banking services, and approve the attached list of revenue and expenditure budget changes .... .) Prepared by Mike Dennis, Director of Finance Ralph Bursey, City Treasurer/Revenue Manager David Carr, Assistant City Treasurer 4 ~~ ATTACHMENT I REQUESTED FY 1999-00 REVENUE AND EXPENDITURE BUDGET CHANGES * Revenues Account Number Amount 01224400750 123,760 11501 400750 3,257 12264 400750 1,134 13224400750 5,985 15264400750 2,810 16263400750 867 17263400750 3,926 18263400750 694 19262400750 85 20224400750 7,001 25671 402950 13,076 27441 400750 1,852 30625 402550 1,102 31661 402950 28,693 32621 400750 2,630 33631 402950 1 ,435 34661 402950 721 37641 402250 508 41656 403010 13,225 43401 400750 989 51207 400750 65 52631 402950 143 53511 402950 366 54461 400750 4,544 55223 400750 544 56232 402950 9,597 57233402950 1,048 58234 402950 2,867 59235402950 9,554 77610402950 1,302 2 ~ ----- Expenditures Account Number Amount 01274522180 44,019 01695522180 (2,766) 11522 522180 1,086 12274522180 378 13224 522180 1,995 14274 522180 3,307 15695 522180 937 16695522180 289 17695522180 1,309 18695 522180 231 19274522180 28 20274522180 2,334 25671 522180 4,359 27441 522180 617 30625 522180 367 31661 522180 9,564 32621 522180 877 33631 522180 478 34274522180 240 37641 522180 169 41656522180 5,934 43274 522180 330 51207522180 22 52274 522180 48 53274 522180 122 54461 522180 1,515 55274522180 181 56232522180 3,199 57233 522180 349 58234522180 956 59235 522180 3,185 77610522180 434 * Assumes new contract becomes effective 10/1/99 (9 months of revenues and expenditures) Note Interest to TORCA Fund IS recorded as deferred revenue 2 ----