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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
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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
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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
....
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Prepared by Mike Dennis, Director of Finance
Ralph Bursey, City Treasurer/Revenue Manager
David Carr, Assistant City Treasurer
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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
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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
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