SR 12-12-2023 5G
City Council
Report
City Council Meeting: December 12, 2023
Agenda Item: 5.G
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue
Subject: Award Contract for Banking Services to JPMorgan Chase
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section
15061(b)(3) (Common Sense Exemption) of the California Environmental Quality
Act (CEQA) Guidelines.
2. Award RFP #360 to JPMorgan Chase Bank, N.A. to provide banking services for
the Finance Department.
3. Authorize the Director of Finance/City Treasurer to negotiate and execute an
agreement with JPMorgan Chase Bank, N.A. in an estimated amount of
$800,000 for eight years, with future year funding contingent on Council budget
approval.
Summary
The City maintains general banking services with one institution in order to maximize its
cash flow and earnings, as well as minimize administrative costs and service fees. The
City is proposing to contract with JPMorgan Chase Bank, N.A. (JPMorgan Chase) to
provide banking services. Staff recommends an eight-year agreement with JPMorgan
Chase for an estimated amount of $800,000 for banking services.
Discussion
Banking services are needed for revenue collection, payment processing, cash
management, debt management, financial reporting and analysis, online and mobile
banking, and other services. City operational needs and State legal requirements limit
the pool of banks able to provide City banking services. Also, on February 28, 2017,
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Council approved resolutions that disqualified banking institutions that have been
subject to a consent order for improper sales practices by the Consumer Financial
Protection Bureau (CFPB) or other federal or State regulatory agencies with jurisdiction
to protect consumers from providing banking services to the City if the consent order
was issued within five years of the City’s solicitation for such services. Pursuant to
these resolutions, proposals from Bank of America and U.S. Bank National Association
were disqualified from consideration. The City previously contracted with Union Bank for
banking services. Union Bank, however, was subsequently acquired by and merged into
U.S. Bank, which is one of the banks that was disqualified per the criteria in the prior
resolutions.
JPMorgan Chase has several years of experience with government agencies, meets the
required criteria, has capacity to remain current with evolving technology, and is
financially stable. In addition, they have a robust security system in place that meets the
industry best practices and the requirements of the global regulators. JPMorgan Chase
is a leading global financial services firm with assets of more than $3.7 trillion. They
have deposits of approximately $2.4 trillion as of March 2023.
City bank deposits are approximately $760 million annually with a similar amount of
payments issued to vendors. These deposits come from a variety of traditional sources,
such as direct payments of wire transfers, ACH payments, checks, cash and credit
cards to the City for taxes and services, as well as other types of deposits such as on-
line payments, payments by mobile devices, and deposits from lockbox facilities.
Payments to vendors are also made in several different ways. This high level of
financial activity, the complexity of the City’s financial operations, and the need to
provide a safe and prudent stewardship of taxpayer funds require a full-service financial
institution with experience providing banking services for large government entities. This
full suite of services includes “positive pay” to limit fraudulent check activity; quick
processing of City payroll; timely processing of all types of deposits; a sophisticated on-
line banking system providing an array of reporting, reconciliation, and payment
services; a purchasing card system; advanced technology that increases the efficiency
of banking transactions, such as the use of the remote deposit scanner; and certain
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investment services. In addition to the above considerations, banks must have sufficient
capitalization to meet State legal guidelines regarding public funds, such as the
requirements that all deposits in excess of FDIC insured amounts be collateralized.
Finally, banks must have a Community Reinvestment Act (CRA) rating of “Satisfactory”
or better to qualify for public fund deposits. The Community Reinvestment Act is
intended to encourage institutions to help meet the credit needs of the community in
which they operate, including low-and moderate-income neighborhoods, consistent with
safe and sound operations.
Based on the current volume of transactions, the annual estimated cost for JPMorgan
Chase is $100,000 for banking services for an estimated amount of $800,000 for an
eight-year term. An estimate is necessary for the cost for banking services because
fees are based on the City’s bank account balance which is constantly fluctuating. The
City will continue to use U.S. Bank until full transition to JPMorgan Chase in FY 2024-
25.
Consultant Selection
Bidder Recommendation
Best Bidder JPMorgan Chase Bank, N.A. (JPMorgan Chase)
Evaluation Criteria
Experience with similar projects of comparable complexity and working
with municipalities, financial strength, technical competence,
methodology, value-added- breath of services, ability to meet work
plan/timelines, stability, and cost of services.
Municipal Code SMMC 2.24.190
RFPs Received
Bank of America Bank of the West JPMorgan Chase Bank, N.A U.S. Bank National
Association
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RFP Data
Date Posted Posted On Advertise In
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
4/6/23 City's Online
Bidding Site Santa Monica Daily Press 16 5/18/2023
Environmental Review
The award agreement is exempt from CEQA pursuant to Section 15061(b)(3) of the
CEQA Guidelines. The award agreement is covered by the common-sense exemption
which states that CEQA does not apply, “where it can be seen with certainty that there
is no possibility that the activity in question may have a significant effect on the
environment.” The award agreement will provide banking services to the City.
Therefore, it can be seen with certainty that the agreement would not result in adverse
physical impacts on the environment, and as such, is exempt from CEQA.
Financial Impacts and Budget Actions
Staff seeks authority to approve funding from various City Funds to award an
agreement with JPMorgan Chase for banking services for an estimated eight-year total
of $800,000. Please note that the contract would be executed FY 2023-24, but due to
the transition period, costs would be incurred starting FY 2024-25. During the transition
Best Bidder Justification
Based on the evaluation criteria and criteria in SMMC 2.24.190, staff recommends JPMorgan Chase
as the best bidder. JPMorgan Chase has been providing banking services to government clients for
over 150 years; serves 1,900 government clients in all 50 states and provides financial solutions to
all types of government through their Government Banking specialized industry group; its financial
strength is indicated by its strong long-term issuer ratings of Aa2/A+/AA; and it has more than $2.4
trillion in deposits and total assets of more than $3.7 trillion across their diverse group of markets.
In addition, JPMorgan Chase maintains a rigorous program to safeguard their clients’ information.
Their security program is designed to address the risks presented by an evolving threat landscape,
and meet regulatory expectations in the places that they operate. This includes three (3) global
cybersecurity operation centers, a firmwide cyber program around data protection, and cyber
resiliency.
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period (FY 2023-24), there would be no banking activities and no expenses would be
incurred with JPMorgan Chase.
Agreement Request
FY 2024-25
Request Estimated
Amount
Future Years Estimated
Amount Department Account # Total Estimated
Contract Amount
$100,000 $700,000 Various Accounts
(Object 534000) $800,000
Future year funding is contingent on Council budget approval.
Prepared By: David Carr, Assistant City Treasurer
Approved
Forwarded to Council
Attachments:
A. OAKS Initiative Form
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CITY OF SANTA MONICA
OAKS INITIATIVE NOTICE
NOTICE TO APPLICANTS, BIDDERS, PROPOSERS
AND OTHERS SEEKING DISCRETIONARY PERMITS, CONTRACTS,
OR OTHER BENEFITS FROM THE CITY OF SANTA MONICA
Santa Monica’s voters adopted a City Charter amendment commonly known
as the Oaks Initiative. The Oaks Initiative requires the City to provide this notice and
information about the Initiative’s requirements. You may obtain a full copy of the
Initiative’s text from the City Clerk.
This information is required by City Charter Article XXII—Taxpayer Protection.
It prohibits a public official from receiving, and a person or entity from conferring,
specified personal benefits or campaign advantages from a person or entity after
the official votes, or otherwise takes official action, to award a “public benefit” to that
person or entity. The prohibition applies within and outside of the geographical
boundaries of Santa Monica.
All persons or entities applying or receiving public benefits from the City of
Santa Monica shall provide the names of trustees, directors, partners, and officers,
and names of persons with more than a 10% equity, participation or revenue
interest. An exception exists for persons serving in those capacities as volunteers,
without compensation, for organizations exempt from income taxes under Section
501(c)(3), (4), or (6), of the Internal Revenue Code. However, this exception does not
apply if the organization is a political committee or controls political committees.
Examples of a “public benefit” include public contracts to provide goods or services
worth more than $25,000 or a land use approval worth more than $25,000 over a 12-
month period.
In order to facilitate compliance with the requirements of the Oaks Initiative,
the City compiles and maintains certain information. That information includes the
name of any person or persons who is seeking a “public benefit.” If the “public benefit”
is sought by an entity, rather than an individual person, the information includes the
name of every person who is: (a) trustee, (b) director, (c) partner, (d) officer, or has
(e) more than a ten percent interest in the entity. Therefore, if you are seeking a
“public benefit” covered by the Oaks Initiative, you must supply that information on
the Oaks Initiative Disclosure Form. This information must be updated and supplied
every 12 months.
5.G.a
Packet Pg. 337 Attachment: OAKS Initiative Form (6032 : Award Contract for Banking Services)
CITY OF SANTA MONICA
OAKS INITIATIVE DISCLOSURE FORM
In order to facilitate compliance with the requirements of the Oaks Initiative, the
City compiles and maintains certain information. That information includes the
name of any person or persons who is seeking a “public benefit.” If the “public
benefit” is sought by an entity, rather than an individual person, the information
includes the name of every person who is: (a) trustee, (b) director, (c) partner, (d)
officer, or has (e) more than a ten percent interest in the entity.
Public benefits include:
1.Personal services contracts in excess of $25,000 over any 12-month period;
2.Sale of material, equipment or supplies to the City in excess of $25,000 over a
12-month period;
3.Purchase, sale or lease of real property to or from the City in excess of
$25,000 over a 12- month period;
4.Non-competitive franchise awards with gross revenue of $50,000 or more
in any 12-month period;
5.Land use variance, special use permit, or other exception to an established
land use plan, where the decision has a value in excess of $25,000;
6.Tax “abatement, exception, or benefit” of a value in excess of $5,000 in any
12-month period; or
7.Payment of “cash or specie” of a net value to the recipient of $10,000 in any
12-month period.
Name(s) of persons or entities receiving public benefit:
Name(s) of trustees, directors, partners, and officers:
Name(s) of persons with more than a 10% equity, participation, or revenue interest:
Prepared by: Title:
Signature: Date:
Email: Phone:
Permit #
FOR CITY USE ONLY:
Bid/PO/Contract #
5.G.a
Packet Pg. 338 Attachment: OAKS Initiative Form (6032 : Award Contract for Banking Services)
Executive officers of JPMorgan Chase Bank, N.A.
●James Dimon, Chief Executive Officer and
President
●Ashley Bacon, Chief Risk Officer
●Jeremy Barnum, Chief Financial Officer
●Marianne Lake, Co-Chief Executive Officer
of Consumer & Community Banking
●Robin Leopold, Head of Human Resources
●Douglas B. Petno, Chief Executive Officer
of Commercial Banking
●Lori A. Beer, Chief Information Officer
●Mary Callahan Erdoes, Chief Executive
Officer of Asset & Wealth Management
●Stacey Friedman, General Counsel
●Jennifer A Piepszak, Co-Chief Executive
Officer of Consumer & Community Banking
●Daniel Pint, Chief Operating Officer and
Chief Executive Officer of Corporate &
Investment Bank
●Peter L. Scher, Vice Chair
Additional officers:
●Stephen Burke, Non-executive Chairman of the Board
●Charles J Bristow, Chief Investment Officer
●Louis Rauchenberger, General Auditor
●Frank Pearn, Chief Compliance Officer
●Albert J. Moffitt, Treasurer
●John H. Tribolati, Secretary
●Giovanna Acquilano, Controller
5.G.a
Packet Pg. 339 Attachment: OAKS Initiative Form (6032 : Award Contract for Banking Services)
Board of Directors for JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A.
● Linda B. Bammann
● Stephen B. Burke (Non-Executive Chairman of
the Board)
● Todd A. Combs
● James S. Crown
● Alicia Boler Davis
● James Dimon
● Timothy P. Flynn
● Alex Gorsky
● Mellody Hobson
● Michael A. Neal
● Phebe N. Novakovic
● Virginia M. Rometty
5.G.a
Packet Pg. 340 Attachment: OAKS Initiative Form (6032 : Award Contract for Banking Services)