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Home My WebLink About08-20-2013 c5 extension of banking services contract FROM: Wayne Padilla, Director of Finance & Information Technology Prepared By: Wayne Padilla, Director of Finance & Information Technology SUBJECT: EXTENSION OF BANKING SERVICES CONTRACT RECOMMENDATION Approve a contract extension for banking services with Bank of America for three years and authorize the City Manager to execute the required documents. DISCUSSION Following an extensive request for proposals (RFP) process in 2009, a contract was awarded to Bank of America in January 2010 for the City’s banking services for a three-year term, with an option to renew for an additional three years. The contract provides for a three-year extension upon mutual agreement of the bank and the City. Bank of America actually began providing services under the previous agreement in April 2010 once the final negotiations were completed and it has been understood that the end of the initial three-year period ended on March 31, 2013. Due to the staffing transitions and the workload related to the development of the new two-year Financial Plan occurring in the Finance Department, there has been a delay in bringing the contract extension request before the City Council. In the meantime, Bank of America has been providing service on a month-to-month basis. Based on the overall quality of the relationship that Bank of America has maintained with the City, staff recommends extending the contract for three more years, through March 31, 2016 (Attachment 2). Further, staff does not believe that the preparation, and issuance of another RFP along with the time required to evaluate the responses can be accomplished along with the other workload demands of the Finance Department at this time. As additional information, the bank has provided a statement indicating the level of community reinvestment giving that has occurred within San Luis Obispo County, the surrounding area as well as within the state. (Attachment 4) FISCAL IMPACT Bank of America has agreed to the contract extension while providing a $15,000 loyalty credit that will be applied in $5,000 increments over the life of the 3-year extension period. This credit will offset bank service fees. In addition, the bank agreed to lower the credit card discount rate to 1.89% effective on April 1, 2013 which is estimated to save the City $24,000 per year. No other changes to existing terms and conditions have been applied while pricing for depository and cash management services will remain at their current levels. Pricing for services not currently utilized will be based on their Current Schedule of Fees and Charges. Meeting Date Item Number August 20, 2013 C5 - 1 Banking Services Contract Page 2 In 2009 the charges proposed by Bank of America were significantly less than the other four proposers. The charges from Bank of America over the last three years are shown in the table below. 2010-112011-122012-13 July*8,950.46$ 10,255.80$ October2,039.61$ 8,426.25$ 11,004.11$ January7,655.70$ 10,229.71$ 10,005.76$ April 7,419.86$ 10,105.98$ 9,854.29$ Total 17,115.17$ 37,712.40$ 41,119.96$ *In 2010-11, a $15,000 fee credit was provided as part of the contract. The annual banking fees are shared by each of the various funds having a cash balance in the deposit account. Adequate funding for these fees is provided in the current year financial plan. ALTERNATIVES Do not approve contract extension and direct staff to issue an RFP now. This option is not recommended since the current contract expired in March 2013 and the City does not have a contracted banking services provider at this time. At the time of the RFP conducted in 2009, the charges proposed by Bank of America were significantly less than the other four proposers. Additionally, the City has been satisfied with the services and fees provided by Bank of America so there is no compelling reason to change banks and incur staff and supply costs associated with doing so. ATTACHMENTS 1. Original agreement with Bank of America for banking services 2. Amendment for three-year banking services contract extension 3. Banking Services Agreement Extension July 23 2013.pdf 4. Foundation Giving and CRA.pdf C5 - 2 '\ 7 AGREEMENT FOR BANKING SERVICES THIS AGREEMENT is made and entered into in the City of San Luis Obispo on January 15, 2010, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, hereinafter referred to as City, and Bank of America hereinafter referred to as Banking Institution. WITNE S SE TH: WHEREAS, on December 15,2009, the City requested proposals for banking services pursuant to Specification No 90995 and; WHEREAS, pursuant to said request, the Banking Institution submitted a proposal which was accepted by City for said banking services. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows: 1. TERM. The term of this Agreement shall be from the date of this Agreement is made and entered, as first written above, until acceptance or completion of said services. 2. INCORPORATION BY REFERENCE. The Banking Institution's proposal dated January 13, 2010 are hereby incorporated in and made a part of this Agreement. 3. CITY'S OBLIGATIONS. For providing services as specified in this Agreement, City will pay and the Banking Institution shall receive therefore compensation as set forth in the Banking Institution's proposal. 4. BANKING INSTITUTION'S OBLIGATIONS. For and in consideration of the payments and agreements hereinbefore mentioned to be made and performed by City, the Banking Institution agrees with City to do everything required by this Agreement. 5. AMENDMENTS. Any amendment, modification or variation from the terms of this Agreement shall be in writing and shall be effective only upon approval by the Director of Finance and Information Technology of the City. 6. COMPLETE AGREEMENT. This written Agreement, including all writings specifically incorporated herein by reference, shall constitute the complete agreement between the parties Attachment 1 C5 - 3 hereto. No oral agreement, understanding, or representation not reduced to writing and specifically incorporated herein shall be of any force or effect, nor shalfimy such oral agreement, understanding, or representation be binding upon the parties hereto. 7. NOTICE. All written notices to the parties hereto shall be sent by United States mail, postage prepaid by registered or certified mail addressed as follows: City Director of Finance & Information Technology City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Banking Institution Government Banking Bank of America, N.A. 333 S Hope Street, 13 th Floor Los Angeles, CA 90071 8. AUmORITY TO EXECUTE AGREEMENT. Both City and the Banking Institution do covenant that each individual executing this agreement on behalf of each party is a person duly authorized and empowered to execute Agreements for such party. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year flIst above written. ATTEST: CITY OF SAN LUIS OBISPO, A Municipal Corporation City Clerk BANKING INSTITUTION Attachment 1 C5 - 4 Attachment 2 AMENDMENT NO. 1 TO AGREEMENT THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on August 20, 2013, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after referred to as City, and Bank of America, hereinafter referred to as Bank. WITNESSETH: WHEREAS, on January 15, 2010 the City entered into an Agreement with Bank for Banking Services per Specification No. 90995; and WHEREAS, the City desires to extend the term of this Agreement for three years and Bank has mutually agreed. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained, the parties hereto agree as follows: 1. The term of this Amendment shall be from April 1, 2013 and expires on March 31, 2016. 2. Incorporated by reference herein, the following documents shall represent the underlying agreement that has been reached by Bank and City: Bank’s Proposal for Banking Services dated January 13, 2010 in response to city’s RFP No. 90995 dated December 15, 2009; Bank’s Treasury Services Terms and Conditions executed on September 21, 2010; Bank’s Contract for Deposit of Moneys executed on November 29, 2010 and the letter from Bank dated April 2, 2013 which references the Banking Services Agreement and identifies a new merchant services rate of 1.89% effective retroactively on April 1, 2013. 3. All other terms and conditions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first written above. ATTEST: CITY OF SAN LUIS OBISPO ____________________________________ By: ____________________________________ City Clerk Katie Lichtig, City Manager APPROVED AS TO FORM: Bank _____________________________________ By: ____________________________________ C5 - 5 City Attorney C5 - 6 Bank of America . Merrill Lynch July 23 ,2013 Wayne Padilla Acting Fi nance Director City of San Luis Obispo 990 Palm Street San Luis Obispo, CA 93401 Ref: Banking Services A greement Dear Mr. Padilla, Alec P. Bigelson Senior Vice President Bank of America Merrill Lynch Publ ic Sector Banki ng CA9-193-19-17 333 S . Hope St., 191" Fl. Los Angeles, CA 90071 Ph . (213) 621 -7132 Fax (213) 621-3606 ale~ ba:.:hun t!Jlaml. com Based upon our recent conversations, I am delighted to confirm the extension of the Banking Services Agreement ("Agreement") between Bank of America N .A. ("Bank") and the City of San Lu is Obispo ("City") from April 1, 2013 through March 3 1,2016. For the sake of good order and to avoid any misunderstanding, I want to note these important terms: • T he base documents governing our Agreement are as fo llows: Bank's Proposal for Banking Services, dated January 13 , 2010, in Response to t he City 's Request for Proposal for Banking Services, Specification No. 90995 , dated December 15 , 2009; -Bank's Treasury Services Terms and Conditions executed on September 21 , 201 0; and, -Bank's Contract for Deposit of Moneys executed on November 29, 2010. • In consideration of the contract extension, Bank i s offering City a loyalty credit of $15 ,000 to be used as an offset against banking service fees. The loyalty credit will be applied in three $5,000 increments on August 31 , 2013, July 31, 2014, and July 3 1,2015 , respectively. Attachment 3 C5 - 7 Wayne Padilla -2-July 23, 2013 • Additionally, a new merchant services rate of 1.89% will be applied to the following merchant IDs effective April 1, 2013: -4301322135368393 -4301322135956668 -4301322159673223 -4301323135043762 -4301322119225437 -4301322159674940 -4301323135363400 • Current unit prici ng for depository and cash management services will remain the same. Pricing for services not presently utilized will be based upon our Current Schedule of fees and Charges or as otherwise agreed. We are very pleased to accommodate the City's request for this extension of our Agreement and to continue our highly valued relationship. Please let me know if you have any questions. I would also appreciate your confirmation of the extension on the principle terms as indicated herein by signing in the space provided below and returning to me a copy of this letter. Sincerely ~p~ Alec P. Bigelson Senior Vice President & Senior Client Manager Acknowledged and agreed upon on behalf of the City of San Luis Obispo: By: --------------------------Dme: __________________ __ City Manager Attachment 3 C5 - 8 Attchment 4 C5 - 9 Attchment 4 C5 - 10