REPORT TO THE CITY COUNCIL
FROM: SANTINO DANISI, MBA, City Controller/Finance Director
SUBJECT
Title
Approve the third amendment to the Bank of America contract for banking services for an additional term to expire on June 30, 2025.
Body
RECOMMENDATION
Staff recommends approval of the third amendment to the Bank of America contract for banking services for a term set to expire on June 30, 2025, for services that are necessary for City business operations.
EXECUTIVE SUMMARY
The City of Fresno currently has previously contracted with Bank of America for banking services. The previous agreement was the result of an award by Council on June 14, 2018, for a five-year contract with two one-year extensions. The approval of the third amendment will continue services with Bank of America through June 30, 2025, while staff conducts a comprehensive Request for Proposal (RFP) process for long-term banking services.
BACKGROUND
On June 14, 2018, the Council awarded a five-year contract with two one-year extensions to Bank of America for banking services. This award came as the result of a Request for Proposal (RFP) that was issued on August 3, 2017. At that time five banks submitted proposals and a review committee recommended awarding the contract to Bank of America.
The City currently maintains approximately fifty bank accounts to facilitate activity needed to manage the significant sum of inflows and outflows for various business processes. Banking services include coin, cash, check, wire, Automated Clearing House (ACH), positive pay, direct deposit and wire transfer transactions. Additionally, there are many complex services and technology the City utilizes to enhance the effectiveness of processes and reduce the exposure to fraudulent activity. The City works closely with its banking partner to optimize performance and service levels.
On April 16, 2024, City staff notified Bank of America of the intention to extend the existing agreement for one final year as allowed by the original terms of the agreement. The request was identical to the request made in April 2023, in which mutual consent was received from Bank of America within a few days. This year, however, the City’s request was met with several requests from Bank of America for amendments in the agreement language. Staff from Finance, Risk Management and the City Attorney’s Office have worked diligently since that time to identify terms that would continue essential banking services while mitigating risk exposure. The result of these negotiations is presented in the amendment recommended for Council approval with a term set to expire on June 30, 2025.
Many of the changes proposed by Bank of America are related to a service offered called Paymode; a service the City has used for decades. Paymode is a third-party service provider utilized by Bank of America to provide technology designed to make mass deposits more efficient and secure. The City of Fresno relies on this service for processing utility payments received from customers opting to use bill-pay for their monthly bills. The technology consolidates payments received via bill-pay into an electronic format that is utilized to mass deposit payments to the City’s bank account and upload into the customer billing database. Without this service city staff would alternatively be required to manually process checks received for any customer using this payment type. Currently approximately 30,000 customers utilize a payment type that benefits from this technology.
Concurrently, the Finance team has drafted Request for Proposal (RFP) materials to consider additional service providers going forward. The team anticipates that the RFP will be available for consideration in July and will conduct outreach to broaden the potential pool of service providers that may be interested in serving the City’s banking needs. The team will plan to present the results and recommendation for a long-term service provider by December 2024.
ENVIRONMENTAL FINDING
By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, these recommendations do not qualify as a “project” as defined by CEQA.
LOCAL PREFERENCE
Local preference was not considered at the time of the original agreement because all the proposers for the request for proposals had at least one branch within the City of Fresno.
FISCAL IMPACT
None
Attachments:
Third Amendment to the Agreement
Original Agreement