March 23, 2017
FROM: MICHAEL LIMA, Controller/Finance Director
Finance Department
BY: CORRINA BARBARITE, Treasury Officer
Finance Department
SUBJECT
Title
Approve a twelve-month interim contract with Bank of America to continue to provide government banking services to the City of Fresno
Body
RECOMMENDATION
Approve a twelve-month interim contract with Bank of America (Bank), an American multinational banking and financial services corporation, to continue to provide government banking services to the City; and authorize the Controller or his designee to sign and execute the standardized contract, approved as to form by the City Attorney’s Office, on behalf of the City.
EXECUTIVE SUMMARY
The Finance Department currently has a contract with Bank to provide government banking services to the City, which expires on March 31, 2017. Bank was initially selected through a competitive selection process in 2009 and has performed satisfactorily under their current contract. An interim contract is necessary to allow Bank to provide uninterrupted government banking services to the City until a new Request for Proposal (“RFP”) can be completed.
BACKGROUND
Bank was selected to provide government banking services to the City through an RFP process conducted in 2009. A contract with Bank became effective on March 15, 2010. The contract was amended effective December 7, 2012 and September 1, 2014. Upon their selection, a five-year contract was agreed upon with provisions for two one-year extensions or one consecutive two-year term. The City exercised their option to extend the contract for two years in September 2014, with the contract term ending on March 31, 2017.
Due to City Treasury staffing changes and changes within the banking industry, additional time is needed to conduct a comprehensive RFP for a new banking services contract. Staff reached out to Bank, to see if they were amenable to an interim contract which would allow for uninterrupted banking services while staff conducted the RFP process. Bank was agreeable to an interim one-year agreement that contained essentially the same terms as the previous contract with two major exceptions. Those exceptions are:
- An increase in pricing of some services that Bank provides in order to match their current pricing structure, as opposed to the pricing structure in place when the contract was established in 2010. Services which saw increases include those involving cash processing and check processing.
- An increase in the interest rate that Bank will pay the City for any funds on deposit. The interest rate is increasing from .2% to .3%.
The net annual effect of these changes is a projected cost increase of $67,200 above the current level of $164,800. Finance has appropriations within its FY17 budget to accommodate this fiscal year’s portion of the net increase. Additional appropriations will be included in the FY 18 Budget to accommodate the remaining portion of the net increase.
If the interim contract is not approved, Bank will impose their standard pricing. Staff anticipates returning to Council late this calendar year or early next calendar year with a new, longer-term contract for banking services.
ENVIRONMENTAL FINDINGS
This item does not qualify as a “project” as defined by the California Environmental Quality Act.
LOCAL PREFERENCE
Local preference was not implemented because this item is an amendment to an existing agreement.
FISCAL IMPACT
Approval of the interim contract is anticipated to increase the cost of banking services by approximately $67,200 annually. Appropriations are in the FY17 Budget for this fiscal year’s portion of the projected increase. Funds will be included in the FY 18 Budget for the portion of the projected increase expected to occur between July 1, 2017 and March 31, 2018.
Attachments:
Bank Contract Extension, Government Banking Services - Amendment III
Contract Renewal Fee Schedule