HomeMy WebLinkAboutStaff Report 4.B 01/22/2018Agenda Item #4.B
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DATE: January 22, 2018
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Corey Garberolio, Interim Finance Director
SUBJECT: Resolution Authorizing the City Manager to Execute an Agreement with
Exchange Bank to Provide Banking Services to the City of Petaluma
RECOMMENDATION
It is recommended that the City Council adopt the Resolution Authorizing the City Manager to
Execute an Agreement with Exchange Bank to Provide Banking Services to the City of
Petaluma.
BACKGROUND
The City of Petaluma entered into an agreement with Exchange Bank to provide banking
services in 2007. Exchange Bank currently provides full service banking for the City including
daily cash management and deposit services, remote deposit capture and merchant service
processing as well as daily automated cash management reporting, formatted cleared item files
and technical support services. They also provide wire, manual and electronic ACH processing.
The net cost for these services is approximately $12,420 annually or $1,035 monthly.
It is prudent for Cities to periodically review their banking service requirements and solicit
proposals from banking institutions to provide services. A Request for Proposal (RFP) was
completed in November of 2017 and released to 11 banks and was also made available on the
city's website. The objective of the RFP was to ensure fair, competitive procurement of cost
effective banking services that not only maintain the high quality of cash management support to
the City, but also support continued technology enhancements that will further improve the
current and future payment options for residents and businesses.
DISCUSSION
The RFP was issued to banking institutions with branches located within the city limits and made
available on the City's website. The RFP required institutions to propose a three year contract
with a renewal option for three additional one -year extensions. The RFP outlined a series of
required services and asked for a description of the bank's approach to providing these services
and required a schedule of fees for such services. Information regarding the bank's financial
condition, experience and commitment to relationship management was also requested. The
maintenance of a local full service branch in Petaluma was a requirement.
The City received a total of 3 proposals from the following institutions: Bank of Marin,
Exchange Bank and US Bank. After a thorough review of the proposals the two banks with the
strongest proposals based on fees, earnings return and perceived quality of service were invited
for interviews. Following the interviews the proposers were evaluated taking into account
services provided to comparable municipalities, the support team at the bank, support services
offered by the local branch, and advantages of future services offered that the City is not
currently utilizing. It was determined that Exchange Bank would be the most ideal and cost
effective institution to provide banking services for the City of Petaluma.
FINANCIAL IMPACTS
The City will incur fees of approximately $30,010 annually for banking services. This cost could
fluctuate depending on the level of account activity. Costs incurred are partially offset by an
earnings credit estimated annually of approximately $18,345. The earnings credit provided by
the bank is based upon the average monthly balance maintained by the City. Total net cost is
estimated at $11,665 annually. Exchange Bank has agreed to provide requested services to the
City for the next three years, with a renewal option for three additional years, at the cost included
in their current proposal. This new cost proposal is estimated to cost $34,995 and provide budget
savings of approximately $2,270 from what the City is currently paying over the requested three
year period.
ATTACHMENTS
Resolution Authorizing the City Manager to Execute an Agreement with Exchange Bank
to Provide Banking Services to the City of Petaluma
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ATTACHMENT 1
RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AGREEMENT WITH EXCHANGE BANK TO PROVIDE BANKING SERVICES TO
THE CITY OF PETALUMA
WHEREAS, since 2007 the City of Petaluma has utilized Exchange Bank for needed
services; and
WHEREAS, it is important and prudent for the City to periodically review its banking
service requirements and test the market to assure an appropriate and cost efficient level of
service is being provided; and
WHEREAS, the City solicited proposals from various banking institutions to provide
banking services for the City of Petaluma; and
WHEREAS, the City has received proposals from three banking institutions; and
WHEREAS, the City has reviewed these proposals and interviewed the top two
banking institutions with the strongest proposals; and
WHEREAS, upon completion of the interviews, the City has determined that
Exchange Bank is the most ideal and cost effective institution to provide banking services to the
City of Petaluma.
NOW, THEREFORE, BE IT RESOLVED that the City Council authorizes the City
Manager to execute an agreement with Exchange Bank to provide banking services for the City
for an initial term of three years, with three additional one year extensions available, for an
approximate net cost of $11,665 annually, based on the level of account activity.
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