Title
A Resolution Of The City Commission Of The City Of Hollywood, Florida, Authorizing The Appropriate City Officials To Enter Into An Agreement Between Wells Fargo Bank, N.A. And The City Of Hollywood; Providing For A Piggyback Of The Banking Services Agreement Awarded By The City Of Sunrise For An Initial Term Beginning May 1, 2015 Through July 31, 2017; Including The Option Of Renewal For Five Additional One Year Periods; At An Annual Cost Not To Exceed $125,000.00.
Body
Staff Recommends: Approval of the attached Resolution.
Explanation:
The City entered into an agreement on March 17, 2010 with Wells Fargo Bank, N.A. (Resolution R-2010-062) for the provision of banking services for the period May 1, 2010 through April 30, 2015 as a result of a formal competitive selection process (RFP 4226-10-JE) pursuant to the City's Purchasing Ordinance, Section 38.42 (A)(1).
The City's current contract with Wells Fargo Bank, N.A. will terminate April 30, 2015 and the City of Hollywood is looking to secure banking services that are competitive and best meet the City's needs.
Section 38.40(C)(5) of the Code of Ordinances provides, that when it is in the best interest of the city, the city may procure, without following formal contract procedure, all contractual services which are the subject of contracts with other governmental entities when the governmental entity's contract is based strictly on competitive proposals.
The City of Sunrise selected Wells Fargo Bank, N.A. as a result of a competitive RFP process and negotiated a contract effective August 1, 2012 for an initial five year term renewable for five additional one year periods.
An additional consideration is the current system conversion the City of Hollywood is undergoing affecting both the Finance and Public Utilities Departments. As a result of the utility billing software conversion, custom programming was required to integrate current banking systems with Wells Fargo Bank, N.A. with the new cash receipting system. These costs along with significant soft costs in the form of Treasury staff resources have been expended to facilitate the conversion. The assimilation of the new cash receipting system and other related Treasury systems will continue to be a significant burden to Treasury staff in the near term and in the upcoming year as Energov is implemented. Bringing on board a new banking services provider would require significant Treasury staff resources which are not available in the near term or upcoming year. Accordingly, it would not be prudent, or cost effective to change banking institutions, services and systems at this time.
The Department of Financial Services has analyzed the City of Sunrise's pricing terms with Wells Fargo Bank, N.A. and has determined that the pricing will result in increased savings to the City.
Wells Fargo Bank, N.A. is currently providing full banking services to the City, is among the largest banking services providers in the industry, and has performed satisfactorily for the City over the past five years.
For the trailing twelve month period ending December 2014, the City incurred approximately $94,000.00 in bank service fees related to our relationship banking operational accounts which was offset by $121,000.00 in earned interest credit providing the City with a net benefit of $27,000.00. Under the proposed contract during this same period, it is estimated that the City would have incurred approximately $101,000.00 in bank service fees which would have been offset by $182,000.00 in earned interest credit and would have provided the City with a net benefit of $81,000.00.
Under the new contract, the cost of banking services will increase by approximately 8% and the earned interest credit will increase from .20% to .30%. The increase in cost is more than offset by the increase in interest earnings.
The cost of these services are paid as a reduction to interest earned credited for compensating bank account balances consistent with current practice and recorded as an expense. The cost associated with these services is allocated to the respective fund at an annual cost not to exceed $125,000.00.
Recommended for inclusion on the agenda by:
Wazir Ishmael, Ph.D., City Manager
Matthew Lalla, Financial Services Department Director