City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council authorize a Banking Custodial Services Contract
with Union Bank of California.
BACKGROUND:
Bank of America has provided the City and RDA’s banking services for many years.
Bank of America had also been the custodial bank for the City and the Agency. On
November 30, 1998, Bank of America discontinued their custodial services and
named Bank of New York (BONY) as sub-custodian. Over the last few years, BONY
has increased their fees substantially and implemented a few programs that have
increased fees with Bank of America as well, such as requiring that the City
Treasurer’s Office initiate outbound wires (at a cost of $25 per wire from B of A and
a receiving fee of $20 from BONY) in order to settle any trades.
Due to the increased costs and reduction of service levels, a Request for Proposal
was issued on May 11, 2006 to seek a qualified financial institution to provide
custodial services for cash and securities related to investment portfolios held in the
name of the City of Culver City (CITY) and the Culver City Redevelopment Agency
(CCRDA).
The scope of the services to be provided was to:
(1) maintain two separate custody accounts for the cash and securities owned by
the CITY and the CCRDA,
(2) collect all coupons and other periodic income on securities,
Meeting Date: 07/24/06 Item Number: J-2
AGENDA ITEM: Authorization of Banking Custodial Services Contract with Union
Bank of California
Contact Person/Dept.:
Nagam Rao/City Treasurer's Office
Phone Number: (310) 253 5889
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [X] Attachments: [X]
Public Notification: All firms submitting audit proposals; Master Notification List
(07/19/06)
Department Approval: Crystal Alexander,
City Treasurer
City Manager Approval: Martin R. Cole
for Jerry B. Fulwood (07/19/06)
City Controller Approval:City of Culver City, California
City Council Agenda Item Report
(3) monitor and record the collection of funds in accounts maintained by the
custodian for CITY and CCRDA,
(4) create, maintain and retain all records relating to securities held in custody in
client accounts to meet the requirements and obligations under Generally
Accepted Accounting Principles, and
(5) provide monthly activity statements and reports for all accounts, including cost
and market value of all securities, current yield plus any accrued interest.
DISCUSSION:
On June 8, 2006, the bids were opened. Six responses were received and evaluated
on the basis of their:
(1) understanding of the needs and operational requirements of the CITY and
CCRDA,
(2) experience, resources, and qualifications of the Firm and the individuals
assigned to this account,
(3) amount and quality of relevant experience managing similar relationships with
public sector clients,
(4) familiarity and knowledge of California State Statues, Banking and Investment
Regulations,
(5) Scope and Quality of additional services provided to the CITY and CCRDA,
(6) Demonstration and commitment to the industry, including continuing education
and service to professional organizations,
(7) Financial strength, financial controls and adequacy of insurance coverage, and
(8) Quality and conciseness of proposals.
Staff reviewed all proposals and found them to be complete. The quantifiable criteria
are shown on Attachment #1. The lowest bidder was US Bank; however, Union
Bank of California provides an interface into our investment software which is
included in their bid while US Bank would charge us to develop the same interface.
It is staff’s recommendation that Union Bank of California be selected as the
difference of $130.00 per year will be offset by the efficiency that we receive from
the interface.
FISCAL ANALYSIS:
Last fiscal year, the City and Agency combined incurred more than $20,000 in fees
for custodial services from Bank of New York. By shifting services to Union Bank of City of Culver City, California
City Council Agenda Item Report
California, there will be a decrease in overall costs resulting in a net increase in
investment earnings of $13,250.00 per year.
There are sufficient funds included in the Fiscal Year 2006/2007 Budget for this
contract.
ATTACHMENT:
1. Request for Proposal
2. Spreadsheet of Proposals in response to RFP
MOTION:
That the City Council:
1. Authorize a banking custodial services contract with Union Bank of California;
and,
2. Authorize the City Attorney to prepare the necessary documents and authorize
the City Manager to approve the documents.
MEETlNG DATE: 07/24/06
AGENDA ITEM: Authorization of Banking Custodial Services Contract with Union
Bank of California
ATTACHMENTS
Pages
1. Request for Proposal
1 - 7
2. Spreadsheet of Proposals in response to RFP
8ATTACHMENT 1
CITY OF CULVER CITY
REQUEST FOR PROPOSAL
CUSTODIAL SERVICES
2006
PREPARED BY THE CITY TREASURER'S OFFICE
Crystal C. Alexander
City Treasurer
CANDIDATE:City of Culver City
RFP-2006 Custodial Services
Page 1
I. INTRODUCTION
This Request for Proposal (RFP) is issued by the City of Culver City (CITY), who is seeking a qualified
financial institution to provide custodial services for cash and securities related to investment portfolios
held in the name of the City of Culver City (CITY) and the Culver City Redevelopment Agency
(CCRDA). The CITY and the CCRDA are local governmental agencies that operate under the laws of
the State of California. They are located in Los Angeles County California, and have a combined
investment portfolios of about S-xxx
IL PROPOSAL PROCEDURES
Schedule of RFP Process
Issue Request
Preparer's Conference
Responses Due
Recommendation to City Council
City Council Approval
Preparation Guidelines
May 11, 2006
June 1, 2006
June 8, 2006
June 15, 2006
June 26, 2006
Each proposal shall be prepared simply and economically avoiding the use of elaborate promotional
materials beyond those sufficient to provide a complete, accurate and reliable presentation. The CITY
will accept electronic submission of proposals, provided the proposal is contained in one file, can be
easily printed, and is followed with an original signature page by mail.
Inquiries. Submission and Deadline
Please direct your questions regarding the RFP to:
Nagam Rao, Treasury Division Manager
Phone: (310) 253-5889
City of Culver City
Fax: (310) 253-5880
9770 Culver Blvd
E-mail: nagam.rao@culvercity.org
Culver City, CA 90232-0507
Please submit 12 (twelve) copies of your Proposals marked "RFP — Custodial Services" to:
Christopher Armenta
City Clerk
City of Culver City
9770 Culver Boulevard
Culver City, CA 90232
Please arrange to deliver your proposal to the above office on or before June 8, 2006 at 5:00 P.M. PDT.
Proposals received after the above date and time will not be considered.
During the evaluation process the CITY reserves the right to request additional information or
2-
clarifications from proposers, or to allow corrections of errors or omissions. At the discretion of theCity of Culver City
RFP-2006 Custodial Services
Page 2
CITY, firms submitting proposals may be requested to make oral presentations as part of the evaluation
process. CITY is under no obligation to return proposals.
Effective Period of Proposals
All proposals must state the period for which the proposal shall remain in effect. Such period shall not
be less than 90 days from the proposal date.
Right of Rejection by CITY
CITY reserves the right to reject any or all proposals. CITY reserves the right to award this contract to
the financial institution that best meets the requirements of the RFP, and not necessarily to the lowest
bidder. CITY reserves the right to reject any or all proposals prior to execution of the contract, with no
penalty to CITY.
III. SCOPE OF SERVICES
The following tasks and services are to be provided by the selected fimi:
• Maintain TWO SEPARATE custody accounts for the cash and securities owned by CITY and the
CCRDA
• All securities and cash held by the custodian shall be segregated from the assets of others and
shall be and remain the sole property of CITY and the CCRDA
• Custodian shall collect all coupons and other periodic income on securities held and processed
per instructions received by authorized persons.
• Monitor and record the collection of funds in accounts maintained by the custodian for C/TY and
CCRDA.
• Create, maintain and retain all records relating to securities held in custody in client accounts to
meet the requirements and obligations under Generally Accepted Accounting Principals.
• Provide monthly activity statements and reports for all accounts, including cost and market value
of all securities, current yield plus any accrued interest. The statement cut off should be the last
day of the month. Statements must be sent by no later than the 7th business day of the following
end of the month.
• It is preferable that access to account information is online through the Internet, or the world
wide web (www)
IV. PROPOSAL INFORMATION REQUESTED
A. QUALIFICATIONS AND EXPERIENCE
• Generally describe the organization, date founded, ownership and other business affiliations.
(please provide number and location of affiliated offices)
• Provide the address of the office location that will service the account.City of Culver City
RFP-2006 Custodial Services
Page 3
• Describe the experience of the financial institution in providing similar custodial services for
public agency clients.
• List the number and market value of public agency custodial accounts for the last three years
and the average length of service.
• Include a copy of the most recently audited financial statement.
B. PERSONNEL
• Provide biographical information on bank officers that will be directly involved in the
management of CITY's account; the primary contact(s); and what, if any, experience these
officers have in working with the public sector.
• Provide an organization chart for the personnel who will be associated with CITY account,
including the roles of each person, and illustrating the relationship among the personnel.
• Phone numbers of personnel who will be associated with the City account.
C. CUSTODIAL SERVICES
• Describe any investments that would be available to CITY on a sweep arrangement. Provide
a complete listing of associated fees and/or administrative charges in the fee section below.
• Are security transactions settled on an actual or contractual basis? How will you compensate
CITY for fail float?
• When do you credit interest and dividends?
• Provide a listing of cutoff times for notification of securities transactions. Please specify if
the cut off times vary for different types of securities.
• Describe any subcustodial arrangements that would be used for securities belonging to Y.
Fully describe the roles and responsibilities of each subcustodian, if applicable.
• The CITY anticipates utilizing a third party broker/dealer to manage the purchase and sale of
securities. Describe how the financial institution interacts with broker/dealers.
• Do you provide custodial information to clients through an on-line inquiry/reporting service?
• Describe in as much detail as possible, any plans to sell, merge or dramatically change the
institution's corporate trust business.
• Do you accept a one time written blanket authorization which directs you to withdraw funds
from the customer's accounts for the purpose of authorized investment purchases, as an
ongoing authorization.
D. REPORTING
• Include sample reports and records.
• Is the bank willing/able to develop customized reports and transmit them electronically? If
so, please provide specific pricing information below.City of Culver City
RFP-2006 Custodial Services
Page 4
E. REFERENCES
• Provide three references (public, if possible), including the length of time you have provided
custodial services, client name, contact personnel, address and phone number.
• Provide a list of California public agency custodial clients who have terminated services in
the last three years.
F. INSURANCE
Clearly state the fidelity coverage, errors and omission or other insurance coverage which the
firm carries and which would be included in an Agreement for Services.
G. PRICING AND ACCOUNT ANALYSIS
This account is a California public agency and can only purchase securities listed in Section
53601 of the California .Government Code, ittanlieif Therefore, when quoting prices, do not
include in your computation costs associated with forms of investments disallowed by the
Government Code.
General Pricing information to be disclosed includes:
• Please identify any minimum fees.
• Clearly define whether security related charges are for a single purchase/sale or complete
"round trip".
• Is the price of a purchase/maturity the same as or different than a purchase/sale?
• Pricing information shall also clearly identify any Administrative fees or overhead charges
and an explanation of how they are charged.
• Identify the length of time these prices will be guaranteed
Detailed Pricing information to be disclosed includes:
On the following page is a sample transaction frequency by type of investment. Provide the
proposed prices for the following list of custodial services based upon the Scope of Services
requested in REP and the sample transaction frequency. In the event of separate transaction fees
please identify them separately.
1. Account Maintenance
2. Physical Security (List charges by type of physical security if charges differ i.e. if charge
for medium-term notes or mortgage backed securities are different than CD's, bankers'
acceptances and commercial paper.)
3. Wireable/Book Entry Securities
4. DTC
5. Free Receipt/Free Delivery
6. Paydowns of principal and interest
7. List all charges involved in custody of repurchase agreements
8. Wire transfers (Incoming, Outgoing, Outgoing-Repetitive and Non-Repetitive)City of Culver City
RFP-2006 Custodial Services
Page 5
9. Other custodial charges, including any sweep fees (please describe in detail)
Sample Annual Transactions for Portfolio
The following table provides a sample of the transaction quantity and frequency to be assumed in
responding with Proposal costing.
Please note: These frequencies are only presented for comparison purposes and are not based on
any historical data. The actual number of transactions incurred may be more or less than the
number shown in this sample.
Transaction Type Purchase
Number of
Transactions
Sale/Maturity
Coupon
Payment
U.S. Treasury Bill 3 3
Federal Agency Issues 9 9
Corporate Medium Term Notes 3 3
Bankers' Acceptances 1
U.S. Treasury Note 6 6 12
Callable Federal Agencies 3 3 6
No. of portfolio holdings as of month end: 80-85
V. EVALUATION AND AWARD CRITERIA
This RFP seeks qualified providers of custodial services. Selection will be made of one, best suited
candidate among the proposing Firms on the basis of the evaluation factors listed below:
• Understanding of the needs and operational requirements of the City of Culver City
• The experience, resources, and qualifications of the Firm and the individuals assigned to this
account
• Amount and quality of relevant experience managing similar relationships with public sector clients
• Familiarity and knowledge of California State Statutes, Banking and Investment Regulations
• Scope and quality of additional services provided to the City
• Demonstration of commitment to the Industry including continuing education and service to
professional organizations
• Financial strength, financial controls and adequacy of insurance coverage
• Quality and conciseness of proposalsCity of Culver City
RFP-2006 Custodial Services
Page 6
VI. CERTIFICATION
We hereby certify that we have read and followed the requirements as set out in this Request for
Proposal. Sufficient documentation has been provided so that the City of Culver City can verify all
information that has been provided. We understand the objectives of the City of Culver City in
releasing this Request for Proposal.
We attest to the accuracy of our firm's response to the CITYs Request for Proposal.
Completion of this Request for Proposal is only part of the City of Culver City's review process, and
DOES NOT guarantee that the candidate will be authorized to provide custodial services to the City.
This section must be signed by the sales representative who will service the CITY account, and by the
most senior person in charge of the custodial operations of the Firm.
Finn: Firm: • Name: Name: Signed: Signed: Title: Title: Date: Date:aq.
Banking Custodial Services
Average # of Union Bank Wells Fargo Northern City National
Service Provided
Transactions of California US Bank Bank Mellon Bank Trust Bank
Account Maintenance charges (City & Agency) 187 4,100.00 5,000.00 9,500.00 20,000.00 25,000.00 26,250.00
Physical Security 50 750.00 375.00 2,250.00 included included 500.00
Wireable Book Entry Securities 24 360.00 180.00 included included included 240.00
DTC 24 360.00 180.00 included included 600.00 240.00
Free Receipt / Free Delivery 24 360.00 180.00 included included 240.00 included
Paydown of Principal & interest 24 120.00 180.00 included included 96.00 included
All charges involved in custody of Repurchase
Agreements 0 0.00 0.00 0.00 0.00 0.00 0.00
Wire Transfers( In /out rep & non rep) 70 700.00 525.00 included included 700.00 1,750.00
Sweep fees included included included included included 0.0415%
Any other custodial charges included included included included included included
Monthly Statements 24 included included 2,000.00 included included included
Termination fee 0.00 0.00 0.00 0.00 1,000.00 0.00
Interface to investment software included fee fee fee fee fee
Total Annual Cost 6,750.00 6,620.00 13,750.00 20,000.00 27,636.00 28,980.00