Agenda Date: 10/21/2014
Subject:
Title
Ordinance on second reading approving a Master Agreement with KeyBank National Association.
Body
Presented By:
Doug Farmen, Finance Director
POLICY QUESTION:
Does city council support establishing a five-year agreement with Key Bank for general banking services?
BACKGROUND:
In June 2014, the finance department issued a Request for Proposals (RFP) regarding general banking services for the city including deposits, checking accounts, lockbox, wire transfers, and investment safekeeping. The city received three responses and staff selected Key Bank as the lowest and best bidder.
Section 103 of the city charter limits contracts for services to two years, unless authorized by ordinance.
STAFF ANALYSIS:
Key Bank's pricing is very attractive and staff recommends fixing the rate structure for five years. The previous banking contract was for two years with Wells Fargo Bank. As soon as that contract expired, the bank lowered the 'earnings credit' given to the city by 75% (this is the investment interest rate given to the city's balances which offsets bank fees). The proposed contract includes adjustments to the earnings credit as interest rates change, with an established minimum interest rate.
If a five-year contract is not approved, the city will enter into a two-year contract with KeyBank, and staff would evaluate their services at the end of the term. If an RFP is issued and Key Bank is again selected, many staff hours would be utilized in negotiating a new contract. In addition to locking in the rate structure, the five-year contract avoids these possible additional costs. The ordinance also authorizes the city manager to approve 13specific Key Bank service schedules such as a safekeeping agreement for city investments. All of these service schedules have been reviewed and approved by the city attorney.
FISCAL IMPACTS:
The contract is estimated to save the city $21,000 annually (38%) in o...
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