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CITY COUNCIL AGENDA REPORT
City of Anaheim
FINANCE DEPARTMENT
DATE: MAY 24, 2022
FROM: FINANCE DEPARTMENT
SUBJECT: APPROVE AN AMENDMENT TO THE AGREEMENT WITH
WELLS FARGO BANK FOR GENERAL BANKING SERVICES
ATTACHMENT (Y/N): YES ITEM # 17
RECOMMENDATION:
That the City Council, by Motion:
1. Approve and authorize the Finance Director/City Treasurer to execute the First Amendment to the agreement with Wells Fargo Bank, N.A. (Agreement) for the City’s general banking services for a total not–to- exceed amount of $500,000, covering a five-year term, with three optional one-year renewals; and
2. Authorize the Finance Director/City Treasurer to execute any amendments under the terms and conditions of the Agreement and authorize any additional renewals.
DISCUSSION:
The City of Anaheim currently has a contract for banking services with Wells Fargo Bank, N.A. (Wells Fargo) which was originally awarded as a result of a Request for Proposals (RFP) process completed in May 2012. Over the term of the current Agreement, Wells Fargo has been a strong financial services partner, offering quality and diversified banking services, while providing efficiencies, automations, and the right combination of services and solutions to meet the City’s needs.
With the current Agreement set to expire in June 2022, Wells Fargo offered a renewal option that allows the City to extend this Agreement for an additional five years, with three optional one-year renewals. Such extension will allow the City to continue effective operations without disruption, while also allowing the Finance Department to focus on implementing additional solutions to streamline processes, enhance payment channels, maintain strong internal controls, and strengthen the safety and security of our assets.
Fees proposed are very competitive and have been compared to other public proposals providing similar services with the same breadth, scope, and size as the City of Approve an Amendment to the Agreement with Wells Fargo Bank for General Banking Services May 24, 2022
Anaheim. The new fee schedule is a mix of some line item fees increasing slightly, while others decrease because of more efficient processing. Throughout the term of the Agreement, the City has consistently earned Earning Credit Rate (ECR) allowances for the accounts within the scope of this Agreement which offset our monthly banking fees by a substantial portion. In recent years, even when interest rates have significantly decreased, our banking fees have averaged under $5,000 per month.
Noting no deficiencies in current services provided and to maintain the highest level of service quality and best overall value to the City, staff recommends the approval of the First Amendment to the Agreement to extend the period of performance for another five years, along with the three optional one-year renewals. The contract extension allows staff to focus on elevating competencies and service offerings while reaping the additional benefits of being a long-term Wells Fargo customer, which include:
Discount of 6% from current charges, representing $5,100 in annual savings Three-month retention credit waiver of account analysis fees – estimated value of $15,000
Increased ECR by 10 basis points – Based on average collected balances, an anticipated increase of approximately $700 per month of additional credit Enhancing Technology Waiver – implementation fee waiver for new innovative bank solutions to enhance technology and create efficiency; complementary business process review to foster improved operations and processing capabilities and to make industry best recommendations
The contract amount limit is set for a cost of $60,000 per contract year, which represents the average cost of annual fees before ECR allowances. Actual charges will fluctuate based on transactional volume, as well as the value of the ECR allowances for each period, and will most likely be below the annual estimate. In years when earning rates are more favorable, the ECR allowance may also fully offset the cost of services.
IMPACT ON BUDGET:
Sufficient funds are included in the Finance Department’s General Fund budget for FY 2021/22, with all subsequent years’ renewals subject to City Council approval of budget appropriations.
Respectfully submitted,
Deborah A. Moreno
Finance Director/City Treasurer
Attachments:
1. First Amendment
2. Original Agreement