1 STAFF REPORT
DATE: June 6, 2023
TO: Justin Hess, City Manager
FROM: Krystle Palmer, City Treasurer
Jennifer Becker, Financial Services Director
By: Craig Wood, Deputy Financial Services Director
SUBJECT: Adoption of a Resolution Authorizing the City Treasurer to Establish Housing Authority Bank Accounts and Sign for Checks
RECOMMENDATION:
Adopt A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF BURBANK
AUTHORIZING THE CITY TREASURER TO ESTABLISH HOUSING AUTHORITY BANK ACCOUNTS AND SIGN FOR CHECKS.
BACKGROUND
Historically, the City of Burbank held bank accounts with two main banks to hold operating funds at Bank of America, and housing funds at Union Bank. Most City treasury operations were performed from the Bank of America account, with Union Bank performing banking for the Housing Authority Section 8 Fund (Fund 11 7). The U.S.
Department of Housing and Urban Development (HUD) requires that Housing Authorities who receive Section 8 funds maintain them in a separate interest-bearing account.
In December of 2022, the City was notified that Union Bank was purchased by U.S. Bank and that the Housing Authority’s account(s) would be transitioned to U.S. Bank on May 26, 2023. That transition of Burbank’s Section 8 f unds was successfully completed; however, the transition prompted discussions amongst staff as to whether maintaining the Housing Authority bank account in a separate institution from the rest of the City’s operations was in the best interests of the City. Staff surveyed the Cities of Glendale and Pasadena and found that both agencies kept their Section 8 bank accounts with the same institution as their main operating accounts.
FINANCIAL
SERVICES
2 DISCUSSION
There are several benefits to relocating the Housing Authority bank account into the same bank as the rest of the City’s operations . The City and Housing Authority are presently paying bank service fees to two separate institutions. Due to the earnings credit allowance on cash balances held by the City at Bank of America, the service fees are proportionally lower than the fees charged by U.S. Bank . Centralizing the two accounts into one institution would allow the Housing Authority to take advantage of the reduced ban king fees already experienced by the rest of the City.
Additionally, operational efficiencies can be gained by consolidating the City and Housing Authority’s banking operations within one institution. Under the current process, Financial Services staff issues monthly checks from the U.S. Bank account to the City’s Bank of America account to reimburse the City’s operating account for Section 8 related administrative expenses, such as payroll, monthly rental rates, and Materials, Supplies, and Service (MS&S) expenses. Any invoice that is charged multiple departments currently requires two check payments – one drawn on Bank of America, and one with U.S. Bank for the Housing portion of the costs. Revenue deposits (checks) for the Housing Authority must be mailed or physically walked to U.S. Bank, as the minimal volumes do not qualify for a deposit terminal onsite at the City Treasurer’s Office. While it does not eliminate the need for monthly reconciliations between the two bank accounts, residence within the same financial institution provides for much simpler reporting and elect ronic transfer processing.
For the above reasons, b oth City Treasurer and Financial Services staff are recommending that the Housing Authority Section 8 bank account be transitioned from U.S. Bank to Bank of America. Since the new Bank of America account will be separate from the City’s existing operating account, Bank of America requires that the Housing Authority of the City of Burbank approve the attached resolution authorizing the City
Treasurer to establish the new bank account and sign for checks (see Attachment 1). Staff is targeting July 1, 2023 as the transition date to move the Section 8 banking operations to the new Bank of America Housing Authority account.
FISCAL IMPACT
There is no fiscal impact associated with the opening of the new Bank of America account.
Once the funds are transitioned, some efficiencies will be gained in terms of staff time, and the Housing Authority will experience a nominal reduction in bank service fees.
ENVIRONMENTAL REVIEW
This activity has no potential for resulting in either a direct or a reasonably foreseeable indirect physical change in the environment. As such, is not a “project” subject to the 3 requirements of the California Environmental Q uality Act (CEQA) 14 Cal. Code Regs § 15378.
CONCLUSION
The attached resolution, if approved, will provide the City Treasurer with the authority to establish new bank account(s) on behalf of the Housing Authority of the City of Burbank.
The consolidation of the City’s banking activities into one institution will create efficiencies for staff and result in lower bank service fees for the Section 8 program.
ATTACHMENTS
Attachment 1: Resolution