City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01785 11/1/2022 Consent Item 3.
Second Amendment to the Master Depository and Banking Services City Agreement [Published for 10-Day Review on 10/20/2022]
File ID: 2022-01785
Location: Citywide
Recommendation: Pass a Motion: 1) authorizing the City Treasurer to execute the Second Amendment to the Master Depository and Banking Services City Agreement (2015-2232) with J.P.
Morgan Chase Bank, N.A including an increase in custody services by $36,000 annually); 2) authorize the City Treasurer to execute the September 2022 Amendment to Select Government Merchant Payment Card Processing Agreement; 3) authorize the City Treasurer to execute the Fifth Amendment to Commercial Card Services.
Contact: John Colville, City Treasurer, (916) 808-8297, [email protected], Kimberlie Gladden, Banking Operations Manager, (916) 808-2675, [email protected], Office of the City Treasurer
Presenter: None
Attachments:
1-Description/Analysis
2-Second Amendment to the Master Depository and Banking Services Agreement 3-City of Sacramento - Renewal Amendment to Select Government Merchant Payment Card Processing Agreement
4-City of Sacramento - Fifth Amendment to Commercial Card Service Terms Application & Agreement Additional Description/Analysis
Issue Detail: In 2015, the City entered into the Master Depository and Banking Services Agreement (No. 2015-2232) with J.P. Morgan Chase, N.A. (JPMC); in 2017 the City entered into the First Amendment to that Agreement (2015-2232-1); and then, in 2020, the City entered into a Supplemental Agreement (Agreement). This Agreement was originally approved after a Request for Proposal (RFP) process. The intent of that process was to find the best service at the best cost.
Staff recommends that Council approve the Second Amendment to the No. 2015-2232 extending the
File ID: 2022-01785 11/1/2022 Consent Item 3.
contract terms for an additional five years through December 22, 2027, with the option for two one- year extensions.
Services provided by JPMC under the Agreement include: (1) general banking (2) merchant services, (3) custody (settlement, safekeeping, and reporting of investment security), and (4) commercial card services (Purchase Card (P-Card), Single Use Account (SUA) and Travel). Under this Agreement, pricing achieved and awarded for general banking and merchant services in 2015 will continue through the extended term without any increases. Pricing for custody and commercial card services have been revised (Exhibits B and Attachment 4, respectively).
Policy Considerations: The Sacramento City Code Section 4.04.020 and Council Rules of Procedure (Chapter 7, Section E.2.d) mandate that unless waived by a 2/3 vote of the City Council, all labor agreements, and all agreements greater than $1 million shall be made available to the public at least ten (10) days prior to council action.
Under Section 73 of the City Charter, the City Treasurer shall be responsible for the deposit and investment of all funds of the City Treasury not made subject to the control of others and keep City Council fully advised which includes the management of the City's banking, depository, custodial and merchant services.
Further, in order to promote the prudent and efficient implementation of the City’s investment activities, the City’s Investment Policy requires the City Treasurer to engage various financial services firms as needed to provide custodial services and safeguarding for the securities maintained in the investment program
The proposed action is also consistent with Sacramento City Code, Chapter 3.64 (Contracts for Professional Services). This item was published for 10-day review on October 20, 2022, in compliance with the City Code.
Economic Impacts: Not applicable.
Environmental Considerations: This report is an administrative activity that does not constitute a “project” as defined by California Environmental Quality Act (CEQA) [CEQA Guidelines Sections 15378(b)(2 and 5)] and is not subject to CEQA [CEQA Guidelines Section 15060(c)(3)] Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Approving the recommended Second Amendment to the Master Depository and Banking Services City Agreement no. 2015-2232 allows the City to continue to
File ID: 2022-01785 11/1/2022 Consent Item 3.
provide ongoing banking and custodial services while maximizing existing service levels.
Staff recommends extending the Master Depository and Banking Services Agreement based upon the savings inherent in renewing the current banking services agreement and deferring the issuance of an RFP for a new services agreement. Specifically, the savings in costs are the result of maintaining the majority of the existing fee schedules and avoiding costly conversion expenses.
Due to the imbedded nature of banking contracts in day-to-day financial transactions, it is not uncommon to see longer term contracts up to five or ten years to ensure continuity of service and necessary strategic deployment of resources for major projects such as the implementation of a new banking relationship. Further, the increased complexity of the financial services used by the City, having the flexibility to address the current financial constraints, and the evaluation process being more complicated and more time-consuming, extending this agreement is prudent to balance available staff resources while still obtaining competitive service, costs, and/or rebates.
The City of Sacramento is again facing extraordinary challenges due to COVID-19 and other economic hardships, and while the current financial condition of the City is strained, upon the completion of these recommended extended terms, staff expects to conduct a new RFP for these services.
Financial Considerations: Banking and Merchant Services cost the City approximately $3 million annually. Pricing achieved and awarded for general banking and merchant services in 2015 will continue through the extended term without any increases and will continue to be paid by appropriate Citywide expenses provided by the City’s respective departments’ operating budgets.
For this engagement, pricing for custody and commercial card services have been revised (Exhibits B and Attachment 4, respectively) and will also be paid through the general fund as an appropriate Citywide expense. Custody services cost the city approximately $140,000 annually. Based on market rates, Custody Services will increase annually $36,000 while the city will benefit from an increase in Commercial Card rebate from 1.20 to 1.70 basis points.
This agreement is structured based on service and activity level and is dictated by transaction volume which can change over time; the City essentially controls costs via a fixed payment per service during the length of the contract. Staff has and will continue to closely monitor costs on a regular basis.
Local Business Enterprise (LBE): Not applicable.
SEPTEMBER 2022 AMENDMENT TO
SELECT GOVERNMENT MERCHANT PAYMENT CARD PROCESSING AGREEMENT
MERCHANT NAME: City of Sacramento
INTERNAL PAYMENTECH USE Rev 01/05/22
Date Printed September 8, 2022
This September 2022 Amendment (this “Amendment”) is entered into by and between Paymentech, LLC, also known as Chase Merchant Services (“CMS”), for itself and on behalf of JPMorgan Chase Bank, N.A. a national banking association (“ Chase”), and each of the merchant(s) whose signature(s) appear below (collectively, the “Merchant”).
This Amendment amends and modifies that certain Select Government Merchant Payment Card Processing Agreement, dated on or about February 24, 2016, as may have been amended through the date hereof (the “Agreement”), between CMS, Chase and Merchant. This Amendment is effective as of the date last signed below. Capitalized terms used but not defined herein shall have the meaning set forth in the Agreement. Unless otherwise specified references to section numbers herein shall refer to the corresponding section of the Agreement. To the extent of any conflict or inconsistency between the terms of this Amendment and the Agreement, this Amendment will control.
The Agreement is hereby amended and modified as follows:
1. EXTENSION OF TERM.
The current term of the Agreement is hereby extended to continue through 12/22/2027. Thereafter, the Agreement shall automatically renew as provided in the Agreement. If the Agreement is silent regarding renewal terms, then the Agreement shall automatically renew for successive one (1) year terms.
2. CONTINUED EFFECT.
Except to the extent amended hereby, all terms, provisions and conditions of the Agreement are hereby ratified and shall continue in full force and effect and the Agreement shall remain enforceable and binding in accordance with its terms.
This Amendment shall be effective on the date on which it is fully executed (i.e. the last signature date below).
Agreed and Accepted by:
City of Sacramento
MERCHANT LEGAL NAME (Print or Type)
915 I St., HCH, 3rd Floor, Sacramento, CA 95814
Address (Print or Type)
By (authorized signature)
By, Name, Title (Print or Type)
Date
Agreed and Accepted by:
PAYMENTECH, LLC for itself and on behalf of
JPMORGAN CHASE BANK, N.A.
By:
Print Name:
Title:
Date:
Address: 8181 Communications Pkwy, Plano, TX 75024
Executive Director
October 18, 2022
Vincent Walker