TO: Mayor and City Council
FROM: Philippe Eskandar, City Manager
BY: Hillary Guirola-Leon , Finance Director
DATE: March 28, 2025
SUBJECT: AUTHORIZATION TO ENTER INTO A 3-YEAR AGREEMENT
FOR SAFEKEEPING SERVICES
STRATEGIC PLAN CRITICAL SUCCESS FACTORS
Fiscally Responsible and Transparent City Government
BACKGROUND
Per the City of San Marino’s investment policy, all securities owned by the City shall be held in safekeeping by a third-party bank trust department. The City currently uses US Bank for safekeeping services. On March 7, 2025, the City was informed that the current safekeeping services platform will sunset on April 30, 2025, and will not continue. The City had short notice regarding the upcoming sunset of our current safekeeping services and had to find alternative solutions for a new safekeeping services agreement to stay in compliance with its own investment policy.
A safekeeping services agreement ensures that valuable assets or documents are held securely by a third party, mitigating risks associated with loss, theft, or mismanagement. The City seeks to enter into this agreement with BMO Bank N.A. (“BMO”) to ensure compliance with industry standards and regulatory requirements.
DISCUSSION
As soon as staff was alerted of the upcoming sunset of our current safekeeping services platform, staff contacted two banks to compare services offered for safekeeping as well as obtained an alternative solution offered by our current Gretchen Shepherd Romey, Mayor
Tony Chou, Vice Mayor
Hunter Chang, Council Member
John Chou, Council Member
Calvin Lo, Council Member
provider, US Bank. Staff contacted East West Bank and BMO for proposals and received one formal proposal from BMO as East West Bank cannot meet the requirements of the City’s current investment policy. Based on staff’s evaluation and conversation with three banks, staff recommends that the City enter into an agreement with BMO for safekeeping services.
US Bank offered custody safekeeping services as an alternative to the current services provided which would have a minimum fee of $15,000 annually. This would be an increase of approximately $13,000 from our current fees.
BMO submitted a proposal as shown in Attachment 1. BMO is one of the top five commercial banks in North America and they have a local presence and government banking team. The proposal as shown in Attachment 1 is for a 3- year agreement with an option to renew 2 additional 1-year terms. The monthly fee would be based on our activity and is estimated to be approximately $503.25 a month ($6,039 annually) based on our latest statement activity. A demand deposit account (DDA) is also necessary in order to establish this service. This is similar to the current structure the City has for its safekeeping services with US Bank.
After reviewing the proposals, staff recommends that the City proceed with entering into an agreement with BMO for safekeeping services, a recommendation that has also been discussed and supported by the city finance liaison.
FISCAL IMPACT & PROCUREMENT REVIEW
The annual fee for Safekeeping services is approximately $6,039. No budget adjustment is needed to cover this cost.
The Finance Director has reviewed all three proposals and the bidding is in compliance with the City’s Municipal Code in regards to procurement of contracts for services.
LEGAL REVIEW
The City Attorney's office has reviewed and approved as to form.
RECOMMENDATION
Staff recommends the Council authorize the City Manager or his designee to execute the agreements necessary to enter into a 3-year agreement with an option to renew 2 additional 1-year terms with BMO for safekeeping services, subject to final language approval by the City Manager and City Attorney, and open a demand deposit account. If the City Council concurs with staff’s recommendation, an appropriate motion would be:
“I move to approve the City Manager or his designee to execute the agreements necessary to enter into a 3-year agreement with an option to renew 2 additional 1-year terms with BMO for safekeeping services, subject to final language approval by the City Manager and City Attorney and open a demand deposit account.”
ATTACHMENTS
1. BMO Proposal Letter and Pricing