REPORT TO COUNCIL
SUBJECT
Title
Authorize an Extension of a Banking Services Agreement with US Bank
Report
REPORT IN BRIEF
Approval is requested to extend a contract with US Bank for three years to provide regular and ongoing banking services. Approval is also requested to authorize the City Manager to renew the contract up to two additional years if services and fees remain favorable to the City.
EXISTING POLICY
Pursuant to Section 2.08.070(b)(1) of the Sunnyvale Municipal Code, contracts for specialized professional service may be exempted from the competitive proposal process.
Section 2.08.070(b)(3) authorizes the purchase of goods and/or services to be exempted from the competitive bidding requirements when the solicitations of bids or proposals would be impractical, unavailing or impossible.
ENVIRONMENTAL REVIEW
The proposed actions are exempt from environmental review under the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15378(b)(4) in that it is a fiscal activity that does not involve commitment to any specific project that may result in a significant impact on the environment.
BACKGROUND AND DISCUSSION
The City previously utilized banking services with Union Bank of California, which was selected after conducting competitive selection processes in 1993, 2000, and 2006 and amending the 2006 agreement throughout the contract term in 2013, 2017, and 2020.
Union Bank was acquired by US Bank in 2023, and the City completed an intensive transition which lasted several months. As part of the acquisition terms, US Bank honored the existing Union Bank service agreement with the City, which is set to expire on December 31, 2024. (Attachment 2 to this report.) Recognizing that the City has been a long-term customer, US Bank has also offered competitive service fees and higher interest earning rates and has provided acceptable service levels and responsiveness.
Under the banking contract, US Bank provides the following:
• Deposit services for all City departments that collect payments
• Wire transfer and check clearing services
• Direct Deposit of employee payroll
• Automated Clearing House (ACH) processing for utility customers to pay utility bills electronically
• Account reconcilement reporting
• Positive pay services
• ACH Payments to vendors and employees
• ACH Control Totals
• Specialized cash management balance reporting compatible with the Oracle financial system
In addition to the banking services contract, the City has a separate contract with US Bank for custody services for a two-year term, which is to expire on December 31, 2025. Council action was not required on this contract because the contract amount was below the threshold for Council action given the separate and distinct scope of work. Under the custody contract, the bank provides for custody services for the City’s investment transactions, which includes the following:
• Processing and safekeeping of all securities
• Reconciling assets
• Collecting and reinvesting interest income
• Providing accounting statements
• Executing ownership documents and forms
Staff is recommending deferring a Request for Proposals (RFP) process for banking services due the implementation of Oracle Cloud Fusion, the City’s Enterprise Resource Planning (ERP) system. Staff is currently working on post-live issues pertaining to the Human Capital Management module, which affects payroll and benefits. Before potentially considering a banking change, a fully operational and stabilized ERP is important, along with the availability of dedicated staffing resources to plan, evaluate, select, and execute a change to a new banking service vendor. Staff is planning to re-evaluate the stability of the ERP at the end of the initial three year extension of this agreement to determine if an RFP is practical at that time.
FISCAL IMPACT
Staff estimates that the cost of banking service fees will be approximately $40,000 on an annual basis. The bank service fee gets offset against the interest earnings before City funds receive their share of interest earnings.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
RECOMMENDATION
Recommendation
Take the following actions:
- Authorize the City Manager to extend the existing contract with Union Bank by three years, from January 1, 2025, through December 31, 2027; and
- Authorize the City Manager to renew the contract for up to two additional years if service and fees remain favorable to the City.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $250 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
_X_ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Inderdeep Dhillon, Acting Assistant Director of Finance
Reviewed by: Dennis Jaw, Acting Director of Finance
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENT
1. Extension of Banking Services Agreement Draft
2. U.S. Bank Terms and Conditions