REPORT TO COUNCIL
SUBJECT
Title
Action on Amendments to Agreement with JPMorgan Chase Bank for Banking Services to the City
Report
COUNCIL PILLAR
Manage Strategically Our Workforce Capacity and Resources
BACKGROUND
The Finance Department makes extensive use of banking services to manage the City of Santa Clara’s (City) treasury operations. In 2019, City conducted its first competitive procurement in decades for comprehensive banking services, which resulted in City Council’s approval to execute agreements with JPMorgan Chase Bank, N.A. (JPMorgan Chase). Due to the unique characteristics and complexities of the various banking products and regulations, the City entered into three separate agreements with JPMorgan Chase for General Banking Services, Merchant Card Services, and Commercial Card Services (RTC 20-493). This report is requesting actions for the General Banking Services Agreement (Agreement), which was established for an initial term of five years, ending on December 15, 2025, with the option to extend for an additional five years, at the City’s sole discretion.
General banking services are essential to City’s day-to-day operations. Millions of dollars in City funds are received and disbursed through multiple banking system channels daily, including, but not limited to, the following activities:
• Receipt and custody of all cash and checks received from any source in compliance with the provisions of State law governing the handling, depositing, and securing of public funds;
• Receipt of credit and debit card transactions; and
• City payments, including general accounts payable, payroll, and debt service.
Prior to the engagement with JPMorgan Chase, the City’s agreement with its previous banking partner was subject to non-negotiable price changes without notice. Under the JPMorgan Chase agreement, pre-negotiated prices are guaranteed through the term of the agreement.
Since full implementation of all JPMorgan Chase products and services, the City has experienced superior service from its banking relationship team, instituted innovative banking services, including new fraud prevention measures and other efficiency tools, and realized cost savings of more than $50,000 annually. In addition, the City receives earnings credits for money on deposit to offset a portion of the banking fees.
DISCUSSION
One key factor in JPMorgan Chase’s selection to provide banking services to the City was its continued investment in innovative technologies and products. The City has benefited from many JPMorgan Chase innovations, such as Account Validation Services and Payment Control for fraud prevention and efficiency improvements. As part of the City’s desire to continue to improve the customer experience, staff recommends adding JPMorgan Chase’s Digital Bill Payment services to the existing Agreement. Digital Bill Payment includes payment processing services to the City and provides the functionality to collect processing fees on non-utilities payments made by customers using payment cards and e-Checks, as authorized in the newly adopted Payment Acceptance and Processing Fees Policy (RTC 24-678).
First phase of implementation will begin with the Permitting Online Portal (also known as Accela Citizen Access). Once implemented, customers will have the option to use Digital Bill Payment at their convenience and agree to pay a processing fee of 2.65% of the transaction amount for payment cards or a $1.00 fixed fee for using e-Checks. There will be no additional costs to the City for offering Digital Bill Payment and any minimal fees for payment card chargebacks or e-Check returns can now be paid with the City’s account earnings credit. In addition, the City will realize cost avoidance estimated to be approximately $500,000 annually by eliminating payment card transaction processing fees.
Additionally, Digital Bill Payment includes an innovative bill presentment and payment solution that offers customers additional payment options, which will allow the City to offer an online quick pay bill-presentment webpage for accounts receivable customers, who previously did not have an online payment option. This enhancement will allow customers to easily view and pay their bills online, improving the overall customer experience while reducing manual processing by City staff.
Staff is impressed by the level of general banking customer service provided by the JPMorgan Chase’s dedicated banking team to the City, as their initiative, responsiveness, and professionalism are unsurpassable. As the initial term of the Agreement is expiring on December 15, 2025, staff is exercising the option to extend the term of the Agreement by five additional years through 2030. Given the complexity of the City’s treasury operations and banking infrastructure, staff is recommending adding up one additional five-year option period. The additional option periods will ensure continuity of banking services while providing the City with sufficient time to conduct a new competitive procurement process, negotiate and execute an updated agreement, and prepare for a potential shift to a new banking services provider.
Staff hereby requests authority to amend the Agreement with JPMorgan Chase to add Digital Bill Payment services and one additional five-year option period, allowing the City, at its sole discretion, to extend the Agreement through 2035.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of a California Environmental Quality Act (“CEQA”) pursuant to the CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Furthermore, the action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
The amended agreement does not require additional budget appropriation. Implementation of Digital Bill Payment is expected to benefit the City by an estimated minimum of $500,000 annually due to cost avoidance.
COORDINATION
This report has been coordinated with the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
1. Approve and authorize the City Manager to execute Amendment No. 1 to the General Banking Services Agreement with JPMorgan Chase Bank, N.A. to add Digital Bill Payment services on the terms and in substantially the form presented, in a final form approved by the City Attorney; and
2. Authorize the City Manager to exercise one additional five-year option to extend the term of the Agreement through December 15, 2035.
Staff
Reviewed by: Kenn Lee, Director of Finance
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. General Banking Services Agreement with JPMorgan Chase Bank, N.A.
2. Amendment No. 1 of General Banking Services Agreement with JPMorgan Chase Bank, N.A.