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1 TRANSMITTAL TO DATE COUNCIL FILE NO. The City Council SEP FROM The Mayor COUNCIL DISTRICT n/a Authority for the Director of Finance to execute an amendment Bank of New York Mellon Trust Company for financial custodian and securities lending services. Transmitted for your consideratioprsee tl tty Administrative Officer report attached. i/ W layj Ana Guerrero.. * CAO 649-d

2 Report From OFFICE OF THE CITY ADMINISTRATIVE OFFICER Analysis of Proposed Contract ($25,000 or Greater and Longer than Three Months) To: The Mayor C.D. No. CAO File No,: n/a Contracting Department/Bureau: Contact: Office of Finance Ken White Reference: Transmittal from the Office of Finance dated August 6, 2015 Purpose of Contract: Financial custodian and securities lending services Type of Contract: ( ) New contract ( X ) Amendment Contract Term Dates: October 1,2012 to September 30, 2016 (one year extension) Contract/Amendment Amount: $75,000 annual flat rate, plus 20 percent of net securities lending revenues and other fees based on requests for services, as detailed in Appendix B of the contract. Source of funds: Department 39, Fund 100, Account 3040 (Contractual Services) Name of Contractor: Bank of New York Mellon Trust Company Address: 400 South Hope Street, Los Angeles, CA Yes No N/A* 8. Contractor has complied with: Yes No N/A* 1. Council nas approved the purpose X a, Equal Employmt, Opptv./Affinn. Action X 2. Appropriated funds are available X «* b. Good Faith Effort Outreach X 3. Charter Section 1022 findings completed X c. Equal Benefits Ordinance X 4. Proposals have been requested X d. Contractor Responsibility Ordinance X 5. Risk Management review completed X e. Slavery Disclosure Ordinance X 6. Standard Provisions for Citv Contracts included X f. Bidder Certification CEC Form 50 X g. Bidder Conlrtbutions CEC Form S5 X 7. workforce that resides in the City: 0.15% i *N/A = not applicable,** Contracts over $100,000 COMMENTS The Office of Finance (Department) requests approval to amend Contact No. C with the Bank of New York Mellon Trust Company (Contactor) for financial custodian and securities lending services. The amendment will extend the term by one year, for a total term of four years, from October 1, 2012 to September 30, 2016, while the Department completes a Request for Proposals (RFP) process for these services. The Department released a RFP to replace this contract on June 8, Only one bid was submitted. The Department is reviewing the bid and reports that it will complete the RFP process and negotiate a new contract before September 30, The requested amendment is the first amendment to the contract and will only extend the term of the contract by one year. All other terms and conditions, Including compensation will remain the same. California Government Code Section requires that securities owned by the City be held by a custodial bank. Under the terms of the agreement, the Contractor provides domestic custody services, monthly audited valuations, daily unaudited valuations, and trade processing and settlement services for a flat annual fee of $75,000. Additional services, such as performance measurement and EClVl Analyst I Ot3 Assistantk= CAO 661 Rev, 9/2006 7" ) Jl City Administrative 015

3 CAO File No Page 2 global analytics are available for an additional cost. The fee schedule for all services is detailed in Appendix B of the agreement. The Contractor also acts as the City s agent to lend securities, which includes negotiating with borrowers, receiving collateral, and collecting distributions and fees. The Contractor retains 20 percent of net securities lending revenues. Net revenue for Fiscal Year was $377,000. The Department projects that securities lending will generate $400,000 this fiscal year. Funding is available in the Department s Contractual Services account for this contact. In accordance with the Los Angeles Administrative Code Section 10.5(a), Council approval of the proposed agreement is required because the term exceeds three years. To the best of our knowledge, the Contractor has complied with all standard provisions for City contracts, as well as City contracting requirements. RECOMMENDATION That the Council, subject to the approval of the Mayor, authorize the Director of the Office of Finance, or designee, to amend Contract No. C with the Bank of New York Mellon Trust Company for a term of October 1, 2012 through September 30, FISCAL IMPACT STATEMENT Funding for the contract is available in Department 39, Fund 100, Account 3040 (Contractual Services). This recommendation is in compliance with the City s Financial Policies in that there is no additional impact on the General Fund. Attachment

4 ANTOINETTE CHRISTO VALE DIRECTOR of FINANCE CITY TREASURER CITY OF LOS ANGELES CALIFORNIA OFFICE OF FINANCE 200 N. SPRING ST. ROOM 101 -CirY HALL LOS ANGELES, CA900I2 (fiel ERIC GARCETTI MAYOR ZYi\' i n. i / (213) 97S-I774 August 6, 2015 The Honorable Eric Garcetti Mayor of the City of Los Angeles 200 N. Spring St., Room 303 Los Angeles, California Attention: Mandy Morales, Legislative Coordinator SUBJECT: APPROVAL TO EXECUTE FIRST AMENDMENT TO CONTRACT WITH BANK OF NEW YORK TRUST COMPANY, NATIONAL ASSOCIATION SUMMARY In accordance with Mayor s Executive Directive No. 3, the Office of Finance (Finance) requests approval to execute the attached proposed Amendment No. 1 to Contract C with the Bank of New York Mellon Trust Company (BNY) to extend the term of the contract by up to one year. BNY provides custody, securities lending and related services under the contract executed October 10,2012. The extension would allow Finance to complete the Request for Proposal process and subsequent new contract negotiation. The term of the current contract expires September 30, California Government Code Section requires all securities owned by the City to be held in safekeeping by the City's custodial bank. The extension will allow for an uninterrupted delivery of services in Finance s Investment activities. REQUEST FOR PROPOSALS Finance released a Request for Proposals on June 8, 2015 soliciting bids for Custody and Securities Lending Services. Responses were due Jufy 30, Only one bid was received and Finance is reviewing the proposal. KEY CONTRACT PROVISIONS The term of the current contract expires September 30,2015. The proposed Amendment extends the term to September 30, 2016 and is currently under review by the City Attorney. All other provisions of the contract, including compensation, are unchanged. A copy of the current contract is also attached foryour reference. AN EQUAL OPPORTUNITY-AFFIRMATIVE ACTION EMPLOYER

5 BNY Mellon August 6, 2015 Page 2 of 2 FISCAL IMPACT Annual costforthe contract is approximately $124,350 which is more than offset by average annual revenue of approximately $197,300. Funds for this contract have been budgeted in the Office of Finance Account 4040, Bank Service Fees. The City would incur the loss of significant revenue if there were a lapse in the contract. RECOMMENDATIONS The Office of Finance respectfully requests: 1) The Mayor submit Amendment No. 1 to Contract No. C to the City Council for its review and consideration; and 2) The City Council authorize the Director of Finance to execute Amendment No. 1 to Contract No. C , subject to final review as to form and legality by the Office of the City Attorney. If you require any further information regarding this matter, please contact Ken White at (213) or at ken.white@lacitv.org. Respectfully, Antoinette Christovale, CPA Director of Finance / City Treasurer Attachments cc: Ana Guerrero, Mayor s Chief of Staff (w/o attachments) Matt Szabo, Deputy Mayor of Budget and Innovation (w/o attachments) Emily Mayeda, Office of the City Administrative Officer AN EQUAL OPPORTUNITY-AFFIRMATIVE ACTTON EMPLOYER

6 AMENDMENT NO. 1 TO CONTRACT No. C BETWEEN THE CITY OF LOS ANGELES AND THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION This First Amendment to Contract No. C between the City of Los Angeles (hereinafter City ) and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION (hereinafter CONTRACTOR ) is entered into with reference to the following: WHEREAS, on October 10, 2012 the parties entered into Contract No. C wherein CONTRACTOR agreed to provide Custody, Securities Lending and related services; and WHEREAS, Contract No. C expires September 30, 2015; and WHEREAS, City would be in violation of California Government Code Section which states that all securities owned by the City shall be held in safekeeping by the City s custodial bank and would face the loss of significant revenue if there were a lapse in Custody, Securities Lending and related services; and WHEREAS, Office of Finance has released a Request For Proposal for Custody, Securities Lending and Related Services; and WHEREAS, the City and the Contractor now agree to continue the CONTRACTOR S services to the City to allow sufficient time for the Office of Finance to complete the Request for Proposal process and subsequent negotiation of a new contract without a lapse in service. NOW THEREFORE, the parties hereby covenant and agree as follows: ARTICLE I - AMENDMENT TO THE CONTRACT Section 3 - Term, on Page 3 of the CONTRACT is hereby amended in its entirety to read: The term of this AGREEMENT shall commence on October 1, 2012, and end on September 30, 2016 subject to the termination provisions herein. ARTICLE II - GENERAL PROVISIONS I Except as amended by this FIRST AMENDMENT, all other provisions of Contract No. C shall remain in ful l force and effect. Signature page follows. Page 1 of2

7 IN WITNESS THEREOF, the parties hereto have caused this instrument to be signed by thenrespective duly authorized officers: Approved Corporate Signature Methods (please sign in blue ink); a) Two signatures: one by Chairman of Board of Directors, President or Vice President; and one by Secretary, Assistant Secretary, Chief Financial Officer or Assistant Treasurer. OR b) One signature by Corporate designated individual together with properly attested resolution of Board of Directors authorizing person to sign on the company behalf. City Of Los Angeles The Bank of New York Mellon Trust Company, National Association ANTOINETTE CHR1STOVALE, CPA Director of Finance / City Treasurer Name: Title: Signature Printed /Typed Printed /Typed Name: Title: Signature Printed/Typed Printed / Typed APPROVED AS TO FORM: MICHAEL N. FEUER City Attorney ATTEST: HOLLY L. WOLCOTT City Clerk Assistant City Attorney Deputy City Clerk Page 2 of2 Custody & Securities leading - BONY Amendment