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5. Designation of Official Depository for City Funds.MEMORANDUM CITY OF 5 CHANHASSEN 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317 (612) 937 -1900 • FAX (612) 937 -5739 TO: Mayor and City Council FROM: Official Depository Evaluation Committee • Don Ashworth/Pam Snell, City Staff • Cliff Hoffman, Deloitte & Touche • Roger Knutson, Campbell, Knutson, Scott & Fuchs • Mark Senn, Councilman, I DATE: November 22, 1995 j . �5 SUBJ: Designation of Official Depository; 1996 [Note: This was to be an Evaluation Committee report based on RFP responses, monetary comparisons, interviews, and other considerations. To ensure delivery of a report to the city council, the following format was chosen to allow for staff review of "monetary comparisons" while allowing for Evaluation Committee comments as well.,. F The four Chanhassen banks wexe given the RFP forms. Two di requirements of the city, ;e Americana and Century Banks did Monetary comparWSd - T' 'The RFP as' car assured. Boy was I wronghe significantly different and to try to�conYe clarify the differences. Staff has met wit] differences between the two proposals. I comparison. to bid given the collateralization f eci' was perfectAn "apples, to apples" comparison could be programs that calculate interest for the tw6 anks is 0 ,. one to the other was difficult at best `The interviews did not both banks since the time 6fnterviews (Friday) to discuss onsider :the following to be a true apples to apples 7 Recommendation (City Staff): Chanhassen State Bank has continued to provide efficient and cost effective services for the City of Chanhassen. City staff would recommend that Chanhassen State Bank be designated as the official depository for 1996. Comments by Cliff Hoffman, Deloitte & Touche: Mr. Hoffinan contacted me expressing the following concerns: • The Richfield earnings rate does not appear to be tied to a specific indicator. The concern is really one of auditability. By comparison, the Chanhassen State Bank rate is tied to the 90 day treasury which is easily traceable; and • Mr. Hoffman also expressed concern over whether the half of 1% service fee charged by Richfield's outside service, when deducted, would produce a rate greater than obtained through a 90 day treasury rate; and • During the interview process, it came out that very few municipal accounts were using this type of account. A good answer as to why was not received; and • Usage of a sweep account will definitely increase the amount of staff time required to administer investment activities. The calculation of the minimum balance has to take into account the number of debits, credits, etc. on a particular day and that type of information may be very difficult to track. Chanhassen simply does not have sufficient staff for this type of work effort; and • Current Gasby Rules do not require the credit risk classification for mutual funds as proposed in the Richfield proposal. However, Cliff, Pam and I agree that the current collateralization requirements with Chanhassen State Bank, where the collateral is physically held by a third parry trust (First), provides the highest level of security that can be obtained; and • In conclusion, it is evident to Mr. Hoffinan that the Chanhassen State Bank proposal represents the best economic deal, has the best security that you can get, and that it takes virtually no staff time and that there are no transition costs. Comments by Roger Knutson, City Attorney: I concur with staff s and the auditor's recommendations. The net earning to the city is higher with Chanhassen State Bank. Service has been good and no good reason to change banks has been shown. Comments by Councilman Mark Senn: Mark did not receive this packet until 1:00 p.m. this afternoon (Wednesday) and has not reviewed the financial comparisons set out above. He would prefer to make his comments verbally Monday evening. -3- 1 11 u I I 1 Chanhassen ' State Bank Richfield Average Balance $900,000 $900,000 Float 50,000 50,000 - ' $850,000 $850,000 Required Reserve 90,000 17,000 ' $760,000 $833,000 5 ,� Minimum Balance 45,00 153,169 Amount available for Investment $712,000 $_67 3 3 13,8 �a Interest Earnings @ 5.61% $39,943 WO 3 Savings from Best RFP $1,805 1 37, ' Other Considerations: Both banks offered "other considerations" as part of their proposals, Le: ' • Richfield: Richfield offers "Executive Express Cash Management." Both Pam & I agreed that this service (not currently provided by Chanhassen State Bank) is beneficial. However, given goals set for the Finance Dept. in 1996, we agree that the service would probably be used minimally. ' • Chanhassen State Bank: In 1992, Chanhassen State Bank supplied the city with an "encoder machine" for our deposits. The machine costs approximately $2,00043,000. The cost is relevant, but minimal in ' comparison to costs of balancing monthly deposits. We continuously had discrepancies of less than $1 between what we showed as being deposited and what the bank statement showed. As our receipting process typically has us running one tape on the group of utility bills being receipted with a separate tape on the ' checks being deposited, the 50¢ error was almost always a bank error in encoding a check as 84¢ instead of 34¢. Having the city doing the encoding guarantees that our deposits will always balance to our records as we're doing it. ' ' Although shown as a line item, "float" is not accounted for in Richfield's spreadsheet. They describe this saying it will appear as "avg. neg. bal." which is deducted from "avg. positive bal" (see example). For the first nine months of 1995, ' our average float ("avg. neg. bal. ") was $50,000 /mo. To make an apples to apples comparison, float must be considered in the Richfield analysis. 2 Chanhassen State Bank does not "sweep" balances to a separate account to calculate interest earnings. To make an apples ' to apples comparison, staff used Richfield's interest rates to set the "serv. chrg. ded." as used in the Richfield proposal. 3 The city's RFP required banks to use an average interest earnings rate of 5.41 %. Richfield was subsequently asked to use ' the "actual average" for the first nine months of 1995 (5.61 %) while also being asked to convert their proposal to ours —a dilemma. To resolve the dilemma, staff converted Chanhassen State Bank's interest earnings to the 5.61 % used by Richfield. 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Z - o I 0f) - rr- a Z; t , -- � v� r� h ►� ,� r t �Q o � 6� Oi v � Ex. x,,,5 cl^-a , r � 3 0 o 0 1A d v - k c oaA-A- Zoo �Ov►r�' Gva. �� t� _ ,,i- o ©-� F ;r QOC7 - 504 If 2 000 I L O v 'r- 1 Q0 O t an a soh; z A& t2S6 V 45 U(Rs ) d � moo Page:' _ `' 1 Act # Activity Name /Season Category / Location ACTIVITY NAME Activity Category Activity Season Activity Location Chanhassen Parks & Recreation ACTIVITYBASIC REPORT Enrollment Dates Min / Max Begins Enr /Opn Ends 1 1010.201 WHIFFLEBALL /SHUFFLE Sports - Youth Winter Gymnasium 10 0 21 12/14/95 21 02/22/96 1011.201 BROOMBALL Sports - Youth 8 17 12/19/95 Winter Rink Hockey #1 CRC 0 17 01/23/96 1012.201 BALLET/TAP Dance 7 15 11/27/95 Winter Aerobics/Dance 4 11 02/12/96 1012.202 Ballet/Tap Dance 7 15 12/02/95 Winter Aerobics/Dance 0 15 02/17/96 1013.201 Jazz/Funk Dance 7 15 12/01/95 1 013.202 Winter Aerobics/Dance 1 14 02/16/96 Jazz/Funk Dance 7 15 12/02/95 Winter Aerobics/Dance 0 15 02/17/96 013.203 Jazz/Funk Dance 7 15 11/29/95 Winter Aerobics/Dance 1 14 02/14/96 013.204 Jazz/Funk Dance 7 15 12/02/95 Winter Aerobics/Dance 0 15 02/17/96 1014.201 KINDERDANCE -34 Dance 7 11 11/27/95 014.202 Winter Kinderdance Aerobics /Dance Dance 6 7 5 02/12/96 12 12/02/95 Winter Aerobics/Dance 7 5 02/17/96 014.203 Kinderdance Dance 7 11 12/02/95 Winter Aerobics /Dance 5 6 02/17/96 1014.204 Kinderdance Dance 7 13 12/01/95 Winter Aerobics/Dance 1 12 02/16/96 - .014.205 KINDERDANCE -5 -K Dance 7 13 11/27/95 Winter Aerobics /Dance 5 8 02/12/96 014.206 Kinderdance Dance 7 11 12/02/95 Winter Aerobics/Dance 3 8 02/17/96 Baton Dance 7 15 11/29/95 �O16.201 Winter Aerobics/Dance 0 15 02/14/96 1018.201 BADMITTON Sports - Youth 8 16 12/11/95 Winter Gymnasium 1 15 02/26/96 019.201 Blockbuster Bowling party Special Events 10 76 12/28/95 Winter Off -Site 0 76 1 020.201 Daddy- daughter date night Special Events 10 26 02/08/96 Winter Community Room 1,2, &3 0 26 02/08/96 1021.201 Ski trip -afton alps Programs - Youth 40 51 01/26/96 1021.202 Winter Off -Site 0 51 / / Ski trip -Welch village Programs - Youth 40 50 02/09/96 Winter Off-Site 0 50 / / '015.201 TAP /JAZZ Dance 7 14 11/28/95 Winter Aerobics/Dance 0 14 02/13/96 018.201 Tap Dance 7 15 12/01/95 Winter Aerobics/Dance 0 15 02/16/96 Times Begins Ends 04:OOPM 05:OOPM 04:30PM 05:30PM 03:15PM 04:15PM 01:30PM 02:30PM 04:30PM 05:15PM 12:45PM 01:30PM 03:30PM 04:15PM 02:30PM 03:15PM 01:30PM 02:15PM 10:OOAM 10:45AM 10:45AM 11:30AM 02:30PM 03:15PM 02:30PM 03:15PM 11:30AM 12:15PM 04:15PM 05:OOPM 04:15PM 05:15PM 01:OOPM 06:OOPM 08:OOPM 03:OOPM 11:30PM 03:OOPM 11:30PM 07:45PM 08:45PM 01:30PM 02:15PM Ages Weekdays MinAge Weekdays/ MaxAge Instructor 8.0 Th 11.9 Staff 8.0 Tu 11.9 Staff 6.0 M 7.9 Staff 8.0 Sa 10.9 Staff 8.0 F 11.9 Staff 8.0 Sa 10.9 Staff 6.0 W 7.9 Staff 11.0 Sa 13.9 Staff 3.0 M 4.0 Staff 3.0 Sa 4.9 Staff 3.0 Sa 4.9 Staff 3.0 F 4.9 Staff 5.0 M 6.0 Staff 5.0 Sa 6.9 Staff 8.0 W 11.9 Staff 6.0 M 10.9 Staff 6.0 10.9 Staff 4.0 Th 9.0 Staff 11.0 F 13.9 Staff 11.0 Th F 13.9 Staff 18.0 Tu 99.0 Staff 50.0 F 99.0 Staff 11/28/95 17:22:52 Sess Total Fees Hrs Keys Date Others 0.0 10 0.0 5 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 10 0.0 8 0.0 0 0.0 1 0.0 0 0.0 0 0.0 10 0.0 10 p ' 2 Times 1 Weekdays Min / Max Act # Activity Name /Season Category / Location ACTIVITY NAME Activity Category Ends Activity Season Activity Location 016.201 Seniors - Folkways of the h Senior Trips 12/12/95 Winter Off -Site 3017.201 Seniors -Babes in Arms Senior Trips / / Winter Off -Site 1030.201 Punch Card 10 Exercise 02/21/96 Winter Fitness Room 030.202 Punch Card 20 Exercise / / Winter Fitness Room 5030.203 Punch Card 40 Exercise 11/21/95 02:OOPM 0.0 0030.204 Winter Fitness Room / / Punch Cash Single Exercise Staff Winter Fitness Room 1 030.205 Punch Cash Aerobics Exercise Winter Fitness Room / / Punch Cash Locker Exercise 1030.206 Winter Fitness Room Chanhassen Parks & Recreation ACTIVITYBASIC REPORT Enrollment Dates Times Ages Weekdays Min / Max Begins Begins MinAge Weekdays/ Enr / Opn Ends Ends MaxAge Instructor 15 21 12/12/95 01:30PM 0.0 To 0 21 / / 99.0 Staff 10 21 02/21/96 12:OOPM 0.0 0 21 / / 99.0 Staff 0 999 11/21/95 02:OOPM 0.0 8 991 / / 99.0 Staff 0 999 11/21/95 02:OOPM 0.0 4 995 / / 99.0 Staff 0 999 11/21/95 02:OOPM 0.0 6 993 / / 99.0 Staff 0 999 11/21/95 02:OOPM 0.0 127 869 / / 99.0 Staff 0 999 11/21/95 02:OOPM 0.0 13 986 / / 99.0 Staff 0 999 11/21/95 02:OOPM 0.0 2 997 / / 99.0 Staff 11/28/95 17:22:53 Sess Total Fees Hrs Keys Date Others 0.0 $0.00 0 $32.00 0.0 $0.00 0 $60.00 0.0 $0.00 0 $35.00 0.0 $0.00 0 $66.00 0.0 $0.00 0 $124.00 0.0 $0.00 0 $3.50 0.0 $0.00 0 $7.00 0.0 $0.00 0 $1.00