TO: AC Transit Board of Directors
FROM: Michael A. Hursh, General Manager/Chief Executive Officer
SUBJECT: Custody/Safekeeping Bank Services
ACTION ITEM
AGENDA PLANNING REQUEST: ?
RECOMMENDED ACTION(S):
Title
Consider approving one two-year option for custody/safekeeping bank services with Principal Custody Solutions.
Staff Contact:
Chris Andrichak, Chief Financial Officer
Body
STRATEGIC IMPORTANCE:
Goal - Financial Stability and Resiliency
Initiative - Financial Efficiency and Revenue Maximization
Custody/Safekeeping bank service provides investment services and safekeeping of district funds.
BUDGETARY/FISCAL IMPACT:
This contract offers a fee schedule with an annual maintenance base fee of $0 - $6,000 with a tiered discount pricing schedule based on the District's account balance. There will be no fees as long as balances of more than $20 million in Principal Custody Solutions' Principal Public Deposit Sweep Program (PPDSP) balances. The District has maintained combined PPDSP balances well over $20 million at least for the past five (5) years, and therefore has incurred zero cost. Staff anticipates that similar balances will be maintained going forward.
BACKGROUND/RATIONALE:
On January 30, 2019, the District issued a Request for Proposals (RFP) - RFP No. 2019-1457 for Custody/Safekeeping Bank Services, and subsequently awarded the contract to Wells Fargo Custody/Safekeeping Services. In February 2022, Wells Fargo's Custody/Safekeeping Services was acquired by Principal Custody Solutions. As Principal Custody Solutions has provided satisfactory service since the acquisition, exercising the one (1) two (2) year option is being recommended.
The District uses Custody/Safekeeping Bank Services pursuant to California Government Code Section 53651, whereby California banks are required to secure certain District deposits by pledging eligible securities as collateral. Adherence to this statute is also sti...
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