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HomeMy WebLinkAboutContract 35607CUSTODY AGREEMENT THIS CUSTODY AGREEMENT (this "Agreement") dated as of d�-L�� is made by and between the City of Fort Worth, Texas, a Texas home rule city, he "Depositor") and Wells Fargo Bank, National Association, a national banking association, as custodian hereunder (the "Custodian"). WHEREAS, the Depositor desires to engage the services of the Custodian to act on its behalf in providing custodial services for certain assets under the Depositor's management; WHEREAS, Depositor is responding to a request from the United States Department of Housing and Urban Development ("HUD"), which requires Depositor to open an account with a national banking association for maintaining custody of the funds which may be required to be repaid to HUD as a result of an audit finding; and WHEREAS, the Custodian is willing to act as the Depositor's custodian to provide these services for the Depositor, and has agreed to serve as the safekeeping agent for the securities and similar investments of the Depositor. NOW, THEREFORE, the parties hereto agree as follows: 1. Services to be Provided by the Custodian. The Custodian shall: a. Open and maintain an interest -bearing custody account entitled HUD Audit Custody Account (the "Custodial Account") in the name of the Depositor and hold in such custody account all cash and securities initially deposited by the Depositor plus any additional cash and securities that may be received from time to time for the Qustody account. Notwithstanding the foregoing sentence, any earnings on the Custodial Account shall be deposited in accordance with section (b) below. b. Hold and invest all such cash and securities deposited into the Custody Account (the "Custodial Funds") in accordance with the written direction of the Depositor. c. Act upon written direction from an authorized representative or officer of the Depositor, duly appointed in writing by the Depositor. The Custodian shall be protected in acting on a facsimile transmissions as provided in Section 13 hereof. The Custodian shall treat as genuine and may rely on any written notice or communication without further verification, that it believes is from the proper parry and shall be protected in doing so by the Depositor. d. Disburse cash and securities in the Custody Account in accordance with the written directions of the Depositor. e. Issue advices to the Depositor setting forth particulars of purchases, sales, receipts, deliveries and principal collection. £ Present for payment all maturing securities or any securities called for red collect proceeds therefrom. g. Deliver proxy materials for securities held in the Custody Account as the Depositor may direct in writing. h. The Depositor recognizes and agrees that the Custodian will not provide supervision, recommendations or advice relating to either the investment of moneys held in the Custody Account or the purchase, sale, retention or other disposition of any investments. Powers of the Custodian. The Custodian is authorized and empowered to: a. Hold assets in the Depositor's name, in the name of a nominee selected by the Custodian or at depositories. b. Employ agents other than persons on its regular payroll and delegate to them such ministerial and other nondiscretionary duties as it sees fit and to rely upon such information furnished by such agents. c. Make, execute, acknowledge and deliver any and all documents of transfer and conveyance and other instruments that may be necessary or appropriate to carry out the custodianship duties and powers. d. As it pertains to investment of funds hereunder, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or any such affiliate is acting as agent of the Custodian or for any third person or dealing as principal for its own account 3. Reports. The Custodian shall furnish to the Depositor a monthly statement of the Custody Account reflecting all activity during the month, and an inventory of assets including market value as of month end. The Custodian will furnish such other reports as the Depositor may reasonably request, including reports to the Depositor's accountant or its examiners, but no more frequently than monthly. 4. Fees. The Custodian shall receive compensation from the Depositor as set forth in Exhibit A attached to this Agreement, as amended from time to time by the parties. The Custodian shall also be reimbursed by the Depositor for its reasonable out -of pocket expenses during the performance of the Custodian's duties under this Agreement. 5. Authorized Persons., The Depositor shall furnish a list to the Custodian (and from time to time whenever there are changes therein) of persons authorized to act on behalf of the Depositor for the purpose of transmitting instructions to the Custodian concerning the An initial list is attached hereto as Exhibit B. The assets in the Custody Account. Custodian shall have no duty to confirm whether the information on Exhibit B is current. Unless and until written notice of any changes to Exhibit B shall be delivered to and acknowledged by the Custodian, the Custodian shall be entitled to assume that such information is current. 2 6. Amendment and Termination. This Agreement may be amended by written agreement of the parties at any time. The duties of the Custodian may not be increased without the Custodian's prior written consent. This Agreement shall continue in effect until terminated by either party upon thirty (30) days written notice to the other party. Upon termination, all cash or securities held in the Custody Account shall be delivered by the Custodian to the Depositor or in accordance with the Depositor's written instruction. Any fees remaining outstanding and any balance owing to the Custodian may be deducted from the assets of the Custody Account prior to delivery to the Depositor or as the Depositor directs. 7. Indemnification. To the extent permitted by law, the Depositor hereby agrees to indemnify and hold the Custodian and its agents, affiliates, successors and assigns harmless from and against any and all damages, claims, liabilities, losses, costs and expenses (including without limitation attorney's fees and expenses) ("Losses"), that may be imposed on, incurred by, or asserted against the Custodian by reason of any action taken or not taken by the Custodian under this Agreement, unless such Losses are finally adjudicated to have been primarily caused by the gross negligence or willful misconduct of the Custodian. In no event shall the Custodian be liable for any special, indirect or consequential losses or damages of any kind (including without limitation lost profits) from any action taken or omitted to be taken by it, even if advised of the possibility of such damages. The foregoing indemnification shall survive any termination or assignment of this Agreement and the resignation or removal of the Custodian. 8. Notices. All notices, instructions, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (a) on the date of service if served personally to the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile transmission to the facsimile number given below, and written confirmation of receipt is obtained promptly after completion of transmission, (c) on the day after delivery to Federal Express or similar overnight courier service or the Express Mail service maintained by the United States Postal Service, or (d) on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to the party as follows: Notices to the Depositor shall be directed and mailed as follows: City of Fort Worth 1000 Throcicmorton Street Fort Worth, Texas 76102 Attention: Jerome Walker Tel: (817) 392-7537 Fax: (817) 392-7328 Notices to the Custodian shall be directed and mailed as follows: 3 5 Wells Fargo Bank, National Association Corporate Trust Services 201 Main Street, Suite 301 Fort Worth, Texas 76102 Attention: Mark A. Dunn Tel: (817) 334-7061 Fax: (8170 885-8650 Either parry may change its address for purposes of the paragraph by giving the other party written notice of the new address in the manner set forth above. 9. Inspection Privileges. The books, records, documents, accounting procedures and practices of the Custodian relevant to this Agreement are subject to examination by the Depositor, or its designated independent public accountant, during normal business hours and upon at least two (2) business day's prior written notice to the Custodian, and at the Depositor's expense. 10. Governing Law. This Agreement and all transactions hereunder shall be governed by, interpreted, construed and enforced in accordance with the laws of the State of Texas. 11. Miscellaneous. (a) Nothing in this Agreement is intended or shall confer upon anyone other than the parties hereto any legal or equitable right, remedy or claim. (b) The invalidity of any portion of this Agreement shall not affect the validity of the remainder hereof. (c) This Agreement is the final integration of the agreement of the parties with respect to the matters covered by it and supersedes any prior understanding or agreement, oral or written, with respect thereto. (d) The rights and obligations of each party hereto may not be assigned or delegated to any other person without the written consent of the other parry hereto. Subject the foregoing, the terms and provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 12. Regarding the Custodian. (a) The Custodian is not a party to, is not bound by, and has no duty to inquire into any agreement other than this Agreement. The Custodian shall have no implied duties, fiduciary or otherwise, beyond the express duties set forth herein. (b) It is the intention of the parties to this Agreement that the Custodian shall never be required to use or advance its own funds or otherwise incur personal financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. (c) Any corporation or association into which the Custodian may be converted or merged, or with which it may be consolidated, or to which it may sell or transfer all or substantially all of its corporate trust business and assets as a whole or substantially as a whole, or any corporation or association resulting from any such conversion, sale, merger, consolidation or transfer to which the Custodian is a party, shall be and become the successor Custodian under this Agreement and shall have and succeed to the rights, powers, duties, immunities and privileges as its predecessor, without the execution or filing of any instrument or paper or the performance any further act. (d) The Custodian may resign as such following the giving of thirty (30) calendar days prior written notice to the Depositor. Similarly, the Custodian may be removed and replaced following the giving of thirty (30) days prior written notice to the Custodian by the Depositor. In either event, the duties of the Custodian shall terminate (30) days after receipt of such notice (or as of such earlier date as may be mutually agreeable); and the Custodian shall then deliver the balance of the moneys or assets then in its possession to a successor Custodian as shall be appointed by the Depositor as evidenced by a written notice filed with the Custodian. If the Depositor has failed to appoint a successor prior to the expiration of thirty (30) calendar days following receipt of the notice of resignation or removal, the Custodian may appoint a successor or may petition any court of competent jurisdiction for the appointment of a successor Custodian or for other appropriate relief, and any such resulting appointment shall be binding upon all of the Depositor. (e) The Custodian shall have no responsibility or liability for any loss which may result from any investment or sale of investment made pursuant to Agreement. (f) The Custodian shall be entitled to rely on the advice of counsel or other professionals retained or consulted by the Custodian and shall not be liable for any non -negligent act or omission while acting in good faith and in the exercise of its own best judgment. The Custodian may perform any and all of its duties through its agents, representatives, attorneys, custodians, and/or nominees. 13. Fa (a) The Custodian is authorized to accept directions and/or data transmitted to the Custodian through the means set forth in this Section 11 by authorized representatives, including duly appointed third parties. (b) The Custodian is authorized to act on written instructions conveyed by facsimile transmission, notwithstanding the fact that such instructions do not bear an orinal gi authorized signature, provided the instructions acted upon: (i) appear to be signed by a person(s) entitled to give binding instructions to the Custodian, and (ii) are consistent with the established authority of such person(s). (c) The Depositor acknowledges its responsibility for the accuracy and completeness of the facsimiles it submits to the Custodian, including data from duly appointed third party agents, and is solely responsible for any adverse consequences that may result from errors or inaccuracies caused by the quality of such data. The Custodian may fully rely on data received, and shall have no obligation to review it or verify its accuracy. The Depositor understands the risks associated with communicating time sensitive matters, such as trade Erections, by facsimile and acknowledges that, if it elects to do so, the Custodian will act within a reasonable time of receipt of the facsimile. The Depositor further acknowledges that information or instructions provided under this Agreement may be less confidential than information transmitted by other methods. The Custodian shall not be liable for any loss of the confidentiality of information prior to its reception. 14. Tax Matters. (a) Reportin6 of Income. The Custodian shall report to the Internal Revenue Service the "IRS"), as of each calendar year-end, and to the Depositor, all income earned from the investment of any sum held in the Custody Account against the Depositor, as and to the extent required under the provisions of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the "Code"). The Depositor shall furnish the Custodian with a completed Form W-8 or Form W-9, as applicable. (b) Preparations and Filing of Tax Returns. The Depositor is required to prepare and file any and all income or other tax returns applicable to the Custody Account with the IRS and all required state and local departments of revenue in all years income is earned in any particular tax year to the extent required under the provisions of the Code. (c) Payment of Taxes. Any taxes payable on income earned from the investment of any sums held in the Custody Account shall be paid by the Depositor, whether or not the income was distributed by the Custodian during any particular year and to the extent required under the provisions of the Code. [ Signature page is attached. IN WITNESS WHEREOF, authorized officers of the parties have duly executed this Agreement as of the day and year first written above. con tract- A inor., zati on D a-1C.e City of Frnt Worth. as Depositor Name: Dale Fisseler Title: Assistant City Manager By: itv and form: Assistant City ATTEST: (i�, City Wells Fargo Bank, National Association, as Custodian Name: Title: • LTIMMUMON: � ,. mm �, WOkiff, TEXI Exhibit A CUSTODIAN' S FEE SCHEDULE (See attached) E:3 Wells Fargo Bank Corporate Trust Services 1445 Ross Avenue, 2" `r Floor Mac T5303-022 Dallas, TX 75202 Gregory Hasty Vice President/Business Development Tel: 214.740.1548 Fax: 214.777.4086 greg. hasty@wellsfargo. con¢ SCHEDULE OF FEES City of Fort Worth, Texas and United States Department of Housing and Urban Development Custodial Account; $1,452,675 $0600 Acceptance Fee: Initial Fees as they relate to Wells Fargo Bank acting in the capacity of Custodian — includes review of the Agreement; acceptance of the appointment; setting up the Account(s) and accounting records; and coordination of receipt of funds for deposit to the Account(s). Acceptance Fee payable at time of Agreement execution. Custodial Annual Administration Fee: $1,500.00 For ordinary administrative services by Custodian — includes daily routine account management; investment transactions; cash transaction processing (including wire and check processing); monitoring claim notices pursuant to the agreement; disbursement of funds in accordance with the agreement; and mailing of trust account statements to all applicable parties. Float credit received by the bank for receiving funds that remain uninvested are deemed part of the Custodian's compensation. rtinis included for up to Five (5) entities. Should additional reporting be necessary, a $25 per reporting Tax repog charge will be assessed. This fee is payable in advance, with the first year fee due upon opening of the account. The Annual Fee covers a full year or any part thereof, and therefore will not be prorated or refunded in the year of early termination. Wells Fargo's bid is based on the following assumptions: • Number of Accounts to be established: One (1) • Number of Deposits to Account: (1-3) • Number of Withdrawals from Account: Not more than Two (2-5) • Term: Ongoing • APPOINTMENT SUBJECT TO RECEIPT OF REQUESTED DUE DILIGENCE INFORMATION AS PER THE USA PATRIOT ACT • THIS PROPOSAL ASSUMES THAT BALANCES IN THE ACCOUNT WILL BE INVESTED IN MONEY MARKET FUNDS • ALL FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO A DOMESTIC OR AN APPROVED FOREIGN ENTITY • IF THE ACCOUNT(S) DOES NOT OPEN WITHIN THREE (3) MONTHS OF THE DATE SHOWN BELOW, THIS PROPOSAL WILL BE DEEMED TO BE NULL AND VOID Out -of Pocket Expenses: At Cost We will charge for out-of-pocket expenses in response to specific tasks assigned by the client or provided for in the escrow agreement. Possible expenses would be, but are not limited to, express mail and messenger charges, travel expenses to attend closing or other meetings. There are no charges for indirect out -of- pocket expenses. This fee schedule is based upon the assumptions listed above which pertain to the responsibilities and risks involved in Wells Fargo undertaking the role of Custodian. These assumptions are based on information provided to us as of tl:e date of this fee schedule. Our fee schedule is subject to review and acceptance of the final documents. Should any of the assumptions, duties or responsibilities change, we reserve the right to affirm, modify or rescind our fee schedule. Extraordinary services (services other than the ordinary administration services of Custodian: described above) are not included in the annual administration fee and will be billed as incurred at the rates in effect from time to time. P=50474 April 19, 2007 Exhibit B DESIGNATED PERSONS OF THE DEPOSITOR Name and Titie I. Dale Fisseler Assistant City Manager 2. Jenny Townsend Acting City Treasurer 3. Jerome Walker Director of Housing Si ng afore Page 101 City of Fort Worth, Texas DATE: Tuesday, May 29, 2007 LOG NAME: 05CUSTODIAL REFERENCE NO.: GA5737 SUBJECT: Authorize the Use of General Fund Unrestricted Undesignated Retained Earnings for the Creation of a Custodial Account for the Resolution of a Housing and Urban Development Finding and Authorize the Execution of a Custodial Agreement RECOMMENDATION: It is recommended that the City Council: 1. Authorize the designation of $1,452,675 from the General Fund unreserved, undesignated fund balance as HUD Review Funds which may be used to bring closure to a 2004 HUD finding; 2. Authorize the establishment of a custodial bank account with Wells Fargo Bank, NA, to retain the $1,452,675 in an account segregated from consolidated City funds; and 3. Authorize the execution of the related Custody Agreement with Wells Fargo Bank, NA, governing use of the funds. DISCUSSION: In 2004, the U.S. Department of Housing and Urban Development (HUD) local field office staff conducted a financial management review of City 's grant funded programs. This review resulted in seven findings of which some had multiple parts. Five of these findings have been closed. In an attempt to resolve the open findings with HUD, staff issued a Request for Proposal seeking an outside accounting service to reconcile the project activities with the accounting system. Staff has also met with the local HUD field office during this process to ensure that an appropriate resolution is achieved. The results of these discussions is an agreement to create a custodial account that will be established at Wells Fargo Bank, NA, to retain the questioned costs of $1,452,675. The City is negotiating with a qualified audit firm to conduct a forensic audit of the CDBG program expenditures from 1999 to 2004. Upon the creation of the custodial account, which must be established with non-federal funds, HUD has agreed to close the finding and allow the City additional time to conduct the audit. Funds will be maintained in accordance with the terms of a Custody Agreement between the City and Wells Fargo Bank, NA, and will only be released from the custodial account upon mutual agreement between the City and HUD. Any funds that are deemed to be ineligible costs will be returned into the City's Line of Credit. Funds returned to the Line of Credit will be available to be used on other eligible grant fund activities. The designated funds will be held in separate accounts along with any interest revenue. FISCAL INFORMATION/CERTIFICATION: The Finance Director certifies that upon approval of the above recommendations funds will be available in the cash account of the General Fund. Upon approval, the unaudited, unreserved, undersignated fund balance of the General Fund will be $4,006,081 which is the amount available above the minimum reserve http://www.cfwnet.org/council.packet/Reports/mc.print.asp 12/18/20( Page 2 o fund balance of $46,845,951 required by the City's Financial Management Policy Statement (i.e., 10 percent of the current -year adopted budget expenditures less the annual transfer from the General Fund to the Debt Service Funds). TO Fund/ACCOunt/C enters ?)GG01 106000 0000000 $1,452,675.00 Submitted for City Manager's Office by: Originating Department Head: Additional Information Contact: FROM Fund/Account/Centers 2)3G01 101000 0000000 $1,452,675000 Dale Fisseler (6140) Jerome Walker (7537) Deidra Emerson (7563) http : //www. c fwnet. org/c ouncil�acket/Rep o rts/mc�rint. asp 12/18/200