HomeMy WebLinkAboutContract 56266-R3DocuSign Envelope ID: AF177E63-232F-4EDC-BD33-DOE01095853E
CITY SECRETARY CONTRACT No. 56266-R3
THIRD RENEWAL OF
FORT WORTH CITY SECRETARY CONTRACT NO. 56266
GLOBAL SECURITIES LENDING AGENCY AGREEMENT
This Third Renewal of Fort Worth City Secretary Contract No. 56266 - Global
Securities Lending Agency Agreement ("Renewal') is entered into by and between the CITY
OF FORT WORTH (the "Lender"), a home rule municipal corporation of the State of Texas, and
CITIBANK, N.A., a national banking organization (the "Agent"). Lender and Agent may be
referred to collectively herein as the parties.
RECITALS
WHEREAS, the parties have previously entered into a Global Securities Lending
Agency Agreement, with an effective date of April 1, 2021, identified as Fort Worth City
Secretary Contract No. 56266 (the "Agreement"); and
WHEREAS, the Agreement involves the appointment and acceptance of the Agent to
lend certain of the Lender's securities upon the terms and conditions set forth in the Agreement;
and
WHEREAS, the Fort Worth City Council, by and through M&C 21-0172, authorized the
Agreement with an initial one-year term and nine, one-year renewal options; and
WHEREAS, the parties wish to exercise the third renewal option to renew the
Agreement for an additional one-year period.
NOW, THEREFORE, Lender and Agent, acting herein by and through their duly
authorized representatives, agree as follows:
The Agreement is hereby renewed and extended for a one year renewal term
commencing on April 1, 2024 and ending March 31, 2025.
2.
This Renewal may be executed in several counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument. A signature
received via facsimile or electronically via email shall be as legally binding for all puiposes as an
original signature.
3.
All provisions of the Agreement shall remain in full force and effect during the renewal
term unless expressly amended herein.
OFFICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
Third Renewal — CSC 56266 Page 1 of 2
DocuSign Envelope ID: AF177E63-232F-4EDC-BD33-DOE01095853E
Executed this ISt day of Ap r� , 2024.
[Executed effective as of the date signed by the Assistant City Manager below.] / [ACCEPTED
AND AGREED:]
City:
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Name: David ooke
Title: Cit�anager
Date: -914 12,0 2,�(
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Citibank, N.A.:
DocuSigned by:
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Name:
Title: Managing Director
Date: 2/28/2024
CITY OF FORT WORTH INTERNAL ROUTING PROCESS:
Approval Recommended: Contract Compliance Manager:
By signing I acknowledge that I am the person
By: John Samford (Feb 29, 202413:02 CST) responsible for the monitoring and administration
Name: John Samford, City Treasurer of this contract, including ensuring all performance
Title: Financial Management Services and reporting requirements.
Department
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By: Reginald Zeno (Feb 29, 2024 13:32 CST) By: James Rutledge (Feb 29, 2024 if 50 CST)
Name: Reginald Zeno Name: Jay Rutledge
Title: Director of Finance/Chief Financial Officer Title: Financial Services Manager & Assistant
Treasurer
Approved as to Form and Legality:
By:
Name: Taylor C. Paris
Title: Assistant City Attorney
Contract Authorization:
M&C: 21-0173
City Secretary:
By:
Name: Jannette S. Goodall
Title: City Secretary
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OFFICIAL RECORD
CITY SECRETARY
FT. WORTH, TX
Third Renewal — CSC 56266 Page 2 of 2
City of Fort Worth, Texas
Mayor and Council Communication
DATE: 03/09/21 M&C FILE NUMBER: M&C 21-0173
LOG NAME: 13SECURITIES LENDING 2021
SUBJECT
(ALL) Authorize Execution of Professional Services Agreements with Citibank, N.A. for the City's Securities Lending Program
RECOMMENDATION:
It is recommended that the City Council authorize the execution of professional services agreements with Citibank, N.A. for the City's Securities
Lending Program.
DISCUSSION:
The purpose of this Mayor and Council Communication (M&C) is to authorize new agreements with Citibank, N.A. (Citibank) to continue providing
professional services and function as agent and custodian for the City's Securities Lending Program (SLP).
The SLP is a portfolio management strategy involving the lending of the City's securities to a primary dealer with the substitution of securities of
greater market value being safe -kept by a third party custodial bank in an account in the City's name. The program is designed so that the City
earns supplemental income on the portfolio without losing ownership or interest payments on the loaned securities. The SLP entails the following
services/functions:
• Negotiate rebates and/or lending fees with the borrowers
• Collect from borrowers the cash, securities or other financial instruments that services as collateral for the loans
• Enter into and sign, as agent for the City, such documents and instruments, including but not limited to repurchase agreements, tri-party
agreements, subscription agreements, asset management agreements or other relevant agreements as are required for the investment of
collateral
• Hold in custody and/or enter into any required agreement with a third party custodian that will hold in custody any and all loaned securities
and collateral
• If requested by the City, to invest on the City's behalf all cash collateral delivered by borrowers in respect of loans
• Perform daily the "mark -to -market" function and to request and return collateral
• Collect or arrange for the collection of any interest, dividends or other distributions or other payments of any kind on loaned securities
(including but not limited to manufactured dividends, if any, and other distributions due to the City in respect of the loan) and pay the same to
the City
• Terminate or modify any loan at any time as required by the City
• Indemnify and hold the City harmless from and against damages, losses, costs, and fees incurred by the City that result from Citibank's
negligence or willful misconduct in performing its duties as the agent
A securities lending program is very complex and requires an agent that has a robust network of borrowers along with a sizable portfolio of
lendable assets.
Citibank has provided services for the City's SLP since 2011, when it was awarded the agreement following a competitive procurement process
(M&C P11216). Some of the key benefits that have been provided during Citibank's tenure include the following:
• Since the inception of the SLP with Citibank, the City has earned more than $14.5 million in lending income
• The City's SLP has outperformed the lending market in total return to lendable assets by an average of 15 basis points over the past five
years, as reported by the independent industry benchmarking service DataLend
• Citibank's SLP is a premier provider of agency lending services, with over $4 trillion of lendable assets (an increase of —193% since 2015)
• Due to the customized reinvestment structure Citibank and the City treasury has implemented, the Citibank's lending program has nearly
twice as many assets on loan (utilization) as compared to the industry average of other governmental entities with the same securities, as
reported by DataLend
• The Citibank program has been designed to enable the City to offset custody charges directly from lending revenue with no out-of-pocket
expenses
Staff has been satisfied with Citibank's performance under the current agreement. Citibank has agreed to continue under its existing
compensation structure, which involves a 90/10 revenue split (the City receiving 90% of the revenue and Citibank receiving 10%) and custody fees
of approximately $2,000.00 per month per account. Staff conducted an informal survey of several other cities/organizations and has determined
that the existing/proposed rates are subtantially better than the 80/20 or 70/30 splits, which are most common. In addition to a less favorable
revenue split, switching vendors would involve an estimated transitional period of up to six months, which could result in a loss of income of
approximately $500,000.00.
To retain the highly favorable fee structure and avoid loss of revenues due to a transition, staff highly recommends entering into new agreements
with Citibank for the SLP to provide professional services as agent and custodian.
Staff recommends mirroring the structure of the current contract, with an initial term of one year and nine (9) one-year renewal periods, with each
renewal at the City's sole option.
A Form 1295 is not required because: This contract will be with a publicly -traded business entity or a wholly -owned subsidiary of a publicly -traded
business entity: Citigroup, Inc.
FISCAL INFORMATION / CERTIFICATION:
The Director of Finance certifies that upon approval of the above recommendation and execution of the professional services agreement, funds
will be deposited into the City's operating funds. The Financial Management Services Department is responsible for the collection and deposit of
funds due to the City.
Submitted for Citv Manaaer's Office bv: Jay Chapa 5804
Oriainatina Business Unit Head: Reginald Zeno 8517
Additional Information Contact: John Samford 2318
Expedited