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Min 09/23/1975 1252 i i Wichita Falls , Texas Memorial Auditorium Building September 23, 1975 Item 1 The Board of Aldermen of the City of Wichita Falls, Texas, met in called session on the above date in the Council Room of the Memorial Auditorium Building at 10:00 o'clock A.M. , with the following members present: J. C. Boyd, Jr. Mayor Pro tem Hardy McAlister X Guillermo Garcia Bill E. Gowan X Peggy McCullough X Gerald Fox City Manager H. P. Hodge, Jr. City Attorney Wilma J. Thomas Deputy City Clerk Max Kruger Absent Joe N. Prothro Absent Mayor Pro tem Boyd noted that this meeting had been called in hopes of select- s �r ing a depository for the city's funds. The City Manager noted that the information provided to the Council has also been provided to the two bidding institutions. Analysis has been provided on the two banking institutions for the past two years. The City Attorney has also provided the Council with certain information relating to savings accounts. Frank Gibson appeared as attorney for City National Bank. He stated that he has examined the two bids, the opinions of the city attorney and finance director, and the statutes pertinent to the question. Three things should be considered : (1) the amount of money the City will receive from the bids, (2) the ability to serve the city's accounts, and (3) security for the taxpayers ' accounts. He stated that in regard to the bid, it was clear what the City National Bank will pay. As far as the ability to serve the accounts, they have a large staff and computer facilities. They have serviced it for 41 years. As far as the security of the funds , their bid is clear and explicit. They will secure all funds with quality security, valued at the lower of par or market. This means that there is always 115 percent value in the securities pledged of the city's funds. As far as the amount of money which the taxpayers will receive from Parker Square, they have two proposals. He stated that Parker Square did not bid on a savings account. On securities they bid 110 percent of the city's market value of funds. He mentioned par value. He believes the Council has the choice of a known, clear, and certainty of bid with City National Bank as opposed to an unknown, unclear, and uncertainty of the Parker Square bid. Caven Crosnoe appeared as the attorney for Parker Square State Bank. He stated that he believes it is important to make a decision on objective and not subjective data. He mentioned the City's request for statistical data. Either one of Parker Square's offers is superior to City National Bank's bid. A comparison shows $64,000 more in the variable rate for Parker Square. Daily compounding increases the rate from 7.75 percent to a guaranteed 8.05 percent. He stated that he feels they con- sider a floor or maximum important. The best evidence of it is what happened in 1975 regarding treasury bills. Parker Square's guaranteed rate out performs City National Bank by $34,000. Parker Square's guaranteed rate as opposed to City National 's variable rate brings $75,000 more from Parker Square than City National. On CD's under $100;,000,, Parker Square is clearly greater than City National Bank. Mr. Crosnoe stated that he believes Mr. Hodge's opinion has laid to rest the matter of whether Parker Square's bid includes a savings account. Parker Square has never paid less than the maximum amount on savings accounts , and they will not now pay less. They will be willing to put it into the contract. Mr. Crosnoe stated that the City makes the decision on selection of par or market values. The only issue for decision to- day is whether to select the City National Bank or the Parker Square bid. Which issue they select from Parker Square can be decided later. He urged the Council to select Parker Square. Alderman McAlister inquired if the City supports a bond issue, how would that affect the bank? The City Manager stated that they would not sell all of them at one 1253 Item 1, cont'd. time, but over a three to four year period. Once they are sold the money is de- posited in interest bearing securities. Alderman McAlister inquired how much of this would be placed in the City's funds over the next two years? The City Manager indicated that it would probably be about three million dollars per year. Alderman Gowan inquired if we can demand either par or market value. The City Attorney stated that he feels we do not have to choose one and stick with it. We can choose either, whichever is lesser. Frank Gibson stated that he guessed he misinterpreted Mr. Hodge's opinion. He assumed the interest would be used on the City's operating funds. The treasury bill was down two years ago. We could not have received the rate two years ago that we would today. He mentioned that on state depository bids they stated that it would be the lower of market or par value. Regarding the City Manager 's com- ments, he feels the amount of bonds we would sell would depend on the market at that time. He still contended that Parker Square 's bid did not include a savings account. If this is implied, why would not CD rates be implied? He stated they do not have to pay interest on savings accounts. He submitted that City National 's bid is best for the City of Wichita Falls. Mr. Crosnoe stated that the rate of treasury bills in October 1973 was over seven percent. Alderman McAlister inquired what affect the City's business would have on the bank? Mr. Crosnoe stated that it goes back to securities. They have offered 110 percent security, and the City has the right to choose those securities. There is full protection of the City's funds. City Attorney H. P. Hodge stated that with reference to what Mr. Gibson said about changing a bid, no one has the right to change a bid after it is opened. In his opinion, in evaluating these bids the Council should consider what we would be entitled to under both bids. Alderman Boyd asked if the Council chose Parker Square, could they choose now or later which of the alternate bids they desire? The City Attorney pointed out that it should be put in the resolution, and that it could be written into this resolution if Parker Square is chosen. Alderman McAlister noted that the areas of contention are interest rates. City National Banks bid contracts for the maximum allowable under Regulation Q, and Parker Square would pay whatever they were normally paying at that time. He stated that in the interpretation of securities pledged , we can establish criteria for maintaining the value of the funds that are pledged to the value of the securities that are pledged. In Mr. Hodge's estimation there is no particular difference in the two bids. They can be valued at either par or market on any particular day they choose. From that standpoint, he cannot see any difference in the two bids. He also inquired :if we have any way to project what our advantage would be on a savings account? Is this a significant factor in our day to day business? Ronnie Wood stated that :it would be. Most of our funds would be transferred to savings accounts rather than demand deposits. Both would pay interest. Alderman Gowan asked if they knew of any bank in the State of Texas which did not pay interest on savings accounts. Frank Gibson stated that Alvord Bank does not. All City of Wichita Falls banks now pay five percent. Regulation Q does not speak to the method of computing interest, but to the maximum amount. The question had been brought up whether City National Bank compounded interest daily. Don Wills stated that they did. Caven Crosnoe stated that City National Bank did not bid that they would compound it daily. He further stated that he does not believe that Mr. Gibson knows whether Parker Square intended to bid on savings accounts. Alderwoman McCullough commended Parker Square for entering into the bidding system, stating that she feels the citizens of Wichita Falls will appreciate it, also. Mayor Pro tem Boyd also expressed his appreciation. Moved by Alderman Gowan that Resolution No. 1720 be passed accepting the bid of Parker Square State Bank as being the bid which would obtain the most money for the City of Wichita Falls based on past performance. Motion seconded by Alderman Garcia, and lost by the following vote: Ayes : Aldermen McAlister, Garcia, and Gowan Nays : Mayor Pro tem Boyd and Alderwoman McCullough. Moved by Alderwoman McCullough that Resolution No. 1720 be passed , accepting the bid of City National Bank. 1254 Item 1, cont'd. Motion seconded by Alderman Boyd, and lost by the following vote: Ayes: Mayor Pro tem Boyd and Alderwoman McCullough Nays : Aldermen McAlister, Garcia, and Gowan A recess was called at 11 :15 and the meeting resumed at 11:45. City Attorney H. P. Hodge stated that the two possibilities mentioned by Mayor Pro tem Boyd (splitting the funds between the two banks, or rejecting both bids) are about the only alternative they can come up with. He feels that rejecting a bid seems to be for the purpose of keeping them from having to select the lesser of all bad bids. He does not feel that the Council could force a bank to accept one-half of the bid. The City Manager pointed out that they would have the problem of determining which funds go where. The administration would need to know what the Council desired. He noted that it would be unwieldly to work with. Alderman Boyd suggested a one-year contract with each of the , auks. Alderman McAlister stated that his reason for voting for Parker Square is that there is no appreciable difference in the bids except for the rate of return offered. He has totally discounted the Parker Square variable rate. It is Parker Square 's fixed rate versus City National 's variable. Because of the way bids were submitted we might be within our prerogative to reject the bids and clear up some interpreta- tions necessary and ask both bidders to submit a fixed rate. This would make the decision process considerably easier. He feels it is more fair to throw them out than to split them. Frank Gibson stated that City National Bank would be acceptable to splitting it time wise. Mr. Crosnoe stated that he believes it would be unfair to re-bid it because other banks might bid. Also, there is the time period involved in giving notice and receiving bids. He believes this Council has the right to make a joint award. Parker Square State Bank would be agreeable to take the second year of the two-year term of the award. r RESOLUTION NO. 1720 RESOLUTION SELECTING CITY NATIONAL BANK AND PARKER SQUARE STATE BANK AS THE DEPOSITORIES FOR THE CITY OF WICHITA FALLS. WHEREAS , notice has been published by the City that applications for the custody of City funds will be received; and, WHEREAS, applications have been received from two banks that desire to be selected as the depository of the City; and, WHEREAS, the Board of Aldermen has considered such applications, and finds that City National Bank and Parker Square State Bank have offered equally favorable terms and conditions for the handling of such funds. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF ALDERMEN OF THE CITY OF WICHITA FALLS, TEXAS , THAT: SECTION 1. City National Bank and Parker Square State Bank are hereby selected as the depositories of the funds of the City of Wichita Falls, and the City Manager is authorized to execute depository contracts for the City with such banks in accord- ance with said applications ; the principal funds of the City shall be deposited in the City National Bank from October 1, 1975 through September 30, 1976, and in Parker Square State Bank from October 1, 1976 through September 30, 1977. SECTION 2. As required by law, said banks shall qualify as City depositories by pledging with the City for the purpose of securing such City funds such securities as are authorized by law. As soon as said securities have been so pledged by each bank, each such bank shall be designated as depository of the funds of the City. Moved by Alderman Gowan that Resolution No. 1720 be passed, awarding the de- pository contract jointly to City National Bank and Parker Square State Bank from October 1, 1975 to September 30, 1977, and that the principal of all funds be de- posited with City National Bank from October 1, 1975 to September 30, 1976, and with Parker Square State Bank from October 1, 1976 to September 30, 1977, based on Parker Square's non-variable rate of return. G h 1 1255 Item 1, cont 'd. Motion seconded by Alderman Garcia, and carried by the following vote: Ayes : Mayor Pro tem Boyd, Aldermen McAlister, Garcia, Gowan, and McCullough. Nays : None. Moved by Alderman McAlister that Mayor Pro tem Boyd appoint a committee of local banking representatives to assist the staff in revising the bid form for future depository bids. Motion seconded by Alderman Garcia and carried unanimously. Mayor Pro tem Boyd appointed Harold Jones as Chairman, Dick Waggoner and Willard Still. Moved by Ald!erwoman McCullough that the meeting be adjourned. Motion seconded by Alderman Gowan, and carried unanimously. The Board of Aldermen adjourned at 12 :10 P.M . PASSED AND APPROVED this 4�64111 day of CG y,Zyk 1975. ay&f Pro t ATTEST: Deputy City Clerk