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13 THE CITY OF CITY COUNCIL AGENDA REPORT pL E ASANTONo July 21, 2009 Finance Department TITLE: AUTHORIZE THE CITY MANAGER TO EXECUTE A BANKING SERVICES AGREEMENT WITH UNION BANK OF CALIFORNIA TO PROVIDE UTILITY BILLING REMITTANCE PROCESSING SERVICES SUMMARY Increasingly, customers are paying their City utility bills online or authorizing direct debits to their bank accounts; however, the majority of customers continue to write checks and mail in their remittance stubs. The Utility Billing division of the Finance Department currently receives and processes approximately 5,000 bills per month through the mail. Processing this volume of mail, reconciling accounts, resolving discrepancies and preparing bank deposits is a time consuming task, often requiring two Utility Billing staff members up to two hours, each, per day. Staff invited proposals from Bank of America (the City's main banking relationship) and Union Bank of California to provide remittance processing services (commonly referred to as "lockbox" services). With a lockbox, utility bills are mailed from the City with a return envelope addressed to the City of Pleasanton, in care of the bank. The bank then receives the payment, processes it and electronically, deposits funds in our utility account with Bank of America, and remits the payment data to City staff. After reviewing the pricing structures and interviewing various cities, staff recommends Union Bank of California to provide remittance processing services. The use of this service will allow staff to provide improved customer service and is in keeping with the overall effort to increase the use of technology in Utility Billing. RECOMMENDATION Authorize the City Manager to execute a Banking Services Agreement for Utility Billing remittance processing services with Union Bank of California. FINANCIAL STATEMENT Based on the attached pricing sheet and the anticipated volume of transactions to be processed through the bank remittance processing service, staff estimates the annual cost for banking services to be approximately $33,700. The cost of the service will be absorbed in the current Utility Billing budget by not utilizing summer interns (typically two paid interns are hired) and through reduced banking fees resulting from faster deposits. The use of the lockbox service will accelerate the rate in which funds are deposited in the bank by at least one day.