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HomeMy WebLinkAboutJoint CC/RDA/FA - C24550 - Wells Fargo & CompanyCITY OF PALM DESERT OFFICE OF THE CITY TREASURER STAFF REPORT REQUEST: Terminate the City's gust relationship with the Bank of New York, and approve Wells Fargo & Company as a successor trustee for a five-year term. (contract No. c24550) APPLICANT: N/A CASE NOS. N/A DATE: November 10, 2005 CONTENTS: Exhibit "A": Wells Fargo Trust Services RFP Recommendation: By minute motion: That the City Council terminate the City's trust relationship with Bank of New York, and approve Wells Fargo & Company as a successor trustee for a five-year term, commencing January 1, 2006. Background: Bank of New York ("BONY") is the City's current trustee. BONY's five-year contract with the City of Palm Desert ("City") has expired. The relationship has been unsatisfactory for the following reasons: ➢ BONY has been a revolving door for account officers (the City has had five different trust officers over five years -- with varying degrees of competence). BONY has not delivered on its technology promises (Staff has not been able to download trust statements from the Internet for over two years due to BONY technical problems, and BONY failed to develop a BONY-SymPro interface). BONY "called" the WRONG bonds for Bighorn/Canyons of Bighorn. Staff Report Approval of 2005 Successor Trustee November 10, 2005 Page 2 of 3 BONY deposited unrelated third party .money into one of the City's trust accounts. BONY's inconsistent accounting practices have made it virtually impossible to monitor BONY's compliance with the City's money market fee rebate agreement. ➢ BONY never disclosed to the City that BONY was closing its California trust office (except for skeleton staff). City staff learned of this from a competitor long after it had happened. The City Treasurer's Office accordingly issued a Request for Proposals ("RFP") for Corporate Trust Services to three firms that had expressed an interest in doing business with the City: Wells Fargo Corporate Trust Services (San Francisco, California). Wachovia Corporate Trust Services (Charlotte, North Carolina). ➢ Zions Bank (Salt Lake City, Utah). Wachovia is the fourth largest bank in the United States. Zions Bank is currently the City's most competitive investment broker. All three banks have a trust office in California. City Finance staff and Redevelopment Agency staff interviewed all three candidates. What follows is a comparative summary on key points. Price. Wells had the lowest annual Trustee Fees for successor bond issues (Zions: $35,500. Wachovia: $27,000. Wells: $23,400). On a unit basis, it broke down to: (Zions: $2,000. Wachovia: $1,500. Wells: $1,300). Wells also had the lowest money market fees (Wachovia: 54 basis points ("b.p.") and a 25 b.p. 12b-1 Fee. Zions: 42 b.p. and a 25 b.p. 12b-1 Fee. Wells: 35 b.p. and no 12b-1 Fee) since Wells sells its own money market funds. The City currently keeps $30 million in trustee money market funds. Customer Service. Wells had the largest California -based staff for customer service purposes (Wachovia: 3 employees. Zions: 6 employees. Wells: 29 employees). Rob Schneider, the Wells Fargo employee who would be administering the City's trust accounts, formerly did so at U.S. Bank when the City was its client. Mr. Schneider is competent, and well -respected within the trust business. Operations. Wells administered the largest amount of municipal debt (Zions: $16 billion. Wachovia: $124 billion. Wells: $178 billion). In summary, based upon price, staffing, and experience with the City's bond issues, Staff recommends that Wells Fargo Corporate Trust Services be approved as the City's trustee for the period of 2006-2010. Staff verified the five references that Wells Fargo submitted — all were excellent. Staff Report Approval of 2005 Successor Trustee November 10, 2005 Page 3 of 3 Submitted By: GG�c��n�z2� Paul S. Gibson, C.C.M.T., City Treasurer Approved By: Carlos L. Ortega, ity Manager EXHIBIT "A" WELLS FARGO BANK SECTION B RFP NO. 2005: MINIMUM QUALIFICATIONS CERTIFICATION I hereby certify that my firm meets all of the minimum qualifications that are listed below for RFP No. 2005. My firm agrees to notify the City of Palm Desert ("Municipality") Treasurer's Office immediately, in writing, if it is selected as the Municipality's trustee and cannot continue to meet said minimum qualifications. Minimum Qualifications. The firm must: t. Be a trust company or a commercial bank (or a subsidiary of a parent bank holding company or corporation) that has the powers of a trust company, and that is su�ect to supervision or examination by a federal or state agency. Wells Fargo is a National Association, with full trust company powers and is thoroughly regulated by State and Federal Agencies. 1 2. Have a corporate trust office that is physically located within the State of California. Wells Fargo has two Corporate Trust Offices located in California, one in San Francisco and one in Los Angeles. Our Los Angeles office would be used to provide trust administration for the City of Palm Desert. 3. Have a combined capital (exclusive of borrowed camel) and surplus of at least $75 million. As of December 31, 2004 Wells Fargo reported total shareholder equity of $37,866 billion, surplus (additional paid in capital) of $9,806 billion and retained earnings of $26,482 billion L4. Have at least five years of experience in providing corporate trust services Wells Fargo Bank has been in the Corporate Trust business since 1934. 1 5. Be able to provide all of the 'Required Services" that are specified in this RFP. Wells Fargo can provide all "Required Services" specified in the RFP. The account representative who would be assigned to the relationship must execute this section. Firm: Wells Fargo Bank Signed: —AC'� Title: Robert Schneider, Vice President Date: September 16, 2005 The most senior person in corporate trust services must execute this section. Firm: Wells Fargo Bank Signed: L'4- Title: JennianyfMinardi, Sr. Vice President, Division Manager Date: September 16, 2005 WELLS FARGO BANK SECTION C RFP NO.2005: FEE PROPOSAL ESTI14ATED SERVICES ANNUAL VOLUME Acceptance Fees (Conversion) Per Bond Issue Acceptance Fees (New Issues) Per Bond Issue Counsel Fees (Conversion) I Per Band Issue Counsel Fees (New Issues) ( Per Bond Issue Trustee Fees Per Bond Issue NOTE. It is Wells Fargo's practice to charge an "all inclusive" Annual Fee. No additional add -on or transactional fees for tasks performed such as the production of checks or wires or the processing of construction requisitions wiU be charred. Fiscal Agent Fees Paying Agent Fees Registrar Fees Transfer Agent Fees Defeasance Escrow Agent Fees Depository Agent Fees Tender Agent Fees Letter of Credit Draw Charges Bondholder Account Maint. Charges Wire Transfer Charges Redemption Charges Security Trade Charges Collateral Maintenance Charges Out-of-pocket Charges' Itemize Ali Other Expenses Below: Investment Contracts — One time charge to set-up and review (See Below) I UNIT PRICE No Charge $1,500 No Charge $300 All Fixed Rate Assessment District, Tax Allocation and Lease Revenue Bonds - $1,300* As shown above No Charge No Charge No Charge $350 No Charge No Charge No Charge No Charge No Charge No Charge No Charge $500 per annum (assuming we are responsible for calculating mark - to -market, otherwise — to be waived) At Cost Per Agreement - f $500 TOTAL DIRECT FEE PRICE $0.00 $1,500 $0.00 $300 Total Annual Administration Fee for all issues - $23,400 (For 18 issues) Included in Annual Administration $0.00 $0.00 $0.00 To Be Determined $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Depends on # of accounts for which collateral maintenance is necessary At Cost $500 Per Agreement Forward Delivery Agreements - Annual Fee (See Below) TOTAL ANNUAL FEES' Per Agreement $1,000 Per $1,000 Agreement $ $23,400 ► Each offeror shall be responsible for contacting the Municipality's current trustee, BNY Western Trust, for data on the annual volume for each service. Any new bonded debt that the Municipality issues after January 1, 2006, shall be subject to the terms, provisions and pricing of this RFP and of the resultant trust services contract, while the latter is in effect.' *$1,300 Annual Administration Charge is for the following eighteen issues: 1. Assessment District No. 98-1 Limited Obligation Refunding Bonds (19I5 Special Improvements Act). 2. 1995 Revenue Bonds (1915 Special Improvements Act & 1985 Marks -Roos Local Bond Pooling Act). 3. 1997 Revenue Bonds (1915 Special Improvements Act & 1982 Mello -Roos Community Facilities Act). 4. 2003 Assessment Revenue Bonds (1915 Special Improvements Act & 1985 Marks -Roos Local Bond Pooling Act). 5. 1995 Series Tax Allocation Revenue Bonds (Project Area No. 2). 6. 1995 Series A - Tax Allocation Revenue Refunding Bonds. 7. 1997 Series Tax Allocation Refunding Revenue Bonds. 8. 1998 Series Tax allocation (Housing Set -Aside) Revenue Bonds. 9. 1998 Series Tax Allocation Revenue Bonds (Project Area No. 4). 10. 2001 Series Tax Allocation Revenue Bonds (Project Area No. 4). 11. 2002 Series A Allocation Refunding Revenue Bonds (Project Area No. 1, as Amended). 12. 2002 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 2). 13. 2002 Series Tax Allocation (Housing Set -Aside) Revenue Bonds. 14. 2003 Series Tax Allocation Revenue Bonds (Project Area No. 2). 15. 2003 Series Tax Allocation Revenue Bonds (Project Area No. 1). 16. 2003 Series Tax Allocation Revenue Bonds (Project Area No. 3). 17. 2004 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 1, as Amended). 18. 2003 Series A Lease Revenue Bonds (County Facility Projects). 1 Trustee Fees Only I ADDITIONAL INFOR.MA►TION RELATING TO FEES: INVESTMENT AGREEMENT If applicable, there will be an Annual Fee of $500.00 for the set-up, review and maintenance of any STANDARD investment agreement or similar instrument. The investment activities included in this fee assume there will be no more than one (1) draw on the instrument per month. Fees for NON-STANDARD agreements such as repurchase/swap/hedge agreements or for investment funds held outside the bank (such as CAMP or LAIF) charges will be negotiated separately. FORWARD DELIVERY AGREEMENT As shown above, Should a Forward Delivery Agreement be used in connection with this financing, a minimum Annual charge of $1,000 will be assessed. Sweep Funds Wells Fargo currently offers a full range of money market funds free of additional transactional charges. If more detailed information is required, please feel free to contact us. Management fees for the funds vary. Yields quoted are net of those fees. Extraordinary Fees Fees indicated in this proposal do not include fees for unusual or extraordinary services such as arbitrage calculations, default administration, dissemination agent services or other duties as may be mandated by further laws or regulatory agencies. We do provide such extraordinary services for additional fees. Terms and Conditions 1. Fees for extraordinary services, such default administration, will be negotiated and charged based upon time expended and personnel involved. Z. Should this documentation change substantially or the transaction become increasingly complex prior to final closing, Wells Fargo Bank reserves the right to adjust its fees accordingly. 3. Billings over 30 days past due are subject to a 1.5% per month late payment penalty on balance due. Wells Fargo's bid is based on the following assumptions: • The Registered Bonds are in book entry or fully registered form • Number of Series: One (1) per Issue • Number of funds/accounts : Twelve (12) per issue • Number of closings : Not Applicable for Successor issues • Interest rate: Fixed • Frequency of interest payments to holder: Semi -Annually and Monthly • Frequency of principal payments to holders: Annually This proposal is based upon the assumptions listed above which pertain to the responsibilities and risks involved in Wells Fargo undertaking the role(s) of Trustee, Fiscal Agent and Paying Agent. These assumptions are based on information provided to us as of the date of this proposal. Our proposal 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 proposal. SECTION D RFP NO.2005: TRUST SERVICES QUESTIONNAIRE 1. Firm Name. 2. Contact Address. 3. Contact Personnel: Account Administrator Name: Robert Schneider Title: Vice President TEL: 213.614.3353 Wells Fargo & Company Wells Fargo Corporate Trust Services 707 Wilshire Blvd. — 17th Floor Los Angeles, CA 90017 Supervising Manager Name: Jeanie Mar Title: Vice President TEL: 213.614.3349 4. Please provide resumes for the account administrator, the supervising manager, and any other employees who would be assigned to the Municipality's account. Please identify the current average trust client caseload for each employee; academic background; relevant certifications; years of experience in field; and years Huth your fine. If appointed, Mr. Rob Schneider will be assigned the administrative relationship with the City. Rob has over 20 years of Corporate Trust experience, having joined Wells Fargo from US Bank Trust in Los Angeles. Rob's administrative experience includes but is not limited to escrows, paying agencies, CFDs, COPs, Revenue, Special Tax, Multi -Family Housing, Single Family Housing, Mello -Roos and Marks - Roos transactions. Rob holds a Bachelor of Arts degree from the University of La Verne. Supporting Rob as Relationship Specialist will be Ms. Jane Thang. Jane will be well versed in the City's accounts and available to City personnel when called upon. In the event that Rob is absent, he is backed up by Ms. Jeanie Mar. Jeanie is our Office Manager and has parallel responsibilities to Rob, but will be available when called upon. This organizational model is unique to the corporate trust industry. As such, we are very confident that our service level will always remain excellent for the City of Palm Desert. 5. Please provide five references from California cities that have an established relationship with the account administrator who is listed in Question 3. Indicate: (a) name of city. (b) address, (d) telephone number; and (e) length of relationship. Public Agency References for Robert Schneider: City of Rancho Cucamonga, San Bernardino County Ms. Ingrid Bruce GIS/Special District Supervisor 10500 Civic Center Drive Rancho Cucamonga, CA 91730 909477-2700 x2567 City of Moreno Valley, Riverside County Mr. Steve Chapman Finance Director/City Treasurer 14177 Frederick Street P.O. Box 88005 Moreno Valley, CA 92552-0805 909-477-2700 x2567 City of Oxnard, San Buenaventura County Mr. Ake More Financial Services Manager 305 West Third Street Oxnard, CA 93030 805.385.7810 California Statewide Communities Development Authority (CSCDA) Jerry Burke General Manager 2175 N California Blvd. Suite 550 Walnut Creek, CA 94596 925.933,9229 x 211 California Infrastructure and Economic Development Bank (CIEDB) Mr. Blake Fowler Assistant Executive Director 1001 I Street — 19`h Floor Sacramento, CA 95814 916.323.8022 Length of Relationships: Rob has administered City of Rancho Cucamonga issues for over 20 years dating back to his tenure at Bank of America. Upon his arrival at Wells Fargo in 2000, the City shifted their new issue appointments to Wells Fargo. The City ultimately moved their entire portfolio on a successor basis from U.S. Bank to Wells Fargo with Rob as their Relationship Manager. The City of Oxnard appointed Wells Fargo as successor trustee for their bond portfolio of 11 issues in 2003. The resigning Trustee was BNY Western Trust Company. Rob has been assigned to that relationship since inception. CIEDB specifically requested that Rob serve as their Relationship Manager and has been appointing Wells Fargo Bank for selected issues since 2001. Blake Fowler is an advocate for the use of our TPR online system (fully described in Question 29). The City of Moreno Valley joined Wells Fargo in 2002. The relationship between Steve Chapman and Rob extends to when Mr. Chapman was with the City of Redlands and Rob was with Bank of America. CSCDA became a client in 2000 and has continued to be a steady client. Rob's relationship with CSCDA has been growing for 5 years. 6. Please provide two references from California cities that no longer have a relationship with your firm. Indicate: (a) name of city; (b) contact person; (c) address; (d) telephone number; and (e) length of relationship. Please explain why your firm no longer manages these accounts. In California, Wells Fargo Bank currently manages all accounts for which it has been appointed as "trustee. Since our establishment in the state of California in April, 1999, we have not lost any Trust relationships. 7. Please identify the total number of professionals and suppert staff that your firm has in the corporate trust office that would serve the Municipality. There are 29 Corporate Trust professionals and support staff located in the Los Angeles office, the second largest office in the Wells Fargo network of 28 offices nationwide. 8. How many of the employees in Question 7 devote a majority, (>50%) of their time to municipal debt administration Of the 29 Corporate Trust professionals located in the Los Angeles office, 18 individuals devote more than 50% of their time to the administration of municipal debt. 1 9. What percentage of time does the account administrator who is listed in Question 3, devote to municipal debt administration Approximately 75% of Rob Schneider's time is currently devoted to municipal debt administration. However, if we are awarded the City of Palm Desert's corporate trust business, we expect this % to increase to around 95%. If appointed, Rob will migrate selected smaller relationships to other administrators in order to accommodate the City of Palm Desert. 10. What is your firm's fiduciary classification? (Check all that apply) Bank - National Association XX Bank - State Association Affiliate of Investment Bank Affiliate of Foreign Bank Joint Venture with Another Firm (describe) Trust Company - National Trust Company - State Limited Purpose Trust Company Affiliate or Subsidiary of a Bank Holding Company Other (describe) 11. Please describe your firm's ownership structure. If your fin-n is owned by a parent bank holding company or corporation, then please identify that entity's name; its net capitalization, and where it is headquartered (city and state) Wells Fargo & Company is a publicly owned institution that is listed and traded on the New York Stock Exchange. Wells Fargo's ticker symbol is "WFC". We are headquartered in San Francisco and the largest bank maintaining headquarters offices in the State of California. Wells Fargo utilizes a decentralized management structure so that every local Wells Fargo store and office has autonomy to make significant decisions on behalf of their customers on a local basis. This autonomy extends to our Los Angeles Corporate Trust office where the City's relationship would be maintained. As of June 30, 2005, Wells Fargo & Company, has over $435 billion in assets, more than 155,000 employees, approximately 23 million customers, and more than 6,100 financial services stores in all 50 states, Canada, the Caribbean, Latin America and elsewhere internationally. Wells Fargo has an extensive history in Riverside County. Our roots date back to 1875 when Agents Elyron and Rosenthal established a Wells, Fargo & Company Express office in the City of Riverside. In 1960 Citizen's National Bank of Los Angeles opened a de novo office in the City of Riverside. In 1963 Crocker National Bank purchased Citizens Bank and in 1986 Wells Fargo Bank purchased Crocker which established the Wells Fargo Bank name in the County of Riverside for the first time. Today Wells Fargo operates from 58 fixed offices within the geographical boundaries of 18 Riverside County municipalities. This includes six locatior..s in the City of Palm Desert. The Bank employs over 1,200 people in Riverside County including 81 in the City of Palm Desert. Our commitment to the institutions and people of Riverside County and the City of Palm Desert extends well beyond business interests. In 2004, the Wells Fargo Foundation contributed $84,075 to 16 Palm Desert charities (a list of institutions and donation amounts is available upon request). We believe in being an active corporate citizen in the communities we are fortunate enough to serve. 12. Where is your corporate trust services subsidiary headquartered (city and state)? _ Although Wells Fargo & Co. is headquartered in San Francisco, California, our Corporate Trust headquarters is located in Minneapolis, MN. 13. Based upon currentlyavailable information, is your fine apossible m_trker or acquisition candidate? (check one) Yes X No If "yes", please discuss and identify the possible merger partner or acquiring organization. 14. What federal or state agency supervises or examines your firm? Wells Fargo & Company uses internal auditors and is governed by the Office of the Comptroller of the Currency (OCC) which charters, regulates, and supervises national banks. 15. What is the total amount of your firm's combined capital (exclusive of borrowed capital) and surplus as of December 31, 2004? As of December 31, 2004 Wells Fargo reported total shareholder equity of $37,866 billion, surplus (additional paid in capital) of $9,806 billion and remined earnings of $26,482 billion _16. What is your firm's Tier 1 capital ratio (to risk -adjusted assetsZas of December 31, 2004? - - Wells Fargo & Company's Tier 1 capital ratio is 8.41% as of December 31, 2004. 17. The total dollar amount of all outstanding bond principal (government and non -government) for which your firm provides corporate trust services? What is the total dollar amount of municipal outstanding bond pnncipal for which your firm provides corporate trust services? J Wells Fargo Corporate Trust Services administers a portfolio of over 16,500 issues representing over $1.25 trillion in outstanding debt. The Corporate & Municipal Markets Group (CMG), which will be administering your portfolio, administers over 12,000 bond issues representing over $178 billion in outstanding debt, the majority of which are public authority bond issues. L 18. Does your firm have a co orate trust office that is physically located within the State of California? (check one) XX Yes No If "yes", please identify the location, the business hours, and how long your firm has been providing corporate trust services in California. Wells Fargo currently has Corporate Trust offices in Los Angeles and San Francisco. The Palm Desert relationship would be administered from our Los Angeles office. Business hours are 8 a.m. to 5 p.m. We are the nation's and California's 3rd largest Corporate Trust provider. We have been operating our Corporate Trust business in California since April 1, 1999. 19. Is your firm's corporate trust administration centralized at ole physical location? (Check one) Yes XX No If "yes", please identify the city and state 20. Does your firm own a securities clearing operation or does it subcontract that reMonsibility to another fine?_(check one) XX Own Subcontract If "subcontract", please identify the subcontractor. And how long your firm has done business with the subcontractor. 21. Where is the securities clearing operation located (city and state)? What is the time zone? What are the "cut-off" times for "cash" trades, corporate securities, Treasuries, Agencies, and bankers's acceptances? For clearing physical securities, Wells Fargo's Operations unit is located in Minneapolis, MN - Central Time Zone). Wells Fargo is also capable of clearing physical securities in New York City through an arrangement with the DTC. The cut-off time for each of the following instrument is: Cash trades: Varies depending upon selected moni:y market fund (earliest possible - 9:15 a.m. P.S.T.) Corporate Securities: 12:00 Noon P.S.T. Treasuries: 10:30 a.m. P.S.T. Agencies: 10:30 a.m. P.S.T. Banker's Acceptances: 10:30 a.m. P.S.T. 22. Which of the following investment instruments is your firm capable of clearing? (check appropriate choices) T-Bills XX Certificates of Deposit XX T-Notes XX Commercial Paper XX T-Strips XX Corporate MTNs and Bonds XX Banker's Acceptances XX Mortgage -Backed Securities XX Repurchase Agreements XX Agencies (specify -all normally traded) XX Wells Fargo is capable of clearing any type of negotiable agency security. - 23. Please specify the hours (Pacific Standard Time when wiry transfers may be done on the Municipality's behalf. --_� Transfers on behalf of the Municipality may be performed between the hours of 6:00AM and 3:OOPM Pacific Time. 24. Please describe your firm's policy regarding failed transactions and its method of compensating customers in the event that your fine is at fault. Please provide a description of the compensation formula and the methodology that is used to calculate compensation. Our policy is simple: If we make a mistake, we pay the customer the interest lost due to the trade failure. Compensation Calculation: Interest Rate X Principal/365 X # of days of interest lost. 25. How many and what percentage of your securities transactions failed last month) During the last 12 months? Unfortunately, we are unable to answer the question as posed. However, we are able to extrapolate a response based upon data collected over the last tlree months. On average, Wells Fargo handles 276,000 DTC and Fed Trades combined and experiences approximately 6,900 failed trades (2.5%) per month. It is worthy to note that the failed trades are primarily due to brokers failing to deliver the shares (i.e. - buy fails). i 26. What is the aggregate policy limit on the coverage that your firm purchases for a Financial Institution Bond; excess securities insurance: banker's professional liability (errors and omissions) insurance: and mail insurance? Who are the insurance carriers? Protection for our customers with respect to en -ors or omissions caused by Wells Fargo or theft or misappropriation of their assets is provided by the financial strength, integrity and contractual obligations of Wells Fargo. We do carry a fidelity bond which insures Wells Fargo for loss arising out of employee initiated and other dishonest acts. The following is a breakdown of our policies (copies of the certificates - with the exception of the mail insurance - are included at the end of this RFP): Bond and Professional Liability Coverage Wells Fargo & Company purchases a combined Bond/Management Liability policy which includes Financial Institutions Bond (including Electronic and Computer Crime Coverage) and Professional Liability coverage, The coverage provides a $500 million aggregate and is purchased through our captive insurance company, Superior Guaranty Insurance Company (underwriter), with reinsurance protection provided by: • ACE American Insurance Company • St. Paul Travelers Insurance Company • Lexington Insurance Company • Arch Insurance Group • Axis Insurance Services • National Union Insurance Company • Chubb Group of Insurance Companies • ACE London Insurance Company • Starr Excess Liability Insurance Company • Steadfast Insurance Company • Swiss Reinsurance Company Excess SIPC Coverage We are currently analyzing our exposure and the scope of coverage offered by Excess SIPC coverage. In the interim, we believe our customers should feel confident in the strength of our management and ability to continue operations on the basis that Wells Fargo is the only U.S. bank to be awarded Moody's Aaa rating. This rating is awarded on the basis of our ;.mancial strength. Transfer Agents Mail Coverage As respects Mail Insurance, Wells Fargo purchases a Transfer Agent's Mail Policy from Chubb. The policy provides the following limits: • $500,000 maximum limit per envelope by first class mail or air mail • $50,000,000 maximum limit per envelope by registered mail or overnight courier, including overnight air courier, except $100,000,000 for only one certificate in non-negotiable form being sent via overnight air couriers to any domestic addressee. • $50,000,000 maximum limit per addressee per day • $5,000,000 maximum limit per shipment to other places in the world. 1 27. Where is the vault facility in which your firm would hold the Municipality's physical securities (street address, city and state)? Within our vault, we maintain over 932,974 securities and our facility is located at Wells Fargo Bank, 608 2nd Ave. S., Minneapolis, MN. 28. Please describe how your firm would ensure that all of the Municipality's securities that it holds in trust will quality for a GAS83, Category 1 rating. Will the Municipality's securities be registered in the Municipality's name or insured_? With regard to ensuring that all of the Municipality's securities would qualify for a GASB3 Category 1 rating, Wells Fargo (as custodian) can take certain actions that will assist it in earning a strong audit rating. These include, • Hold the Municipality's invested securities in a segregated trust account; • Ensure that all of the Municipality's assets are invested in accordance with governing documents; • Provide to the Municipality periodic valuations, no less frequently than monthly; • Ensure that all of the Municipality's uninvo:sted cash is adequately collateralized; • Provide the Municipality with account statements not less frequently than monthly. At those times when securities are to be purchased or sold, Wells Fargo can do business with the Municipality as a broker/dealer, using Wells Far -go Securities Inc. which is a member of SIPIC and therefore is fully covered. In addition the Wells Fargo carries supplemental insurance of $100,000,000 per customer. 29. Please identify and describe your firm's trust accounting data processing system; its reporting capabilities: how it can be accessed on-line; and the percentage or time, over the last 12 months_ it has been inaccessible because of technical problems. Accountine Data Processin.L, Sjtstems: While our systems are internal and largely transparent to our trust customers they have a direct impact on service responsiveness and minimizing error rates. Like any other business activity, corporate trust has been required to improve its efficiency to remain a viable bank product. Fees have been compressed by competitive forces requiring service providers to do more with less while maintaining a respectable level of service to their customers. Faced with the huge dollar technology investment in a low margin product with moderate risks, many banks have made the decision to exit the corporate trust business. Others centralized certain aspects of administration to achieve the needed levels of efficiencies which resulted in sacrifices in service and response levels. Continuous investment in technology is the solution that Wells Fargo has chosen to address this dilemma. We have grown our network of regional offices because the market has told us they want local administration and a single Relationship Manager who responds to all their needs as a trust client. Wells Fargo invests in technology based solutions to support the service delivery system our customers prefer. Wells Fargo will utilize various systems for the administration of the City's Bond programs. The core trust systems currently supporting account and portfolio management, compliance monitoring and payment/security processing are: Account Control (for Trustee & Fiscal Agent appointments) We utilize a corporate trust database management system to assist the Account Team in the compliance and risk management tasks of a customer's portfolio. Account Control is well equipped to handle the specific requirements of any portfolio, incorporating compliance and payment tracking. The reporting options in Account Control help the Account Team ensure compliance with document requirements and enable them to deliver superior service by communicating upcoming compliance items to our clients prior to when they are due. SEI Trust 3000 (for Trustee & Fiscal Agent annointments) SEI Trust 3000 is a real-time processing system. It records actual cash and securities held in all trust accounts with up -to -the minute reporting. SEI is the nation's leading provider of trust service software, and provides us the automation, information and financial capabilities to service its clients. Between 1997 and 2002, SEI invested $125 million in our trust systems. Since we are one of the four largest users of SEI's applications, we are an influential member of the R&D Steering Committee that drives the strategic direction of future system development On -Line Service & Reporting• Options We understand that sometimes you will have questions during non-traditional business hours and need an answer immediately. Our online products offer you the opportunity to view your accounts 24 hours a day, 7 days a week. Included below is a brief description of the alternatives offered. Trust Information Delivery (TID) This provides clients with instant web -based access to their financial and investment performance information, via Wells Fargo's Commercial Electronic Office® (CEO®). Trust reports are taken electronically from our asset custody systems, converted to PDF and retained by Trust Information Delivery in a secure environment, where they can be accessed and viewed by the client's authorized users. An email notification is sent as soon as new reports are available. You can search for a report by account number, report type, or report or processing date. Up to three months of history can be stored on the system. For longer retention, the entire report or just a portion can be easily downloaded and archived for use within other applications. Trust Portfolio Reoortin&j) (TPR) 1P TPRr was introduced in 2000 as one of the first product offerings on Wells Fargo's Commercial Electronic Office" (CEO. Twenty standard reports are available for viewing or exporting in standard HTML, PDF (Portable Data Format), ExcelTm, or comma separated formats. Several reports contain drill down features. Asset reports may be created for the past 30 business days or up to 13 prior month -ends. History accumulation begins at the time Trust Portfolio Reporting is implemented. Additional information or an in-house demonstration for you and your staff on our online products is available upon request. Both TID & TPR maintained a 99.999% uptime record, free of any technical problems. 30. Does your firm have an existing interface program that is capable of electronically linking your firm's trust accounting data processing system Wth SymPro, and directly transferring cash balance data into individual SymPro investment files? Yes XX No If "yes", please describe the interface program's capabilities with respect to SymPro and how long the interface program has been operational. Please also list three references from California public agencies that are currently using the interface program. Wells Fargo does not have an existing interface program. However, in the past Sympro and TPR (described in question 29) have been successfully linked for another client who ultimately did not use the system. Upon speaking with representatives from Sympro (Tom Panas and Carlton Young), we are confident that a successful link between Sympro and TPR can once again be achieved. In order to link the systems together two events must occur. One, Wells Fargo will need to build a custom Ad Hoc Report within TPR for the City of Palm Desert. Second, a custom Financial Services Module will need to be written by Sympro and installed locally on the Palm Desert systems. This module will capture the daily cash balance data for the 207 trust accounts. In order to calculate the monthly average cash balance for each account, Wells Fargo will develop a custom Excel or ACCESS database for the City of Palm Desert. As no actual data or files will be available for a TPR to Sympro download, we cannot demonstrate the process specifically. If we are called for interviews on September 29 or 30th, we will be happy to demonstrate TPR and the ease of Ad Hoc Report creation. We will assist in the creation of all needed Ad Hoc Reports for the City. We are confident with the once the 18 bond issues are transferred and set up on Wells Fargo TPR, a successful link between TPR and Sympro will follow shortly thereafter. This will allow the City to receive cash balance data directly into individual Sympro investment files as stipulated on Page 8 of the RFP dated August 22nd. Wells Fargo is happy to underwrite any associated costs. 1 31. Please describe the procedures that your firm would use to ensure that all of the Municipality's bonds are in compliance with , their indentures of trust. To assist the Account Team in the compliance and risk management tasks of a customer portfolio, Corporate Trust Services utilizes a corporate trust database management system referred to as AccountControl. This system incorporates compliance tracking along with on -going database needs for each issue. AccountControl is well equipped to handle the specific requirements of a portfolio. For example, AccountControl is designed to track payments and generate reports outlined within the financing structure of the issue or the governing documents, at the Obligor, Resolution or Borrower level. Further, the Account Team receives the benefit of automated account monitoring to ensure integrity within complex cash flow structures or multi -faceted debt structures within our more complex bond programs. AccountControl also generates "ticklers" allowing. the Relationship Manager to keep abreast of his or her specific duties and functions vis .a vis a particular issue. After closing (or transfer in the case of a successor appointment) the ticklers are compiled and organized into a Synoptic that is presented to and reviewed with the client. The Synoptic serves as an essential summary of all of the salient duties required of the Relationship Manager and the Issuer. Upon successful transfer and set up of the City's respective issues, Rob Schneider and Stuart Weiss will request an appointment with Paul Gibson, Thornas Jeffrey and other interested parties to present and review the respective Synoptics with them. 32. What is your bond registrar system? Bondmaster/Certmaster (for Registrar and Paving Agent aanointments) The features of these bond recordkeeping systems include: full transfer processing, tax reporting, holder reporting, principal and interest payment and bond call processing. Wells Fargo Corporate Trust Operations is involved with the vendor of these products in their efforts for continuous system improvements. 33. How many successor trusteeships have you done over the last 12 months? With the Municipalitys current trustee over the last 12 months With regard to our understanding and ability to act as successor Trustee/Fiscal Agent, we have a standardized process for the assumption of administrative duties. This process has been honed by our assumption of administrative duties for 186 California issues from four different California trustees since 1999. What follows is a listing of issuers who have appointed us as successor trustee along with the name of the resigning trustee(s) and the year the relationship came to Wells Fargo Bank. • California Health Facilities Financing Authority (Lucile Packard Stanford Children's Hospital, Palo Alto, Santa Clara County) (From U.S. Bank Trust) 2003 • California Statewide Communities Development Authority (From U.S. Bank Trust) 2000 • City of Azusa, Los Angeles County (From BNY-Western Trust Company) 2003 • City of Burbank, Los Angeles County (From BNY-Western Trust Company and U.S. Bank Trust) 2001 • City of Chino, San Bernardino County (From BNY ,Western Trust and U.S. Bank Trust) 2003 • City of Imperial (From State Street Ban k4) 2002 • City of Moreno Valley, Riverside County (From BNY-Western Trust Company) 2002 • City of Oxnard San Buenaventura County (From BNY-Western Trust Company) 2002 • City of Perris, Riverside County (From U.S. Bank Trust) 2001 • City of San Diego (From U.S. Bank Trust) 2002 • City of San Jose Redevelopment Agency, Santa Clara County (From U.S. Bank Trust) 2002 • City of Shafter, Kern County (From U.S. Bank Trust) 2003 • City of Stockton, San Joaquin County (From U.S. Bank Trust) 2003 • City of San Pablo, Contra Costa County (From BNY-Western Trust Company) 2004 • County of San Berardino Economic and Community Development Department (From U.S. Bank Trust) 2003 • Cucamonga (San Bernardino) County Water District (From U.S. Bank Trust) 2001 • Delta Diablo Sanitation District, Contra Costa County (From U.S. Bank Trust) 2000 • City of Maryville, Yolo County (Fremont-Rideout Health Group), (From BNY Western Trust) 2003 • City of Rancho Mirage (Eisenhower Medical Cent,--r) (From BNY Western Trust Company) 2005 • County of Contra Costa (From US Bank Trust) 2004 • City of Rancho Cucamonga (From US Bank Trust) 2005 i 34. Will your firm charge acceptance fees and counsel fees for the Municipality's outstanding bond issues if it becomes the successor trustee? (Check one) Yes XYX No If "yes", please identify the charges in the Fee Proposal 35. Please describe the capabilities and the experience of your firm in providing all services that are listed under "Required Services" in this RFP. As a full service Trustee, we are competent and capable of performing all services listed under the "Required Services" section of the RFP. Since 1934, Wells Fargo has been providing trust services to municipalities and corporations. Since that early date, we have maintained an aggressive stance of staying ahead of the needs and requirements of our Corporate Trust customers. This has and will continue to involve our Team members focusing on product research, development, information technology, policies, procedures, legal and statutory changes, new pub: is financing structures and much more. By doing this, our customers have confidence that they can rely on us as a resource and authority for all matters relating to corporate trust and more. By way of example, many of our procedures are automated to reduce the chance of "human error". We utilize the software program, AccountControl (described in detail in the response to question 31). Within our guidelines, all electronic ticklers must be entered into the system that will remind the Administration Team when action is required. Once the ticklers are entered, they are double checked by an independent internal group to ensure compliance and accuracy. In this case, "two sets of eyes are better than one". U.S. Bank Trust acquired State Street Bank's Corporate Trust business in late 2002 The Administration Team, led by Rob Schneider, will be your primary contact. The Team will work in tandem with other Wells Fargo departments to ensure that the information you request is provided quickly. In addition, the Team will work with any external consultants that the City requires (arbitrage rebate calculators, auditors, underwriters, financial advisors, legal advisors, investment advisors, etc.) In short, by contacting Rob and your Administration Team you will have a "one -stop" shop for all of your corporate trust requirements. 36. Please describe any "Optional Services' that you believe vvould be of benefit to the Municipality. Any associated costs should be itemized in the Fee Proposal. The services listed below are all customized for the specific needs of our clients. As such any and all associated costs are subject to negotiation. With this in mind no associated costs will be itemized in the Fee Proposal. Wells Fargo Institutional Brokerage (Fee waived) Wells Fargo has been helping municipalities, schools, hospitals and other public entities manage their finances for more than a century. Wells Fargo provides the resources of a respected, national financial services firm, together with local expertise and a commitment to customer service. Each institutional sales representative is part of an experienced team of brokers, traders and sales assistants, ensuring that someone is always there to assist you. We specialize in institutional investments so we are attuned to the specific needs of public entities. Our expertise translates into a more efficient, effective response to your investment needs. Institutional Brokerage & Sales has 15,000 institutional customers across the United States with $20 billion in securities traded daily. Wells Capital Management Wells Capital Management provides customized, active management of reserves, bond proceeds, cultural endowment and retirement assets for public entities, corporations and other institutions. With over $157 billion under management (as of 3/05), Wells Capital specializes in developing investment policies and asset allocation strategies in a wide array of styles and strategies, each drawing from Wells Capital's renowned economic and credit analytics, and each having its own comprehensive, GASB-friendly reporting package. Custody and Safekeeping Services Wells Fargo Institutional Trust Services is dedicated to providing safekeeping services to clients located in all 50 states and is a distinct business line within Wells Fargo Bank. Providing custody and safekeeping products and services for over 150 years, Wells Fargo ITS provides custody for over $380 billion assets. Government Banking The Government Banking Division at Wells Fargo Bank is a team of seasoned professionals dedicated exclusively to serving the unique banking needs of the public sector. We draw on the Bank's vast resources to deliver state-of-the-art banking products and we are committed to serving our government entities and their employees, and the communities in which they live, through a complete range of products and personalized service. Other Financial Services Wells Fargo Corporate Trust via its associates can also assist the City of Palm Desert with the following: • Guaranteed Investment Contract Bidding Agent via Wells Fargo Investment Advisory Services • insurance (Property, Casualty, D&O, E&O, Malpractice, Etc.) via Acordia Insurance Services 37 Please list and describe the money market funds that your firm offers as part of its automated cash sweep program. Please identify the number of basis points that the mutual fund company would charge and that your firm would charge for each fund. Can your firm rebate part of its charges to the City? if so, by how such? How would you calculate the rebate on a monthly basis? Please also identify the fund number or fund class for each fund. The following Administrative Class funds are utilized in our automated cash sweep program: Wells Fargo Government Money Market Fund — CUSIP: VP7001259 — invests 100% of total assets in high -quality, short-term money :market instruments and at least 80% of the Fund's assets in U.S. Government obligations and repurchase agreements collateralized by U.S. Government obligations. This fund is rated Aaa. Wells Fargo Cash Investment Money Market Fund — CUSIP: VP7001457 — invests 100% of total assets in high -quality, short-term money market instruments. This fund is not rated. Wells Fargo Heritage Money Market Fund — CUSIP: VP7000210 — invests 100% of total assets in high -quality, short-term money market instruments. This fund is rated Aaa. The Wells Fargo Advantage Institutional Money Market Funds are offered with no 12-B-1 fees — this can be a significant savings. The Net Expense fees shown represent the entire cost connected to each respective fund. No rebates are offered. Further information on the funds including prospectuses is available upon request in both electronic and hard copy form Wells Fargo Cash Investment Money Market Fund Wells Fargo Heritage Money Market Fund Admin Admin 138 bps NIA 10 bps 38 bps 38. Can your firm guarantee the fees and expenses that it listed in its Price Proposal for the five-year term of the proposed trust services contract? Wells Fargo Corporate Trust Services guarantees the fees and expenses listed in the Price Proposal for the five-year term and beyond. 39. Why should your firm be retained as the Municipality's truslee? Please elaborate on any competitive advantages that the Municipality would gain by selecting your firm, as opposed to other firms. Familiarity of the City of Palm Desert's bond issues via Rob Schneider. Since Rob will be your primary contact the benefit to the City will be two -fold: immediate understanding of the unique needs of Palm Desert; and superior technology with which to administer the accounts and to provide you with the information you need. Sympro — Can Do. Upon successor appointment, we will commission Sympro to write a customized and Financial Services Module to be installed on respective Palm Desert computer systems. We will also refine and finalized a distinctive Ad Hoc Report on TPR (see Answer 29) that will facilitate the download of cash balance data into Sympro. Wells Fargo will underwrite associated costs for these activities. With Sympro's committed cooperation (both Wells Fargo and the City of Palm Desert will be their clients at that point) we are confident that the interface will be achieved and in place after all 18 issues have been transferred from BNY Western Trust to Wells Fargo. Our actions speak louder than words. We recognize that when Wells Fargo and Norwest merged in 1998, some questioned our commitment to remaining in the Corporate Trust Business. Since your last proposal (March 2000) we have: • more than doubled our staff to over 1,200 employees • more than doubled the accounts administered to over 16,000 • increased our locations by 33% to 28 offices nationwide • Remained a top 3 national trustee for new money issues. Growing in California through reputation, not acquisition. Our approach seems to be working as we are the 3'd largest trustee in the state. Your business is a privilege, not a right. Some competitor's have maintained their national ranking through purchasing books of business taking the choice of providers out of the hands of the client. We believe in the more personalized approach of earning your business through superior customer service, diligent work, exceptional experienced professionals and the best technology available in the industry. Through our methodology, the choice of providers remains in your hands. We want your business. We thank you for the opportunity to propose our services for the City of Palm Desert. Our hope is that Rob Schneider, Stuart Weiss and our entire Team will be able to work with you for many years to come. 40. Have any of your firm's public sector clients claimed, in writing, within the last 12 months, that your firm was responsible for any investment losses? (check one) Yes XX No If "yes", please describe each matter briefly. 41. Has your firm been subject to any litigation, arbitration, or regulatory proceedings, either pending, adjudicated, or settled, within the last 12 months, that involved allegations of improper, fraudulent, disreputable, or unfair activities related to the purchase, sale or settlement of securities on behalf of institutional clients? (che& one) Yes XX No If "yes", please describe each matter briefly. 42. Has your firm been subject to a regulatory, state, or federal agency investigation with the last 12 months, for alleged improper, fraudulent, disreputable, or unfair activities related to the purchase, sale or settlement of securities? (check one) Yes XX No If "yes", please describe each matter briefly.