OFFICE OF FINANCE200 N. SPRING ST.

ROOM 101 - CITY HALL LOS ANGELES, CA 90012

CITY OF LOS ANGELESCALIFORNIA

CLAIRE BARTELSDIRECTOR of FINANCE

CITY TREASURER

(844) 663-4411

ERIC GARCETTI MAYOR

September 12, 2016

The Honorable Members of the Budget and Finance CommitteeCity of Los Angeles200 N. Spring St., Room 340Los Angeles, CA 90012C/O City ClerkAttn: Richard Williams

APPROVAL TO EXECUTE SECOND AMENDMENT TO CONTRACT WITH THE BANK OF NEW YORK MELLON FOR FINANCIAL CUSTODIAN AND SECURITIES LENDING SERVICES

RE:

The Office of Finance (Finance) requests approval to execute the attached proposed Amendment No. 2 to Contract C-121154 with the Bank of New York Mellon (BNY). BNY provides custody, securities lending and related services under the contract executed October 10, 2012. The purpose of the amendment is to extend services until March 30, 2017.

A Request for Proposals (RFP) was released in June, 2015, and BNY was the successful proposer. The requested extension would allow Finance to complete contract negotiations with BNY and execute a new contract pursuant to the RFP. Finance, in cooperation with representatives from the Office of the City Attorney and the City Administrative Officer, is negotiating contract terms related to the City’s Standard Provisions for City Contracts with BNY.

FISCAL IMPACT

Funds to pay for this extension are provided for under the current fiscal year’s budget. Therefore, no additional funding is required. A copy of the current contract is also attached for your reference.The average annual cost for the contract is approximately $111,211 which is more than offset by the average annual revenue of approximately $444,860. Funds for this contract have been budgeted in the Office of Finance Account 4040, Bank Service Fees.

RECOMMENDATIONS

The Office of Finance respectfully requests that the City Council authorize the Director of Finance to execute Amendment No. 2 to Contract No. C-121154, subject to final review as to form and legality by the Office of the City Attorney.

AN EQUAL OPPORTUNITY-AFFIRMATIVE ACTION EMPLOYER

BNYM Amendment No. 2 September 12, 2016 Page 2

If you require any further information regarding this request, please contact Tom Juarez, Chief Investment Officer, at (213) 978-4039 or Tom.Juarez@lacity.org.

Respectfully,

Oua~Claire BartelsDirector of Finance/City Treasurer

Attachments

Matt Szabo, Deputy Mayor of Budget and Innovation Zara Bukirin, Office of the City Administrative Officer

cc:

AMENDMENT NO. 2 TO CONTRACT No. C-121154 BETWEEN THE CITY OF LOS ANGELES

ANDTHE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL

ASSOCIATION

This Second Amendment to Contract No. C-121154 between the City of Los Angeles (hereinafter “City”) and THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION (hereinafter “CONTRACTOR”) is entered into with reference to the following:

WHEREAS, on October 10, 2012 the parties entered into Contract No. C-121154 wherein CONTRACTOR agreed to provide Custody, Securities Lending and related services; and

WHEREAS, Contract No. C-121154 expires September 30, 2016; and

WHEREAS, City would be in violation of California Government Code Section 53601 which states that all securities owned by the City shall be held in safekeeping by the City’s custodial bank and would face the loss of significant revenue if there were a lapse in Custody, Securities Lending and related services; and

WHEREAS, Office of Finance released a Request For Proposal for Custody, Securities Lending and Related Services and contract negotiations are underway; and

WHEREAS, the City and the Contractor now agree to continue the CONTRACTOR’S services to the City to allow sufficient time for the Office of Finance to complete the Request for Proposal process and subsequent negotiation of a new contract without a lapse in service.

NOW THEREFORE, the parties hereby covenant and agree as follows:

ARTICLE I - AMENDMENTS TO THE CONTRACT

1. Section 2 - Representatives of the Parties, on Page 3 of the CONTRACT is hereby amended in its entirety to read:

A. Representatives of the Parties:

The representatives of the respective parties authorized to administer this AGREEMENT, and to whom formal notices, demands, and communications shall be given are as follows:

The representative of the CITY shall be, unless otherwise stated in this AGREEMENT:

1)

Tom JuarezCity of Los Angeles, Office of Finance 200 North Spring Street, Room 220, City Hall

Amendment 2 Contract No. C-121154

Los Angeles, CA 90012

The representative of the CONTRACTOR shall be, unless otherwise stated in this AGREEMENT:

2)

Linda McAteeBNY Mellon Asset Servicing 400 South Hope Street, Suite 400 Los Angeles, CA 90071

2. Section 3 - Term, on Page 3 of the CONTRACT is hereby amended in its entirety to read:

“The term of this AGREEMENT shall commence on October 1, 2012, and end on March 30, 2017 subject to the termination provisions herein.”

3. Appendix B - Fee Schedule, of the CONTRACT is hereby amended to be replaced with the attached, updated Fee Schedule.

ARTICLE II - GENERAL PROVISIONS

Except as amended by this SECOND AMENDMENT, all other provisions of Contract No. Cl21154 shall remain in full force and effect.

Signature page follows.

Page 2 of 3

Amendment 2 Contract No. C-121154

IN WITNESS THEREOF, the parties hereto have caused this instrument to be signed by theirrespective duly authorized officers:

Approved Corporate Signature Methods (please sign in blue ink):

a) Two signatures: one by Chairman of Board of Directors, President or Vice President; and one by Secretary, Assistant Secretary, Chief Financial Officer or Assistant Treasurer. OR

b) One signature by Corporate designated individual together with properly attested resolution of Board of Directors authorizing person to sign on the company behalf.

The Bank of New York Mellon Trust Company, National AssociationCity Of Los Angeles

By: By:CLAIRE BARTELSDirector of Finance / City Treasurer

Signature

Name:Printed/ Typed

Date:Title:

Printed /Typed

By:Signature

Name:Printed / Typed

Title:Printed /Typed

Date:

APPROVED AS TO FORM:MICHAEL N. FEUER City Attorney

ATTEST:HOLLY L. WOLCOTT City Clerk

By: By:Assistant City Attorney Deputy City Clerk

Date: Date:

Bank Of New York Contract - C-121154 - Amend No 2 - 7-27-16 Draft

Page 3 of 3

APPENDIX B

CUSTODY SERVICES INDICATIVE FEESCHEDULE

Fee ScheduleBasis

PointsBasis Points x

Assets Assets = ChargeFlat Annual FeeDomestic

Custody and Related Services *$100,000

'CommentsFee assumes BNY Mellon is the primary securities lending agent and collateral manager and may lend your entire pool of assets.

Charge Per Item

Charge Per Item x Item ChargeItems

Structural Charges (annual fees based on monthly valuation)Investment Pool Accounting

Per Separate AccountPer Separate Account with any OTC DerivativesPer Line Item (Real Estate, LP, Commingled Fund, Mutual Fund, Hedge Fund, Gift Processing)Per Collateral Account Per Cash Portfolio

$2,500.00$3,500.00

Included in flat fee

$1,000.00$2,000.00

$500.00

Included in flat fee

Included in flat fee

Transaction Fee Domestic *

Per Depository Eligible Transaction (includes purchases, sales, free receipts, free deliveries and maturities)Per P&l, PayupyPaydownPer Repo Transaction/CollateralPer Leg of Futures, Options or Swap TransactionPer Physical trades and Mutual Fund Transactions (Non NSCC)Per Other Transaction (i.e. Not-in-bank)

$10.00$10.00$15.00$25.00$25.00$25.00

Included in flat fee Included in fiat fee Included in flat fee

I

Included in flat fee Included in flat fee

* Cancels will be treated as a transaction and charged as such (if arising from action of client or investment manager)

OtherPer Incoming/Outgoing US Wire Per Manual Check Request Per Margin VariationPer Third Party Securities Lending Agent (Applicable Transaction fees would also apply)Per FIX Not Executed At BNY Mellon (Developed Markets)Per FIX Not Executed At BNY Mellon (Emerging Markets - A higher fee may apply for Restricted Currencies)Per Manual Transaction where automated solutions exists (in addition to Transaction fee)

$10.00$35.00$12.00

Included in flat fee

$100,000.00$35.00

$35.00

$100 00 Included in flat fee

BNY MELLON ASSET SERVICING

Proxy Services Per Ballot Issue Per Incoming Vote Per Manual Instruction Any other Proxy Service Charges

$5.00$10.00$25.00

Pass through + 10%

Independent Valuation (OTC Derivative Pricing)Daily valuation, per position per vendor per day Daily valuation, per centrally dearerd position per day Monthly valuation, per position per vendor per month

$3.25$2.00

$45.00

Cash Investment Sweep

Dreyfus Cash Management Funds See Prospectus

Per 3rd Party Cash Management (STIF) Sweep (Waived tor sweeps into BNY Mellon supported funds) $12,000.00

Securities Lending

80% of the income earned from lending the assets will be remitted to City of Los Angeles and the remaining 20% will be retained by BNYMellon with a 2 bps fee for the administration of the collateral.

Programming / Information TechnologyCustom Programming and Reporting Requirements - per hour rate $150,00

TOTAL$100,000

BNY MELLON ASSET SERVICING