AGENDA MEMORANDUM

 

 

Meeting Date:           July 27, 2009

 

From:                          Mike Thornton, Purchasing Manager

 

Subject:                      Resolution authorizing execution of an inter-local agreement with Polk County for participation in a corporate purchasing card program

 

 

Staff Recommendation:

Staff recommends execution of the inter-local agreement with the Polk County Board of County Commissioners for participation in a corporate purchasing card program.

 

Analysis:

The City currently uses corporate purchasing cards (P-card) to make small dollar purchases for services and materials necessary for operation of the various departments.  The City currently has 266 cards issued to City employees.  Currently the single transaction, not item, limit is $1,000.00 for nearly all cardholders.  The system has served the City well.

 

There are many benefits in a corporate or organization purchasing card program.  Departments have the flexibility and convenience to purchase the goods and services they need to operate.  The City receives a rebate on purchases made.  The purchasing division can focus its attention on higher dollar purchases where greater savings can be realized.  The cost of processing a purchase and payment is much less for the City.  Generally, merchants prefer government agencies to use a purchasing card instead of payment by check.  The merchant or vendor receives their payment much quicker than the conventional method of issuing a purchase order and check for payment.

 

On November 24, 2003 the City Commission approved resolution 6975 authorizing an Agreement with SunTrust expanding bank services to provide a purchasing card program.  The current agreement between the City and SunTrust provides a rebate or revenue sharing of 50 basis points (.5%) on purchases with the purchasing card.  Purchases classified by Visa as large ticket items are not included in this rebate program.  Additionally, in order for the City to receive any rebate we must spend at least $1.5 million dollars annually. 

 

The Bank of America program through Polk County will provide the City several possible rebate amounts based on the total dollars spent by all the participants and the grace period selected by the City.  I estimate the rebate percentage to the City in this program to be 1.25%.  The table included here shows the different examples of rebates available.


 

 

Purchase Card Annual Volume Tiers (Excludes Large Ticket)

Grace or Payment Days

Grace or Payment Days

Grace or Payment Days

3 days

7 days

14 days

$1,000,000 - $1,999,999

.91%

.85%

.75%

$2,000,000 - $2,999,999

1.10%

1.05%

.95%

$3,000,000 - $4,999,999

1.16%

1.10%

1.00%

$5,000,000 - $9,999,999

1.18%

1.12%

1.02%

$10,000,000 - $14,999,999

1.19%

1.13%

1.03%

$15,000,000 - $19,999,999

1.20%

1.14%

1.04%

$20,000,000 - $24,999,999

1.21%

1.15%

1.05%

$25,000,000 - $49,999,999*

1.25%

1.20%

1.10%

$50,000,000 - $74,999,999

1.28%

1.23%

1.13%

$100,000,000 or over

1.30%

1.25%

1.15%

Qualified Large Ticket Transactions

 

 

 

$0 and over

.50%

.45%

.35%

            * The participating agencies total spend placed the rebate percent at this tier.

 

Last year the participating agencies spent just over a total of $27,000,000.00  Participating agencies are Polk County Board of County Commissioners, Lake County Board of County Commissioners, School Board of Broward County, City of Lakeland(still implementing), and Lakeland Area Mass Transit.  The total dollars spent of all participating agencies is used to determine the ‘Volume Tier’.  The grace or payment days selected by each individual agency will determine the rebate percent at that tier.  Each agency then receives a rebate amount based only on their dollar amount spent using  the applicable rebate percent.

 

For example, if the City of Leesburg spent a total of $1,500,000 using the purchasing card and used a 3-day payment period (payment to the bank), the rebate percent would be 1.25% or $18,750.00.  Participating in this program allows smaller agencies, like Leesburg, to receive the higher rebate available to larger agencies.  If the City remains in our current agreement with SunTrust, we would receive a rebate of $7,500 in this example.  We can more than double the rebate amount received simply by participating in this cooperative program.

 

During the last two fiscal years, the City has not met the minimum spending requirements to receive a rebate in existing program.  Participation in this program will guarantee the City no less than a 1% rebate regardless of our total dollars spent.  The attached inter-local agreement provides for this guarantee in paragraph D.

 

With some minor changes to the purchasing procedure and possible use of payment management programs through Bank of America, the City can increase total dollars spent using the purchasing card program.  This will result in a higher rebate amount.  With the proper policies, procedures, and employee education, the City can minimize misuse and receive increased cash back for our expenditures.

 

Other than executing the inter-local agreement, the only requirement for the City to participate in this program is membership in the Mid-Florida Chapter of NIGP.  This is a local chapter of the National Institute of Governmental Purchasing professional organization.  The annual membership fee is $40.00.

 

There are no recurring bank costs for the City to particpate in this program.  Standard bank fees for late fees and finance charges are part of the agreement, but have never been assessed since the City implemented the purchasing card program in 2003.

 

Options:

1.  Approve execution of the inter-local agreement with the Polk County Board of Commissioners;

     or

2.  Such alternative action as the Commission may deem appropriate

 

Fiscal Impact:

There will be a positive fiscal impact with the City actually receiving a rebate and at a higher rate than currently provided by our card issuer.

 

Submission Date and Time:    7/24/2009 8:43 AM____

 

Department: _Finance________________

Prepared by:  _Mike Thornton________                     

Attachments:         Yes__X__   No ______

Advertised:   ____Not Required __X___                     

Dates:   __________________________                     

Attorney Review :       Yes___  No ____

                                                

_________________________________           

Revised 6/10/04

 

Reviewed by: Dept. Head ________

 

Finance  Dept. _________JB_______                                     

                              

Deputy C.M. ___________________                                                                         

Submitted by:

City Manager ___________________

 

Account No. ____NA___________

 

Project No. _____NA___________

 

WF No. ________NA___________

 

Budget  ________NA___________

 

Available _______NA____________


 

 

RESOLUTION NO._______________

 

A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA, AUTHORIZING THE MAYOR AND CITY CLERK TO EXECUTE AN INTER-LOCAL AGREEMENT WITH THE POLK COUNTY BOARD OF COUNTY COMMISSIONERS ALLOWING THE CITY TO BE A PARTICIPATING AGENCY IN A CORPORATE PURCHASING CARD PROGRAM WITH BANK OF AMERICA; AND PROVIDING AN EFFECTIVE DATE.

 

BE IT RESOLVED BY THE CITY COMMISSION OF THE CITY OF LEESBURG, FLORIDA:

 

            THAT the Mayor and City Clerk are hereby authorized to execute an inter-local agreement  with the POLK COUNTY BOARD OF  COUNTY COMMISIONERS whose address is 2470 Clower Lane, Bartow, Florida  33830, for participation in a corporate purchasing card program pursuant to their agreement with Bank of America.

 

             THAT this resolution shall become effective immediately.

 

PASSED AND ADOPTED by the City Commission of the City of Leesburg, Florida, at a regular meeting held the __27th___ day of __July___ 2009

 

 

 

                                                                            __________________________

                                                                             Mayor

 

ATTEST:

 

 

__________________________

City Clerk