HomeMy WebLinkAbout2017-04-24 City Council Workshop PacketPPLLEEAASSEE NNOOTTEE SSTTAARRTT TTIIMMEE
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staff and citizens. It is hoped that by following these simple rules, everyone’s opinions can be heard and understood in a
reasonable manner. We appreciate the fact that when appearing at Council meetings, it is understood that everyone will
follow these principles:
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Show respect during comments and/or discussions, listen actively and do not interrupt or talk amongst each other.
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AGENDA
MAPLEWOOD CITY COUNCIL
MANAGER WORKSHOP
5:30 P.M. Monday, April 24, 2017
City Hall, Council Chambers
A. CALL TO ORDER
B. ROLL CALL
C. APPROVAL OF AGENDA
D. UNFINISHED BUSINESS
None
E. NEW BUSINESS
1. Rush Line Corridor Update
2. Financial Policies
F. ADJOURNMENT
THIS PAGE IS INTENTIONALLY LEFT BLANK
MEMORANDUM
TO: Melinda Coleman, City Manager
FROM: Michael Thompson, Director of Public Works
DATE: April 17, 2017
SUBJECT: Rushline Corridor Update
Introduction
The City Council will receive an update on the Rushline Corridor project.
Background / Discussion
Ramsey Council Regional Rail Authority staff will be presenting the progress to date including
the proposed locally preferred alternative and upcoming critical dates.
Budget Impact
None.
Recommendation
Information item only.
Attachments
1.Policy Advisory Committee Public Hearing Flyer
2.Power Point Presentation
E1
Workshop Packet Page Number 1 of 96
NEIGHBORHOOD FOCUSED
OPEN HOUSES
5:00 p.m. | Open House
• Learn about the recommended route,
selection process and next steps
• Talk with project team members
6:00 p.m. | Presentation
• Hear an overview of the project and details on the
draft locally preferred alternative
6:30 p.m. | Public Hearing
• Provide comments and questions to the
Policy Advisory Committee and for the public record
SCHEDULE
CAN'T ATTEND?
View materials on www.rushline.org
Comments on the draft locally preferred alternative
will be accepted until May 4, 2017.
Thursday, April 27, 2017
5:00 - 8:00 p.m.
Our Redeemer Lutheran Church
1390 Larpenteur Ave. E, St. Paul
Accessible by bus route #64
Dedicated Bus Rapid Transit (BRT) from
Union Depot in St. Paul to White Bear Lake,
generally along Phalen Blvd, Ramsey County
Regional Railroad Authority right-of-way
(Bruce Vento Trail) and Hwy 61, is being
recommended as the draft locally preferred
alternative for the Rush Line Corridor
(see map on back).
The Policy Advisory Committee is hosting
an open house and public hearing
to provide information and collect input.
OPEN HOUSE + PUBLIC HEARING
Upon request, RCRRA will provide reasonable accommodations to persons with disabilities or interpreters at the public meeting.
Please submit such requests by April 18, 2017: info@rushline.org • 651-266-2760
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en español, llame al 651-266-2760
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ntawv Hmoob hu rau tus xov tooj
651-266-2760
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laguugu tarjumo Af Somali, la soo xiriir
651-266-2760
Sign up for email updates. Provide comments. Ask questions. Learn more.
• www.facebook.com/rushline • @rushlinetransit
• www.rushline.org • info@rushline.org • 651-266-2760
E1, Attachment 1
Workshop Packet Page Number 2 of 96
E1, Attachment 1Workshop Packet Page Number 3 of 96
Transit Study Update
Maplewood City Council Workshop
April 24, 2017 E1, Attachment 2Workshop Packet Page Number 4 of 96
Study Area
30-mile study area between
Union Depot in St Paul and
Forest Lake
Connects major destinations,
neighborhood activity centers
and job concentrations
Serves diverse and growing
population
2 E1, Attachment 2Workshop Packet Page Number 5 of 96
Need for Improved Transit
#2 Serve People Who Rely on Transit
46,100 Number of people over
age 65
55%People living below
poverty line since 2000
11%Median household income
#1 Sustainable Growth and Development
24%
30%
Forecasted population
growth by 2040
#4 Transit Demand is Increasing
Transit demand in
northern oriented routes 10%
Demand by
route type
3%
Express
Suburban Local9%
33%
Urban Local
#3 Sustainable Travel Options are Limited
9%3%
17%
Traffic volumes are increasing
Commute times between
35-90 minutes
I-35E Hwy. 61
Forecasted employment
growth by 2040 E1, Attachment 2Workshop Packet Page Number 6 of 96
Project Development Process
Pre-Project Development (PPD) Transit Study is first
step in lengthy project development process
4 E1, Attachment 2Workshop Packet Page Number 7 of 96
Study Milestones
Summer 2014
EARLY
OUTREACH•Review of Relevant
Work
•Current and Future
Conditions
•Purpose/Need
•Goals/Objectives
•Tier 1 Screening
•Detailed Definition of
Alternatives
•Tier 2 Screening
•Tier 2 Refinement
•Identify LPA
•Implementation Plan
Community Engagement
Complete
CORRIDOR
VISION
Complete
ALTERNATIVES
EVALUATION
2 In Progress
LOCALLY PREFERRED
ALTERNATIVE (LPA)
3
We Are Here
1
E1, Attachment 2Workshop Packet Page Number 8 of 96
Public Engagement
6
More than 5,000 people participated in the
Rush Line Study through community events,
workshops, business outreach, presentations,
pop-up events, social media, and online
engagement forums.E1, Attachment 2Workshop Packet Page Number 9 of 96
What we heard
All-day transit service needed
Connect people to businesses,
services, jobs and education
Preserve natural spaces
Concern about property and business
impacts
Pursue highest transit investment
possible to make areas more
desirable
Transit options should also be cost-
effective
7 E1, Attachment 2Workshop Packet Page Number 10 of 96
Evaluation Criteria by Project Goal
8 E1, Attachment 2Workshop Packet Page Number 11 of 96
Where We Started
9 E1, Attachment 2Workshop Packet Page Number 12 of 96
Recommended Vehicle
E1, Attachment 2Workshop Packet Page Number 13 of 96
Recommended Vehicle
11
Less than half the cost of Light
Rail Transit
Cost per rider could quality for
federal funding with refinements
Similar level of service as LRT
Operates in own lane
Frequent and reliable
Upgraded stations and vehicles
Can be catalyst for economic
development
Dedicated Bus
Rapid Transit
E1, Attachment 2Workshop Packet Page Number 14 of 96
Health Line -Cleveland
12 E1, Attachment 2Workshop Packet Page Number 15 of 96
Orange Line -Los Angeles
13 E1, Attachment 2Workshop Packet Page Number 16 of 96
Recommended Route
E1, Attachment 2Workshop Packet Page Number 17 of 96
Recommended Route
Phalen Boulevard, Ramsey
County Regional Railroad right-
of-way (Bruce Vento Trail), and
Highway 61
Co-locate with Bruce Vento Trail
Bus connection to Forest Lake
and system improvements will
be further explored
15 E1, Attachment 2Workshop Packet Page Number 18 of 96
Why use RCRRA ROW?
Cost-effective due to public
ownership of ROW
Longest route with fixed
guideway, maximizes
development potential at station
areas
Shortest travel time between St.
Paul and Maplewood
Direct Routing to St John’s
Hospital and Maplewood Mall
serves over 7,000 jobs
16 E1, Attachment 2Workshop Packet Page Number 19 of 96
Why use RCRRA ROW?
BRT Lanes will share RCRRA ROW with Bruce Vento
Trail
No private property acquisition anticipated because ROW
is already in public ownership
Potential environmental impacts can be addressed as
design progresses
17
Current Future Concept
E1, Attachment 2Workshop Packet Page Number 20 of 96
Why use Phalen into Downtown?
18
Serves the most jobs
and equity populations
(zero-car households,
households below
poverty)
Highest Potential
Ridership
Shortest travel time
Convenient Transfer to
METRO Green Line
near Region’s Hospital E1, Attachment 2Workshop Packet Page Number 21 of 96
Why use Hwy 61 North of I-694?
19
More cost effective than using
adjacent private BNSF ROW
due to public ownership
Similar potential ridership and
travel time
Stations along the way serve
higher employment areas
E1, Attachment 2Workshop Packet Page Number 22 of 96
Draft Locally Preferred Alternative
(Route & Vehicle)E1, Attachment 2Workshop Packet Page Number 23 of 96
Draft Locally Preferred
Alternative
21
Approx. Length:
Dedicated Guideway:
Number of Stations:
Schedule:
Frequency:
Travel Time:
14 miles
85-90%
20
5A-12A, 7 days/week
Rush hour: every 10 mins
Non-rush hour: every 15 mins
14 mins
One way, White Bear Lake > Maplewood
36 mins
One way, Maplewood Mall > Union Depot E1, Attachment 2Workshop Packet Page Number 24 of 96
# of People Living below
Poverty in Station Areas
(2040):
Draft Locally Preferred
Alternative
Capital Cost
($2021):
Annual O&M Cost
($2015):
Average Daily Ridership
(2040):
# of Residents in
Station Areas
(2040):
$420 M
($55 million higher cost if other routes in guideway)
$7.8 –8 M
5,700 –9,700
(higher ridership if other routes use guideway)
60,200
# of Jobs in
Station Areas
(2040):
106,700
11,700 E1, Attachment 2Workshop Packet Page Number 25 of 96
Ongoing LPA Engagement Activities
Timeline for public comment
•March 24 -May 4, 2017
PAC Public Hearing and Open House:
•April 27, 5 -8 pm
•Location: Our Redeemer Lutheran
Church, 1390 Larpenteur Avenue
Pop-Up Information Tables
•Merrick Food Shelf: April 17
•Lafayette Business Park: April 20
•Maplewood Community Center: April
20
Website notice and email updates
Presentations upon request
23 E1, Attachment 2Workshop Packet Page Number 26 of 96
Opportunities
Less visual and noise impacts than LRT
Less expensive than LRT or other routes
Possibility to convert to LRT in future
Perceived as safer than LRT
Faster travel times
Preference for hybrid or electric buses
Challenges
Need to consider how people will access service at stations
Concerns about potential impacts to existing green space, trail, and private property
Perception that it will lower property value and quality of life and/or change character of
neighborhood
Concerns about safety in neighborhood and along route
24
Input Received on Draft LPA
E1, Attachment 2Workshop Packet Page Number 27 of 96
Input Received on Draft LPA
“Good transportation access is key in guiding
redevelopment decisions” –Sherman Associates
“High quality transit in a dedicated guideway will create
value for employers, employees, clients, customers, and
residents along the corridor” –St. Paul Area Chamber of
Commerce
“The proposed Rush Line route and strategically placed
stations will provide transportation options for our clients to
connect with our state of the art health care services” –
HealthEast St. Johns Hospital
25 E1, Attachment 2Workshop Packet Page Number 28 of 96
Next Steps
More detailed environmental analysis to begin Fall
2017
26
MAY 2017
•Public hearing to
obtain feedback on draft
LPA
•Project committees
vote on whether to
approve the LPA
•County and Cities
along the route will be
asked to confirm support
for the LPA
APRIL 2017 JUNE -JULY 2017
E1, Attachment 2Workshop Packet Page Number 29 of 96
Questions
E1, Attachment 2Workshop Packet Page Number 30 of 96
E2
MEMORANDUM
TO: Melinda Coleman, City Manager
FROM: Ellen Paulseth, Finance Director
DATE: April 24, 2017
SUBJECT: Financial Policy Revisions
Introduction
The City has a comprehensive set of financial policies that help set standards for how the City
will be managed financially. Financial policies are an important component of long-term
financial planning. The Government Finance Officers Association (GFOA) has identified several
key reasons for adopting and maintaining formal, written financial policies:
To institutionalize good financial management practices;
To clarify and establish strategies for financial management;
To define boundaries and set parameters;
To support good bond ratings;
To promote strategic and long-term thinking;
To manage financial risk;
To comply with established public management best practices.
The City’s financial policies should be reviewed annually to ensure that the policies are current,
relevant, and effective. The GFOA recommends that policies be clear, concise and free of
administrative details. The City’s financial policies include 12 broad areas of financial
management operations, including:
Revenue Management
Cash and Investments
Reserves
Operating Budget
Capital Improvement Plan
Economic Development Authority
Debt Management
Accounting, Auditing and Financial Reporting
Risk Management
Grant Management
Public Purpose Expenditure Policy
Procurement Policy
Some of these policies are new, some contain minor revisions, and some have major changes
with significant implications. Because the changes are so extensive, the redline document can
be difficult to follow. Major changes to the policy framework are summarized by financial
management area below:
Workshop Packet Page Number 31 of 96
E2
1. Revenue Management
Four subsections, covering Diversification, Equity, Economic Development and
Collections were added to the statement of purpose. The impact on the policy is
described as follows:
Diversification – a diversified revenue base is important to prevent fluctuations
in revenue and is looked at favorably by the credit rating agencies. The policy
encourages the City to seek out new sources of revenue, including franchise
fees. Staff is promoting the expansion of the electric franchise fee to help
finance road construction projects and reduce the amount of outstanding debt.
Equity – encourages the City to seek the most equitable solution when
establishing new fees and taxes.
Economic Development – encourages the consideration of economic
development factors when establishing fees and charges. Also encourages the
recapture of economic development benefits through development charges.
Collections – calls for vigilant collections of outstanding charges to the extent
the cost of collection does not exceed the value of collections. This policy gives
staff broad discretion in the collection of ambulance bills and other accounts
receivable. It does not allow staff to write-off accounts receivable without Council
approval; however, it allows staff to write-off minor amounts of $5.00 or less
when it is prudent to do so.
Section D was added to provide guidance for the management of non-recurring and
volatile revenues. These types of revenues should not be relied on to fund ongoing
programs and should be directed toward capital needs.
2. Cash and Investments
This policy has been replaced in its entirety to comply with the latest GASB
requirements. Substantive changes include provisions for:
Diversification of investments – this will mitigate the risk of loss resulting from
the over concentration of assets in a specific maturity, issuer, or class of
maturities. The policy sets broad limits on the allocation of the portfolio to the
various sectors of the market.
Concentration – the policy protects liquidity needs by limiting concentration of a
specific maturity sector and establishing an investment horizon of five years, with
limited ability to extend the horizon in certain circumstances.
The policy establishes reporting requirements and authorizes the formation of an
investment committee, if desired. It also establishes performance benchmarks for
measuring investment yield.
The policy also eliminates the old requirement of charging an investment management
fee to other funds. This is not a common industry practice. It is overly burdensome and
introduces unnecessary complexity into the accounting system. We have eliminated it
for efficiency purposes.
Workshop Packet Page Number 32 of 96
E2
3. Reserves
This policy was updated to reflect the latest GASB requirements. Changes include:
General Fund – establishes minimum level of unassigned fund balance to 40% of
operating expenditures, rather than a minimum of 36.1% with a goal of achieving 40%.
The City currently has excellent liquidity in its debt service and internal service funds. As
dynamics change in the City, the City could become more dependent on its twice-yearly
property tax settlements for liquidity. The General Fund must have sufficient liquidity to
pay expenses for 6 months before the first tax settlement for the year is distributed.
Rating agencies look favorably on policies that ensure adequate reserves because they
allow the City some budgetary flexibility and provide room for contingencies. The
General Fund currently carries in excess of 40% of operating expenditures in
unassigned fund balance, so this change should not create a burden on the City.
4. Operating Budget
There are no substantive changes to this policy. It has been updated and reorganized.
5. Capital Improvement Plan
There are no substantive changes to this policy. It has been updated and reorganized.
6. Economic Development Fund
There are no substantive changes to this policy. It has only been reformatted.
7. Debt Management
This policy has been reworked and contains significant changes from the existing policy.
Substantive changes and policy considerations are as follows:
Restrictions on Debt Issuance – Encourages the use of Pay-as-you-Go Financing for
equipment and minor capital assets.
Financial Limitations – Adds language to encourage the City to keep the total maturity
length of general obligation bonds below 20 years and structure the bonds to allow for
retirement of at least 50% of the principal within 2/3 of the term of the bond issue.
Adds language to encourage the City to achieve a minimum of an “Adequate” or better
rating from the credit rating agencies on the City’s debt and contingent liability profile.
Adds language to encourage the City to maintain the amount of net direct outstanding
debt at less than $1,800 per capita. Currently, it is less than $1,600 per capita. The
Council may wish to discuss the various options.
Adds language to encourage the City to maintain the highest possible credit rating and
to maintain good relations with rating agencies and keep a positive perception in the
marketplace.
Adds language to encourage the City to do a formal RFP for municipal financial advisors
and bond counsel every five years.
Workshop Packet Page Number 33 of 96
E2
Conduit Debt Policy – Updates the City’s conduit debt policy. Increases the fee to
.50% of par on the first 10,000,000, instead of .25% of par, and eliminates the cap on the
amount of the fee. Reduces the processing fee from $3,500 to $2,500.
Post Issuance Compliance Policy – changes the responsibility for post issuance
compliance actions from the City Council to the Finance Director. Contains other minor
revisions and updates.
8. Accounting, Auditing, and Financial Reporting
Provides for the creation of an audit committee for the purpose of providing an
independent review and oversight of the City’s financial reporting processes, internal
controls, and independent audit. The Committee consists of the City Manager, Finance
Director, and two City Council members. The Committee establishes guidelines for the
operation and scope of its work.
9. Risk Management
There are no substantive changes to the existing policy.
10. Grant Management
Minor changes were included to require all grant activity to run through the Finance
Department to ensure that the City meets the new federal Uniform Grant Guidelines.
11. Public Purpose Expenditure Policy
This is a new policy that defines “public purpose” from the City’s perspective. Examples
of permitted and non-permitted expenditures are included. The policy essentially
describes when it is and is not appropriate to expend public funds on items such as food
and beverages and employee recognition. It also establishes limitations on the use of
City assets and creates requirements for documentation of expenses.
12. Procurement Policy
Formerly known as the Purchasing Policy, this policy was updated to meet requirements
of the new federal Uniform Grant Guidance. A section defining ethics and conflict of
interest was added. An affirmative action section was added to encourage the City to do
business with small, minority-owned, women-owned, disadvantaged, veteran-owned,
and local business enterprises.
Budget Impact
There is no budget impact
Recommendation
Consider debt policy parameters. Adopt the revised financial polices at a future meeting.
Attachments
1. Draft Financial Policies (redlined)
2. Power Point slides
Workshop Packet Page Number 34 of 96
FINANCIAL MANAGEMENT POLICIES
The City of Maplewood has an important responsibility to its citizens to plan
the adequate funding of services desired by the public, to manage the
municipal finances wisely, and to carefully account for public funds. The
City strives to ensure that it is capable of adequately funding and providing
local government services needed by the community. The City will maintain
or improve its infrastructure on a systematic basis to insure the
maintenance of quality neighborhoods for its citizens.
In order to achieve these goals, this plan has the following objectives for
the City’s fiscal performance:
1. To be proactive, rather than reactive, in the City’s policy-making
efforts to ensure that important decisions are not controlled by
financial problems or emergencies.
2. To enhance the City Council’s policy-making ability by providing
accurate financial information related to the various authority or
service levels provided by the City.
3. To assist in sound management of the City government by
providing accurate and timely information on financial condition.
4. To provide sound principles to guide the City Council with decisions
that will have significant financial impact on the City.
5. To set forth operational principals that minimize the cost of local
government, to the extent consistent with services desired by the
public, and minimize financial risk.
6. To utilize revenue policies and forecasting tools to prevent undue
or unbalanced reliance on certain revenues, especially property
taxes, and that also distribute the cost of municipal services fairly
and provide adequate funds to operate desired programs.
7. To provide essential public facilities and prevent deterioration of the
City’s infrastructure and various facilities.
8. To protect and enhance the City’s credit rating and prevent default
on municipal debts.
9. Ensure the legal use and protection of City funds through a good
system of financial and accounting controls.
10. Record expenditures in a manner that allocates to current
taxpayers or users the full cost of providing current services.
11. To adopt a balanced budget in the General Fund that will ensure
an adequate, stable fund balance.
E2, Attachment 1
Workshop Packet Page Number 35 of 96
To achieve these objectives the following fiscal policies have been adopted
by the City Council to guide the City’s budgeting and financial planning
process. Each fiscal policy section includes a statement of purpose and a
description of the policy.
1. Revenue Management
2. Cash and Investments
3. Reserves
4. Operating Budget
5. Capital Improvement Plan
6. Economic Development Authority Fund
7. Debt Management
8. Accounting, Auditing and Financial Reporting
9. Risk Management
10. Grant Management
11. Public Purpose Expenditure Policy
12. Procurement Policy
E2, Attachment 1
Workshop Packet Page Number 36 of 96
1. Revenue Management
It is essential to responsibly manage the City’s revenue sources to provide maximum
service value to the community. The most important revenue policy guidelines
established by the City Council are for the two major sources of city revenue:
property taxes and fees/charges.
A. Purpose
The purpose of this policy is to establish broad goals to assist the City in managing
its revenue. These goals will consider diversification and stabilization; equity;
economic development; and collections.
1. Diversification
The City will strive to maintain a diversified revenue base to prevent
fluctuations in revenue. Property taxes add stability to the revenue base, but
should not be the sole source of revenue. When possible, the City will seek
out new sources of revenue to diversity the tax base. This could include
long-term solutions, such as franchise fees or additional fees and charges.
Short-term solutions should also be considered, such as a one-time sale of
assets.
The City will strive to support policies that promote economic development in
the City to encourage a diversified local economy and expand the tax base.
2. Equity
The City will strive to ensure that funding is derived from a fair, equitable and
adequate resource base, while minimizing tax differential burdens. Services
having a citywide benefit shall be financed with revenue sources generated
from a broad base, such as property taxes and state aids. Services where
the customer determines the use should be financed with user fees,
charges, and assessments related to the level of service provided.
3. Economic Development
The City’s revenue sources should not unduly reduce the City’s economic
competitiveness or negatively impact individual choices in the local economy.
The City’s overall revenue structure should be designed to recapture some of
the financial benefits resulting from economic and community development
investments. The City will strive to keep a total revenue mix that encourages
growth and keeps Maplewood economically competitive.
4. Collections
City staff should engage in vigilant collections of outstanding balances due
to the City. However, the cost of collections should not exceed the marginal
extra revenue obtained or absorb a large percentage of the amount
collected. City staff and collections contractors may write off accounts
receivable in amounts of $5.00 or less without Council approval.
E2, Attachment 1
Workshop Packet Page Number 37 of 96
B. Property Taxes
1. When possible, property tax increases should accommodate
incremental adjustments. Further, when discussing property taxes,
the City should simultaneously explore other revenue and expenditure
alternatives that will maximize the City’s future financial flexibility and
ability to provide services. This may include considering options such
as debt management, fees and charges, cost allocation, use of
reserves, and expenditure cuts.
Possible factors for considering an increase in property tax include:
1. Maintenance of City services.
2. Long-term protection of the City’s infrastructure.
3. Meeting legal mandates imposed by outside agencies.
4. Maintaining adequate fund balance and reserve funds sufficient to
maintain or improve the City’s bond rating.
5. Funding City development and redevelopment projects that will clearly
result in future tax base increases. The expenditures of development
and redevelopment funds must be in accordance with a defined
strategy as shown in the City’s Comprehensive Plan, Capital
Improvement Program and other Council documents.
Property tax increases to meet other purposes will be based on the following criteria:
1. A clear expression of community need.
2. The existence of community partnerships willing to share resources.
C. Service Fees and Charges
The City will consider service fees and charges wherever appropriate for the
purposes of keeping the property tax rate at a minimum and to fairly allocate the full
cost of services to the users of those services. Service fees and charges broaden
the base to include tax exempt properties, which still have municipal costs associated
with the property. Specifically, the City may:
1. Establish utility rates sufficient to fund both the operating costs and the
long-term depreciation and replacement of the utility systems.
2. As part of the City’s enterprise effort, evaluate City services and
pursue actions to accomplish the following:
Find community based partners to share in service delivery.
Make services financially self-supporting or, when possible,
profitable.
E2, Attachment 1
Workshop Packet Page Number 38 of 96
3. Annually review City services and identify those for which charging
user fees are appropriate. These services will be identified as
enterprise services and a policy for establishing fees will be set for
each. Included as part of this process may be a market analysis that
compares our fees to comparable market cities.
4. Identify some enterprise services as entrepreneurial in nature. The
intent of entrepreneurial services will be to maximize revenues to the
extent the market allows.
5. Waive or offer reduced fees to youth, seniors, community service
groups, and other special population groups identified by the Council
as requiring preferential consideration based on policy goals.
Selected criteria are used to determine the specific rate to charge for a fee for service.
The approach for establishing the rate criteria is determined by the policy relating to
the fee in the City policies and procedures manual. The rate criteria can be one of
five approaches:
1. Market Comparison
a. Attempt to set fees in the upper quartile of the market.
2. Maximum set by External Source
a. Fees set by legislation, International Building Code, etc.
3. Entrepreneurial Approach
a. Fees will be at the top of the market.
4. Recover the Cost of Service
a. Program will be self-supporting.
5. Utility Fees
a. A rate study will be updated or reviewed each year.
D. Non-recurring and Volatile Revenues
Non-recurring revenues should directed towards one-time uses and should not be
relied on to fund ongoing programs. Several one-time revenue sources, such as
intergovernmental transfers, grants, and insurance dividends are outside of direct
City control and must be relied upon conservatively. The City Manager and Finance
Director shall ensure that the budget preparation process includes an evaluation of
all major non-recurring revenues, in order to minimize reliance on unpredictable
revenues for on-going operating costs.
Volatile revenues, such as court fines, interest earnings and building permits can
produce undependable yields and should not be heavily depended on to fund
ongoing programs. High yields from these sources should be treated in a manner
similar to non-recurring revenues. Revenues can be considered volatile if they vary
by more than 10% from budgetary estimates.
E2, Attachment 1
Workshop Packet Page Number 39 of 96
2. Cash and Investments
Effective cash management is essential to good fiscal management.
Investment returns on funds not immediately required can provide a
significant source of revenue for the City. Investment policies must be well
founded and uncompromisingly applied in their legal and administrative
aspects in order to protect the City funds being invested.
A. Purpose
The purpose of this policy is to establish the City’s investment objectives
and establish specific guidelines that the City will use in the investment of
city funds. It will be the responsibility of the Finance Director to invest city
funds in order to attain a market rate of return while preserving and
protecting the capital of the overall portfolio. Investments will be made,
based on statutory constraints, in safe, low risk instruments.
B. Scope/Funds
This policy applies to the investment of all city funds available for
investment and not needed for immediate expenditure. The City will
consolidate cash balances from all funds to maximize investment earnings.
Investment income will be allocated to the various funds based on their
respective participation and in accordance with generally accepted
accounting principles.
C. Delegation of Authority
Authority to manage the investment program is granted to the Finance
Director who shall act in accordance with established written procedures
and internal controls for the operation of the investment program consistent
with this investment policy. Procedures should include references to:
safekeeping, delivery vs. payment, investment accounting, repurchase
agreements, wire transfer agreements and collateral/depository
agreements. No person may engage in an investment transaction except
as provided under the terms of this policy and the procedures established
by the Finance Director.
The primary objectives, in priority order, of investment activities shall be
safety, liquidity, and yield:
1. Safety: Safety of principal is the foremost objective of the
investment program. Investments shall be undertaken in a manner
that seeks to ensure the preservation of capital in the overall
portfolio. The objective will be to minimize the risk of market
fluctuations, such as credit risk and interest rate risk. Credit risk is
the risk that the borrower will be unable to make their debt service
payments to the investors. Interest rate risk is the risk that rates will
(for example) rise while the investments you hold have lower rates
– if the City were to sell their investments prior to maturity in this
case, they would have to sell the investments at a loss.
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2. Liquidity: The investment portfolio must remain sufficiently liquid to
meet all operating costs that may be reasonably anticipated. The
portfolio must be structured so that securities mature concurrent with
cash needs to meet anticipated demands. Cash needs will be
determined based on cash flow forecasts.
3. Diversification of instruments: A variety of investment vehicles
must be used so as to minimize the exposure to risk of loss. The
investment portfolio must be diversified by individual financial
institution, government agency, or by corporation (in the case of
commercial paper) to reduce the exposure to risk of loss.
4. Diversification of maturity dates: Investment maturity dates
should vary in order to ensure that the City will have money available
when needed.
5. Yield: The investment portfolio shall be designed with the objective
of attaining a market rate of return throughout budgetary and
economic cycles, taking into account the investment risk constraints
and liquidity needs. Return on investment is of secondary
importance compared to the safety and liquidity objectives described
above.
D. Oversight
The City Manager shall oversee the City’s investment program. The
Finance Director will maintain a more detailed and comprehensive
investment policy based on the principles established by the City Council
and consistent with the most current guidelines within the public sector. On
at least an annual basis, the Finance Director shall provide a status report
to the City Council. Annually, the City Council shall designate depositories
for investment purposes.
E. The City shall invest in the following instruments as allowed by
Minnesota Statute 118A
1. Government Securities: Direct obligations of the federal
government or its agencies, with the principal fully guaranteed by
the U.S. Government or its agencies.
2. Certificates of Deposit: A negotiable or nonnegotiable instrument
issued by commercial banks and insured up to $250,000, or the
amount set, by the Federal Deposit Insurance Corporation (FDIC).
3. Repurchase Agreement: An investment that consists of two
simultaneous transactions, where an investor purchases securities
from a bank or dealer. At the same time, the selling bank or dealer
agrees to repurchase the securities at the same price plus interest
at some agreed-upon future date. The security purchased is the
collateral protecting the investment.
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4. Prime Commercial Paper: An investment used by corporations to
finance receivables. A short-term (matures in 270 days or less),
unsecured promissory note is issued for a maturity specified by the
purchaser. Corporations market their paper through dealers who in
turn market the paper to investors. The City will only purchase
commercial paper issued by U.S. corporations or their Canadian
subsidiaries that has been rated highest quality (A1, P1 and F1) by
two of three rating agencies.
5. State or Local Government Securities: Any security that is a
General Obligation of the State of Minnesota or any of its
municipalities.
6. Statewide Investment Pools: Statewide investment pools that
invest in authorized instruments according to Minnesota Statutes
§118A.04, such as the Minnesota Municipal Money Market (4M)
Fund.
7. Money Market Mutual Funds: Money market mutual funds that
invest exclusively in U.S. Government and agency issues.
F. Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain
from personal business activity that could conflict with the proper execution
and management of the investment program. Employees and investment
officials shall disclose any material interests in financial institutions with
which they conduct business or that could be related to the performance of
the investment portfolio. Employees and officers shall refrain from
undertaking personal investment transactions with the same individual with
whom business is conducted on behalf of the City.
G. Internal Controls, Audits, External Controls
The Finance Director is responsible for establishing and maintaining an
internal control structure designed to ensure that the assets of the City are
protected from loss, theft, or misuse. Accordingly, compliance with City
policies and procedures should be assured by the Finance Director, and
addressed through the annual audit (CAFR) process.
H. Authorized Financial Institution and Dealer
In accordance with Minnesota Statutes §118.02, the responsibility for
conducting investment transactions resides with the City Council. Also, the
Council shall be responsible for designating the depositories of the funds.
Depositories shall be selected through a banking services procurement
process, which shall include a comprehensive review of credit
characteristics and financial history by the Finance Director or reliance on
selection criteria by an independent third party. In selecting depositories,
the creditworthiness of the institutions under consideration shall be
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examined. The City Council shall designate depositories after a
recommendation from staff.
Only approved security broker/dealers authorized in Minnesota Statutes
118A.06 shall be utilized for safekeeping and custody.
All financial institutions and broker/dealers must supply the following as
appropriate:
1. Audited financial statements;
2. Proof of Financial Industry Regulatory Authority (FINRA)
certification,
3. Proof of state registration;
4. Completed broker/dealer questionnaire for firms who are not major
regional or national firms;
5. Certification of having read the City’s investment policy.
I. Broker Representations
Municipalities must obtain from their brokers certain representations
regarding future investments. The City of Maplewood will provide each
broker with information regarding the municipality’s investment restrictions.
Before engaging in investment transactions with the City of Maplewood, the
supervising officer at the securities broker/dealer shall submit a certification
stating that the officer has reviewed the investment policies and objectives,
as well as applicable state laws, and agrees to disclose potential conflicts
of interest or risk to public funds that might arise out of business
transactions between the firm and the City of Maplewood. All financial
institutions shall agree to undertake reasonable efforts to preclude
imprudent transactions involving the city’s funds.
J. Collateralization
The City funds must be deposited in financial institutions that provide at
least $250,000 in government insurance protection. At no time will deposits
in any one institution exceed the insured amount unless such excesses are
protected by pledged securities. Pledged securities, computed at market
value, will be limited to the following:
1. United States Treasury bills, notes or bonds that mature
within five years;
2. Issues of United States government agencies guaranteed by
the United States government;
3. General obligation securities of any state or local government
with taxing powers which is rated “A” or better, or revenue
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obligation securities of any state or local government with
taxing powers which is rated is rated AA or better, provided
no single issue exceeds $300,000 with maturities not
exceeding five years;
4. Irrevocable standby letters of credit issued by Federal Home
Loan Banks accompanied by written evidence that the bank’s
public debt is rated AA or better;
5. Time deposits that are fully insured by any federal agency.
In order to anticipate market changes and provide a level of security for all
funds, the collateralization level will be 110 percent (110%) of the market
value of principal and accrued interest. Collateral shall be deposited in the
name of the City of Maplewood, subject to release by the City’s Finance
Director. All certificates of deposit and repurchase agreements purchased
by the City shall be held in third-party safekeeping by an institution
designated as primary agent. The primary agent shall issue a safekeeping
receipt to the City listing the specific instrument rate maturity and other
pertinent information. All deposits will be insured or collateralized in
accordance with Minnesota Statutes Chapter 118. No other collateral
except as designated above will be authorized for use as collateral for City
funds.
K. Safekeeping and Custody
When investments purchased by the City are held in safekeeping by a
broker/dealer, they must provide asset protection of $500,000 through the
Securities Investor Protection Corporation (SIPC) and at least
another $2,000,000 supplemental insurance protection.
L. Diversification
It is the policy of the City to diversify its investment portfolios to eliminate
the risk of loss resulting from the over concentration of assets in a specific
maturity, a specific issuer, or a specific class of maturities.
The portfolio, as much as possible, will contain both short-term and long-
term investments. The City will attempt to match its investments with
anticipated cash flow requirements. Liquidity is necessary to pay for
recurring operations. Maturities should not be extended beyond the dates
necessary to meet these projected liquidity needs and should be staggered
in such a way that avoids over concentration in a specific maturity sector.
Extended maturities may be utilized to take advantage of higher yields;
however, no more than 20% of the total investment portfolio should extend
beyond five (5) years and in no circumstance should any extend beyond
ten (10) years.
The portfolio will reflect diversity by class of maturity and issuer. The
following limits are imposed for investments of a specific class:
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1. Commercial Paper: At any one time, no more than 20% of the
total portfolio shall consist of commercial paper investments.
Maximum holdings for any one issuer of commercial paper will be
5% of the total portfolio.
2. Certificates of Deposit: At any one time, no more than 70% of
the total portfolio shall consist of certificates of deposit. Maximum
holdings for any one issuer of a certificate of deposit will be
$250,000, or the amount insured by the Federal Deposit Insurance
Corporation (FDIC), unless collateral is provided in accordance
with this policy and Minnesota Statute Chapter 118. Maximum
holdings for any one issuer of collateralized certificates of deposit
will be 5% of the total portfolio.
3. Government Securities: At any one time, no more than 70% of
the total portfolio shall be invested in obligations of the federal
government or its agencies.
4. Repurchase Agreements: At any one time, no more than 5% of
the total portfolio shall be invested in repurchase agreements.
5. State or Local Government Securities: At any one time, no more
than 50% of the total portfolio shall be invested in State or local
government securities. Maximum holdings for any one issuer of
state or local government securities will be 10% of the total
portfolio.
6. Money Market Funds: At any one time, no more than 70% of the
total portfolio shall be invested in authorized money market mutual
funds.
M. Investment Reporting
The Finance Director shall prepare an investment report at least quarterly,
including a management summary that provides a clear picture of the
status of the current investment portfolio and transactions made over the
last quarter. The investment reporting function shall include requirements
for budgetary reporting, interim reporting, internal reporting, and annual
reporting.
1. Budgetary Reporting: As part of the annual budget, interest
income shall be estimated for all funds based on a formal cash
flow forecast. This forecast shall take into account the historical
pattern of inflows and outflows of general fund cash, the
adopted fiscal policies and any other pertinent factors affecting
cash flow. The budget document shall explicitly state the
assumptions of the cash flow forecast, the assumed interest
rate on short-term investment and the interest estimated for any
long-term investments.
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2. Interim Reporting: The investment portfolios for the City funds shall
be provided to the Council with the periodic budget versus actual
reports. These reports shall be sequenced by maturity and shall state
the type of investment, annualized rate of return based on the daily
interest amount. The Finance Director shall summarize any changes in
investment strategy or anticipated variances from the investment
income budgeted as part of monthly reporting process.
3. Internal Reporting: Finance Department procedures shall ensure that
investment portfolios are maintained on the City’s records system on a
daily basis and available to management or the City Council at any time.
Management shall be provided investment portfolios monthly together
with their budget versus actual reports.
4. Annual Reporting: Within 90 days of the City’s fiscal year end, the
Finance Director shall prepare a written comprehensive fiscal report on
the investment program and investment activity. This report shall
include:
a. A summary of the investment activity and rate of return for the
fiscal year then ended;
b. A discussion of how the year’s investment activity compares to
the stated objectives and the budgeted amount;
c. A detailed comparison of total rate of return with other
benchmarks. Benchmarks for comparison may include: the
Minnesota Municipal Money Market fund; other state investment
pools that have similar investment restrictions; treasury bill rates
that are indicative of a strictly passive investment strategy;
performance indexes, as set forth in the Government Finance
Officers’ monthly publication of the Public Investor (e.g. the 10
bill index); or any other index that may be deemed appropriate;
d. A discussion of the outlook for interest rates and the economic
trend for the upcoming year, investment strategies to be
implemented and budgetary expectations for investment
income.
N. Investment Committee
The City Council may appoint an investment committee to serve at its pleasure.
The mission of the committee shall be to monitor the City’s investment portfolio and
make recommendations to the Finance Director and City Manager. The
committee shall consist of five members defined as follows: the City Finance
Director, the City Manager, two City Council members, and one member of the
community who has a background in public finance and no financial connection
with the City. The Finance Director shall serve as the facilitator of the committee.
The committee shall meet as often as it sees fit, but no less than once per year and
no more than once per quarter.
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O. Interest Earnings
Interest earnings will be credited to all major funds with a positive cash balance at
the end of each month, based on the average cash balances during that month.
Market value adjustments will be credited to the source of the invested monies
monthly based on the average cash balances during that month. The City will use
the average yield of the two-year Treasury note as a benchmark for performance
comparisons.
P. Conclusion
The intent of this policy is to ensure the safety of all City funds. The main goal of
the City will be to achieve a market rate of return while maintaining the safety of its
principal.
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3. RESERVES
It is important for the financial stability of the City to maintain reserve funds for
unanticipated expenditures or unforeseen emergencies, as well as to provide
adequate working capital for current operating needs to avoid short-term borrowing.
The Reserve Policy of the City is managed closely with the City’s Debt
Management Policy. The City may choose to consider paying cash for capital
projects that can be anticipated and planned for in advance. Therefore the City’s
reserve levels fluctuate, in part, based on capital project plans.
A. Classifications
Fund balances in governmental funds are reported in classifications that disclose
constraints for which amounts in those funds can be spent. These fund balance
classifications apply to governmental funds:
1. Nonspendable: Consists of amounts that are not in spendable form, such
as inventories and prepaid items.
2. Restricted: Consists of amounts related to externally imposed constraints,
established by creditors, grantors or regulatory agencies.
3. Committed: Consists of amounts that have internally imposed constraints,
established by resolution of the City Council. The committed amounts
cannot be used for any other purpose unless the Council removes or
changes the specified use by resolution of the City Council.
4. Assigned: Consists of amounts that are intended to be used for a specific
purpose; intent can be expressed by the City Council or by a delegate of the
City Council.
5. Unassigned: Consists of the residual classification for the General Fund and
also reflects negative residual amounts in other funds.
B. Authorization
The City Council authorizes the Finance Director and/or City Manager to assign
fund balance that reflects the City’s intended use of the specified funds. When both
restricted and unrestricted resources are available for use, it is the City’s policy to
use restricted resources first, and then use unrestricted resources as needed.
When unrestricted resources are available for use, it is the City’s policy to use
resources in the following order: 1) committed, 2) assigned, 3) unassigned.
C. Fund Balance Policies
1. General Fund: The General Fund is established to account for all
revenues and expenditures which are not required to be accounted for
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in other funds. Revenue sources include property taxes, license and
permit fees, fines and forfeits, program revenues, intergovernmental
revenues, investment earnings, and transfers in. The General Fund’s
resources finance a wide range of functions, including the operations of
general government, public safety, and public works. The General Fund
will have committed fund balances at year end for purchase order
encumbrances and budget carryovers. The General Fund may have a
portion of its fund balance classified as nonspendable if there are long-
term receivables, inventories, or prepaid items on the balance sheet.
The General Fund is the only fund that can have any unassigned fund
balance. The City’s unassigned fund balance in the General Fund shall
be maintained at a minimum level of 40% of annual general fund
operating expenditures.
2. Special Revenue Funds: Special revenue funds are used to account
for and report the proceeds of specific revenue sources that are
restricted or committed to expenditures for specified purposes other than
debt service or capital projects. Governmental accounting standards
require that substantial inflows of revenues into a special revenue fund
be either restricted or committed in order for the fund to be considered a
special revenue fund. The City will maintain fund balances in the Special
Revenue Funds at a level which will avoid issuing short-term debt to
meet the cash flow needs of the current operating budget.
3. Debt Service Funds: Debt service fund balances are considered
restricted. The resources being accumulated in the funds are for
payments of principal and interest maturing in current and future years.
The City’s fund balance in the Debt Service fund shall be at a minimum
level of 50% of annual debt service expenditures. Because the majority
of annual debt service is paid on February 1 and August 1 of each year,
funds must be available for payment of February 1 debt service.
4. Capital Project Funds: Capital project fund balances are considered
restricted or committed. The resources being accumulated are for
current and future projects. Capital project funds are used to account for
and report financial resources that are restricted, committed, or assigned
to expenditures for capital assets. The fund balances in these funds
within the Capital Improvement Budget vary annually based upon the
timing of construction projects. The City will maintain reserves in the
Capital Project Funds at a minimum level sufficient to provide adequate
working capital for current expenditure needs. The maximum amount of
reserves should include the amount necessary to pay for future capital
projects. Future capital projects must be identified and quantified in a
written finance plan for the fund in the City’s annual budget document.
5. Enterprise Funds: The City will maintain reserves in the Enterprise
Funds at a minimum level sufficient to provide adequate working capital
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for current expenditure needs. Generally, the City shall strive for a
minimum of 3-months operating cash in these funds. The maximum
amount of reserves should include the amount necessary to pay for
future capital needs. Future capital projects must be identified and
quantified in a written finance plan for the fund in the City’s annual budget
document. Rates and fees in these funds will be analyzed annually for
a five year period to provide for level rate changes.
6. Internal Service Funds: These funds are used to allocate common
costs among the various funds and programs of the city. Deficits and
surpluses are allowed however the goal is to maintain reserves at 10%
of budgeted expenditures.
7. Stabilization Arrangements: Stabilization arrangements are defined
as setting aside amounts for use in emergency situations or when
revenue shortages or budgetary imbalances arise. The City will set aside
amounts by resolution as deemed necessary that can only be expended
when certain circumstances under which a need for stabilization arises.
The need for stabilization will only be utilized for situations that are not
expected to occur routinely.
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4. Operating Budget
The operating budget is the annual financial plan for funding the costs of City
services and programs. The general operating budget includes the General Fund,
Special Revenue Funds, and Capital Project Funds. Enterprise operations are
budgeted in separate Enterprise Funds.
1. Balanced Budget
The City Manager shall submit a balanced budget for the General Fund in
which appropriations shall not exceed the total of the estimated revenues
and available fund balance. Balanced budget is defined as a budget in
which current revenues plus net operating transfers and one-time use of
excess reserves will be sufficient to support budgeted expenditures. One-
time revenues or use of excess reserves will not be used to fund on-going
expenditures. One-time funding sources shall only be used to fund capital
improvements, equipment, or other one-time expenditures. The City will
provide for all current expenditures with current revenues. The City will
avoid all budgetary procedures that balance current expenditures at the
expense of meeting future years’ budgets, such as postponing
expenditures, rolling over short-term debt, and using reserves to balance
the operating budget.
2. Budget Period
The City’s budget year is the calendar year. The City legally adopts an
annual budget for the General Fund. Budgets for Special Revenue Funds,
Debt Service Funds, Capital Project Funds and Enterprise Funds are
adopted for management purposes only.
3. Basis of Budgeting
The modified accrual basis will be used for all of the Governmental Funds
in the budget. The accrual basis will be used for the budgets of the
Enterprise Funds. The basis of budgeting is the same as the basis of
accounting used in the City’s audited financial statements.
4. Budget Amendment Process
Budget appropriations are by department total within the General Fund
rather than by line item (i.e., account). Budget changes that involve the
transfer of appropriations among accounts only require the approval of the
City Manager or designee. Council approval is required for budget
changes that involve a transfer of appropriations between funds or from
contingency accounts. The budget changes can be made at any Council
meeting. For budget changes that can be approved by the City Manager
or designee, the procedure involves the department head completing a
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budget transfer request form on which the following is indicated: budget
transfer amount, accounts involved, purpose, justification, date approved
by department head, and department head initials. This form is submitted
to the Finance Director for review. Upon approval by the Finance Director,
a copy of the form is given to the department head.
5. Long-Term Financial Forecasts
The City Manager will coordinate the development of the five-year capital
improvement plan budget and ten-year outlook with the development of the
operating budget. Operating costs associated with new capital
improvements will be projected and included in future operating budget
forecasts. The budget will provide for adequate maintenance of the capital
plant and equipment, and for their orderly replacement. The impact on the
operating budget from any new programs or activities being proposed
should be minimized by providing funding with newly created revenues
whenever possible.
6. Budget Form and Information
Excess revenues from a specific fiscal year will be placed into the City’s
reserves in a manner consistent with the City’s fund balance reserve
policies. The operating budget will describe the major goals to be
achieved and the services and programs to be delivered for the level of
funding provided. All unencumbered appropriations for the City’s operating
budget lapse at year end. Amounts reserved for encumbrances are
classified as assigned fund balance. The City Council approves the
reductions in prior year appropriations and increases in current year
appropriations.
7. Level of Control
The City Manager will ensure that a budgetary control system is in place to
adhere to the adopted budget. The City Manager may approve the
transfer of budget amounts between accounts within a department’s
budget. City Council approval is required for any increase in a
department’s budget. The budget changes can be made at any Council
meeting. The legal level of budgetary control is at the department level in
budgeted funds.
8. Performance Measurement
The Finance Department will provide regular monthly reports comparing
actual revenues and expenditures to the budgeted amounts. Each year
the City will strive to obtain the Government Finance Officers Association
Distinguished Budget Award. The City’s annual Budget shall be made
available to citizens and the general public upon request and available on
the City’s website. The City shall strive to maintain full transparency and
accountability of all of its financial resources and assets.
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5. Capital Improvement Plan
The demand for services and the cost of building and maintaining the City’s infrastructure
continues to increase. No city can afford to accomplish every project or meet every service
demand. Therefore, a methodology must be employed that provides a realistic projection of
community needs, the meeting of those needs, and a framework to support City Council
prioritization of those needs. That is the broad purpose of the CIP.
The CIP includes the scheduling of public improvements for the community over a five-year
period and takes into account the community’s financial capabilities as well as its goals and
priorities. A “capital improvement” is defined as any major nonrecurring expenditure for
physical facilities of government. Typical expenditures are the cost of land acquisition or
interest in land, construction of roads, utilities and parks. Vehicles and equipment can be
covered in a CIP or covered separately under an equipment schedule. The CIP is directly
linked to goals and policies, land use, and community facility sections of the Comprehensive
Plan since these sections indicate general policy of development, redevelopment, and the
maintenance of the community.
A. CIP Development Process
1. Compile and prioritize projects. Staff will consolidate and prioritize recommended
projects into the proposed Capital Improvement Plan.
2. Devise proposed funding sources for proposed projects. Recommended funding
sources will be clearly stated for each project.
3. Project and analyze total debt service related to the total debt of the City.
4. A debt study will be provided summarizing the combined property tax impact of all
the existing and proposed debt.
On an annual basis, the City Council will evaluate the proposed CIP and decide on the
following:
1. Project Prioritization;
2. Funding Source Acceptability;
3. Acceptable Financial Impact on Tax Levy, Total Debt, and Utility Rate Levels;
4. Currently the debt levy has no state limitations. The City should annually consider
a variety of financing options, including issuing equipment certificates, cash
financing, tax-exempt leasing, or direct bank investment as appropriate financing
mechanisms to meet capital needs while maintaining levy flexibility.
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6. Economic Development Authority
The Economic Development Authority (EDA) was created by the City Council. The
City Council acted to appoint the members of the City council to serve as the Board
of Commissioners. Under Minnesota Statutes Chapter 469, Economic
Development, cities are permitted to establish an EDA.
Minnesota Statutes § 469.107 gives authority to the City Council to levy a tax up to
0.01813 percent of estimated market value in the City. The Revenue Management
Policy of the City, as included in this Financial Management Plan, sets policy for
when a tax levy may be considered. The EDA is subject to the statutory levy limits
of the City, except for a debt levy. This policy section establishes the amount of
tax levy that will be considered for the EDA.
A. Funding
The City Council may annually appropriate money to the EDA from a tax levy or
other available source. The appropriation can be equivalent to the maximum that
could be provided by a tax levy for economic development purposes. The annual
tax levy shall be set based on the amount needed when combined with other
available sources achieves the funding level set by this policy.
To provide other sources (non-tax) of funding to the EDA, the City Council shall
annually review the fund balance in the General Fund to determine whether
sufficient unreserved fund balance is available for transfer from the General Fund
to the EDA. The decision shall be made at the time the annual EDA tax levy is
established. If other sources of revenue are not available, the EDA may request
the tax levy at the maximum allowed.
B. Procedure for Using Funds
Expenditures may be made from the EDA based on the following criteria:
1. The EDA appropriates the funds as part of the annual budget, or
2. The EDA authorizes an amendment to the EDA budget outside of the annual
appropriation process.
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7. Debt Management
The purpose of the debt policy is to ensure that debt is used wisely and that future
financial flexibility remains relatively unconstrained. Debt is an important
mechanism to fund capital expenditures. It can reduce long-term costs due to
inflation, prevent lost opportunities, and equalize the costs of improvements to
present and future constituencies.
Debt management is an integral part of the financial management of the City.
Adequate resources must be provided for the repayment of debt, and the level of
debt incurred by the City must be effectively controlled to amounts that are
manageable and within levels that will maintain or enhance the City’s credit rating.
A goal of debt management is to stabilize the overall debt burden and future tax
levy requirements to ensure that issued debt can be repaid and prevent default on
any municipal debt. A high debt level places a financial burden on taxpayers and
can create economic problems for the community. The debt policies ensure that
the City’s outstanding debt does not weaken the City’s financial structure and
provide limits on debt to provide for manageable debt service. This policy is critical
for maintaining the best possible credit rating.
A. Policy
Wise and prudent use of debt provides fiscal and service advantages. Overuse of
debt places a burden on the fiscal resources of the City and its taxpayers. The
following guidelines provide a framework and limit on debt utilization:
1. Conditions for Issuance
a. The City will confine long-term borrowing to capital improvements,
equipment, or projects that have a life of at least five years and
cannot be financed from current revenues.
b. Net general obligation debt will not exceed the statutory limit of
3% of the estimated market value of taxable property in the City,
as required by M.S. § 475.53.
c. The City shall use a competitive bidding process for the sale of
debt unless the use of a negotiated process is warranted due to
adverse market conditions, timing requirements, or a unique
pledge or debt structure. The City will award competitively issued
debt on the true interest cost (TIC) basis.
d. The City should strongly consider market conditions (i.e., interest
rates, construction market) when planning for the issuance of
debt. The City should consider issuing debt, rather than paying
cash, when interest rates are lower.
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e. Debt should be structured in a manner that distributes costs and
benefits appropriately. Intergenerational equity aspects should be
considered when financing capital assets. The debt payments
should be distributed over the useful life of the asset.
f. Long-term forecasts should support the assumption that the City
will be able to repay the debt without causing financial distress.
g. Interfund borrowing for periods of more than one year shall only
be undertaken for capital expenditures. A payment schedule for
the borrowed amounts shall be established by the City Council.
Interest charges for interfund loans utilizing tax increment bonds
will be in accordance with Minnesota Statutes, §469.178, Subd 7.
2. Restrictions on Debt Issuance
a. Where possible, the City will issue revenue (including general
obligation backed revenue) or other self-supporting type bonds
instead of general obligation bonds.
b. The City will not use long-term debt for current operations.
c. The City should not issue debt with a longer amortization period
than the life of the asset being financed.
d. When possible, the City should use pay-as-you-go financing for
equipment and other minor capital assets.
3. Financial Limitations
a. The City will strive to keep the total maturity length of general
obligation bonds below 20 years and structure the bonds to allow
for retirement of at least 50% of the principal within 2/3 of the term
of the bond issue.
b. Bond rating categories shall be used as a means of assessing the
City’s financial condition. The City will strive to achieve and
maintain a ratio of governmental funds debt service to
expenditures that will result in an adequate, or better than
adequate, debt and contingent liability profile rating from the rating
agencies.
c. The City will strive to maintain the amount of net direct outstanding
debt at less than $1,800 per capita.
d. The City will maintain regular communications with bond rating
agencies about its financial condition and will follow a policy of full
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disclosure in every financial report and bond statement. The City
will comply with Securities and Exchange Commission (SEC)
reporting requirements.
e. The City is committed to providing continuing disclosure to certain
financial and operating data and material event notices as
required by Securities and Exchange Commission (SEC) Rule
15c2-12. The Finance Department shall be responsible for the
preparation of all disclosure documents and releases required
under Rule 15c2-12.
f. When feasible, the City will use refunding mechanisms to reduce
interest costs and evaluate the use of debt reserves to lower
overall annual debt service. Refunding of outstanding debt shall
only be considered when present value savings of at least 3.0%
of the principal amount of the refunded bonds are produced,
according to Minnesota statutes. Savings from refundings will be
distributed evenly over the life of the refunded bonds unless
special circumstances warrant a different savings structure.
g. Retirement funds will be examined annually to ensure adequate
balances and funding progress.
h. The City should take steps to ensure the highest credit rating
possible.
4. Professional Service Providers
a. Municipal financial advisors should be selected through a process
of evaluating formal proposals every 5 years. Selection should be
based on, but not limited to, experience with the type, size, and
structure of the bonds typically issued, ability to commit sufficient
time to accomplish necessary tasks, and lack of potential conflicts
of interest.
b. Proposals for bond counsel should be solicited and considered on
an occasional or as-needed basis. Consideration should be given
to experience with municipal debt, ability to commit sufficient time
to accomplish necessary tasks, and lack of potential conflicts of
interest.
c. The City should have an ongoing strategy to maintain good
relations with rating agencies and a positive perception in the
marketplace.
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B. Conduit Debt Policy
The City of Maplewood is granted the power to issue conduit revenue bonds and
other conduit revenue obligations under Minnesota Statutes, Section 469.152-
469.165, as amended, and Minnesota Statutes, Chapter 462C, as amended. The
Maplewood City Council, being aware that such financing may prevent the
emergence of blighted land, excessive unemployment and the need for
redevelopment financing from the State and Federal governments, has expressed
its support for the use of such financing but has reserved the right to approve or
reject projects on a case-by-case basis. The following criteria have been developed
as a guide for review of applications:
Criteria
1. The project is to be compatible with the overall development plans and
objectives of the City and neighborhood where the project is located.
2. New businesses locating in Maplewood must show new tax base being
generated by the project.
3. Locating in areas of the City that the City wishes to develop, redevelop, or
which in any way complements any development plans or policy of the City,
will constitute a prime purpose under these guidelines. It is also the City’s
intent to assist in business expansions or relocations within the City where
it can be shown that such would have a substantial, favorable impact on
employment, tax base, or both.
4. It is the City’s intent to assist new or existing businesses in the acquisition
of existing facilities, where such acquisition will maintain the stability of the
tax base, employment, or both.
5. The project must not put a burden on existing City services or utilities
beyond that which can be reasonably and economically accommodated.
6. The applicant (and/or the lessee) must have a good financial standing,
show a substantial net worth or equity in the project, and have an
acceptable earnings history or pro forma. Projects are to show, in the
application for financing, an owner equity or other collateral (such as a bank
Letter of Credit, a Bankers Acceptance, Pledge of a Certificate of Deposit,
insurance company guarantee, or similar security) which will be satisfactory
to the end-lender or rating agency, all determined with reference to total
project costs.
7. The credit rating and method of offering conduit* bonds or notes of the City
are important considerations. The City will not entertain applications for such
financings unless (i) the debt is rated investment grade by a nationally
recognized rating agency or (ii) the debt is sold in a private placement. Debt
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will be considered sold in a private placement (i) if no advertising or solicitation
of the general public occurs, and (ii) if the bonds are initially sold to not more
than ten purchasers (not including any underwriter or placement agent as a
purchaser) and (iii) the City receives written certification from each initial
purchaser (or each underwriter or placement agent based on its reasonable
belief) that: (a) such purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
the risks of the debt, and (b) such purchaser is not purchasing for more than
one account or with a view to distributing the debt. In addition, for a private
placement either (a) all bonds or notes (except for one bond or note) must
always remain in minimum denominations of not less than $100,000, or (b)
investment letters from not only each initial purchaser, but from any
subsequent purchaser must be obtained which contains the above described
certifications from the purchasers. Any offering material for a private
placement must prominently state in effect that: “THE CITY OF
MAPLEWOOD HAS NOT ASSUMED ANY RESPONSIBILITY TO REVIEW
THIS OFFERING MATERIAL AND HAS NO RESPONSIBILITY FOR ITS
ACCURACY OR COMPLETENESS. THE CITY HAS NO FINANCIAL
OBLIGATION OF ANY NATURE WITH RESPECT TO THE OFFERED
BONDS.” Finally, to qualify as a private placement the financing documents
must require annual financial statements from the benefited private party (or
the ultimate provider of credit) to be delivered to each investor (or a trustee).
*The term “conduit” refers to any type of City revenue obligation the
proceeds of which are loaned to a private party and for which the City has
no financial obligation.
8. Applications for acquisition of or replacement of machinery and equipment
will be discouraged unless in conjunction with a totally new business in
Maplewood, a physical plant expansion of an existing business, or where it
is shown that the equipment acquisition is essential to the continued
operation of the business in Maplewood. Also, it is the City’s intent to assist
where possible in the acquisition of pollution control equipment for any new
or existing business being required to meet mandated standards.
9. A further permitted use under these guidelines are projects, whether profit
or nonprofit, engaged in providing health care services, including hospitals,
nursing homes, and related medical facilities, when either of the following
findings can be made:
a) Number of new jobs is increased.
b) The project would provide a facility or service considered
desirable or necessary by the community.
The following procedures have been developed to facilitate the application for
financing:
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Procedures
1. The applicant shall make an application for financing on forms available
from the Finance Department of the City of Maplewood. The completed
application is to be returned to the Finance Director, accompanied by
the processing fee, whereupon the application will be forwarded to the
City Council with a staff recommendation. Specific findings shall be
made and recited regarding the criteria as well as satisfaction of public
purposes of the applicable statutes.
2. The application cannot be considered by the City until tentative City
Code findings and requirements have been made with respect to
zoning, building plans, platting, streets and utility services.
3. The applicant is to select qualified financial consultants and/or
underwriters, as well as legal counsel, to prepare all necessary
documents and materials. The City may rely on the opinion of such
experts and the application shall be accompanied by a financial
analysis (pro forma income statement, debt service coverage,
mortgage terms, etc.) by the underwriter as to the economic feasibility
of the project and the underwriter’s ability to market the financing.
Financial material submitted is to also include most recent fiscal year-
end, audited, financial statements of the applicant and/or of any major
lessee tenant, if readily available.
4. Further, in the case of the tax exempt mortgage placements, the
applicant will be required to furnish the City, before passage of the
Final Resolution, a comfort letter (but not necessarily a letter of
commitment) from the lending institution, to the affect that said lending
institution has reviewed the economic feasibility of the project, including
the financial responsibility of the guarantors and find that, in their
professional judgment, it is an economically viable project.
5. The applicant shall furnish along with the application, a description of
the project, plat plan, rendering of proposed building, etc., and a brief
description of the applicant company, all in such form as shall be
required at the time of application. Such of this data as necessary may
be furnished to members of the City Council for background
information.
6. If an allocation of bonding authority is required under Minnesota
Statutes, Chapter 474A, as amended, the applicant shall be required to
pay any required application fee and provide any required application
deposit as specified in Chapter 474A, without regard to whether the
application fee or application deposit will be refunded.
7. The applicant shall covenant in the applicable conduit bond documents
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to comply with all applicable requirements of the Internal Revenue
Code of 1986, as amended (the “Code”), and the applicable Treasury
Regulations, including, but not limited to: (i) the arbitrage and rebate
requirements of Section 148 of the Code; and (ii) the qualified bonds
provisions of Sections 141(e), 142, 143, 144, and 145 of the Code. The
applicant shall be the party responsible for monitoring the conduit
bonds for compliance with such requirements and to remediate
nonqualified bonds in accordance with the requirements of the Code
and applicable Treasury Regulations. The applicant shall be the party
responsible for monitoring compliance with the requirements of Section
148 of the Code.
8. The applicant shall covenant in the applicable conduit bond documents
to reimburse the City for all costs paid or incurred by the City (including
the fees of attorneys, financial advisors, accountants, and other
advisors) as a result of the City’s response to or compliance with an
audit, inspection, or compliance check (random or otherwise), by the
Internal Revenue Service, the Minnesota Department of Revenue, the
Minnesota Office of the State Auditor, or any other governmental
agency with respect to the conduit bonds or the project financed with
the proceeds of the conduit bonds.
The following administrative fees and provisions apply to the application for
financing:
Administrative Fees and Provisions
1. The City Council reserves the right to deny any application for financing
at any stage of the proceedings prior to adopting the final resolution
authorizing issuance of the industrial development financing. The City
Council may waive any provision of this Conduit Bonds Policy if the City
Council determines that such waiver is in the best interests of the City.
2. The City is to be reimbursed, and held harmless, for and from any out-
of-pocket costs related to the actual or proposed issuance of conduit
revenue bonds. In addition, a nonrefundable processing fee of $2,500
must be submitted with the application. Upon closing, an administrative
fee is due and payable to the City based on the following schedule:
On the first $10,000,000 .50% of par
On portion in excess of $10,000,000 .10% of par
3. In the case of a refinancing, the fee shall be calculated at 50% of the
above schedule. The City will be reimbursed for any technical changes
to a bond issue previously issued to be calculated at 25% of the above
schedule.
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4. All applications and supporting materials and documents shall remain
the property of the City. Note that all such materials may be subject to
disclosure and/or public review under applicable provisions of State law.
5. The Finance Department shall, report all conduit debt issues in the
Comprehensive Annual Financial Report in accordance with Generally
Accepted Accounting Principles and shall report any material events with
regard to all conduit debt issued by the City, and still outstanding, to the
City Council.
C. Post-Issuance Compliance Policy for Tax-Exempt Governmental Bonds
The City of Maplewood issues tax-exempt governmental bonds to finance capital
improvements. As an issuer of tax-exempt governmental bonds, the City is required
by the terms of Sections 103 and 141-150 of the Internal Revenue Code of 1986,
as amended (the “Code”), and the Treasury Regulations promulgated thereunder
(the “Treasury Regulations”), to take certain actions subsequent to the issuance of
such bonds to ensure the continuing tax-exempt status of such bonds. In addition,
Section 6001 of the Code and Section 1.6001-1(a) of the Treasury Regulations,
impose record retention requirements on the City with respect to its tax-exempt
governmental bonds. This Post- Issuance Compliance Procedure and Policy for
Tax-Exempt Governmental Bonds (the “Policy”) has been approved and adopted
by the City to ensure that the City complies with its post-issuance compliance
obligations under applicable provisions of the Code and Treasury Regulations.
1. Effective Date and Term. The effective date of this Policy is the date of
approval by the City Council of the City and shall remain in effect until
superseded or terminated by action of the City Council of the City. This
Policy amends and restates the Post- Issuance Compliance Procedure and
Policy for Tax-Exempt Governmental Bonds adopted by the City Council of
the City on June 10, 2012.
2. Responsible Parties. The Finance Director of the City shall be the party
primarily responsible for ensuring that the City successfully carries out its
post-issuance compliance requirements under applicable provisions of the
Code and Treasury Regulations. The Finance Director will be assisted by
the staff of the Finance Department of the City and by other City staff and
officials when appropriate. The Finance Director of the City will also be
assisted in carrying out post-issuance compliance requirements by the
following organizations:
(a) Bond Counsel (the law firm primarily responsible for providing
bond counsel services for the City);
(b) Municipal Advisor (the organization primarily responsible for
providing financial advisor services to the City);
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(c) Paying Agent (the person, organization, or City officer primarily
responsible for providing paying agent services for the City); and
(d) Rebate Analyst (the organization primarily responsible for
providing rebate analyst services for the City).
The Finance Director shall be responsible for assigning post-issuance
compliance responsibilities to members of the Finance Department, other
staff of the City, Bond Counsel, Paying Agent, and Rebate Analyst. The
Finance Director shall utilize such other professional service organizations
as are necessary to ensure compliance with the post-issuance compliance
requirements of the City. The Finance Director shall provide training and
educational resources to City staff who are responsible for ensuring
compliance with any portion of the post- issuance compliance requirements
of this Policy.
3 .Post-Issuance Compliance Actions. The Finance Director shall take
the following post- issuance compliance actions or shall verify that the
following post-issuance compliance actions have been taken on behalf
of the City with respect to each issue of tax-exempt governmental bonds
issued by the City:
a. The Finance Director shall prepare a transcript of principal
documents (this action will be the primary responsibility of
Bond Counsel).
b. The Finance Director shall file with the Internal Revenue Service
(the “IRS”), within the time limit imposed by Section 149(e) of the
Code and applicable Treasury Regulations, an Information
Return for Tax-Exempt Governmental Obligations, Form 8038-G
(this action will be the primary responsibility of Bond Counsel).
c. The Finance Director shall prepare an “allocation memorandum”
for each issue of tax-exempt governmental bonds in accordance
with the provisions of Treasury Regulations, Section 1.148-
6(d)(1), that accounts for the allocation of the proceeds of the tax-
exempt bonds to expenditures not later than the earlier of:
i. eighteen (18) months after the later of (A) the date the
expenditure is paid, or (B) the date the project, if any, that
is financed by the tax-exempt bond issue is placed in
service; or
ii. the date sixty (60) days after the earlier of (A) the fifth
anniversary of the issue date of the tax-exempt bond issue,
or (B) the date sixty (60) days after the retirement of the
tax-exempt bond issue.
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Preparation of the allocation memorandum will be the primary
responsibility of the Finance Director (in consultation with the
Municipal Advisor and Bond Counsel).
d. The Finance Director, in consultation with Bond Counsel, shall
identify proceeds of tax-exempt governmental bonds that must be
yield-restricted and shall monitor the investments of any yield-
restricted funds to ensure that the yield on such investments does
not exceed the yield to which such investments are restricted.
e. In consultation with Bond Counsel, the Finance Director shall
determine whether the City is subject to the rebate requirements
of Section 148(f) of the Code with respect to each issue of tax-
exempt governmental bonds. In consultation with Bond Counsel,
the Finance Director shall determine, with respect to each issue
of tax-exempt governmental bonds of the City, whether the City is
eligible for any of the temporary periods for unrestricted
investments and is eligible for any of the spending exceptions to
the rebate requirements. The Finance Director shall contact the
Rebate Analyst (and, if appropriate, Bond Counsel) prior to the
fifth anniversary of the date of issuance of each issue of tax-
exempt governmental bonds of the City and each fifth anniversary
thereafter to arrange for calculations of the rebate requirements
with respect to such tax-exempt governmental bonds. If a rebate
payment is required to be paid by the City, the Finance Director
shall prepare or cause to be prepared the Arbitrage Rebate, Yield
Reduction and Penalty in Lieu of Arbitrage Rebate, Form 8038-T,
and submit such Form 8038-T to the IRS with the required rebate
payment. If the City is authorized to recover a rebate payment
previously paid, the Finance Director shall prepare or cause to be
prepared the Request for Recovery of Overpayments Under
Arbitrage Rebate Provisions, Form 8038-R, with respect to such
rebate recovery, and submit such Form 8038-R to the IRS.
4. Procedures for Monitoring, Verification, and Inspections. The Finance Director
shall institute such procedures as the Finance Director shall deem necessary
and appropriate to monitor the use of the proceeds of tax-exempt
governmental bonds issued by the City, to verify that certain post-issuance
compliance actions have been taken by the City, and to provide for the
inspection of the facilities financed with the proceeds of such bonds. At a
minimum, the Finance Director shall establish the following procedures:
(a) The Finance Director shall monitor the use of the proceeds of tax-
exempt governmental bonds to: (i) ensure compliance with the
expenditure and investment requirements under the temporary
period provisions set forth in Treasury Regulations, Section 1.148-
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2(e); (ii) ensure compliance with the safe harbor restrictions on the
acquisition of investments set forth in Treasury Regulations, Section
1.148-5(d); (iii) ensure that the investments of any yield-restricted
funds do not exceed the yield to which such investments are
restricted; and (iv) determine whether there has been compliance
with the spend-down requirements under the spending exceptions
to the rebate requirements set forth in Treasury Regulations, Section
1.148-7.
(b) The Finance Director shall monitor the use of all bond-financed
facilities in order to: (i) determine whether private business uses of
bond-financed facilities have exceeded the de minimus limits set
forth in Section 141(b) of the Code as a result of leases and
subleases, licenses, management contracts, research contracts,
naming rights agreements, or other arrangements that provide
special legal entitlements to nongovernmental persons; and (ii)
determine whether private security or payments that exceed the de
minimus limits set forth in Section 141(b) of the Code have been
provided by nongovernmental persons with respect to such bond-
financed facilities. The Finance Director shall provide training and
educational resources to any City staff who have the primary
responsibility for the operation, maintenance, or inspection of bond-
financed facilities with regard to the limitations on the private
business use of bond-financed facilities and as to the limitations on
the private security or payments with respect to bond-financed
facilities.
(c) The Finance Director shall undertake the following with respect to
each outstanding issue of tax-exempt governmental bonds of the
City: (i) an annual review of the books and records maintained by the
City with respect to such bonds; and (ii) an annual physical
inspection of the facilities financed with the proceeds of such bonds,
conducted by the Finance Director with the assistance with any City
staff who have the primary responsibility for the operation,
maintenance, or inspection of such bond-financed facilities.
5. Record Retention Requirements. The Finance Director shall collect and retain
the following records with respect to each issue of tax-exempt governmental
bonds of the City and with respect to the facilities financed with the proceeds
of such bonds: (i) audited financial statements of the City; (ii) appraisals,
demand surveys, or feasibility studies with respect to the facilities to be
financed with the proceeds of such bonds; (iii) publications, brochures, and
newspaper articles related to the bond financing; (iv) trustee or paying agent
statements; (v) records of all investments and the gains (or losses) from such
investments; (vi) paying agent or trustee statements regarding investments
and investment earnings; (vii) reimbursement resolutions and expenditures
reimbursed with the proceeds of such bonds; (viii) allocations of proceeds to
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expenditures (including costs of issuance) and the dates and amounts of such
expenditures (including requisitions, draw schedules, draw requests, invoices,
bills, and cancelled checks with respect to such expenditures); (ix) contracts
entered into for the construction, renovation, or purchase of bond-financed
facilities; (x) an asset list or schedule of all bond-financed depreciable property
and any depreciation schedules with respect to such assets or property; (xi)
records of the purchases and sales of bond-financed assets; (xii) private
business uses of bond-financed facilities that arise subsequent to the date of
issue through leases and subleases, licenses, management contracts,
research contracts, naming rights agreements, or other arrangements that
provide special legal entitlements to nongovernmental persons and copies of
any such agreements or instruments; (xiii) arbitrage rebate reports and
records of rebate and yield reduction payments; (xiv) resolutions or other
actions taken by the governing body subsequent to the date of issue with
respect to such bonds; (xv) formal elections authorized by the Code or
Treasury Regulations that are taken with respect to such bonds; (xvi) relevant
correspondence, including letters, faxes or emails, relating to such bonds;
(xvii) documents related to guaranteed investment contracts or certificates of
deposit, credit enhancement transactions, and financial derivatives entered
into subsequent to the date of issue; (xviii) bidding of financial products for
investment securities; (xix) copies of all Form 8038- Ts, Form 8038-Rs, and
Form 8038-CPs filed with the IRS and any other forms or documents filed with
the IRS; (xx) the transcript prepared with respect to such tax-exempt
governmental bonds, including but not limited to (a) official statements, private
placement documents, or other offering documents, (b) minutes and
resolutions, orders, or ordinances or other similar authorization for the
issuance of such bonds, and (c) certification of the issue price of such bonds;
and (xxi) documents related to government grants associated with the
construction, renovation, or purchase of bond-financed facilities.
The records collected by the Finance Director shall be stored in any format
deemed appropriate by the Finance Director and shall be retained for a period
equal to the life of the tax-exempt governmental bonds with respect to which
the records are collected (which shall include the life of any bonds issued to
refund any portion of such tax-exempt governmental bonds or to refund any
refunding bonds) plus three (3) years. The Finance Director shall also collect
and retain reports of any IRS examination of the City or any of its bond
financings.
6. Remedies. In consultation with Bond Counsel, the Finance Director shall
become acquainted with the remedial actions (including redemption or
defeasance) under Treasury Regulations, Section 1.141-12, to be utilized in
the event that private business use of bond- financed facilities exceeds the de
minimus limits under Section 141(b)(1) of the Code. In consultation with Bond
Counsel, the Finance Director shall become acquainted with the Tax Exempt
Bonds Voluntary Closing Agreement Program described in Notice 2008-31,
2008-11 I.R.B. 592, to be utilized as a means for an issuer to correct any post-
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issuance infractions of the Code and Treasury Regulations with respect to
outstanding tax-exempt bonds.
7. Continuing Disclosure Obligations. In addition to its post-issuance compliance
requirements under applicable provisions of the Code and Treasury
Regulations, the City has agreed to provide continuing disclosure, such as
annual financial information and material event notices, pursuant to a
continuing disclosure certificate or similar document (the “Continuing
Disclosure Document”) prepared by Bond Counsel and made a part of the
transcript with respect to each issue of bonds of the City that is subject to such
continuing disclosure requirements. The Continuing Disclosure Documents
are executed by the City to assist the underwriters of the City’s bonds in
meeting their obligations under Securities and Exchange Commission
Regulation, 17 C.F.R. Section 240.15c2-12, as in effect and interpreted form
time to time (“Rule 15c2-12”).The continuing disclosure obligations of the City
are governed by the Continuing Disclosure Documents and by the terms of
Rule 15c2-12. The Finance Director is primarily responsible for undertaking
such continuing disclosure obligations and to monitor compliance with such
obligations.
8. Other Post-Issuance Actions. If, in consultation with Bond Counsel, Municipal
Advisor, Paying Agent, Rebate Analyst, the City Manager, the City Attorney,
or the City Council, the Finance Director determines that any additional action
not identified in this Policy must be taken by the Finance Director to ensure
the continuing tax-exempt status of any issue of governmental bonds of the
City, the Finance Director shall take such action if the Finance Director has
the authority to do so. If, after consultation with Bond Counsel, Municipal
Advisor, Paying Agent, Rebate Analyst, the City Manager, the City Attorney,
or the City Council, the Finance Director and the City Manager determine that
this Policy must be amended or supplemented to ensure the continuing tax-
exempt status of any issue of governmental bonds of the City, the City
Manager shall recommend to the City Council that this Policy be so amended
or supplemented.
9. Taxable Governmental Bonds. Most of the provisions of this Policy, other than
the provisions of Section 7, are not applicable to governmental bonds the
interest on which is includable in gross income for federal income tax
purposes. On the other hand, if an issue of taxable governmental bonds is
later refunded with the proceeds of an issue of tax-exempt governmental
refunding bonds, then the uses of the proceeds of the taxable governmental
bonds and the uses of the facilities financed with the proceeds of the taxable
governmental bonds will be relevant to the tax-exempt status of the
governmental refunding bonds. Therefore, if there is any reasonable
possibility that an issue of taxable governmental bonds may be refunded, in
whole or in part, with the proceeds of an issue of tax-exempt governmental
bonds then, for purposes of this Policy, the Finance Director shall treat the
issue of taxable governmental bonds as if such issue were an issue of tax-
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exempt governmental bonds and shall carry out and comply with the
requirements of this Policy with respect to such taxable governmental bonds.
The Finance Director shall seek the advice of Bond Counsel as to whether
there is any reasonable possibility of issuing tax-exempt governmental bonds
to refund an issue of taxable governmental bonds.
10. Qualified 501(c)(3) Bonds. If the City issues bonds to finance a facility to be
owned by the City but which may be used, in whole or in substantial part, by
a nongovernmental organization that is exempt from federal income taxation
under Section 501(a) of the Code as a result of the application of Section
501(c)(3) of the Code (a “501(c)(3) Organization”), the City may elect to issue
the bonds as “qualified 501(c)(3) bonds” the interest on which is exempt from
federal income taxation under Sections 103 and 145 of the Code and
applicable Treasury Regulations. Although such qualified 501(c)(3) bonds are
not governmental bonds, at the election of the Finance Director, for purposes
of this Policy, the Finance Director shall treat such issue of qualified 501(c)(3)
bonds as if such issue were an issue of tax-exempt governmental bonds and
shall carry out and comply with the requirements of this Policy with respect to
such qualified 501(c)(3) bonds.
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8. Accounting, Auditing, and Financial Reporting
The key to effective financial management is to provide accurate, current, and
meaningful information about the City’s operations to guide decision making and
enhance and protect the City’s financial position.
A. Policy
1. The City’s accounting system will maintain records on a basis consistent
with generally accepted accounting standards and principles for local
government accounting as set forth by the Government Accounting
Standards Board (GASB) and in conformance with the State Auditor’s
requirements per State Statutes. This allows for modified accrual for
populations exceeding 2,500, or cash basis for smaller communities.
2. The City will establish and maintain a high standard of accounting practices.
3. The City will follow a policy of full disclosure written in clear and
understandable language in all reports on its financial condition.
4. The Finance Department will provide timely monthly and annual financial
reports to users.
5. An independent public accounting firm will perform an annual audit and
issue an opinion on the City’s financial statements.
6. Annually the City Council and staff will meet with the Auditors to review the
audit report.
7. Periodic financial reports on budget performance will be provided to the City
Council monthly.
8. The City shall annually submit the Comprehensive Annual Financial Report
(CAFR) to the Government Finance Officers Association (GFOA) for the
purpose of earning the Certificate of Achievement for Excellence in Financial
Reporting.
9. The City’s CAFR shall be made available to citizens and the general public
upon request and on the City’s website. The City shall strive to maintain full
transparency and accountability of all of its financial resources and assets.
10. The City Council may appoint an audit committee for the purpose of
providing independent review and oversight of the City’s financial reporting
processes, framework of internal control, and independent auditors. The
Committee will consist of the City Manager, Finance Director, and two
members of the City Council. The Committee will establish guidelines for
operation and scope of work.
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9. Risk Management
A comprehensive risk management plan seeks to manage the risks of loss
encountered in the everyday operations of an organization. Risk management
involves such key components as risk avoidance, risk reduction, risk assumption,
and risk transfers through the purchase of insurance. The purpose of establishing
a risk management policy is to help maintain the integrity and financial stability of
the City, protect its employees from injury, and reduce overall costs of operations.
A. Policy
1. The City will maintain a risk management program that will minimize the
impact of legal liabilities, natural disasters or other emergencies through the
following activities:
a) Loss prevention - prevent losses where possible.
b) Loss control - reduce or mitigate losses.
c) Loss financing - provide a means to finance losses.
d) Loss information management - collect and analyze data to make
prudent prevention, control and financing decisions.
2. The City will review and analyze all areas of risk in order to, whenever
possible, avoid and reduce risks or transfer risks to other entities. Of the
risks that must be retained, it shall be the policy to fund the risks which the
City can afford and transfer all other risks to insurers.
3. The City will maintain an active safety committee comprised of City
employees.
4. The City will periodically conduct educational safety and risk avoidance
programs within its various divisions.
5. The City will, on an ongoing basis, analyze the feasibility of self-funding and
other cooperative funding options in lieu of purchasing outside insurance in
order to provide the best coverage at the most economical cost.
6. The Finance Director will maintain effective internal control policies
designed to help safeguard the City’s assets.
7. Staff will report to the Council, annually on the results of the City’s risk
management program for the preceding year.
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10. Grant Management
A. Policy
1. The City will aggressively pursue all available grant opportunities. Each
grant shall be evaluated on the long-term financial impact to the City. The
City will only accept grants for one-time or capital items or when the
continued funding of the program can be incorporated into the City’s future
budgets.
2. All grants and other federal and state funds shall be managed to comply with
the laws, regulations, and guidance of the grantor.
3. The wishes and instructions of the donor will be strongly considered when
managing and expending gifts and donation.
4. The Finance Department must be notified of all grant applications prior to
submission of the grant application. The Finance Department must also be
notified of all related requests for reimbursement at the time of request.
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11. Public Purpose Expenditure Policy
Purpose
The City Council recognizes that public funds may only be spent if the
expenditure meets a public purpose and the expenditure relates to the
governmental purpose for which the City of Maplewood was created.
The meaning of “public purpose” is constantly evolving. The Minnesota
Supreme Court has followed a broad approach and has generally concluded
that “public purpose” means an activity that meets ALL of the following
standards:
The activity will primarily benefit the community as a body.
The activity is directly related to functions of government.
The activity does not have as its primary objective the benefit of a private
interest whether profit or not-for-profit.
This policy is intended to provide guidelines regarding which expenditures are
for public purposes and authorized in accordance with the City’s annual budget
process, and which expenditures are not considered to fall within the public
purpose definition and are therefore not allowed. There is a public benefit in
ensuring high employee productivity and morale.
Responsibility
The City Manager is the responsible authority overseeing all City expenditures
and as such is the chief purchasing agent for the City. Responsibility for
administering this Public Purpose Expenditure Policy has been delegated to the
Finance Department. Further, all officers and employees authorized by their
Department to make purchases for the benefit of their respective departments
are responsible for complying with this policy and corresponding procedures.
Policy
Expenditures of public funds must comply with the public purpose standards
defined above. When reviewing an expenditure to verify the standards have
been met, the City Manager, or his/her designee, should consider the time of
day the event is held, the business purpose of the event, whether the event was
intended to attract non-City employees, the frequency of the event, and the
reasonableness of the cost. The following guidelines address specific examples
of public expenditures, but examples are not meant to be all-inclusive.
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Examples of Permitted Expenditures for Meals and Refreshments
Use of City funds in reasonable amounts for meals and/or refreshments for
elected and appointed city officials and employees are permitted in the following
circumstances, with Department Head approval:
City-sponsored events of a community-wide interest where staff are
required to be present (e.g., 4th of July Festival, National Night Out,
Citizens Police Academy).City council, boards and commissions
meetings held during or adjacent to a meal hour.
Meetings related to City business at which the attendees include non-
city representatives.
Professional association meetings, conferences and training when
meals are included as part of the registration or program fee, or in
accordance with the travel policy.
Election judge training meetings.
Annual employee recognition and appreciation events (e.g., service
awards, de minimis food and beverage, employee Christmas breakfast.
Annual recognition events for volunteer and non-employees (e.g., annual
fire department banquet and volunteer appreciation lunch).
Fire department meetings and in-house training sessions.
Multi-departmental meetings scheduled during or adjacent to a meal
hour when no other meeting time is available.
Work activities requiring continuous service when it is not possible to
break for meals (e.g., election days, water main breaks, emergency snow
removal, time-sensitive public safety responses).
Healthy snacks and incentives of moderate value provided to attendees
of safety, health, and wellness programs for City employees.
Events recognizing completion of a significant work-related project (City
Manager approval required).
Examples of Other Permitted Expenditures
Up to $100 may be used toward a retirement or farewell recognition
event when an employee retires or resigns after a minimum of 10 years
with the City. The funds may be used for a cake, beverages,
decorations, and a plaque. The funds may not be used for a gift.
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Uniforms, clothing or apparel that is considered necessary for safety or
for visible staff recognition by the public (e.g. safety footwear and
eyewear for maintenance personnel, shirts purchased to identify staff
leadership status at events).
Staff time and equipment use for city sponsored employee events as
approved by City Council and/or City Manager as allowed by state
statute (e.g. set-up for annual employee picnic).
City expenditures for non-profit organizations allowed by state statute.
Prohibited Expenditures
Use of City funds for meals and/or refreshments for elected and appointed City
officials and employees are prohibited:
Food and refreshments for routine work meetings.
Alcoholic beverages.
Employee functions or celebrations that are solely social in nature (e.g.,
birthdays, holiday luncheon, ice cream social).
Fundraisers for non-City related events (e.g., Chamber of Commerce).
Participation in optional activities unless included as part of an overall
conference registration fee (e.g. optional golf rounds, sporting events,
concerts).
Employee-sponsored fundraising events (e.g., charitable giving
campaign).
For funeral flower arrangements upon death of an employee, elected
official, or one of their immediate family members.
Clothing or apparel that is not considered necessary for safety or for
visible staff recognition by the public (e.g. sweatshirts for a job well done,
departmental shirts given to staff to promote team spirit).
Employee coffee and supplies, coffee services
Permitted Use of Assets
Specific City assets such as equipment may be used by City employees for
personal reasons only when City management has established the following:
Costs and wear resulting from use of the assets are reasonable and
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minimized.
Administrative controls are in place to ensure that the use is appropriate
and not abused.
There is a documented/demonstrated City benefit by such usage (e.g.
such as the Mobile Device Policy or Information Security Policy) as
approved by the City Manager.
Such permitted use may include:
Incidental and de minimis use of City-owned electronic equipment such
as City-owned mobile devices, tablets, copiers, etc. as specifically
covered under other City policies.
Incidental and de minimis use of non-motorized tools, such as hammers
and wrenches.
Prohibited Use of Assets
Examples of use of City assets for personal use is prohibited in the following
circumstances:
City employees washing personal autos at the public works facility car
wash.
Employees borrowing City-owned non-motorized or motorized tools for
personal use.
Documentation
All expenses allowed above must be fully documented. The expected
documentation will include: date and time of the event, business reason for the
event (agenda from a meeting is sufficient), staff and non-city representatives
in attendance, and a receipt for the actual purchase. Supervisor approval and
written documentation is required for use of City assets. Failure to provide
sufficient documentation may result in a denial of the expense.
Any expenditure for meals or refreshments that exceeds $250 for one event
must have prior, written authorization by the Department Head, before the
purchase is made. Any expenditure for meals or refreshments that exceeds
$500 for one event must have prior, written authorization by the City Manager,
before the purchase is made. Failure to obtain the necessary authorization may
result in denial of the claim.
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Special Requests
From time to time, there may be an event that is a proper public expenditure,
but that is not contemplated by the policy above. Departments may submit
to the City Manager, or the City Manager’s designee, a request for such a
public expenditure in writing. This request must show how the expenditure
is related to a public purpose as stated in the Purpose section above. Only
expenditures that meet all of the findings in the Purpose section above may
be approved.
Periodic Review
This policy shall be reviewed at least once every five years by the City
Manager or designee.
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TruThFinancial PoliciesCity Council WorkshopApril 24, 2017E2, Attachment 2
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Financial PoliciesRevenue ManagementCash and InvestmentsReservesOperating BudgetCapital ImprovementEconomic Development AuthorityDebt ManagementAccounting, Auditing and Financial ReportingRisk ManagementGrant ManagementPublic Purpose Expenditure PolicyProcurement PolicyE2, Attachment 2
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Revenue Management•Diversification– property taxes should not be sole source; when possible diversify revenue sources. Recommend increase in electric franchise fees.•Equity– emphasis on fairness and minimizing tax differential burdens. Property taxes vs. user fees.•Economic Development – Consider the local economy and economic development when establishing revenue sources.•Collections– the cost of collections should not be burdensome. Gives staff ability to write off up to $5.E2, Attachment 2
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Cash and Investments•Primary Objectives•Safety•Liquidity•Diversification of Instruments•Diversification of Maturities•YieldMinnesota Statutes § 118A establish significant parameters for local government investment authority.E2, Attachment 2
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Cash and Investments (continued)•Diversification of Investments•Commercial Paper – limit to 20% of total portfolio and 5% for one issuer.•Certificates of Deposit – limit to 70% of portfolio.•Government Securities – limit to 70% of portfolio.•Repurchase Agreements – limit to 5% of portfolio.•State of Local Government Securities – limit to 50% of portfolio and 10% for one issuer.•Money Market Funds – limit to 70% of portfolio.•Diversification of Maturities•No more than 20% of the portfolio beyond 5 years, and no maturities beyond 10 years.E2, Attachment 2
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Reserves•Fund Balance Classifications•Nonspendable – inventories and prepaid items•Restricted – externally imposed constraints•Committed – City Council imposed constraints•Assigned – specific purpose, usually assigned by City Manager or Finance Director•Unassigned – residual classification for General Fund and negative residual amounts in other funds.E2, Attachment 2
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Reserves (continued)•General Fund – minimum of 40% of operating expenditures.•Special Revenue Funds – maintain adequate cash flow without issuance of debt.•Debt Service Funds – minimum of 50% of annual debt service expenditures.•Capital Project Funds – maintain adequate working capital for current expenditures, maximum amount necessary to fund future capital needs.•Enterprise Funds – Adequate working capital, 3 months.•Internal Service Funds – maintain 10% of expenditures.
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Operating Budget•No substantive changes to existing policy.•Requirement for balanced budget.•Adds long-term financial planning component.•City Manager may approve transfer of budget amounts between accounts in a departmental budget. Any increase in a department’s budget must be approved by City Council.E2, Attachment 2
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Capital Improvement Plan•No substantive changes to existing policy.•Includes requirement to analyze impact on outstanding debt and property tax burden.•Encourages consideration of pay-as-you-go financing and other non-traditional forms of financing including tax-exempt leasing and direct bank investment. E2, Attachment 2
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Economic Development Authority•No substantive changes to existing policy.•Part of the City’s levy and is subject to any statutory levy limits of the City.•M.S. § 469.107 authorizes the City Council to levy a tax of up to 0.01813% of estimated market value.E2, Attachment 2
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Debt Management•Restrictions on Debt Issuance•Debt should not be used for current operations. •Encourages pay-as-you-go financing for equipment.•Financial Limitations •Encourages limits on issuances to 20 years or less.•Encourages retirement of at least 50% of principal within 2/3 of the term of the bond issuance.•Encourages limitation of debt to less than $1,800 per capita.•Encourages regular communications with bond rating agencies and maintaining highest possible bond rating.•Changes refunding threshold to savings of statutory amount of 3% of principal, rather than 3.5%.E2, Attachment 2
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Debt Management (continued)•Professional Services •Encourages selection of municipal financial advisors and bond counsel through a formal RFP process every 5 years.•Encourages positive perception in the marketplace and a strategy to maintain good relations with rating agencies. •Conduit Debt Policy•Sets parameters for applications to be received.•Increases administrative fee to .50% of par on the first $10M, instead of .25% of par.•Decreases application fee from $3,500 to $2,500.E2, Attachment 2
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Debt Management (continued)•Post-Issuance Compliance Policy for Tax Exempt Governmental Bonds•Required by Internal Revenue Code to ensure compliance with all rules, regulations, and requirements after the issuance of the bonds.•Changes existing policy by making Finance Director responsible for post-issuance compliance responsibilities, rather than City Council.•Establishes 18-month arbitrage period.E2, Attachment 2
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Accounting, Auditing and Reporting•Audit Committee•Added the provision for the creation of an audit committee to allow for review and oversight of the City’s financial reporting, internal controls, and independent audit. First recommended with Sarbanes-Oxley legislation.•Audit committee would consist of the City Manager, Finance Director and two members of the City Council.•Provides for independent meetings of the two City Council committee members and the City’s independent auditors, without the Finance Director and City Manager present. E2, Attachment 2
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Risk Management•No substantive changes to the existing policy.•Emphasis on loss prevention and safety programs.E2, Attachment 2
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Grant Management•No substantive changes to the existing policy.•Adds a notification provision for all departments to the Finance Department. This will allow the City to ensure compliance with the new federal Uniform Grant Guidelines. E2, Attachment 2
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Public Purpose Expenditure Policy•Public Purpose•This is a new policy; however, some components were included in the former purchasing policy.•Defines public purpose in the context of Supreme Court decisions.•Activity will primarily benefit the community;•Activity is directly related to functions of government;•Activity does not primarily benefit private interest.•Sets clear examples for permitted and non-permitted expenditures (i.e., food, refreshments, employee functions).E2, Attachment 2
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Procurement Policy•Formerly known as the Purchasing Policy.•Meets several new requirements of the new federal Uniform Grant Guidelines.•Adds guidelines for sole source purchases.•Adds a section on Ethics and Conflict of Interest.•Adds a section encouraging affirmative action.E2, Attachment 2
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Council Considerations•Recommendation•Establish parameters for debt policy if not in agreement with recommendations.•Adopt the 2017 Financial Policies.E2, Attachment 2
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Questions?E2, Attachment 2
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