Review City Policies - Conduit Debt, Debt Management, Purchasing and Donations of Surplus Property to Non-Profits

Four Financial Policies are attached for review and comment.  The policies will be brought to City Council for final adoption at a future City Council meeting.  Conduit Debt, Debt Management and Donation of Surplus Property to Non-Profits will be adopted by Resolution whereas the Purchasing Policy needs to be adopted by ordinance. 
 
The four policies and a brief detail of what they encompass are as such:
     1.  Conduit Debt Policy:  This policy puts in place the procedures that need to be followed if the city is to issue "Pass-
          through" debt for a not-for profit or other agency.  Only Government Agencies are eligible to issue Conduit Debt.  This
          policy was originally adopted on May 10, 2005 and amended on May 26, 2015.  The only major change to the policy is to 
          ask the applicant to pay an administrative fee of 1% of the par amount of the bonds requested (or as negotiated based on
          the size of the issue), where the administrative percentage rate was 1/2%.  One percent is the standard fee on conduit
          debt. 
      2.  Debt Management Policy:  Outlines the framework the City will follow when issuing debt.  The city's former debt policy
          was outdated and Standard & Poor's noted this on their last bond rating review.  The City's Charter states that no debt
          obligation shall be issued to pay current expenses, but council may issue and sell obligations for any other municipal
          purpose in accordance with state statues and within the limitations prescribed by law.  The policy includes and expands
          on the Charter language and spells out MN State Statute 475.53 that limits debt of municipalities at 3% of the market
          value of taxable property in the municipality.
     3.  Purchasing Policy:  This policy is to amend the City Code under Chapter 2-Administration; Division 2-Purchasing.  The  
          policy was last amended in 2011 and the current amendment is to further clarify the bidding laws, give City Administrator
          a maximum sign-off on un-budgeted expenditures when time is of the essence, and include detail related to
          Emergencies or Disasters, Credit Card Use and Public Purpose Expenditures.
     4.  Donation of Surplus Equipment to a Non-Profit Organization:  The draft policy that is attached follows the example
          prepared by the League of MN Cities.  A new law was passed in 2016, effective August 1, 2016, which allows a local unit
          of government to donate "surplus equipment" to a non-profit or 501(c)(3) organization.  Before surplus equipment can
          be donated, a city must adopt a policy on how it will determine what equipment is surplus eligible for donation and how
          it will determine which non-profit organizations may receive donations.  In addition, the policy must address the obligations
         of the local government to disclose to the non-profit that the surplus equipment may be defective and cannot be relied
         upon for safety purposes.  The new law also adds a municipal tort immunity to MN Statutes, Section 466.03 which states 
         that municipalities, including all cities, are immune from liability for any tort claim resulting from the use of surplus
         equipment donated by the municipality to a non-profit organization under section 471.3459.  

        
 

30-45 minutes

Finance Director

Review policies and provide comment/and or changes that will be incorporated prior to Council adoption at a future City Council meeting.