Agenda - Council Work Session - 10/11/2016

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CC Work Session 2. 1. Meeting Date: 10/11/2016 Information Title: Review City Policies - Conduit Debt, Debt Management, Purchasing and Donations of Surplus Property to Non -Profits Purpose/Background: 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 The city's former debt policy was outdated and Standard & Poor's noted this on their last bond rating review.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