Agenda - Council - 10/25/2016 - Laserfiche WebLink

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CC Regular Session 4.8. Meeting Date: 10/25/2016 By: Diana Lund,Finance Information Title Financial Policies: Adopt Resolution 416-10-203: Conduit Debt;Adopt Resolution 916-10-204: Debt Management Policy and Adopt Resolution#16-10-205: Policy for Donation of Surplus Equipment to a Nonprofit Organization Purpose/Background: The following policies were brought to the City Council worksession of October 11, 2016 for review and comment: Conduit Debt,Debt Management and Donation of Surplus Property to Non-Profits. The policies and a brief detail of what they encompass are as such: I. 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 I%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 The city's former debt policy was outdated and Standard&Poor's noted this on their last bond rating review.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. 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.