Resolution No. 2024-06, Approving Financial Management Policy Revisions
Resolution No. 2024-06
Approving Financial Management Policy Revisions
Whereas, the City last approved the Financial Management Policy Manual on September 14,
2020, via Resolution No. 2020-46; and
Whereas, since then, a number of revisions and updated guidance have come from Minnesota
State Statutes, Code of Federal Regulations and Government Finance Officers Association; and
Whereas, revisions are necessary to comply with best practice, Minnesota State Statutes and
Federal Regulations.
Therefore, be it resolved, that the City Council of the City of Fridley hereby approves and
authorizes the revisions to the Financial Management Policy Manual, as shown on the attached
Exhibit A.
Passed and adopted by the City Council of the City of Fridley this 8th day of January,
2024.
_______________________________________
Scott J. Lund – Mayor
Attest:
________________________________________
Melissa Moore – City Clerk
Exhibit A
Financial Management
Policy Manual
City of Fridley, Minnesota
Table of Contents
Introduction and Purpose __________________________________________________________________________ 4
Organizational Mission _________________________________________________________________________ 4
Public Purpose Expenditure Policy _____________________________________________________________ 6
External Auditor Independence Policy _______________________________________________________ 10
Budgetary and Financial Controls ________________________________________________________________ 11
Operating Budget Policy _____________________________________________________________________ 12
Capital Investment Program Policy __________________________________________________________ 14
Capital Assets Policy _________________________________________________________________________ 15
Fiscal Agent Services Policy __________________________________________________________________ 18
Cash and Investment Management ______________________________________________________________ 20
Forfeited Assets Policy _______________________________________________________________________ 20
Fund Balance Policy __________________________________________________________________________ 21
Self–Insurance Fund Policy ___________________________________________________________________ 26
Investment Policy ____________________________________________________________________________ 27
Community Investment Fund Policy _________________________________________________________ 34
Debt Management _______________________________________________________________________________ 37
Debt Management Policy ____________________________________________________________________ 37
Private Activity or Conduit Bonds Policy _____________________________________________________ 39
Post–Issuance Debt Compliance Policy ______________________________________________________ 43
Post–Issuance Debt Compliance Procedures _________________________________________________ 44
Procurement _____________________________________________________________________________________ 49
Purchasing Policy ____________________________________________________________________________ 49
Procurement Card Use Policy ________________________________________________________________ 57
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Travel, Training and Reimbursement Policy __________________________________________________ 60
Donations ________________________________________________________________________________________ 67
Surplus Property Policy ______________________________________________________________________ 67
Municipal Liquor Store Donation Policy _____________________________________________________ 69
Revenue and Collection __________________________________________________________________________ 72
Revenue Policy _______________________________________________________________________________ 72
Public Utilities Revenue and Remittance Policy ______________________________________________ 73
Special Assessment Deferment Policy ________________________________________________________ 76
Adoption and Implementation ___________________________________________________________________ 79
Interpretation ________________________________________________________________________________ 79
Discipline _____________________________________________________________________________________ 79
Adoption _____________________________________________________________________________________ 79
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Introduction and Purpose
Organizational Mission
The City of Fridley, Minnesota (City) maintains a Vision Statement and a set of Organizational
Values, which guide both the daily and long–term activities of the organization:
1. Vision Statement: “We believe Fridley will be a safe, vibrant, friendly and stable home for
families and businesses;” and
2. Organizational Values: “Friendly, Responsive, Driven.”
Specifically, the Department of Finance (Finance Department) maintains the following mission
statement: “The Department of Finance strives to support and provide sound stewardship of the
financial resources and information technology needed to support excellent public services for
those who live, work and shop in the Fridley Community.”
Purpose
The City has an important responsibility to its citizens to plan for the adequate funding of services
desired by the public and the City Council, including the provision and maintenance of public
facilities, appropriate staffing, prudent financial management and accurate accounting for public
funds. The City strives to maintain adequate and consistent funding as well as promote
transparency and understanding of local government services as desired by the Fridley community.
Objectives
In order to achieve this purpose, the following objectives are established for the City's fiscal
performance:
To protect the City Council's policy–making ability by ensuring that important policy
decisions are not controlled by financial concerns, problems and/or emergencies;
To enhance the City Council's policy–making ability by providing accurate information on
the full costs of current operations, new proposals and capital requests;
To assist sound management of the City by providing accurate and timely information on
its financial condition;
To provide sound principles to guide the decisions of the City Council and staff;
To set forth operational principles which promote long–term cost effectiveness while
providing services desired by the public with prudent financial risk;
To employ revenue policies and forecasting tools to identify and prevent undue or
unbalanced reliance on certain revenues, but to distribute the costs of municipal services
fairly and to provide adequate funds to operate desired programs;
To provide and improve essential public facilities and prevent deterioration of the City's
infrastructure;
To protect and enhance the City's credit rating;
To ensure the legal use and protection of all City funds through a strong system of financial
and accounting controls;
To record transactions in a manner that matches current revenues to current expenditures;
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and
To report year–end financial information in accordance with Generally Accepted
Accounting Principles (GAAP) and in accordance with recommended best practices as
promulgated by the GFOA and the Statements of Position of the Office of the State Auditor
(OSA).
Code of Professional Ethics
The City shall adhere to the Code of Professional Ethics as established by theGFOA as outlined
below and Chapter 5 of the Fridley City Code, which govern the ethical conduct of certain staff.
To further the above objectives, all employees are enjoined to adhere to legal, moral, and
professional standards of conduct in the fulfillment of their professional responsibilities. Standards
of professional conduct as set forth in this Manual are promulgated in order to enhance the
performance of all persons engaged in public finance and to protect the Fridley community.
Personal Standards. Employees shall demonstrate and be dedicated to the highest ideals of honor
and integrity in all public and personal relationships to merit the respect, trust, and confidence of
governing officials, other public officials, employees, and of the public.
They shall devote their time, skills, and energies to their office both independently and in
cooperation with other professionals.
They shall abide by approved professional practices and recommended standards.
Responsibility as Public Officials.Employees shall recognize and be accountable for their
responsibilities as officials in the public sector.
They shall be sensitive and responsive to the rights of the public and its changing needs.
They shall strive to provide the highest quality of performance and counsel.
They shall exercise prudence and integrity in the management of funds in their custody and
in all financial transactions.
They shall uphold both the letter and the spirit of the constitution, legislation, and
regulations governing their actions and report violations of the same to the appropriate
authorities.
Professional Development. Employees shall be responsible for maintaining their own
competence, for enhancing the competence of their colleagues, and for providing encouragement
to those seeking to enter the field of government finance. They shall promote excellence in the
public service.
Professional Integrity–Information.Employees shall demonstrate professional integrity in the
issuance and management of information.
They shall not knowingly sign, subscribe to, or permit the issuance of any statement or
report which contains any misstatement, or which omits any material fact.
They shall prepare and present statements and financial information pursuant to applicable
law and generally accepted practices and guidelines.
They shall respect and protect privileged information to which they have access by virtue
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of their office.
They shall be sensitive and responsive to inquiries from the public and the media, within
the framework of state or local government policy.
Professional Integrity–Relationships.Employeesshall act with honor, integrity, and virtue in all
professional relationships.
They shall exhibit loyalty and trust in the affairs and interests of the government they serve,
within the confines of this Manual.
They shall not knowingly be a party to or condone any illegal or improper activity.
They shall respect the rights, responsibilities, and integrity of their colleagues and other
public officials with whom they work and associate.
They shall manage all matters of personnel within the scope of their authority so that
fairness and impartiality govern their decisions.
They shall promote equal employment opportunities, and in doing so, oppose any
discrimination, harassment, or other unfair practices.
Conflict of Interest. Employees shall actively avoid the appearance of or the fact of conflicting
interests.
They shall discharge their duties without favor and shall refrain from engaging in any
outside matters of financial or personal interest incompatible with the impartial and
objective performance of their duties.
They shall not, directly or indirectly, seek or accept personal gain which would influence, or
appear to influence, the conduct of their official duties.
They shall not use public property or resources for personal or political gain.
Public Purpose Expenditure Policy
The City Council recognizes that public funds may only be spent if the expenditure meets a public
purpose as outlined in State law, case law of the Minnesota Supreme Court and opinions of the
Minnesota Attorney General.
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 whole;
The activity is directly related to functions of government; and
The activity does not have as its primary objective the benefit of a private interest whether
for–profit or not.
This section is intended to provide guidelines regarding which expenditures are consistent with a
public purpose(s) and authorized in accordance with the City’s annual budget process, and which
expenditures are not considered within the public purpose definition and are therefore prohibited.
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Responsibility
Per Section 6.05 of the City Charter (Charter), 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 and interpreting this Public Purpose Expenditure Policy has been
delegated to the City Manager, or their designee. Further, all employees authorized by the City
Manager or their respective Department Director to make purchases on behalf of their respective
departments are responsible for complying with this Financial Management Policy Manual
(Manual) and corresponding procedures. Expenditures of public funds must comply with the
public purpose standards defined above.
Permitted Expenditures for Meals and Refreshments
Use of City funds for reasonable meals and/or refreshments for elected officials and employees
shall be permitted in the following circumstances, upon City Manager approval:
City–sponsored events of a community–wide interest where staff are required to be present
(e.g., Town Hall Meeting);
City Council, boards and commissions meetings held during the meal hour (e.g., City
Council Conference Meetings, City Council Retreats);
Professional association meetings, conferences, and training when meals are included as
part of the registration or program fee, or in accordance with the travel and training section
of this Manual;
Annual employee recognition and appreciation events (e.g., service awards);
Annual recognition events for volunteer and non-employees (e.g., volunteer appreciation
lunch);
City–sponsored training or work–related meetings where employees are required to
participate and be available during the meal hour;
Multi–departmental meetings scheduled during the meal hour;
Work activities requiring continuous service when it is unreasonable to break for meals (e.g.,
election days, water main breaks, emergency snow removal, time–sensitive public safety
responses); and
Healthy snacks and incentives of modest value provided during safety, health and/or
wellness programs for City employees.
When reviewing an expenditure to verify the standards have been met, the City Manager, or their
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. These guidelines address specific examples of public expenditures,
but examples are not meant to be exhaustive.
Other Permitted Expenditures
Apart from meals and refreshments, the City Manager, or their designee, may permit the following
expenditures:
Recognition events or purchases (Minnesota Statutes § 412.221 and § 15.46);
o Purchases for recognition at special one–time or annual events when provided at
modest level (e.g., recognition plaques);
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o Employee recognition programming for years of services for regular and permanent
part–time employees that work 20 or more hours per week;
Uniforms, clothing or apparel that is considered necessary for the performance of official
duties, safety or for visible staff recognition by the public (e.g., safety footwear, eyewear for
maintenance personnel);
Staff time and equipment use for City–sponsored, employee events as approved by the City
Manager as allowed by applicable regulations (e.g., set–up for annual employee picnic);
Employee wellness programming; the City Council recognizes the importance of employee
fitness and health as it relates to the overall work and life satisfaction of the employee and
the overall impact on the City’s insurance programs.
Special Events, including;
o National Night Out/Night to Unite, Department Open Houses and other events that
involve or invite participation by the general public; and
o Expenditures for meals and participation fees are allowed, and representative staff
members may participate in the events that directly benefit the marketing of the
City, pursuant to Minnesota Statute § 469.101, subd. 16, and § 438.11.
Employee Training, including the reasonable registration, tuition, meals and travel expenses
for conferences, seminars, workshops, tuition and approved city employment related
course work;
Memberships and Dues;
o Participation in the local Chamber of Commerce is allowed per Minnesota Statute §
469.191;
o Cost of membership/dues in professional organizations and City social and
community organizations when the purpose is to promote, advertise, improve or
develop the City’s resources and relationships and not personal interest or gain;
Clothing and other sundry items, such as t–shirts and other sundry items of nominal value
when these items are made available to the general public or if these items are determined
by the City Manager to be important to the successful involvement of employees in special,
City–sponsored or City–supported events;
City expenditures for non–profit organizations allowed by applicable State statutes,
Minnesota Supreme Court case law, or opinions of the Minnesota Attorney General;
Certificates and licensures that employees must hold and maintain on behalf of and for the
benefit of the City; and
Supplies for retirement and recognition events.
Prohibited Expenditures
Use of City funds for meals and/or refreshments for elected officials and employees are prohibited,
including, but not limited to:
Food and refreshments for routine work meetings, other than as identified in other sections
of the Manual;
Alcoholic beverages and tobacco products;
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);
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Participation in optional activities unless included as part of an overall conference
registration fee (e.g., optional golf rounds, concerts);
Employee–sponsored fundraising events (e.g., charitable giving campaign);
For funeral flower arrangements or other such gifts upon death of an employee, former
employee, elected official or one of their 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”); and/or
Employee coffee and related consumable supplies, coffee services.
Gift cards
Permitted Use of Assets
Specific City assets, such as equipment, may be used by City employees for personal reasons only
when City has established the following:
• Costs and wear resulting from use of the assets are reasonable and minimal;
• Administrative controls are in place to ensure that the use is appropriate and not abused;
and
• 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 or City
Council.
Such permitted use may include incidental and de minimis use of City–owned electronic
equipment such as City–owned mobile devices and multi–function copiers. It may also include the
use of City–owned vehicles provided to City employees as part of their official duties (e.g., Fire
Duty Crew Officer, Public Works Supervisors).
The limited personal use of City–owned assets shall be a privilege, and the City Manager or
Department Director may end such practices specifically or generally in their sole discretion.
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 or within City–
owned spaces (e.g., fire stations);
• Employees borrowing City–owned, non–motorized or motorized tools for personal use; and
• Use that results in unreasonable costs and/or wear on City assets.
Documentation
All expenses allowed above must be fully documented. The expected documentation will include:
date and time of the expenditure; business reason for the expenditure (e.g., agenda from a
meeting); staff and non–city representatives in attendance, if appropriate; and a receipt for the
actual purchase. Department Director or 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.
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Any expenditure for meals or refreshments that exceeds $250 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.
Special Requests
From time to time, there may be an event that is a proper public expenditure, but that is not
contemplated by this Manual. Departments must submit to the City Manager, or their designee,
a request for such prior to a public expenditure in writing. This request must show how the
expenditure is related to a public purpose as stated in this Manual, or other applicable laws or
regulations.
ExternalAuditorIndependence Policy
The City will arrange for an annual audit of all funds and account types by independent, certified
public accountant(s) that are qualified and licensed to issue such reports.
In accordance with the Government Accountability Office (GAO), the authority on local
government audits, in all matters relating to audit work, the external auditor shall be free both in
fact and appearance from personal, external and organizational impairments to independence.
The City’s external audit organization shall not be responsible for designing, developing and/or
installing the City’s accounting system or its operating system where this system generates
information used in preparing financial statements of the City.
External auditors shall not develop a performance measurement system, or any other system relied
upon in developing financial statements.
External auditors may prepare draft financial statements, schedules or perform other duties as long
as they are based on the City’s direction and the work results in a recommendation to
management. Decisions based on the external auditor’s recommendations must be approved by
the City Manager, or their designee.
External auditors shall provide routine advice to the City and to management to assist them in
activities such as establishing internal controls or implementing audit recommendations and
answers to technical questions and provide training. However, they may not direct or unduly
influence management with those decisions.
Any non–audit work related to tax rulings, arbitrage, attestation, compilation, sales tax audits,
counted value audits and financial report assistance proposed by the auditors, or for which the
City wishes to hire them must be consistent with the purchasing provisions of this Manual.
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BudgetaryandFinancialControls
The City will establish and maintain the highest standard of accounting practices, in conformity
with GAAP, Governmental Accounting Standards Board (GASB) guidance and recommended best
practices as provided by the GFOA, along with all applicable laws and regulation governing the
activities of a municipal corporation.
Consistent with Section 7.05 of the Charter, the City shall maintain a structurally balanced budget,
which includes the following:
The City Manager shall submit a balanced budget in which appropriations do not exceed
the total of the estimated revenues and available fund balance as outlined in this Manual;
The City will avoid budgetary strategies or procedures that balance the current budget at
the expense of future budgets;
The City Manager will coordinate the development of the Capital Investment Program (CIP)
with the operating budget, and include all estimated operating costs associated with CIP
activities in the budget projections; and
The budget will provide for the adequate maintenance and orderly replacement of all
capital assets; and
The City will not use short–term borrowing (i.e., less than five years), sell assets or use one–
time accounting measures to balance the operating budget for any fund.
General budgetary and financial control is to be centralized in one department, under the direction
of the Director of Finance /City Treasurer (Finance Director) pursuant to Section 6.04 of the Charter,
whose functions shall include, but not be limited to, the following:
Debt management;
CIP budget management and asset tracking;
Cash management;
Annual Comprehensive Financial Report (i.e., audit);
Financial analysis;
Grant accounting and management;
General accounting;
Investment management;
Operating Budget preparation and monitoring;
Payment of claims against the City;
Payroll;
Purchasing (consistent with Section 6.05 of the Charter);
Special Assessments; and
Utility Billing, revenue collection and all other receipting.
The Finance Department will review, and update, the schedule of fund balances, reserves, and
working capital in all other funds of the City, as needed, and determine adequacy of those cash
and/or fund balances, using specified guidelines and criteria in conjunction with the budgets set
annually.
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The Finance Department will also monitor the performance of the Fridley Fire Relief Association
through its City representatives, pursuant to Minnesota Statute § 424A.04.
Operating Budget Policy
The formal budgeting process provides the primary mechanism by which key decisions are made
regarding the levels and types of services to be provided by the City, given the anticipated level of
available funding sources.
Primary responsibility in the management of budgeted funds lies with the Department Directors.
Such management includes, but is not limited to, reviewing expenditures before authorization,
reviewing monthly financial reports to detect errors and assess progress, and complying with the
revenue and expenditure budgets authorized by the City Council.
Department Directors will be responsible for administration of their assigned budgets, as
determined by the City Manager, and are to submit requests for any required budget adjustments,
such as supplemental appropriations, to the Finance Director before the project, program or
service incurs cost during the budget period.
Budget Development Process
The City will utilize a “target based” service level approach to resource allocation. At the start of
each budget development cycle (as determined by the City Manager or their designee), the City
Manager, in consultation with the City Council, identifies budgetary targets and/or goals for each
department and their program areas. Each program area, project or service will prioritize services
and allocate resources accordingly. The City will attempt to maintain its present service level for all
services identified as priority and/or essential, as determined by the City Manager, within available
funding sources.
The City will utilize procedures that allow departments to integrate priorities and objectives into
the budget requests. All unfunded positions will be automatically removed from the proposed
budget unless the Department Director requests the position remain appropriated due to potential
future funds, such as an external grant. However, all budget assumptions and projections shall be
determined by the Finance Director in consultation with the City Manager.
The City will conservatively estimate and budget its annual expenditures and revenues through an
objective and analytical process. All existing and potential revenue sources shall be reviewed on
an at least an annual basis, and the total of the sums appropriated shall be less than or equal to
the total estimated revenues by fund annually. When possible, the City shall maintain a margin of
3%, which shall be reflected in the budget as contingency or reserve and shall not exceed the level
authorized by Section 7.08 of the Charter.
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The City will publish the proposed budget on its official website at least 10 days prior to the
adoption by the City Council. All publications and preparations of the annual budget documents
shall be consistent with Sections 7.04 and 7.05 of the Charter.
Any City enterprise funds are intended to be self–supporting (i.e., current revenues will cover
current expenditures), including capital improvements, debt services and depreciation. Enterprise
operations are to be reviewed annually for their self–sufficiency.
Budget Compliance
In order to maintain compliance with the annually adopted budget resolution(s), the City shall
maintain a strict budget compliance program with the thresholds established annually by the City
Council through the budget resolution.
For the Operating Budget, ultimate budget adoption and compliance occurs at the department
level. In order to ensure compliance, the City will consider budgetary compliance at the program
level (i.e., personnel services, supplies, capital outlay). Consistent with Section 7.07 of the Charter,
the authority to amend the current year budget shall be as follows:
Description Amount Review Approval
Increase to Overall Greater than $1 City Manager City Council
Department Budget
Inter–Department Greater than $1 City Manager City Council
Amendments
Program Level $175,000 or greaterCity Manager City Council
Amendments (i.e.,
$25,000 to $174,999 Finance DirectorCity Manager
intra–department)
$10,000 to $24,999 Department Director Finance Director
Up to $9,999 Department Director
Under no circumstances may budget adjustments be split to avoid approval thresholds or limits.
In order to effectuate a budget amendment, the Department Directors shall complete the Budget
Amendment Form, which shall be maintained by the Finance Director. All approved budget
amendments shall be subsequently included in the revised annual budget.
Pursuant to Section 7.07 of the Charter, no expenditures may exceed the amounts authorized by
the respective budget resolution, unless actual revenues exceed estimated revenues; and/or by
identifying offsetting decreases in other areas of the budget. In order to maintain compliance with
this section of the Charter, the City will strive to limit transfers within and among departments as
outlined in this Manual.
All costs incurred must be reasonable, necessary and for a bona fide public purpose. Pursuant to
Section 7.06 of the Charter, “Any obligation incurred by an officer or City employee for any purpose
not authorized in the budget resolution or for any amount in excess of the amount appropriated
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in the budget resolution or in excess of available moneys in any fund of the City may be considered
a personal obligation upon the person incurring the expenditure.”
Department Directors shall be responsible for contacting the Finance Director should there be any
questions regarding financial management or if the issue or concern is related to internal controls.
The Finance Director will monitor overall operating and CIP budget progress routinely throughout
the year.
Performance Measurement and Use of Data
The City integrates performance measurement and productivity indicators to measure operational
performance where practical. Performance data for individual departments are included in the
budget document. Performance data should be directly related to the goals and objectives of the
unit and focus on results and accomplishments rather than inputs. Performance measures should
provide a meaningful way to assess the effectiveness and efficiency of each operational unit.
Capital Investment Program Policy
A Capital Investment Program (CIP) will be developed for a period of up to five years. As resources
are available, the most current year of the CIP will be incorporated into the annual budget. The CIP
will be reviewed and updated annually. Years two through five are for planning purposes only and
do not confer any official budget authority. Generally, the CIP will be composed of two parts 1)
capital improvements; and 2) capital equipment.
The City will identify the estimated cost and potential funding sources for each capital project
proposal before it is submitted to the City Council for approval and in that process will determine
the most effective financing method for the proposed project. All construction projects shall
include at least a 10% contingency prior to receiving bids and at least 5% upon acceptance of the
bid. The City will make all capital improvements in accordance with the adopted CIP, which may be
amended by the City Council from time to time.
To be considered in the CIP a project must have an estimated cost of at least $10,000 in one of the
calendar years of the project. Projects may not be combined to meet the minimum standard unless
they are dependent upon each other.
Capital projects and/or capital asset purchases will receive a higher priority if they meet a majority
of the following criteria:
Mandatory project;
Maintenance project;
Improve efficiency;
Provide a new or expand desired service;
Positive effect on operation and maintenance costs;
Availability of external grants;
Elimination of hazards (i.e., improves public safety);
Prior commitments; and/or
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Replacement due to disaster or loss.
In order to maintain compliance with the annually adopted budget resolution(s), the City shall
maintain a strict budget compliance program with thresholds established annually by the City
Council through the budget resolution. For the CIP, ultimate budget adoption and compliance
occurs at the fund level. In order to ensure compliance, the City will consider budgetary compliance
at the individual project level as outlined below:
Description Amount Review Approval
Increase to Overall Greater than $1 City Manager City Council
Fund Budget
Inter–Fund Greater than $1 City Manager City Council
Amendments
Project Level Greater than $175,000 City Manager City Council
Amendments (i.e.,
$25,000 to $174,999 Finance DirectorCity Manager
intra–fund)
$10,000 to $24,999 Department Director Finance Director
Up to $9,999 Department Director
Under no circumstances may budget adjustments be split to avoid approval thresholds or limits.
In order to effectuate a budget amendment, the Department Directors shall complete the Budget
Amendment Form, which shall be maintained by the Finance Director. All approved budget
amendments shall be subsequently included in the revised annual budget.
The City will coordinate development of the CIP with the development of the operating budget.
Future operating costs associated with the new capital improvements will be projected and
included in operating budget forecasts.
The City will maintain all its assets in a manner adequate to protect the City’s and its citizens’
capital investment and to minimize future maintenance and replacement costs. The City will
provide for maintenance and replacement from current revenues where possible.
The CIP is to be presented by the Finance Director annually to the City Council for approval. Any
substantive change to the CIP not addressed in this Manual must be reviewed and adopted by
the City Council.
Capital Assets Policy
Per GASB Statement No. 34, a Capital Asset is defined as the purchase of or improvement to land,
easements, buildings, building improvements, vehicles, machinery, equipment, works of art and
historical treasures, infrastructure, and all other tangible or intangible assets that are used in
operations and that have initial useful lives extending beyond a single reporting period
For this section of the Manual, the City shall use the following definitions:
Inventory, an inventory of capital assets will be reviewed and updated annually;
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Reporting, the capital asset inventory will be reported within the Annual Comprehensive
Financial Report (in accordance with governmental accounting standards);
Depreciation, all capital assets within the inventory (excluding land and easements) will be
depreciated evenly based on their original or historical valuation over their estimated
useful life.
Asset Capitalization and Depreciation Tables
The Citywill accountforallcapital assetsthathave auseful lifeof greaterthantwoyearswith
values equal to or exceeding those in the following table:
Asset Classification or Type Value
Land$1
Vehicles $10,000
Machinery and Equipment $10,000
Furniture and Office Equipment $10,000
Recreation Equipment$10,000
Building and Building Improvements $25,000
Land Improvements $25,000
Infrastructure $50,000
Bulk Asset Purchase $100,000
The following ranges represent guidelines in setting estimated useful lives for capital asset
reporting:
Asset Classification or Type Depreciation
LandNot depreciable
Land Improvements
Athletic fields and playfields 15 years
Fencing 15 years
Irrigation systems& outsidelighting 15 years
Retainingwalls 10 years
Parkinglots 20 years
Landscaping (including trees & shrubs)10–15 years
Easements Not depreciable
Buildings and Building Improvements:
Buildings 25–40 years
Park Shelters 20 years
Roofing, FireSprinkling, Electrical,Plumbing 20 years
HVAC Systems 15 years
Cabinetry andPermanent Furnishings10 years
Well Rehab. andReconstruction5–20 Years
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Cars,Vans,LightTrucks3–10years
Medium/HeavyDutyTrucks8–16years
FireTrucks15–25Years
Machinery and Equipment
Heavy Equipment(Sweepers, Loaders) 10–20 years
Tractors 15 years
Mowers 7–10 years
Firefighting Equipment 10 years
Other Equipment7–15 years
WellPumpsandEquipment20–25Years
Furniture and Office Equipment 3–10 years
Recreation Equipment
Playstructures 10 years
Scoreboards 10 years
Tennis and BasketballCourts20 years
Information Technology
Telecommunication Systems (e.g., Fiber Optic)25 years
Servers, Network Switches and Firewalls 5 years
Infrastructure
Bridges 25 years
Streets(includes curb and gutters) 25 years
Sidewalksand Trails15years
WaterDistribution50 years
Sanitary Sewer Collection
Mains and Lines50 years
Lift Stations, Equipment&Liners 20–30 years
Storm Water System
Mains andStorm Ponds 50 years
Catch Basins, Culverts, Manholes25 years
Non–Structural BMPs10–25 years
Structural BMPs 25–50 years
Streetlights and Traffic SignalSystem 25 years
Other Infrastructure20–50 years
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Disposition of Capital Assets
Capital Assets may be disposed of, in accordance with State guidelines, through the following
methods:
Sold by a public auction or advertisement for bids;
Exchanged or “traded–in” for a replacement;
Donated in a manner consistent with the Donation section of this Manual;
Retired, recycled or placed in garbage (i.e., obsolete, broken items); and
Salvaged, after the end of its useful life.
Fiscal Agent Services Policy
From time to time, the City, in order to support applicable public purposes or other community–
wide benefits, may agree to provide fiscal agent services to an external organization. If the City
determines such an arrangement would be in the best interest of both parties, the following Fiscal
Agent Service Policy shall apply and control.
Eligibility
The City shall only provide fiscal agent services to a 501(c)(3) organization fulfilling a statutorily
recognized public purpose or other community–wide benefit as determined by the City. All
requests for fiscal agent services shall be reviewed on a case–by–case basis. If the City maintains a
same or similar business relationships with other organizations, such relationships shall not be a
basis for the approval or denial of any individual request.
All fiscal agent services arrangements shall be governed by a written Fiscal Agent Services
Agreement (Agreement) approved by the governing board of the external organization and the
City Council. Any costs associate with the creation, review and implementation of this Agreement
shall be borne by the external organization through a non–refundable, administrative fee as
determined by the City.
The City shall not provide fiscal agent services for any unincorporated associations or groups. It
may also deny any request for fiscal agent services at any point prior to the approval and execution
of the Agreement.
Fiscal Agent Services Requirements
The Agreement shall outline the type of assistances and services to be provided by the City.
Generally, these services may be administrative, financial or legal in nature. The City may also
provide access to insurance products and other services through its vendors. As a rule, the City will
not provide programmatic assistance (e.g., providing staff for an event) or waive fees or similar
costs charged to the general public (e.g., park shelter rental fee). All services outlined in the
Agreement shall be conducted in a manner consistent with the legal requirements and best
practices of the City, State, and applicable accounting standards.
Any material changes, as determined by the City, in the activities of the external organization shall
require the written approval of the City, and a subsequent modification of the Agreement by the
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City Council. The City shall not provide any fiscal agent services associated with any unapproved
activities, or activities not otherwise contemplated by the Agreement.
The external organization shall support all costs associated with the fulfillment of the Agreement,
including, but not limited to: annual audit requirements; interim reports and other requests for
information; banking needs; daily and regular transactions and associated fees; amendments to
the Agreement; legal services; insurance premiums; and other costs determined by the City to
support the letter and spirit of the Agreement. The City may also charge up to a 5% administrative
fee based on the total expenditures of the external organization annually in addition to the costs
outlined above.
On behalf of the external organization, the City, as the Fiscal Agent, shall establish and maintain a
separate Fiduciary Fund to segregate applicable financial activities. The City shall only disburse, or
release funds associated with such as account upon the written authorization of at least two parties,
as identified in the Agreement, upon a form(s) determined by the City. The maintenance of all funds
shall be consistent with the internal controls established for regular City business activities.
The City will maintain all financial records associated with the external organization according to
GAAP and OSA requirements, as well as any other applicable standards associated with the
business activities of the external organization (e.g., grant covenants). The external organization
shall support the cost of any employee trainings or certifications necessary to support its business
activities.
The Agreement shall also indemnify the City and allow the City Council to terminate upon a 90–
day written notice. Additionally, if the City Council determines any illicit, illegal and/or disreputable
activities on the part of the external organization, it may terminate the Agreement if the external
organization either fails to or cannot remedy the situation(s) in 10 days. If the City terminates the
Agreement, it shall provide all data and information to the external agency upon request and to
complete required reports and submissions.
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Cash and Investment Management
In order to maintain compliance with applicable Federal regulations, State laws and Charter
provisions, the City shall maintain the following standards with respect to cash and investment
management.
Forfeited AssetsPolicy
The City receives property and money through law enforcement seizures under Federal Law
21USCS Section 881(e) and Minnesota Statutes, Sections 609.531–609.5317, and 169A.63.
The City will use proceeds from these seizures as defined in State law and Department of Justice
guidelines. Forfeited assets (e.g., property, cash) will be used:
Only for law enforcement purposes;
Only as a supplement to budgeted funds; or
Not as a source to supplant ordinary operating expenses.
The City will establish procedures to ensure the safekeeping of forfeited property and funds until
such time as they are used for approved purposes. The City will use forfeited funds for appropriate
Police and City Attorney purposes, including, but not limited to the following.
Vehicles
o Forfeited automobiles may be used to supplement the police fleet, but not to
replace existing budgeted vehicles.
o Unused vehicles will be stored, sold according to City policy, and the proceeds used
according to this Forfeited Assets Policy.
Other Property
o May be used in ongoing Police and City Attorney operations.
o Will be sold if no police use is imminent and cash proceeds used according to this
Forfeited Assets Policy.
Cash
o Forfeited Funds activity budget will be presented for approval to the City Council
with the regular City budget each year.
o Unbudgeted, proposed purchases will be presented as a budget amendment
consistent with the Operating Budget Policy of this Manual and Charter.
Examples of Appropriate Uses of Cash
• Vehicles may be rented that do not supplant vehicles normally provided through City
funds; such vehicles are in addition to the regular fleet.
• Equipment may be purchased providing it is not part of the regular budget.
• Overtime may be paid provided it is unanticipated in the rest of the Police and City Attorney
budgets.
• Training costs in addition to those in the regular budget may be paid.
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Examplesof InappropriateUses
Purchasing any item(s) with forfeited funds that are already approved in the regular budget.
Paying regular salaries or benefits from drug forfeiture funds but permitted for Driving
Under the Influence (DUI) forfeiture fund as part of program operation.
Purchasing anything for other City departments unless for a law enforcement purpose.
Capital purchases previously approved for purchase with City funds.
Fund Balance Policy
The purpose of this Fund Balance Policy is to establish appropriate fund balance levels for each
fund that is primarily supported by property tax revenues or user fees. These policies will ensure
that adequate resources are available to meet cash flow needs for carrying out the regular
operations of the City.
The GFOA’s guiding principle for classifying the various components of fund balance is to indicate
the extent to which the government is bound to honor constraints on the specific purposes for
which amounts in the fund can be spent. Following governmental accounting standards, the City
has three basic categories: governmental funds, proprietary funds, and fiduciary funds. This Fund
Balance Policy applies only to the governmental categories.
Government Accounting Standards Board Statement No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions, altered the categories and terminology used to describe the
components of fund balance in the governmental funds (but it does not apply to the proprietary
or fiduciary funds). The City’s governmental funds include the following fund types:
General Fund;
Special Revenue Funds;
Debt Service Funds; and the
Capital Projects Funds.
For the purpose of GASB Statement No. 54 and thisManual, the following definitions shall apply
to the types of fund balances:
Fund Balance, the difference between assets and liabilities reported in a governmental fund;
Non–Spendable Fund Balance, amounts that are not in a spendable form (e.g., prepaid
items and inventories of supplies); resources that must be maintained intact pursuant to
legal or contractual requirements are also considered non–spendable;
Restricted Fund Balance, amounts subject to externally enforceable legal restrictions (e.g.,
creditors, grantors, contributors, and by law through constitutional provisions or enabling
regulations);
Unrestricted Fund Balance, the total of committed fund balance, assigned fund balance,
and unassigned fund balance, as described below;
Committed Fund Balance, amounts that can be used only for the specific purposes
determined by a formal action of the government’s highest level of decision-making
authority (i.e., City Council). Commitments may be changed or lifted only by the City
Council taking the same formal action that imposed the constraint originally. The City
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Council must act on these commitments before year end;
Assigned Fund Balance, amounts a government intends to use for a specific purpose; intent
can be expressed by the government body or by an official or body to which the governing
body delegates the authority; and
Unassigned Fund Balance, amounts that are available for any purpose in the General Fund.
The City Council authorizes the Finance Director and/or City Manager to assign fund balances that
reflects the City’s intended use of those funds. When both restricted and unrestricted resources are
available for use, it is the City’s policy to first use restricted resources, and then use unrestricted
resources as they are 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.
General Fund
The General Fund is established to account for all revenues and expenditures which are not
required to be accounted for in other funds. Revenue sources include property taxes, license and
permit fees, fines and forfeits, charges for services, intergovernmental revenues, investment interest
earnings and transfers.
The General Fund will have committed fund balances at year end for any purchase order
encumbrances and budget carryovers. The General Fund may have a portion of its fund
balance classified as non–spendable if there are long term receivables, inventories, or prepaid
items. The General Fund is the only fund that can have any unassigned fund balance.
The City will strive to maintain an unassigned fund balance in the General Fund in the range of
35%–50% of the subsequent year’s budgeted expenditures. Since a significant source of revenue
in the General Fund comes from property taxes, maintaining a fund balance that is equal to at least
five months of operating expenditures ensures that sufficient resources are available to fund basic
City functions between property tax settlements. This range is in conformance with guidance from
the OSA. An assignment or restriction of fund balance may be used to offset revenues earned in
one year where substantial services are required to be performed in the next fiscal period.
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. Consistent with GASB Statement No. 54, substantial inflows of revenues
into a Special Revenue Fund must be either restricted or committed in order for the fund to
be considered a Special Revenue Fund. The table on the next page restricts/commits the Special
Revenue Funds for the City.
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Special Revenue Funds, Designations
FundSpecial Revenue Source Restricted/Committed For
Cable Television Cable Franchise FeesMarketing and
Communication Activities
Solid Waste Abatement Federal and State Grants, User Recycling Activities
Fees
Alcohol, Drug, Gambling Federal and State ForfeituresPolice Activities
Forfeiture
Police ActivityFederal, State and County Police Activities
Grants
Springbrook Nature CenterProperty Taxes and User FeesSpringbrook Nature Center
Activities
Solid Waste Abatement Fund. The Solid Waste Abatement Fund is a Special Revenue Fund that
provides for curbside recycling pickup throughout the City, as well as recycling drop–off events
during the year. It receives the majority of its funding from user fees. The fund balance for this fund
shall be consider committed.
The City will strive to maintain a fund balance in the Solid Waste Abatement Fund in the range of
10%–15% of the subsequent year’s budgeted expenditures. This lower percentage is deemed
adequate since revenues are received monthly as part of the utility billing process.
Springbrook Nature Center Fund. The Springbrook Nature Center (SNC) Fund pays for the
ongoing operations of the SNC, as well as associated capital investment projects in concert with
other City funds. Property taxes and user fees make up the majority of the revenues for this fund.
The fund balances are both restricted and committed depending on the activity. The City shall
consider any donations made for specific purposes but unexpended by the City as restricted. The
portion of the fund balance comprised of user fees and property taxes shall be committed for use
by the SNC.
The City will strive to maintain a fund balance in the Springbrook Nature center Fund in the range
of 35%–50% of the subsequent year’s budgeted expenditures.
Cable Television Fund. The Cable Television Fund pays for the ongoing operations for cable
television programming, community marketing and other communications, as well as capital
investment projects required for broadcasting equipment. Franchise fees make up the majority of
the revenues for this fund. This fund balances are both restricted and committed by the franchise
agreements. The Public Education and Government (PEG) Fee revenues are restricted per the
franchise agreement. The Cable Television Franchise Fees are committed.
The City will strive to maintain afund balance in the Cable Television Fund in the range of 25%–
50% of the subsequent year’s budgeted expenditures.
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Public Safety Support Fund.The Public Safety Support Fund administers grants and payments
from a variety of intergovernmental agencies for public safety purposes. Payment from other
agencies and grant proceeds make up the majority of the revenues for this fund. The fund balances
for are both committed and restricted depending on the activity. For the Public Safety Data System
Manager, the payments from Anoka County shall be committed. Any grant proceeds recorded in
the fund shall be restricted.
Given the type of activity supported by the fund, and the fact that external revenues support all of
the costs associated with it, the City does not maintain fund balance policy for the fund.
Forfeiture Funds.The City maintains three Forfeiture Funds, which payfor eligible purchases
associated with applicable activities (e.g., drugs, alcohol enforcement) as outlined in Federal
regulations and State law (e.g., DUI training). Assets forfeitedor seized due to criminal activities
are recorded in this fund based on formulas established by either Federal regulations or State
laws. Given that all allowable expenditures are controlled by law, all forfeited assets shall be
considered restricted.
Given the type of activity supported by the fund, the City does not maintain a fund balance policy
for it.
Debt Service Funds
Debt service fund balances are considered restricted as they are resources that are being
accumulated for payments of principal and interest maturing in current and future years.
Capital Project Funds
Capital project funds are used to account for and report financial resources that are restricted,
committed, or assigned for capital outlays, including the acquisition or construction of capital
facilities and other capital assets. They also accumulate funds for future, planned expenditures.
The City shall consider all Capital Project Funds as assigned fund balances, except in the following
circumstances:
Long–term receivables, inventories, and prepaid items, which shall be non–spendable;
Proceeds from the sale of bonds, and any Municipal State Aid held by the City or similarly
designated funding, which shall be restricted; and
Funds held for the Capital Equipment Fund and Community Investment Fund shall be
committed.
For any other activity, the City Manager or their designee shall determine the fund balance
classification. Given the type of activities supported by these funds (e.g., one–time expenditures),
the City does not maintain fund balance policies for each individual fund.
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Enterprise Funds
These funds were established to account for the operation of Water, Sanitary Sewer, Storm Water
and Municipal Liquor operations which are designed to be self–supporting from user charges and
fees.
Water.This fund is used to account for the provision of water services for the customers of the City
related to administration, operations and capital outlay. This fund is financed predominantly
through user charges and fees.
The City will strive to maintain a cash balance in the Water Utility Fund in the range of 50%–100%
of the subsequent year’s budgeted operating expenses less depreciation, plus the subsequent
year’s debt service and capital improvement obligations. Since a significant source of revenue in
the Water Fund comes from user charges and fees, maintaining a cash balance in this range ensures
that sufficient resources are available to fund basic City functions between receipts of user charges
and fees. In addition, due to the mature water infrastructure within the City, a higher percentage
of fund balance is prudent to address any potential issues.
Sanitary Sewer. This fund is used to account for the provision of sanitary sewer collection and
conveyance for the customers of the City related to administration, operations and capital outlay.
This fund is financed predominantly through user charges and fees.
The City will strive to maintain a cash balance in the Sanitary Sewer Utility Fund in the range of
50%-100% of the subsequent year’s budgeted operating expenses less depreciation, plus the
subsequent year’s debt service and capital improvement obligations. Since a significant source of
revenue in the Sanitary Sewer Fund comes from user charges and fees, maintaining a cash balance
in this range ensures that sufficient resources are available to fund basic City functions between
receipts of user charges and fees. In addition, due to the age of the sanitary sewer infrastructure
within the City, a higher percentage of fund balance is prudent to address any potential issues.
Finally, due to the volatility of charges from Metropolitan Council Environmental Services, and
being it encompasses a significant portion of total expenditures, it is also prudent to keep a higher
percentage of fund balance.
Storm Water. This fund is used to account for the provision of storm water collection, conveyance
and water quality management for the customers of the City related to administration, operations
and capital outlay. This fund is financed predominantly through user charges and fees.
The City will strive to maintain a cash balance in the Storm Water Fund in the range of 50%–100%
of the subsequent year’s budgeted operating expenses less depreciation, plus the subsequent
year’s debt service and capital improvement obligations. Since a significant source of revenue in
the Storm Water Fund comes from user charges and fees, maintaining a cash balance in this range
ensures that sufficient resources are available to fund basic City functions between receipts of user
charges and fees. In addition, due to the age of storm water infrastructure and the potential for
emergency events within the City, a higher percentage of fund balance is prudent to address any
potential issues.
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Municipal Liquor.This fund is used to account for the operations of the City’s off–sale liquor
stores. This fund is financed predominantly through the sale of liquor and similar items.
The City will strive to maintain a cash balance in the Municipal Liquor Fund in the range of 5%–
15% of the subsequent year’s budgeted expenses. Due to the correlation of sales to purchases of
inventory, a lesser cash balance percentage is justifiable. This will ensure that sufficient resources
are available to fund Municipal Liquor operations and future capital improvements.
Carryovers and Encumbrances
At year end, the City Council may approve purchase order encumbrances and budget carryovers
in the form of a revised budget. Both the encumbrances and the budget carryovers will be
considered committed fund balances upon approval of the City Council through the subsequent
annual budget.
Self–Insurance Fund Policy
The City will maintain a separate Self–Insurance Fund within its financial structure to support the
cost of certain insurance and risk management programs. The Self–Insurance Fund will be the first
fund to respond to insurance premiums, claims and other costs, including those defending a claim
against the City, which will allow the City to accept higher deductibles, thereby reducing the
premiums paid on its insurance policies. It will also provide protection from fluctuating insurance
premiums due to changes in the insurance markets.
The City shall calculate, at least annually, an estimated working capital requirement for the Self–
Insurance Fund. The working capital estimate should include the actual claims from the last three
completed years, plus 50% for unexpected claims. If this analysis and formula determines the
available working capital to be inadequate, the City Council shall transfer monies from other funds
subject to its authority to satisfy the estimated amount.
Generally, the City shall consider the proportionate share of claims by activity and/or department
to address any funding shortfall. Claim payments will be made from the Self–Insurance Fund for
all claims against the City. Contributions to the Self–Insurance Fund are calculated annually by
considering premiums, claims history and other factors, such as the insured value of property and
equipment, as well as the number of vehicles assigned to each department.
The City Council may only transfer monies from the Self–Insurance Fund after at least three years
of actual expenditures and claim experience, or a report from a qualified, external consultant,
indicates excess funding. The fund balance will be reviewed each year during the annual budget
preparation. The City Manager or Finance Director shall approve all Self–Insurance Fund activities,
consistent with other sections of this Manual.
The City will utilize the services of a professional Risk Manager, either on–staff or by contract, to
administer a risk avoidance and mitigation program. The City will periodically conduct educational
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safety and risk avoidance programs within the various departments. Staff will report to the City
Manager, at least annually, on the results and costs of the risk management program for the
preceding year.
The City will conduct at least every five years, using external consultants, a comprehensive risk
management study and will implement the corresponding recommendations for the improvement
of risk management that are found to be feasible and cost–effective. The City will maintain the
deductible amount considered prudent in light of the relationship between the cost of insurance
and the City’s ability to sustain both per occurrence and annual loss costs.
Planned drawdown of the Self–Insurance Fund below the estimated working capital level will be
permitted for operational purposes to cover extraordinary expenditures or to reduce the impact
of increasing premiums or claims experience. Reductions in the fund balance are meant to be
temporary and must be resolved through rate adjustments, implementation of a new permanent
revenue source or reduction in expenditure levels. Surplus fund balance above the minimum level
may be used to defer or reduce payments needed to support risk management operations.
Investment Policy
This Investment Policy specifically outlines the investing philosophy and practices of the City and
serves as a reference point for the management of City assets. It is the policy of the City to invest
public funds in a manner which will provide for the following in order of importance: safety,
liquidity and yield (i.e., return on investment) that conforms to all Federal, State and local
regulations governing the investment of public funds.
The purpose of this Investment Policy is to develop an overall program for cash investments
management, including: a high degree of professionalism; to ensure public trust; to establish that
elected and appointed officials and employees are fiduciaries of a portfolio, which shall be subject
to public review; and to establish cash investment objectives, delegation of authority, standards of
prudence, internal controls, authorized investments, selection process for investments, and broker
representations.
Scope
This Investment Policy applies to all financial assets of the City. These funds are accounted for
within the City’s Annual Comprehensive Financial Report and include:
General Fund;
Special Revenue Funds;
Capital Project Funds;
Debt Service Funds;
Enterprise Funds;
Internal Service Funds;
Trust and Agency Funds; and
Any new fund created by the City, unless specifically exempted by City Council; and/or
falling under the constraints of a separate section of State law other than Chapter 118A.
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Prudence
Investments shall be made with judgment and care, under circumstances existing at the time the
investment is made, which persons of prudence, discretion and intelligence exercise in the
management of their own affairs, not for speculation, but for investment, considering probable
safety of the capital as well as interest yield to be derived.
The standard of prudence to be used by investment officials shall be the “prudent investor”
standard and shall be applied in the context of managing the overall portfolio. Investment officers
acting in accordance with written procedures and this Investment Policy and exercising due
diligence shall be relieved of personal liability for an individual security’s credit risk or market price
changes, provided deviations from expectations are reported in a timely fashion and appropriate
action is taken to control adverse situations. Investment procedures developed for the Finance
Department must be complied with by those with access to and management responsibilities for
City investments, including any external investment managers, advisors, consultants, brokers
and/or counterparties.
Objective
At all times, investments of the City shall be made in accordance with Minnesota Statutes Chapter
118A and amendments thereto. The primary objectives of the City's investment activities shall be
in the following order of priority.
Safety.Safety of principal is the foremost objective of the investment portfolio. Investments shall
be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
The objective will be to mitigate credit risk, interest rate risk, and custodial risk.
Credit Risk. Credit Risk is the risk of loss due to failure of the security issuer to make payments on
time and/or in full. Credit Risk will be minimized by:
Limiting investments to the type of securities listed in this Investment Policy; and
Diversifying the investment portfolio so that the impact of potential losses from any type
of security or from any one individual issuer will be minimized.
Interest Rate Risk. Interest Rate Risk is the risk that the market value of securities in the portfolio
will fall due to changes in general interest rates. The City will minimize Interest Rate Risk by
structuring the investment portfolio so that securities mature to meet cash requirements for
ongoing operations, thereby avoiding the need to sell securities on the open market prior to
maturity. The City has also established diversification guidelines and maturity limits to control the
sensitivity of the portfolio to changes in interest rates.
Custodial Risk. The City will minimize deposit Custodial Risk, which is the risk of loss due to failure
of the depository bank (or credit union), by obtaining collateral or bond for all uninsured amounts
on deposit, and by obtaining necessary documentation to show compliance with state law and a
perfected security interest under federal law.
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The City will minimize investment Custodial Risk by maintaining custody of securities and cash
holdings outside of authorized depository institutions with an eligible custodian(s) that meets
statutory and Investment Policy requirements or with a Federal Reserve Bank. Investment Custodial
Risk is the risk that in the event of failure of a custodian, such as a broker/dealer, the City will not
be able to recover the value of its investment securities that are in possession of an outside party
and in that party’s nominee name for which the City is a beneficial owner. Investments in
investment pools and money markets are not evidenced by securities that exist in physical or book
entry form, and therefore are not subject to custodial Credit Risk disclosures.
Liquidity
The City’s investment portfolio will remain sufficiently liquid to enable the City to meet all operating
requirements that might reasonably be anticipated. The portfolio will be structured so that
securities mature concurrent with cash needs to meet anticipated demands (i.e., static liquidity).
Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist
largely of securities with active secondary or resale markets (i.e., dynamic liquidity). Alternatively, a
portion of the portfolio may be placed in money market mutual funds or local government
investment pools which offer same day liquidity for short–term funds.
Yield
The City’s investment portfolio shall be designed with the objective of attaining a market rate
return. Securities shall generally be held until maturity with the following exceptions:
A security with declining credit may be sold early to minimize loss of principal and the risk
the investment will no longer comply with the requirements of Minnesota statutes, chapter
118A;
A security swap (simultaneous sale and purchase) would improve the quality, yield, or target
duration in the portfolio; and
Liquidity needs of the portfolio require that the security be sold.
Trading
Portfolio purchases will focus on holding investments until maturity to maintain securities at
amortized value. Excessive investment portfolio turnover commonly referred to as “trading” or
“overtrading” to obtain short–term gains is not consistent with the City’s stated investment
objectives and will be prohibited.
Delegation of Authority
The investment program shall be operated in conformance with Federal, State, and other legal
requirements. Authority to manage the City’s investment program is derived from the following:
Minnesota Statutes Chapter 118 A, Deposit, and Investment of Local Public Funds; and
Fridley City Charter Section 7.13, Receipts to go to City Treasurer.
Management responsibility for the investment program is hereby delegated to the Finance
Director, who shall establish written procedures for the operations of the Investment Program
consistent with this Investment Policy. The Finance Director, with assistance from Finance
Department, monitors performance of the investment portfolio, and ensures that proper internal
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controls are developed to safeguard investments assets. Procedures should include reference to:
safekeeping (custody), delivery versus payment (DVP), investment accounting, wire transfer
agreements, collateral/depository agreements and banking service contracts. Such procedures
shall include explicit delegation of authority to persons responsible for investment transactions.
No person may engage in an investment transaction except as provided under the terms of this
Investment Policy and the procedures established by the Finance Director. The Finance Director or
Assistant Finance Director shall be responsible for all investment transactions and shall establish a
system of controls to regulate the activities of subordinate officials and any external parties.
Ethics and Conflicts of Interest
Officers and employees involved in the investment process shall refrain from conducting personal
business activity that could conflict with proper execution of the investment program, or which
could impair their ability to make impartial investment decisions. Investment officials shall annually
disclose to the City Clerk any material financial interests as required by State statute on an annual
Statement of Economic Interest form. Employees and officers shall subordinate their personal
investment transactions to those of the City, particularly with regard to the time of purchases and
sales, and shall refrain from undertaking personal investment transactions with the same
individual(s) with whom business is conducted on behalf of the City.
Authorized Broker/Dealersand Investment Advisors
The City will conduct investment transactions only with authorized broker/dealers that have met
the following criteria:
They act as primary or regional dealers that qualify under Securities & Exchange
Commission (SEC) Rule 15C3-1 (Uniform Net Capital Rule); and
Submit annually to the Finance Director an OSA Broker Certification Form.
All broker/dealer relationships, providing they meet the above requirements, will be maintained at
the discretion of the Finance Director. The purchase of all investments must be from institutional
brokers.
The City may enter into contracts with investment advisory firms at the discretion of the Finance
Director when their services are deemed beneficial to the City. Any such firm must be registered
under the Investment Advisor’s Act of 1940. The advisor may have authority to transact investments
on behalf of the City and must comply with State statute and this Investment Policy.
Authorized and Suitable Investments
Based on the investment objectives as defined in this Investment Policy, the City will limit its
investments to securities authorized under Minnesota Statute 118A and future revisions. Current
statute allows the City to invest in the following:
United States Securities including bonds, notes, bills, mortgages, or other securities that are
direct obligations or are guaranteed or insured issues of the United States, its agencies, its
instrumentalities, or organizations created by an act of Congress. Mortgage–backed
securities that are defined as high risk or in certificates of deposit secured by letters of credit
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issued by federal home loan banks are not permissible investments;
General obligation of state or local governments with taxing powers rated A or better by a
national bond rating services;
Revenue obligations of state or local governments rated AA or better by a national bond
rating service;
General obligation of the Minnesota Housing Finance Agency, which is a moral obligation
of the State of Minnesota, rated A or better by a national bond rating service;
Any security which is an obligation of a school district with an original maturity not
exceeding 13 months and (i) rated in the highest category by a national bond rating service
or (ii) enrolled in the credit enhancement program pursuant to section 126C.55, Minnesota
statutes.
Certificates of Deposits (i.e., Time Deposits) that are fully insured by the FDIC or the NCUA;
Bankers acceptances of United States banks rated with the highest short-term credit rating
of any two Nationally Recognized Statistical Rating Organizations (NSROs), with a
maximum maturity of up to 270 days from the date of purchase;
Commercial paper issued by United States corporations or their Canadian subsidiaries that
is rated in the highest rating category by at least two nationally recognized rating agencies
and matures in 270 days or less;
Money Market Mutual Funds provided such investment company is registered under the
Federal Investment Company Act of 1940, and which holds itself out as a money market
fund meeting the conditions of rule 2a-7 of the SEC and is rated in one of the two highest
rating categories for money market funds by at least one nationally recognized statistical
rating organization, or whose shares are registered under the Federal Securities Act of 1933,
as long as the investment company’s fund receives the highest credit rating and is rated in
one of the two highest risk rating categories by at least one nationally recognized statistical
rating organization and is invested in financial instruments with a final maturity no longer
than 13 months.
Shares of a Minnesota joint powers investment trust whose investments are restricted to
securities described under sections 118A.04, 118A.07 and subdivision 7, Minnesota
statutes.
In addition, the share value of the money market funds must be equal to $1.00. The Minnesota
Municipal Money Market Fund (4M) that was established by the League of Minnesota Cities in 1987
to address the investment needs of Minnesota cities.
Concentration of Credit Risk
It is the intent of the City to diversify its investments and thereby reduce the risk of loss resulting
from the over–concentration of assets in a specific maturity, issuer, institution or market sector. No
more than 50% of the entity’s total investment portfolio will be invested in a single market sector
and no more than 15% of the overall portfolio may be invested in the securities of a single issuer.
The following investments are exempt from diversification restrictions: U.S. Treasury and Agency
securities, Money Market Funds, Local Government Investment Pools and Deposits fully insured by
the FDIC or NCUA.
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Due to the fluctuations in the value of the portfolio, maximum percentages for a particular issuer
or investment type may be exceeded at a point in time subsequent to the purchase or maturity of
a particular security. Securities need not be liquidated to realign the portfolio; however,
consideration should be given to this matter when future purchases are made.
Given the smaller portfolio of the Housing and Redevelopment Authority (HRA), the above
restrictions will be waived. Prudent judgment in regard to concentration of credit risk should still
be exercised when possible.
Collateralizations
In accordance with Minnesota Statute 118a.03, financial institutions will be required to provide
collateral on the following:
Certificates of Deposits (i.e., Time Deposits); and
Demand Deposits.
The City chooses to limit collateral to the following U.S. government securities:
Treasury Bills;
Treasury Notes;
Treasury Bonds;
Federal National Mortgage Associations (FNMA);
Federal Home Loan Bank (FHLB);
Federal Farm Credit Bank (FFCB);
Government National Mortgage Association (GNMA); and
Federal Home Loan Mortgage Corporation (FHLMC).
Deposits may additionally be collateralized by an irrevocable standby letter of credit issued by
Federal Home Loan Banks.
The underlying securities will be subject to periodic (i.e., monthly) market valuations to ensure there
is no market exposure. In order to anticipate market changes and provide a level of security for all
funds, the collateralization level will be 110% of market value of principal and accrued interest
except that where the collateral is irrevocable standby letters of credit issued by Federal Home
Loan Banks. The amount of collateral shall be at least equal to the amount on deposit at the close
of the financial institution’s banking day.
For cash deposits on–hand collateral will always be held by an independent third party with whom
the City has a current custodial agreement. Clearly marked evidence of ownership (i.e., safekeeping
receipt) must be supplied by the entity and retained. Collateralization shall be in the form of specific
securities held for the City. The only exceptions are FDIC, Securities Investor Protection Corporation
(SIPC) and pre–approved insurance coverage. The right of collateral substitution is granted, subject
to approval from the Finance Director.
Safekeeping and Custody
Securities purchased shall be held in a segregated account for the City’s benefit at a third–party
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trustee as safekeeping agent. The investment dealer or bank from which the security is purchased
shall issue a confirmation ticket to the City listing the specific instrument, issuer, coupon, maturity,
Committee on Uniform Security Identification Procedures (CUSIP) number, purchase or sale price,
transaction date, and other pertinent information. The financial service provider who executes the
transaction on the City’s behalf, if any, shall deliver all securities on a delivery versus payment
method (DVP) to the designated custodian. DVP is a way of controlling the risk to which securities
market participants are exposed. Delivery of securities (i.e. the change in their ownership) is done
simultaneously with payment. This means that neither the buyer nor the seller is exposed to the
risk that the other will default.
Investments, contracts, and agreements may be held in safekeeping with:
Any Federal Reserve Bank; and
Any bank authorized under the laws of the United States or any state to exercise corporate
trust powers including, but not limited to, the bank from which the investment is purchased.
The City’s ownership of all securities should be evidenced by written acknowledgements identifying
the securities by:
The names of the issuers;
The maturity dates;
The interest rates; and
Any CUSIP, serial numbers, or other distinguishing marks.
The City may not invest in securities that are both uninsured and not registered in the name of the
City and are held by either the counterparty or the counterparty’s trust department or agent, but
not in the name of the City.
Maximum Maturities
To the extent possible, the City will attempt to match its investment maturities with anticipated
cash flow liquidity demands (i.e., static liquidity). Fifty percent of the City’s funds in each investment
portfolio will be invested in securities maturing in 5 years or less, with no more than 20% of the
City’s funds being invested in securities maturing in up to 10 years. A minimum of 5% of the
portfolio will mature under 30 days. Maturity is measured by average life, worst call date or
expected life as opposed to final maturity.
Maturities selected shall provide for stability of income and reasonable liquidity. Because of the
inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio
should be continuously invested in readily available funds such as local government investment
pools and/or money market funds to ensure that appropriate liquidity is maintained to meet
ongoing obligations.
Internal Control
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. The internal
control structure shall be designed to provide reasonable assurance that these objectives are met.
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The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed
the benefits likely to be derived; and (2) the valuation of the costs and benefits requires estimates
and judgments by management.
The City will engage an external auditor for an annual independent review to assure compliance
with policies and procedures.
Performance Standards
The investment portfolio will be designed to obtain a market average rate of return during
budgetary and economic cycles, considering the City’s investment risk constraints and cash flow
needs. The investment portfolio will be structured to meet specific criteria addressing safety,
liquidity and yield. The City’s reporting system will provide information concerning cash position,
investment performance, and percentage of the portfolio that is invested by security issuers and
maturity structure.
Market Yield/Benchmark
The City’s investment strategy is conservative. Under this conservative philosophy, the City will
purchase investments that fit in accordance with this policy. Given this strategy, the Finance
Director may establish benchmarks, as appropriate, based on the investment needs of the City.
Reporting
The Finance Director shall provide at least quarterly reports to the City Manager on the investment
activity and returns of the City, which will include: security diversification information, maturity
breakdowns and investment earnings, and a brief summary of current economic conditions
affecting the portfolio. The City will also report this information as part of the Annual
Comprehensive Financial Report.
Community Investment Fund Policy
The Cityacknowledges the limited financial resources available to support various capital projects
throughout the community, such as improvements to park and recreation facilities, and public
utilities. As such, this Community Investment Fund Policy shall create and provide guidance
regarding the use of a Community Investment (CI) Fund to support capital project costs.
Generally, the CI Fund shall be used to issue interfund loans to support the cost of long–term
improvements to utilities owned and operated by the City. Upon repayment, the interest income
earned on those interfund loans will be used to support the cost of park and recreation
improvements throughout the City. Through this CI Fund Policy, the fund shall provide meaningful
cost savings for the City, and a funding source for park and recreation projects for the foreseeable
future.
General Guidelines and Requirements
For the purposes of this CI Fund Policy, the following guidelines and requirements shall control
the operation and use of the fund.
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Fund Created. The City created a Capital Project Fund called the “Community Investment Fund,”
effective December 31, 2018.
Eligible Revenues and Funding Sources. The following funding sources shall be deposited or
transferred into the Fund:
• All assets of the “Closed Bond” Funds and “Improvement Bonds of the Future” Fund as of
December 31, 2018;
• Any repayments as the result of interfund loans issued by the CI Fund;
• All interest and investment earnings of the CI Fund;
• Any unassigned fund balance of the General Fund in excess of upper threshold (i.e., 50%)
established by the Fund Balance Policy of this Manual as determined by June 30 annually;
• Any fees, excluding reimbursements for City staff time, obtained through the issuance of
Private Activity Bonds (i.e., Conduit Bonds);
• Any unanticipated proceeds or payments to the City, except for those controlled by Section
12.06 of the City Charter; and
• Any other monies appropriated by the City Council and/or donated to the Fund.
Eligible Costs and Expenditures
The CI Fund shall be used exclusively to support the capital and debt service expenditures related
to public utilities, pursuant to Section 11.01 of the City Charter. Additionally, the CI Fund may be
used to support capital costs, but not debt service or interfund loans, associated with park and
recreation improvements, including, but not limited to: cultural or civic improvements; natural
resources restoration; park and trail construction; and deferred maintenance related to any of these
activities. Generally, the projects shall provide a community–wide benefit for the City. The CI Fund
may not be used to support any operating costs of the City.
The City may only expend CI Fund assets pursuant to the following regulations:
Any such project must also be authorized as part of the CIP as adopted by the City Council
annually, or from time to time;
The City Council adopts a resolution stipulating the structure and terms of any interfund
loan, pursuant to Section 7.10 of the City Charter, originating from the Fund; and
The project meets or exceeds the requirements of other sections of this CI Fund Policy.
The Finance Director may authorize any transfers from the CI Fund to support park and recreation
improvements provided the amount does not exceed the amount authorized in the CIP and the
Fund’s Cash Flow Projection or violate other sections of this Manual.
The limitations imposed in the sections above do not apply to reasonable expenditures necessary
for the administration of the CI Fund. Additionally, it may be used for emergency and disaster
purchases consistent with the Purchasing Policy of this Manual, and Section 6.06 of the Charter.
Debt Service
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The Fund may be used to support the payment of debt service (i.e., bonds) for qualifying capital
costs, subject to the following limitations:
• The total annual debt service payments do not exceed more than 50% of the ensuing years’
eligible and available revenues as defined below; and
• Available revenue consists of total revenue derived from the aforementioned eligible
revenues and funding sources, less any amount allocated for the accumulation of a
Minimum Fund Balance.
Minimum Fund Balance
The Minimum Fund Balance must be estimated on a 10–year horizon. In order to accumulate a
minimum fund balance and maintain the long–term solvency of the Fund, the Minimum Fund
Balance will be as follows:
• During Fiscal Year 2019 through 2022, the Fund shall maintain a Minimum Fund Balance of
$300,000;
• During Fiscal Year 2023 through 2025, the Fund shall maintain a Minimum Fund Balance of
$500,000; and
• Beginning in Fiscal Year 2026, and for all years thereafter, the Fund shall maintain a
Minimum Fund Balance of $1,000,000.
Administrative Considerations
All agreements, applications, permits or other documents required under this CI Fund Policy shall
be provided in a form(s) as determined by the City Manager or their designee.
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Debt Management
Debt Management Policy
One of the keys to sound financial management is the development of a Debt Management Policy.
This need is recognized by bond rating agencies and development of a debt policy is a
recommended practice of the GFOA. A debt policy establishes the parameters for issuing debt and
managing the debt portfolio. It provides guidance to the administration regarding purposes for
which debt may be issued, types and amounts of permissible debt and method of sale that may
be used. It helps ensure fiscal responsibility and promotes financial sustainability. The following
Debt Management Policy is intended to demonstrate a commitment to long–term financial
planning in conjunction with the CIP for the City.
Debt Issuance Guidelines
The City will confine long–term borrowing to capital improvements, or projects that have a useful
economic life of more than five years and cannot be financed from current revenues. As a general
rule, the City will not use debt or similar financial instruments to acquire machinery and/or capital
equipment, except for as part of the expansion or construction of a City facility. For the purpose of
this Debt Management Policy, current revenues are defined to include that portion of fund balance
in excess of appropriate required reserves and designations.
The City will endeavor to keep the total maturity length of general obligation bonds at or below 20
years and at least 50% of the principal shall be retired within 10 years. In all cases, the maturity
shall be shorter than the useful life of the related asset(s).
The City will prepare annually a five–year CIP, which will be approved by the City Council. The CIP
will include an analysis of the City’s infrastructure and other capital needs, and their corresponding
financial impact and any associated debt service. The City will not issue any long–term debt to
support operating activities nor will it consider debt issuance outside of the adopted CIP, except in
the case of a financial emergency consistent with the definition and processes outlined in Chapter
7 of the Charter.
The City will analyze each project and the proposed debt financing to determine the tax impact
and future operating costs associated with the project and related debt issuance costs. The City
Council shall authorize, approve and appropriate all debt related proceeds.
The City will plan bond issues to minimize the frequency of issuance to ensure the lowest possible
costs of issuance and administrative/compliance costs. When determining the size of a bond issue,
the City will consider the need for construction, debt service and capitalized interest funds. The City
will prepare construction fund draw schedules in conjunction with CIP planning.
The City’s preferred method of sale of bonds is via competitive sale to underwriters; however, the
City may sell bonds via a negotiated sale, private placement, or other method if deemed
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advantageous. The City shall on all occasions comply with the requirements of Minnesota statutes,
Chapter 475 with respect to method of sale and the use of an independent municipal advisor.
Total net general obligation debt, which is generally defined as debt fully supported by property
taxes, will not exceed the statutory limit as required by Minnesota Statute § 475.53. The total debt
levy will not exceed 50% of the total property tax levy in any given year. Where possible and cost–
effective, the City will use revenue, including General Obligation backed revenue bonds, or other
self–supporting type bonds instead of General Obligation Bonds.
The City will maintain frequent and regular communications with bond rating agencies about its
financial condition and will follow a policy of full disclosure in every financial report and bond
prospectus. The City will comply with SEC reporting requirements.
Interfund borrowing for periods of more than one year shall only be undertaken for capital
expenditures. A reasonable payment schedule for repayment of the borrowed amounts and
enforceable covenants, established to ensure recourse if the schedule is not adhered to, shall be
approved by the City Council. Interest charges shall be included to compensate the originating
fund for the use of its financial resources. Interest charges for interfund loans utilizing tax
increment borrowing will follow Minnesota Statutes, Section 469.178, Subd. 7. For interfund
borrowing involving the CI Fund, please see the applicable section of this Manual.
Debt Issuance Types
The City may issue general obligation debt for capital or other properly approved projects. Where
possible and cost–effective, the City will use special assessment, revenue, or other self–supporting
bonds instead of General Obligation Bonds.
The City may issue revenue bonds to fund proprietary fund activities such as water, sanitary sewer
and storm water utilities as well as the municipal liquor store(s) or for other capital projects that
generate adequate revenues from user fees to support operations and debt service requirements.
The bonds will include written legal covenants, which require that revenue sources be adequate to
fund annual operating expenses and annual debt service requirements.
The City may issue tax increment bonds to fund public improvements or for economic
development (i.e., private). All Tax Increment Financing (TIF) proposals shall include a financial
impact analysis addressing the economic relationship of the proposed project to the City’s
estimated tax rates, service costs, and employment opportunities. If General Obligation TIF Bonds
are proposed, there shall be a review and opinion by the City’s Financial Advisor regarding
structuring the issue and the adequacy of the tax increments to retire the debt.
Capital leases may be used to purchase buildings, equipment, furniture and fixtures. The term of
any capital lease shall not exceed the useful life of the leased asset. Lease financing and master
lease obligations, including lease revenue bonds, may be considered as alternative financing
sources, consistent with the Charter.
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Refunding of Debt
The City will refund debt when it is in the best financial interest of the City to do so.
Debt Service Savings.When a current or advance refunding areundertaken to generate interest
rate cost savings, the minimum aggregate present value savings will be 3% of the refunded bond
principal amount. The present value savings will be net of all costs related to the financings.
Term of Refunding Issues. The City will refund bonds within the term of the originally issued
debt. However, the City may consider maturity extension, when necessary to achieve a desired
outcome, provided that such extension is legally permissible. The City also may consider shortening
the term of the originally issued debt to realize greater savings. The remaining useful life of the
financed project or facility should be considered in this decision.
Arbitrage.The City shall take all necessary steps to optimize escrows and to avoid negative
arbitrage in its refunding.
Private Activity or Conduit Bonds Policy
The City has been granted the power to issue private activity or conduit revenue bonds, and other conduit
revenue obligations, under Minnesota Statutes, § 469.152–469.165, as amended, and Minnesota
Statutes, Chapter 462C, as amended (Conduit Bonds Acts).
It is the judgment of the City Council that tax–exempt financing is to be used on a selective basis
to encourage certain development or project that offer a benefit to the City as a whole, including
significant employment and housing opportunities. It is the applicant’s responsibility to
demonstrate the benefit to the City, both in writing and at the required public hearings.
Although approval may have been granted by the City Council for the issuance of financing for a
similar project or a similar debt structure, it shall not be a basis upon which approval will be
granted. Each application will be judged on the merits of the project as it relates to the authorized
public purposes, the Conduit Bonds Acts, and the benefits to the City at the time of the request
for financing.
Criteria
The proposed project must be compatible with the overall development plans and objectives of the
City as outlined in the Comprehensive Plan or other duly adopted actions, resolutions and/or
ordinances of the City Council.
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, qualified housing or the
Property tax base of the City.
The project must not put an undue burden on existing City services or public utilities beyond that which
can be reasonably and economically accommodated, as determined by the City Engineer or their
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designee. Additionally, the applicant shall not place the City in competition with other jurisdictions or
political subdivisions for project financing.
Any and all bonding and bonding authority shall be available on a first–come, first–served basis,
assuming the applicant(s) in question meet the other criteria and procedures outlined in this section of
the Manual.
The applicant must have a good financial standing, show a substantial net worth, equity in the project,
or both, and have an acceptable earnings history or pro forma. Proposed projects are to show in the
application for financing an owner equity or other collateral (such as a Letter of Credit, 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. The applicant will also file with the City, if
requested, a final statement of total costs and project equity, certified to by an authorized officer or
partner, or the individual applicant, and said statement to be filed at time of requesting the final
resolution.
Debt will be considered sold in a private placement if 1) no advertising or solicitation of the general
public occurs, and 2) if the bonds are initially sold to not more than ten purchasers (not including any
underwriter or placement agent as a purchaser); and 3) the City receives written certification from
each initial purchaser (or each underwriter or placement agent based on its reasonable belief) that:
1) 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 2) such purchaser is not purchasing for
more than one account or with a view to distributing the debt.
ddition, for a private placement either 1) all bonds or notes (except for one bond or note) must
In a
always remain in minimum denominations of not less than $100,000, or (2) investment letters from
each initial purchaser, and from any subsequent purchaser, must be obtained and contain the above
described certifications from the purchasers. Any offering material for a private placement must
prominently state in effect that: “THE CITY OF FRIDLEY, MINNESOTA 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,” or such other language to the same force and effect mutually
agreeable to the borrower/obligated party and the City.
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, and the City as the issuer.
Applications for acquisition or replacement of machinery and equipment will be discouraged unless
in conjunction with a new business in the City, 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.
Procedures
The applicant shall make an application for financing on forms determined by the City Manager,
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or their designee. The completed application must be returned to the City, accompanied by the
processing fee as determined by the City, whereupon the application will be reviewed by staff for possible
consideration by the City Council. Specific findings shall be made and recited regarding the criteria as
well as satisfaction of public purposes of the Conduit Bonds Acts, of other applicable Federal
regulations and/or State statutes.
The applicant must select a qualified financial adviser or underwriter to assist the applicant in
preparing all necessary application documents and materials. Applications must include a signed
letter from a responsible financial institution indicating that the project is economically feasible
and viable, and stating that bonds can be successfully sold for the project or that an individual or
institution intends to purchase all of the bonds. Financial material submitted also include the most
recent fiscal year–end, audited financial statements of the applicant and/or of any major lessee tenant,
if readily available.
The applicant must receive approval from the appropriate State agencies, secure financing and
commence construction within one year of the date of the final resolution giving approval to the
project or the housing program. Upon application, the City Council may approve an extension of
the approval.
The applicant shall furnish along with the application, a description of the project, plat plan (if
needed), rendering of proposed buildings, and a brief description of the applicant, all in such form
as shall be required at the time of application. This data may be furnished to other staff, appropriate
consultants and members of the City Council.
The application shall not be considered complete until a review by the City regarding applicable
City Code requirements, including, but not limited to: building plans and platting issues; street and
traffic issues; zoning compliance; and public utility and drainage issues. The review shall consider
both existing and improved conditions of the proposed project. A failure to address these findings
and requirements, or failure to demonstrate a capability to reasonably remediate the same in a
timeline determined by the City, may result in the denial of the application.
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(s) and provide any
required application deposit as specified in Chapter 474A, without regard to whether the
application fee or application deposit will be refunded. If the City shall serve as a pass–through for
any such deposit refunds, it shall process the same in ten business days of receipt.
Administrative
The City Council reserves the right to deny any application for financing for any reason, and at any
stage of the proceedings, prior to adopting the final resolution authorizing issuance of the private
activity or conduit 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.
The City is to be reimbursed, and held harmless, for and from any “out–of–pocket” costs related to
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the actual or proposed issuance of bonds contemplated by this Manual. In addition, a non–
refundable processing fee as determined by the City’s Comprehensive Fee Schedule must be
submitted with the application. Upon closing, an Administrative Fee is due and payable to the City
based on the following schedule:
1/8 of 1% annually of the outstanding principal for the life of the bond issue; or
Up to 1% of the par amount of the bond.
Any costs incurred by the City will be recovered at the time of settlement or through scheduled
payments collected by the Fiscal Agent. Requesting organizations must pay for any City expenses
for Bond Counsel, Financial Advisor and any similar costs related to any financing, which shall be
in addition to the Administrative Fee. The Administrative Fee is to be paid from proceeds of the
Bonds or other sources on the date of issuance of the bonds or may be paid to the fiscal agent
with each debt service payment. The applicant will be responsible for all costs associated with post–
issuance compliance monitoring per this Manual, including the costs of the City in responding to
any Internal Revenue Service (IRS) or other legal inquiries regarding the tax–exempt status of the
bonds.
The applicant shall covenant in the applicable bond documents to comply with all applicable
requirements of the Internal Revenue Code of 1986, as amended (Code), and the applicable
Treasury Regulations, including, but not limited to:
The arbitrage and rebate requirements of Section 148 of the Code; and
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 private activity or conduit bonds
for compliance with such requirements and to remediate non–qualified 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, and all
other requirements outlined in the Post–Issuance Compliance Policy and Procedures of this
Manual.
The first $10,000,000 in bonding authority annually, the maximum allowed for designation as “bank
qualified,” will be reserved for City purposes. To preserve its bank qualification authority, the City
will only consider issuing these types conduit obligations when its needs have been fully
understood. Should the City exceed the bank qualified limit, the borrower in question must pay the
City the net present value between the bank qualified and non–bank qualified rates. The City’s
Financial Advisor shall provide this calculation, if needed.
All applications, supporting materials and documents shall remain the property of the City; and all
such materials may be subject to disclosure and/or public review under applicable provisions of
State law. Additionally, the applicant shall assist the City with any Minnesota Government Data
Practices Act request(s), including paying for any applicable compliance costs determined by the
City.
The Finance Department shall report any and all private activity or conduit debt issues in the Annual
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Comprehensive Financial Report in accordance with GAAP and shall report any material events with
regard to all debt issued by the City, and still outstanding, to the City Council.
Post–Issuance Debt Compliance Policy
The City Council has chosen, by policy, to take steps to help ensure that all obligations will follow
all applicable federal regulations. This Post–Issuance Debt Compliance Policy may be amended, as
necessary.
The IRS is responsible for enforcing compliance with the Internal Revenue Code (Code) and
regulations promulgated thereunder (Treasury Regulations) governing certain obligations (e.g.,
tax-exempt obligations, Build America Bonds, Recovery Zone Development Bonds and various Tax
Credit Bonds). The IRS encourages issuers and beneficiaries of these obligations to adopt and
implement a post–issuance debt compliance policy and procedures to safeguard against post–
issuance violations.
Post–Issuance Debt Compliance
The City desires to monitor these obligations to ensure compliance with the Code and Treasury
Regulations. To help ensure compliance, the City has developed the following Post–Issuance Debt
Compliance Policy. The Post–Issuance Debt Compliance Policy shall apply to the obligations
mentioned above, including bonds, notes, loans, lease purchase contracts, lines of credit,
commercial paper or any other form of debt that is subject to compliance. The Finance Director is
designated as the City’s agent who is responsible for post–issuance compliance of these
obligations.
The Finance Director shall assemble all relevant documentation, records and activities required to
ensure post–issuance debt compliance as further detailed in corresponding procedures. At a
minimum, the Post–Issuance Debt Compliance Procedures for each qualifying obligation will
address the following:
General post–issuance compliance;
Proper and timely use of obligation proceeds and obligation-financed property;
Arbitrage yield restriction and rebate;
Timely filings and other general requirements;
Additional undertakings or activities that support the items listed above;
Continuing Disclosure Obligations;
Maintenance of proper records related to the obligations and the investment of proceeds
of obligations; and
Other requirements that become necessary in the future.
The Finance Director shall apply the Post–Issuance Debt Compliance Procedures to each
qualifying obligation and maintain a record of the results. Further, the Finance Director will ensure
that the Post–Issuance Debt Compliance Policy and Procedures are updated on a regular and as
needed basis.
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The Finance Director, or any other individuals responsible for assisting the Finance Director in
maintaining records needed to ensure post–issuance debt compliance, are authorized to expend
funds as needed to attend training or secure use of other educational resources for ensuring
compliance such as consulting, publications, and compliance assistance.
Most of the provisions of this Post–Issuance Debt Compliance Policy are not applicable to taxable
governmental obligations unless there is a reasonable possibility that the City may refund their
taxable governmental obligation, in whole or in part, with the proceeds of a tax–exempt
governmental obligation. If this refunding possibility exists, then the Finance Director shall treat
the taxable governmental obligation as if such issue were an issue of tax–exempt governmental
obligations and comply with the requirements of this Post–Issuance Debt Compliance Policy.
Private Activity or Conduit Bonds
The City may issue tax–exempt obligations that are qualified “private activity” bonds because
either (1) the bonds finance a facility that is owned by the City but used by one or more qualified
501(c)(3) organizations, or (2) the bonds are so-called “conduit bonds”, where the proceeds are
loaned to a qualified 501(c)(3) organization or another private entity that finances activities eligible
for tax-exempt financing under federal law, such as certain manufacturing projects and certain
affordable housing projects. Prior to the issuance of either of these types of bonds, the Finance
Director shall take steps necessary to ensure that such obligations will remain in compliance with
the requirements of this Post–Issuance Debt Compliance Policy.
In a case where compliance activities are reasonably within the control of a private party (i.e., a
501(c)(3) organization or conduit borrower), the Finance Director may determine that all or some
portion of compliance responsibilities described in this Post–Issuance Debt Compliance Policy
shall be assigned to the relevant party. In the case of conduit bonds, the conduit borrower will
be assigned all compliance responsibilities other than those required to be undertaken by the City
under federal law. In a case where the Finance Director is concerned about the compliance ability
of a private party, the Finance Director may require that a trustee or other independent third party
be retained to assist with record keeping for the obligation and/or that the trustee or such third
party be responsible for all or some portion of the compliance responsibilities.
The Finance Director is additionally authorized to seek the advice, as necessary, of bond counsel
and/or its financial advisor to ensure the City follows this Post–Issuance Debt Compliance Policy.
For additional information regarding other private activity bonds, please see the Private Activity
or Conduits Bonds Policy section of this Manual.
Post–Issuance Debt Compliance Procedures
The Post–Issuance Debt Compliance Policy applies to qualifying debt obligations issued by the
City. As directed by the adoption of the Post–Issuance Debt Compliance Policy, the Finance
Director of the City will perform the following Post–Issuance Debt Compliance Procedures for all
of the City’s outstanding debt.
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General Post-Issuance Compliance
These procedures provide written regulations when more than one party is responsible for
ensuring compliance. These procedures also ensure training and/or educational resources for
post–issuance compliance have been approved and obtained.
The Finance Director understands that there are options for voluntarily correcting failures to
comply with post–issuance compliance requirements, such as remedial actions under Section
1.141-12 of the Treasury Regulations and the ability to enter into a closing agreement under the
Tax–Exempt Bonds Voluntary Closing Agreement Program described in Notice 2008-31 (VCAP
Program).
General Recordkeeping
The responsible parties shall retain records and documents for the obligation and all obligations
issued to refund the obligation for a period of at least seven years following the final payment of
the obligation (or if such obligation is refunded, the final payment of the refunding bond) unless
otherwise directed by the City’s bond counsel.
The responsible parties shall also retain both paper and electronic versions of records and
documents for the obligation. General records and documentation to be assembled and retained:
Description of the purpose of the obligation (referred to as the project) and the State
statute authorizing the project;
Record of tax–exempt status or revocation of tax–exempt status, if applicable;
Any correspondence between the City and the IRS;
Audited financial statements;
Bond transcripts, official statements, and other offering documents of the obligation;
Minutes and resolutions authorizing the issuance of the obligation;
Certifications of the issue price of the obligation;
Any formal elections for the obligation (i.e., election to employ an accounting
methodology other than the specific tracing method);
Appraisals, demand surveys, or feasibility studies for property financed by the obligation;
Documents related to governmental grants, associated with construction, renovation or
purchase of property financed with the obligation; and
Reports of any prior IRS examinations of the City or the City’s obligation.
Arbitrage Yield Restriction and Rebate Recordkeeping
The following investment and arbitrage documentation shall be assembled and retained.
An accounting of all deposits, expenditures, interest income and asset balances associated
with each fund established in connection with the obligation. This includes an accounting
of all monies deposited into the Debt Service Account to make debt service payments on
the obligation, regardless of the source derived.
Statements prepared by Trustee or Investment Provider.
Documentation of at least quarterly allocations of investments and investment earnings to
each obligation (i.e., un–commingling analysis).
Documentation for investments made with obligation proceeds, such as:
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o Investment contracts (i.e., guaranteed investment contracts);
o Credit enhancement transactions (i.e. bond insurance contracts);
o Financial derivatives (i.e., swaps, caps);
o Bidding of financial products (i.e., investments acquired with obligation proceeds
are purchased at fair market value); and
Three bids for open market securities needed in advance refunding
escrows).
Computations of the arbitrage yield.
Computations of yield restriction and rebate amounts including but not limited to:
o Compliance in meeting the “Temporary Period from Yield Restriction Exception”
and limiting the investment of funds after the temporary period expires;
o Compliance in meeting the “Rebate Exception;”
Qualifying for the “Small Issuer Exception;”
Qualifying for a “Spending Exception;”
6–Month Spending Exception;
18–Month Spending Exception;
24–Month Spending Exception;
Qualifying for the “Bona Fide Debt Service Fund Exception;” and
Quantifying arbitrage on all funds established in connection with the
obligation in lieu of satisfying arbitrage exceptions, including Reserve
Funds and Debt Service Funds.
Computations of yield restriction and rebate payments.
Timely Tax Form 8038–T filing, if applicable.
o Remit any arbitrage liability associated with the obligation to the IRS at each five
year anniversary date of the obligation, and the date in which the obligation is no
longer outstanding (redemption or maturity date), whichever comes sooner, within
60 days of said date.
Timely Tax Form 8038–R filing, if applicable.
Procedures or guidelines for monitoring instances where compliance with applicable yield
restriction requirements depends on subsequent reinvestment of obligation proceeds in
lower yielding investments (e.g., reinvestment in zero coupon SLGS).
Expenditure and Asset Documentation to be Assembled and Retained
Documentation of allocations of obligation proceeds to expenditures (i.e., allocation of proceeds
to expenditures for the construction, renovation or purchase of facilities owned and used in the
performance of exempt purposes).
Such allocation will be done not later than the earlier of:
o 18 months after the later of the date the expenditure is paid, or the date the project,
if any, that is financed by the tax–exempt bond issue is placed in service; or
o 60 days after the earlier of the fifth anniversary of the issue date of the tax–exempt
bond issue, or the date 60 days after the retirement of the tax–exempt bond issue.
Documentation of allocations of obligation proceeds to issuance costs.
Copies of requisitions, draw schedules, draw requests, invoices, bills, and cancelled checks
related to obligation proceed expenditures during the construction period.
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Copies of all contracts entered into for the construction, renovation or purchase of facilities
financed with obligation proceeds.
Records of expenditure reimbursements incurred prior to issuing bonds for facilities
financed with obligation proceeds (i.e., Declaration of Official Intent/Reimbursement
Resolutions including all modifications).
List of all facilities and equipment financed with obligation proceeds.
Depreciation schedules for depreciable property financed with obligation proceeds.
Documentation that tracks the purchase and sale of assets financed with obligation
proceeds.
Documentation of timely payment of principal and interest payments on the obligation.
Tracking of all issue proceeds and the transfer of proceeds into the debt service fund as
appropriate.
Documentation that excess earnings from a Reserve Fund is transferred to the Debt Service
Fund on an annual basis. Excess earnings are balances in a Reserve Fund that exceed the
Reserve Fund requirement.
Miscellaneous Documentation to be Assembled and Retained
Ensure that the project, while the obligation is outstanding, will avoid IRS private activity concerns.
The Finance Director shall monitor the use of all obligation–financed facilities in order to:
determine whether private business uses of obligation–financed facilities have exceeded
the de minimus limits set forth in Section 141(b) of the Code as a result of sale of the
facilities (including sale of capacity rights, leases and subleases of facilities, including
easements or use arrangements for areas outside the four walls, (e.g., hosting of cell phone
towers), leasehold improvement contracts, licenses, management contracts in which the
City authorizes a third party to operate a facility, (e.g., cafeteria), research contracts,
preference arrangements (in which the City permits a third party preference, such as
parking in a public parking lot), joint ventures, limited liability companies or partnership
arrangements, output contracts or other contracts for use of utility facilities (including
contracts with large utility users), development agreements which provide for guaranteed
payments or property values from a developer, grants or loans made to private entities
(including special assessment agreements), naming rights agreements, or other
arrangements that provide special legal entitlements to nongovernmental persons; and
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 obligation-financed facilities.
The Finance Director shall provide training and educational resources to any City staff that
have the primary responsibility for the operation, maintenance, or inspection of
obligation–financed facilities with regard to the limitations on the private business use of
obligation–financed facilities and as to the limitations on the private security or payments
with respect to obligation–financed facilities.
The Finance Director shall undertake the following with respect to the obligations:
o An annual review of the books and records maintained by the City with respect to
such obligations; and
o An annual physical inspection of the facilities financed with the proceeds of such
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obligations, conducted by the Finance Director with the assistance of any City staff
who have the primary responsibility for the operation, maintenance, or inspection
of such obligation–financed facilities.
Changes in the project that impact the terms or commitments of the obligation are
properly documented and necessary certificates or opinions are on file.
Additional Undertakings and Activities that Support Above Sections
The Finance Director will notify the City’s Bond Counsel, Financial Advisor and arbitrage provider
of any survey or inquiry by the IRS immediately upon receipt (usually responses to IRS inquiries are
due within 21 days of receipt). Such IRS responses require the review of the above–mentioned data
and must be in writing. As much time as possible is helpful in preparing the response).
The Finance Director will consult with the City’s Bond Counsel, Financial Advisor and arbitrage
provider before engaging in post–issuance credit enhancement transactions (i.e., bond insurance,
letter of credit, or hedging transactions).
The Finance Director will monitor all “qualified tax–exempt debt obligations” within the first
calendar year to determine if the limit is exceeded, and if exceeded, will address accordingly. For
tax–exempt debt obligations issued during years 2009 and 2010, the limit is $30,000,000. (The limit
was $10,000,000 prior to 2009. In 2011 and thereafter, it will remain at $10,000,000 unless changed
by the Federal government). During this period, the limit also applies to pooled financings of the
governing body and provides a separate $30,000,000 for each 501 (c)(3) conduit borrower(s).
Comply with Continuing Disclosure Requirements
If applicable, the timely filing of annual information agreed to in the Continuing Disclosure
Certificate; or give notice of any Material Event, as required within the SEC Rule 15c2-12, as
amended. Identify any post–issuance change to terms of bonds which could be a “reissuance”
under applicable Treasury regulations.
The Finance Director will consult with the City’s Bond Counsel prior to any sale, transfer, change
in use or change in users of obligation-financed property, which may require “remedial action”
under applicable Treasury Regulations or resolution pursuant to the VCAP Program. A remedial
action has the effect of curing a deliberate action taken by the City that results in satisfaction of
the private business test or private loan test. Remedial actions under Section 1.141-12(d)(e) and
(f) include the redemption of non–qualified bonds and alternative uses of proceeds or the facility
(i.e. use for a qualified purpose instead).
The Finance Director will ensure that the appropriate tax form for federal subsidy payments is
prepared and filed in a timely fashion for applicable obligations (i.e. Build America Bonds).
Compliance with Future Requirements
The responsible parties shall take measures to comply with any future requirements issued beyond
the date of these Post–Issuance Debt Compliance Procedures, which are essential to ensuring
compliance with the applicable state and federal regulations.
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Procurement
To ensure that all City expenditures are lawful, the City shall:
Maintain strict compliance with applicable Federal regulations, State laws, and City
ordinances and Charter provisions; and
Establish procedures to protect the City from undue liability or other concerns.
Additionally, this section of this Manual outlines the proper procedures for procurement and
supersedes all previous policies and practices concerning the purchase of goods and/or services
by the City.
Purchasing Policy
This section of the Manual shall meet the following objectives:
To ensure that tax and rate payer supported expenditures provide for cost–effective and
efficient acquisition of goods and services;
To establish uniform procurement processes for all staff and all departments;
To ensure City expenditures are appropriately classified in the City’s financial records; and
To follow Minnesota Statute § 471.345 as it relates to the purchase of supplies, materials,
equipment, or the rental thereof, or the construction, alteration, repair, or maintenance of
real or personal property.
Responsibility
Pursuant to Section 6.05 of the Charter, the City Manager shall be the Chief Purchasing Agent of
the City. In that capacity, the City Manager may establish such policies and procedures to make
purchases on behalf of the City and its component units. The administration, review and supervision
of such purchasing shall be delegated to the Finance Director generally and the respective
Department Director specifically, unless authorized elsewhere in this Manual.
The City has a decentralized purchasing system whereby individual departments are responsible
for making their own purchases. Exceptions including the following types of purchases.
Technology (e.g., hardware, software) must be approved by the Information Technology
Division Manager;
Vehicles and major equipment must be approved by the Fleet Services Manager; and
Building maintenance and improvements must be approved by the Facilities Manager.
The City will purchase supplies, equipment, and services best suited to the specific needs of the
City in as economical a means as possible, including:
The City will purchase EnergyStar certified equipment and appliances if possible;
The City will purchase paper containing at least 30% post–consumer recycled content, if
possible; and
The City will purchase recyclable or compostable consumable goods when feasible.
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The City will promote fair competition among bidders and will comply with all statues and
regulations of the City, State, and Federal government that may pertain to the purchase of supplies,
equipment, and services by a municipal entity.
Purchase Orders
Purchase orders may be used for any purchase. In instances where purchase orders are used, the
following procedures are set forth:
The vendor name, mailing address and contact information is required;
A sufficient description and exact quantities of the respective purchase;
A calculation of total cost, including applicable tax, shipping and handling charges;
In the instance where exact costs are unknown, an estimate is acceptable;
In the instance where quotes are required, they must be attached;
The source of funding and applicable expenditure code for the respective purchase; and
The purchase order shall be completed and signed prior to the respective purchase.
All purchases requiring a purchase order must be procured in writing. All contracts and similar
agreements are subject to review by the City Attorney, City Manager and/or Finance Director.
Uniform Municipal Contracting Law
The City will follow procedures as set forth in Minnesota Statute § 471.345. Purchases should not
be separated into smaller components in order to eliminate an authorization threshold
requirement. Labor and materials may be separated to properly calculate sales and use tax.
For the purchase of supplies, materials or equipment estimated to exceed $25,000, the City must
consider the availability, price, and quality of the supplies, materials, or equipment available
through the State of Minnesota’s cooperative purchasing venture (CPV), or another approved CPV,
before purchasing through another source. The Finance Department will maintain a list of
approved CPVs.
Purchases up to $25,000.If the amount of the purchase isnot estimated to exceed $25,000, the
purchase may be made by either obtaining bids, quotes, through a CPV with another government
entity or consortium or simply buying the item on the open market. If the City chooses to obtain
quotes, it must, as far as practicable, obtain at least two quotes and keep them on file for at least
one year after their receipt. If the City decides to solicit sealed bids, requirements of the bidding
process must be followed and cannot change the process midway through.
Purchases over $25,000 and up to $174,999. If the amount of the purchase is estimated to exceed
$25,000 but not to exceed $174,999, the purchase may be made either through a CPV with another
government entity or consortium or upon sealed bids, by obtaining two or more quotations for
the purchase when possible, and without advertising for bids. Products or services quoted shall be
the same or similar and of comparable quality from each vendor. The City must consider the
availability, price and quantity of supplies, materials or equipment available through the state’s CPV
before purchasing from another source. All quotations obtained shall be kept on file for a period
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of at least one year after their receipt.
Purchases $175,000 and Above. If the amount of the purchase is estimated to exceed $175,000,
sealed bids shall be solicited by public notice in the manner and subject to the requirements of the
law governing purchases by the City. The City must consider the availability, price and quality of
supplies, materials or equipment available through the state’s cooperative purchasing venture
before purchasing from another source. If an approved CPV is in place, bids are not needed. All
bids obtained shall be kept on file for a period of at least one year after their receipt.
State law defines what types of agreements amount to a “contract” for purposes of applicability of
the uniform municipal contracting law and provides cities the option to use the “best value
alternative” or “construction manager at risk alternative” for certain types of contracts, including
those for construction, alteration, repair, or maintenance work.
The various requirements of the competitive bidding process are beyond the scope of this Manual,
and departments meeting this threshold should consult the Finance Department before beginning
the purchasing process.
Professional Services.Contracting for professional services, such as those provided by engineers,
lawyers, architects, accountants, and other services requiring technical, scientific, or other
professional training, when competitive bidding is not required, shall be the primary responsibility
of the Department, with purchasing oversight by the Finance Director and in compliance with this
Manual.
Federal Grant ProgramsPurchasing Guidelines
For purchases under Federal grant programs, two written quotes are needed for purchases greater
than $10,000. Multiple price or rate quotations must be obtained from an adequate number of
qualified sources (i.e., two or more) for purchases greater than this micro–purchase threshold (2
CFR 200.320(b)). Purchasers should familiarize themselves with requirements of purchases made
under grant programs prior to any expenditures (e.g., Davis–Bacon Act, Buy American Provisions)
and contact the Finance Department with any questions
For all contracts for goods or services above the small purchase threshold, the City should
document its review of the excluded parties list (see https://www.sam.gov) to ensure that certain
parties, suspended and/or debarred or otherwise excluded or ineligible contractors are not
contracted with when using federal or state funds.(2 CFR 200.213). Contractors that apply or bid
for an award exceeding $100,000 must file the certification required by the Byrd Anti–Lobbying
Amendment (31 U.S.C. 1352).
All purchases for construction projects using federal dollars in excess of $2,000 are required to
follow the Davis–Bacon Act and related federal regulations concerning labor standards applicable
to federally financed contractors.
The process should ensure fair and open competition and include affirmative steps to assure that
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minority businesses, women’s enterprises and other disadvantaged businesses are solicited and
used whenever possible (CFR 200.321).
Exceptions
The City may contract for the purchase of supplies, materialsor equipment without regard to the
competitive bidding requirements of this Purchasing Policy if the purchase is through the State of
Minnesota’s CPV, a national municipal association’s purchasing alliance or cooperative created by
a joint powers agreement that purchases items from more than one source on the basis of
competitive bids or competitive quotations. The Finance Director shall approve and maintain a list
of authorized CPVs.
Other exceptions may include: professional services, insurance contracts, purchases from other
government agencies, real estate, sole source vendors and others as defined by Minnesota Statute
§ 471.345.
Best Value Alternative. Minnesota Statute § 412.311 allows the City to use a “Best Value”
alternative instead of awarding the bid to the lowest responsible bidder. The various requirements
of the Best Value Alternative process are beyond the scope of this Manual, and departments
interested in this approach should consult the Finance Department before beginning the
purchasing process. Staff interested in this purchasing alternative must receive appropriate
training, as determined by the Finance Director.
Authorization and Compliance
Per Section 6.05 of the Charter, “All purchases on behalf of the City shall be made and all contracts
shall be let by the City Manager, or the City Manager’s designee(s), provided the City Council has
appropriated sums necessary for the contract or purchase, and the amount of the purchase or
contract does not exceed that required for competitive bids as established by state statute. Except
for those purchase or contracts subject to the authority of the City Manager as set forth herein, all
bonds, contracts, conveyances, real estate purchases and sale agreements, and similar instruments
shall be approved by the City Council and signed by the Mayor and City Manager, or the City
Manager’s designee(s), and shall be executed in the name of the City.”
The City Manager, or their designee, may authorize routine expenditures that are already
specifically adopted and identified by the annual budget (e.g., large equipment replacement),
assuming those expenditures do not exceed the authorized amount appropriated by the budget.
The following table outlines the various thresholds and the authority level required for all purchases
regardless of the type (e.g., capital improvement, professional service).
Initial Approval
Purchase Amount Budgeted UnbudgetedFinal Approval
Up to $9,999 Division Manager Department Director Department Director
$10,000 to $24,999 Division Manager Finance Director Department Director
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$25,000 to $174,999Department Director Finance Director City Manager
$175,000 or greater Department Director City Manager City Council
Any purchase or project using sealed bids shall be presented to the City Council for review and
approval if it exceeds $175,000; no project activities may commence until after such approval. Upon
approval, the respective Department Director may authorized applicable expenditures related to
the approved bid or contract without regard for the thresholds listed in the above table, assuming
such approval would not exceed the value of the bid or contract, or exceed the budget authorized
by the City Council. In both of those situations, the thresholds outlined in this Manual shall apply.
In the event of a change order that increases the total cost of the purchase, the thresholds listed
immediately above shall also apply, assuming the amount may be accommodated through existing
budget authority or by a budget revision outlined in the CIP Policy of this Manual. The City Council
must also approve any negative changes order exceeding $175,000.
Any procurement transaction made on behalf of the City that is not in compliance with the
established policies and procedures shall be deemed unauthorized. Employee reimbursement may
be required for any purchases not in compliance with this policy, pursuant to Section 7.06 of the
Charter.
Payment Procedures
In accordance with Minnesota Statute § 471.425, the City has 35 days from receipt of the invoice
to process payment. If an invoice is incorrect in any way, the City must notify the vendor within 10
days of the date of receipt. Department Directors should notify the Finance Department promptly
of any invoices in dispute and the dispute should be documented on the invoice or with a
memorandum accompanying the invoice.
The respective Department Director shall assign specific staff to provide the appropriate account
codes to ensure the accurate recording of expenditures in the City’s financial systems. As outlined
above, the applicable Division Manager shall approve any purchases less than $25,000, while the
applicable Department Director shall approve any purchases greater than or equal to $25,000. The
respective party will be responsible for both the accurate recording and lawful nature of the
purchase in question.
Certain routine transactions as defined by the Finance Director are excluded from Department
Director and/or City Manager review and approval. Such transactions may include but are not
limited to: salaries and wages; health insurance and similar benefit premiums; property and
casualty insurance premiums; utility payments; and applicable taxes.
All payments shall be summarized within a Claims List as required by the City Charter and
Minnesota Statute § 412.271, which will be presented to the City Council at their regularly
scheduled meetings. Once the Claims List has been approved by the City Council, the Finance
Department will release payment(s) to the vendor.
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In some instances, payments may need to be released prior to City Council approval. Such
payments will be authorized at the discretion of the Finance Director and will be presented to the
City Council within the Claims List at the next scheduled regular City Council meeting. The Finance
Director may issue checks or other forms of payment for the following types of claims without prior
City Council approval:
Salaries of regular employees;
Overtime of regular employees, if approved by the respective Department Director;
Salaries of temporary employees, if approved by the respective Department Director;
Health insurance and similar benefits authorized by the City Council;
Utility bills or invoices for regular City operations;
Construction permits and escrows;
Early payment discounts and to avoid fees and penalties;
Property and casualty insurance payments;
Payments to the City (i.e., one fund to another fund);
Petty cash items up to $20;
Flat rate monthly auto allowances;
Postage, postage due or cash–on–delivery items;
Advances to employees for the cost of attending out–of–state conferences, not to exceed
$500;
Registration and other expenses for local conferences;
Reimbursement to an employee for clothing allowance;
Claims approved by the City Council as a separate agenda item (e.g., bids, contracts,
estimates);
Fixed charges that have been previously incurred (e.g., rent payments, payments on bonds,
contracts for deeds);
Investments and investment related expenditures and transfers;
Payroll taxes and other liabilities withheld from employees’ wages, and the corresponding
City paid benefits;
Contracted inspectors that maintain an agreement with the City;
Softball, basketball, and other sporting officials contracted for park and recreation activities;
Refunds of deposits and escrows being held by the City; and
Other reasonable transactions to affect the proper function of the City.
Conflicts of Interest
Employees are required to provide notice to the Finance Director of any conflicts of interest prior
to entering into transactions on behalf of the City. No employee, officer, or agent may participate
in the selection, award, or administration of a contract supported by a Federal award if they have
a real or apparent conflict of interest. Such a conflict of interest would arise when the employee,
officer, or agent, any member of his or her immediately family, their partner, or an organization
that employs or is about to employ any of the parties indicated herein, has financial or other
interest in or a tangible personal benefit from a firm considered for a contract (Minnesota Statute
§ 471.87 – § 471.88).
No purchase orders, contracts or service agreements shall be given to an employee of the City
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or to a partnership or corporation of which an employee is a major stockholder or principal.
No employee shall enter into the relationship with a vendor where the employee’s actions are,
or could reasonably be views as, not in the best interest of the City. If any employee becomes
involved in a possible conflict of interest, the employee shall disclose the nature of the possible
conflict to his or her supervisor and to the Finance Director. The Finance Director will promptly
notify the individual in writing of an approval or disapproval of the activity. If disapproved, the
employee shall remove themselves from the conflict situation.
Acceptance of Gifts and Gratuities
No member of the City Council, official or employee may accept any gift or gratuity in any size
under circumstances in which it could be reasonably thought to influence the performance of their
official duties or appears to be a reward for any official action of their part. Employees responsible
for making purchasing decisions for the City may not accept, directly or indirectly, any gifts, favors,
privileges, or employment from current or prospective City vendors.
Emergency Procurement
Under the Emergency Management Act (Minnesota Statute § 12.37, Act), the City has the authority
to make purchases or enter into contracts during emergencies without following many of the
normally required procedures. The Emergency Management Act defines an “emergency” as an
unforeseen combination of circumstances that calls for immediate action to prevent a “disaster”
from developing or occurring.
The Act defines a “disaster” as a situation that creates an actual or imminent serious threat to the
health and safety of persons, or a situation that has resulted or is likely to result in catastrophic loss
to property or the environment, and for which traditional sources of relief and assistance within
the affected area are unable to repair or prevent injury or loss.
In the event of an emergency or disaster, the City Council has granted authority to the City
Manager, or their designee, to make emergency purchases. At the next regular scheduled City
Council meeting, the City Council will approve the respective purchase(s) via a resolution declaring
the emergency and describing the reasons necessitating the immediate action for protection of
the health, safety or welfare of its citizens. All such expenditures shall be consistent with by Section
7.08 of the Charter
If practicable, the Department Director and/or City Manager should consult the City Attorney and
Finance Director prior to any expenditures under the Emergency Management Act, if possible.
Sole Source Procurement
Sole source purchases may be made if they comply with at least one of the following:
Items or services under patent or copyright held by a single vendor and item or service
possesses or has capabilities critical to use;
Item or service possesses a unique function or capability critical in the use of the item or
service and not available from any other sources;
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The purchase is for equipment associated with use of existing equipment where
compatibility is essential for integrity of results;
The purchase is for replacement parts needed for repair of existing equipment where
compatibility with equipment from the original manufacturer is paramount;
The purchase is for accessories sought for enhancement of existing equipment where
compatibility with equipment from the original manufacturer is paramount;
The purchase is for technical services associated with the assembly, development,
installation, or servicing of equipment of a highly technical or specialized nature;
Additional item, service, or work required, but not known to have been needed when the
original order was placed with vendor and it is not feasible or practicable to contract
separately for the additional need; and/or
The purchase is exclusively compatible with an existing piece or brand of equipment and is
only available from one vendor.
Sole source purchases must still follow the purchase process required based on the amount being
purchased. For example, if the purchase is expected to exceed $175,000, a competitive bidding
process must be followed even if the expectation is that only one bid will be received.
Bid Protest
The City recognizes the need to review and resolve complaints about its purchasing practices and
procedures and has adopted this procedure to provide for any complaints. Any actual or
prospective vendor or contractor who is reasonably aggrieved in connection with the solicitation
or award of the contract may protest to the Finance Director per the following procedure:
Each protest must be in writing and delivered by a certified letter to the Finance Director
within five business days of the City’s notice of award and must include:
o A notice of protest;
o A statement of facts and the reasons for the protest;
o All supporting documentation;
o Address all correspondence to: Bid Protest, Finance Director, City of Fridley 7071
University Avenue Northeast, Fridley, MN 55432.
As soon as a bid protest is received, all award activity will be suspended. The applicable
Department Director(s) will gather all relevant information about the solicitation,
evaluation, and award of the bid and provide it to the Finance Director within five business
days of being notified of the Bid Protest by the Finance Director.
The Finance Director, and any applicable staff, will review the information relevant to the
solicitation and will decide on the merits of the protest, in a prompt manner but not longer
than ten business days after the bid protest was received. The decision will be mailed to the
protestor at the address set forth in the bid protest. A copy of the decision will be posted
on the City website. All documentation concerning the bid protest and the decision will be
retained by the department subject to the protest.
An appeal of the Finance Director’s decision may be in writing and delivered by a certified
letter by the protestor to the City Manager within five business days of the release of the
decision and must include:
o A notice of an appeal;
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o A statement of the nature and the reasons for the appeal, including claimed errors;
o All supporting documents; and
o A deposit to cover the City’s cost for determining a bid protest will be made in the
form of a certified check payable to the City Treasurer, in an amount determined by
the Finance Director.
The City Manager will deliver the protest and all relevant information about the solicitation,
evaluation, and award of the bid to the City Attorney or designee.
A Hearing Date will be set by the City Attorney or designee for the appeal to commence,
which date should not be later than twenty business days from the notice of appeal. The
complainant will be presented with an opportunity to present their case to the City Attorney
or designee.
Upon the conclusion of the appeal, the City Attorney or designee will issue a decision within
twenty business days of the conclusion of the appeal. Staff will track all costs (e.g., wages,
expenses) spent in the appeals process. The total cost will be subtracted from the deposit.
Any remaining balance will be returned to the vendor. If the appeal is upheld, the total
deposit will be returned.
The Finance Director, in their sole discretion, may reject any unreasonable bid protest to prevent
the unnecessary delay in the contract award process or to avoid additional cost to the City.
Sales and Use Tax
As a local government, the City remains generally exempt from sales and use tax. As such, staff
should refrain from paying sales and use tax on official City transactions. The Finance Director, or
their designee, may approve payment of sales and use tax on a case–by–case basis (e.g., staff
reimbursement for an emergency expenditure).
Procurement Card Use Policy
Pursuant to Minnesota Statute § 471.382, the City may provide Procurement Cards (P–Cards) to
employees that demonstrate a business rationale, such as frequent travel or routine purchasing.
The City shall not issue a P–Card for merely for the personal convenience of an employee.
Authorization
Consistent with the delegated authority of the City Manager as the Chief Purchasing Agent, the
City may only provide P–Cards upon the request of the respective Department Director. All P–Cards
requests must be approved by the Finance Director prior to issuance. Only full–time or part–time
regular employees shall be issued P–Cards. All P–Cards shall maintain the following limits, unless
otherwise authorized by the Finance Director of their designee:
Transactions
Staff Level/PositionPer Total (Monthly) Approval
Non–Management$500 $3,000 Division Manager
Division Manager$1,000 $5,000 Department Director
Department Director $2,000 $10,000 City Manager
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City Manager $5,000 $25,000 Finance Director
Accounts Payable$10,000 $50,000 Finance Director
User Guidelines and Rules
Each card holder will be responsible for ensuring that purchases made with their card comply with
Minnesota Statutes, other sections of this Manual and this Procurement Card Use Policy.
All employees authorized to use a P–Card shall review and sign an acknowledgement of the P–
Card Use Policy and a P–Card User Agreement as provided by the financial institution issuing the
P–Card, which shall be retained by the Finance Department. The P–Card User Agreement must also
be signed by the applicable Department Director. The terms of the P–Card User Agreement are
considered a part of this Manual.
P–Card shall be issued in the individual employee’s name. The City shall not issue any generic or
department–wide P–Cards, nor may any individual possess more than one P–Card account, unless
otherwise authorized by the Finance Director. If the City issues a generic P–Card, it must be
assigned and held by a supervisor or manager. Additionally, the P–Card must be accompanied by
a log, which includes the staff using the card, the vendor name and a description of the purchase
included its estimated cost. The generic P–Card must be returned to the supervisor or manager
before being used for another transaction.
Employees that do not possess a P–Card shall not retain either physical possession of the P–Card
or electronic possession of the corresponding account information. All P–Card use must be
approved by the authorized P–Card holder prior to any transaction. Personal use of the City issued
P–Card is prohibited.
It is the P–Card holder’s responsibility to safeguard the P–Card (and corresponding account
information) and protect it from theft and unauthorized use, including, but not limited to:
Immediately reporting lost cards or unauthorized use to the P–Card company as well as to
the Finance Department;
Promptly returning expired P–Cards to the Finance Department for destruction;
Keeping the P–Card in a secure location;
Submitting the appropriate and requested documentation to support purchases and other
activity in a timely fashion;
Taking appropriate precautions when using the P–Card to make purchases; and
Returning P–Card to the Finance Director upon termination.
The Finance Director, in their sole determination, may revoke the P–Card for any reason. Improper
use of the City’s P–Card may result in disciplinary action, and cardholders may be held personally
responsible for unauthorized purchases, consistent with this Manual and the Charter.
Documentation
The billing statement from the P–Card issuer does not contain sufficient information to document
a purchase made. Appropriate documentation is required for all purchases to verify compliance
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with this and other City policies.
A copy of the invoice or receipt for payment must be included to verify the amount charged on
the P–Card. Receipts from vendors that only list the total charged are not considered sufficient
documentation. The receipt must identify all products or services purchased, shipping charges, and
sales tax. A printed confirmation of an internet purchase may be sufficient to comply with this
requirement. If an invoice is not immediately available, the invoice must be forwarded to the
Finance Department as soon as possible. In lieu of an invoice or receipt as described above, the
purchasers may sign an affidavit attesting to the purchase.
The City will not be responsible for any financing or interest charges accruing as a result of untimely
submission of P–Card receipts and transactions. In any instance where a product or service
purchased with a City issued P–Card is returned or canceled the transaction must be refunded to
the P–Card account.
Review and Payment
The P–Card holder should sign and approve the overall monthly statement that shall constitute
their approval of each individual charge or activity. The applicable supervisor shall review all aspects
of the invoice and verifying the validity of the expenditure. The P–Card holder and applicable
supervisor shall also be responsible for providing the account coding and description of purchase
so that expenditures are appropriately classified in the City’s financial records. The applicable
supervisor will authorize the expenditure for payment by including a date and signature or
electronic approval.
All P–Card statements will be reviewed by the Finance Department for compliance with this Manual
and to ensure accurate accounting. Additional documentation may be requested from a P–Card
user to ensure such compliance.
When granted, it is the P–Card user’s responsibility to submit documentation to the P–Card holder.
Ultimately, it is the P–Card holder’s responsibility to obtain documentation for all activity. When
charges relate to more than one person, the purpose of charges and names of attendees should
be noted on the statement.
The City will not use the P–Card account for carrying any debt. The City shall make payment for the
entire outstanding balance of the P–Cards and all P–Card purchases shall be made through the
City’s normal vendor payment process.
No employee of the City shall use the P–Card for cash advances or withdrawals. Under no
circumstances may P–Cards be used by non–City employees.
Individual Vendor Procurement or Credit Cards
The City has established charge accounts with a handful of vendors to expedite the purchasing
process with those respective vendors. These accounts may or may not have physical cards
accompanying them. All sections of this Procurement Card Use Policy are also attributable to the
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respective vendor charge accounts.
Travel, Trainingand ReimbursementPolicy
It is the purpose of this Travel and Training Policy to establish adequate internal controls to satisfy
IRS regulations, GSA guidelines, State laws, and to provide a guide to prescribe circumstances for
travel and training transactions, including reimbursements. This section of the Manual shall apply
to all employees.
Guidelines
Generally, the City should apply the following expectations and guidelines when considering travel
and training opportunities:
Whether the employee will be receiving training on issues or topics relevant to the City,
their specific job responsibilities, or reasonable promotional opportunity;
Whether the employee will be meeting or networking with elected officials and/or
government employees, both from Minnesota and other states, to exchange ideas on
topics relevant to the City;
Whether the employee will be viewing a facility or function that is similar in nature to one
that is currently operating at, or under consideration, by the City where the purpose for
the trip is to study the facility or function to return ideas for the consideration by the City;
Whether the employee has been specifically assigned by the City Council and/or City
Manager to visit another government agency for the purpose of establishing a goodwill
relationship, such as a “sister–city” relationship;
o “Sister–city” expenditures are not supported by any statutory authority and the City
shall only support such expenditure through donations or gifts by a third–party;
Whether the employee has been specifically assigned by the City Council and/or City
Manager to testify on behalf of the City at the United States Congress or to otherwise meet
with federal officials on behalf of the City; and
Whether the City has sufficient budget authority available to pay for the cost of the trip.
The City shall also consider the following guidelines upon review of any request for travel or
training expenditures:
Efforts should be made to limit the number of employees from a single department that
will attend a conference, institute, or training program to avoid excess expenditures;
Travel and training funds should be utilized in an efficient manner in order to benefit the
greatest number of employees possible;
A demonstration of making essential contacts and/or obtaining significant information that
is important to the improved operations and functions of City, and the respective
department is essential prior to travel authorization;
Out–of–state travel must be unquestionably professional in content and should be
requested only when a comparable conference cannot be found locally in the same
calendar year; and
Employees are expected to utilize the same car when incurring official expenses that a
prudent person would utilize if traveling on personal business.
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Authorization
Given the limited resources of the City to support travel and training expenditures, all suchcosts
should be included in an appropriate budget area prior to the travel or training and authorized
based on the below table. Additionally, no individual employee shall incur more than $5,000
annually of travel and training related expenditures, unless authorized by the City Manager.
AmountReviewApproval
Up to $1,999 Division Manager Department Director
$2,000 or more Department Director City Manager
All travel and training arrangements shall be approved by the party listed above at least 10 business
days prior to any such commitments and/or expenditures, whenever possible. The City Manager
and the respective Department Director shall approve all travel and training activities. The City
Manager shall review and approve all travel and training arrangements for all out–of–state travel.
Department Directors may be authorized work time for non–exempt employees for travel out–of–
area the day prior to, the day of, and the day following the convention or meeting date(s).
Travel Arrangements and Requirements
Employees shall travel using the most cost–effective and reasonable transportation alternatives.
The section below outlines the expectations for the most common forms of transportation. All
major travel and training expenditures must be made through a City–issued P–Card, unless
otherwise authorized by the Finance Director.
Commercial. Employees may travel in–state and out–of–area by commercial transportation when
authorized.
Air transportation shall be by coach class utilizing the advance reservation rates, when
possible;
Railroad accommodations shall be standard and shall include lower berth or roomette in
case of overnight travel; and
Bus transportation shall be reimbursed for the fare to and from the closest destination (i.e.,
bus stop) on the most direct route.
City or Personal Vehicle.When traveling in a City vehicle, employees should use a City assigned
P–Card for fuel expenses. Due to potential liability considerations, transportation of persons not
on official City business is prohibited in City Vehicles.
When personal automobiles are used as a mode of transportation for travel, reimbursement will
be reimbursed at the current IRS/GSA mileage reimbursement rate. Payment of mileage will be
based on the most direct route from their primary work location (e.g., City Hall, Public Works) to
the point of destination. The City is not responsible for damage to personal vehicles while on official
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business, as personal vehicles are not covered by the City’s insurance policies.
Rental Vehicle. Prior approval by the Department Director is required if it is necessary to rent a
vehicle at the travel destination. Pre–payment of a vehicle rental can be made using a P–Card. No
personal use of a rental vehicle shall be allowed.
Lodging.Hotel or motel accommodations should be appropriate to the purpose of the trip.
Lodging should be chosen based on reasonableness of cost and proximity to the conference,
meeting, or training site. Unless previously approved by the City Manager, overnight stays within
70 miles of the City will not be reimbursed. The City Manager, or their designee, shall approve the
use of any short–term rental options (e.g., “Airbnb,” “VRBO”).
Each employee shall be allowed an individual single room. Detailed lodging receipts must be
submitted for reimbursement as well as documentation for charges on a P–Card. The receipts must
include the nightly room rate and any incidental expenditures. Only incidental costs related to the
room charges will be reimbursed. Expenditures that are not deemed reasonable and necessary will
not be reimbursed (e.g., hotel room movies, health club fees, dry cleaning cost, personal item costs,
use of the “mini–bar”).
Business telephone calls and reasonable personal calls incurred during overnight stays are
reimbursable. When assigned, a City mobile device should be used for telephone calls.
The individual department will make all arrangements for lodging. The P–Card is the preferred
method of payment. Distance from employee lodgings will be considered in order to minimize
transportation costs. Employees will retain payment receipts to submit to the Finance Department
for reimbursement, if applicable.
International Travel. For domestic travel purposes, the IRS definition of the United States includes
the 50 states and the District of Columbia. The purpose of travel outside the United States for City
business must be unquestionably professional in content and should only be considered if a similar
meeting, conference, or training of similar quality cannot be found within the continental limits of
the United States. International travel expenses for business related purposes are deductible, as
outlined in the IRS Code Publication 463 (Travel Outside the United States) but may be limited if
the travel involves non–business activities. Any travel outside the United States must be approved
by the City Manager.
Meal and Incidental Expenditures
The City in principle does not pay for meals and/or refreshments for elected officials, employees,
the general public and/or vendors, and will use the utmost care as related to the expenditure of
public funds. Funds will not be expended for any purpose which is specifically forbidden by Federal
regulation, State law, City ordinances or polices. Expenditures made under this section shall be
approved, authorized and documented according to established procedures.
For same–day travel, training or business meetings, meals will be reimbursed for the actual amount
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spent and will require an itemized receipt. The use of a P–Card is encouraged, when possible. For
meals involving multiple individuals, the documentation provided for reimbursement or P–Card
documentation shall list all persons attending and participating in the meal(s). Additionally, the City
shall not reimburse any personal expenditures, such as meals, from any petty cash funds as required
by Minnesota Statute § 412.271.
The City will not reimburse or support the cost of any meals already provided as part of a
conference, meeting and/or training, unless the employee maintains a bona–fide dietary
restriction(s). The City may request documentation of any such restriction(s).
Expenditures associated with alcoholic beverages shall not be purchased with a P–Card or
reimbursed by the City, nor shall that City pay or reimburse for any activities associated with a
political party or similar political activities. For additional guidance and restrictions on meal and
related expenditures, please refer to the Public Purpose Expenditure Policy section of this Manual.
Per Diem. The per diem allowance is a daily payment for meals and related incidental expenses
when overnight travel accommodations are necessary, in accordance with published federal per
diem rates instead of receipt–based reimbursement. An employee may claim an amount not to
exceed the allowable per diem rate in accordance with the Standard Federal Per Diem Rate
Schedule (Schedule) in effect at the time of travel. A City assigned P–Card may not be used to pay
for meal and incidental expenditures when per diem is claimed. The per diem allowance is separate
from lodging, transportation and other miscellaneous expenses. The per diem allowance covers all
charges, including taxes and service charges where applicable for:
Meals. Expenditures for breakfast, lunch, dinner and snacks as well as corresponding tips
and taxes. For a City reimbursed meal, a tip shall not exceed 15%, and shall not be
permissible if gratuity is already included in the bill.
o In the event an approved training or conference event is more than one day in
duration, the maximum reimbursement will not exceed the daily per diem rates set
annually by the Schedule for meals and incidentals for the area.
Per IRS regulation, the first and last calendar day of travel is calculated at
75% (e.g., if the daily Per Diem is $50, then the days of travel are $37.50).
o When an event encompasses a full or partial day, employees may spend the daily
allowance among the applicable meals, at their discretion, unless meals are included
as part of the event registration. In that case, the funds allotted for that meal cannot
be used or reimbursed.
o For partial days, the meal allowance will not exceed the amounts set annually by the
Schedule for meals and incidentals separately for breakfast, lunch, or dinner.
Breakfast reimbursements may be claimed if the employee leaves their
temporary or permanent work location before 6:00 a.m. or is away from
home overnight.
Lunch reimbursements may be claimed if the employee is in traveling
more than a total of 70 miles away from their temporary or permanent
work location.
Dinner reimbursements may be claimed only if the employee is away from
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their temporary or permanent work location until after 7:00 p.m. or is away
from home overnight.
o Employees may occasionally be in the position of having to provide a meal for other
persons who have official business with the City. In addition, receipts for these meals
must include the name of each person attending the meal along with a description
of the public purpose/benefit of the meeting.
Incidental Expenditures. Fees for taxis or similar services, parking, as well as reasonable
tips for porters, baggage carriers, bellhops and hotel maid service, associated with travel
while on official City business will be reimbursed at actual cost. Receipts, if possible, shall
be submitted for reimbursement.
Advances and Reimbursements
The City will pay or reimburse for all travel and training costs that are both reasonable and
necessary. In accordance with Minnesota Statutes and when a situation warrants it, a cash advance
may be issued prior to departure with the approval of the Finance Director. Such requests will be
considered an exception to normal procedures.
Only claims for accommodations, goods and services actually incurred by the employee with
corresponding documentation, such as itemized receipts or invoices shall be reimbursed. If an
employee opts to receive the per diem reimbursement for their travel related meal and incidental
expenditures, receipts and other documentation shall not be required. Payment of the
reimbursement shall only be authorized upon approval of the Travel Expenditure Report, which
must be submitted after each travel or training event.
If an employee travels with their significant other and/or immediate family members on an official
City business trip, the expenditures attributable to them (e.g., travel, meals, lodging) shall not be
an authorized expenditure of the City nor shall they be subject to reimbursement. The City shall
pay or reimburse all travel and training expenditures at cost necessary to accommodate the
employee only.
Travel must be by the most direct or normally traveled route unless approved in advance by the
respective Department Director. Reimbursement will be limited to the cost of travel by direct route
or on an uninterrupted basis, as determined by the Finance Department. The elected official or
employee will be responsible for any additional cost exceeding the public purpose related
expenditures.
Travel plans involving expenses that do not require overnight travel accommodations will be
reimbursed based on actual cost substantiated by appropriate receipts. The employee is entitled
to reimbursement of meal expenses after submitting actual receipts. No reimbursement is
authorized if meals are provided during the meeting or event. When available, the assigned City
P–Card should be used for these types of activities. This includes training or meeting within 60
miles from the City.
It shall be the responsibility of the elected official or employee to:
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Maintain accurate travel, training, and reimbursement records;
Make a conscious effort to minimize expenses while maintaining a reasonable level of
comfort and convenience; and
Request reimbursement in an accurate and timely manner, typically 20 business days or
less.
Employees who have announced their intention to resign or retire, are involuntarily terminated, or
in some disciplinary related status, will not be eligible for travel or training under this Travel,
Training and Reimbursement Policy. The purposeful falsification of travel documents and
expenditure reporting may result in disciplinary action, up to and including involuntary termination.
Personal Rebates and Rewards
Employees and elected officials shall not use their personal or private funds for travel and/or
training related costs in an effort to accrue private benefit through rewards program and other
incentives offered by their personal credit card(s). Additionally, the City shall not reimburse an
employee for any expenditure originally made using rewards programs offered by their personal
credit card (e.g., coupons, discounts, points, “frequent flyer miles”)
Elected Officials
Similar to employees, this Travel, Training and Reimbursement Policy recognizes the need and
value of elected officials to travel both in–state and out–of–state for official duties, such as
conferences, events, trainings, and other assignments. Generally, elected officials shall be subject
to the same rules and regulations applied to employees. However, elected officials shall also be
subject to the following considerations, which are consistent with Minnesota Statute § 471.661.
Elected Official Guidelines. The conference, event, training, workshop or other assignment shall
be approved in advance by the City Manager, and mentioned at an open, regularly scheduled
meeting at least 10 business days before the occasion, and must include an estimate of the cost of
the travel and training.
Within 30 days of their return from the travel and training, the elected official(s) shall make an oral
report at an open, regular meeting of City Council regarding their activities. The elected official(s)
shall also provide any information or materials obtained during the conference, event, training or
workshop to the City Manager for distribution to employees or the City Council upon request.
The City shall make payments in advance for airfare, lodging and registration as approved by the
City Manager. All other payments shall be made as reimbursements or per diem payments per the
Schedule to the elected officials.
Elected officials who have announced their intention to resign, not to seek re–election, or who have
been defeated in an election will not be eligible for travel or training under this Travel, Training and
Reimbursement Policy. Unless duly noticed and authorized by the City Manager, a quorum of the
City Council shall not travel or train together.
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The City Manager may make exceptions to the Travel, Training and Reimbursement Policy
depending upon circumstances unique to the trip and/or elected officials and employee.
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Donations
Surplus Property Policy
The City is committed to managing surplus property, such as used furniture and equipment, in a
manner that is fiscally responsible, allows for options to reduce harmful environmental impacts,
and promotes the City’s philosophy of reduce–reuse–recycle. This Surplus Property Policy
establishes a procedure for the sale or disposal of surplus equipment. It also facilitates the removal
of surplus property, promotes alternative uses, and reduces the City’s storage burden
Any item disposed of in a manner designed to generate additional revenue (e.g., auction, trade–in)
to support the cost of its replacement shall not be considered surplus equipment or property within
the meaning of this section of the Manual.
This Surplus Property Policy is also in accordance with Minnesota Statutes Sections 15.054, 412.211,
471.345, and 471.3459 and the Charter. It applies to all City departments that generate Surplus
Equipment and governs the actions of all elected official and employees.
Definitions
For the purposes of this section the Manual, the following terms and phrases shall be defined as
follows:
City, means the City of Fridley, Minnesota;
City Council, means the governing body of the City;
Disclaimer of Warranties Form, means the form which must be signed by persons or entities
acquiring the City’s Surplus Equipment or Surplus Property for uses other than disposal or
recycling;
Donation, means to contribute, donate, or give Surplus Equipment at no cost to a Nonprofit
Organization that serves a public purpose and benefits its community as a whole;
Eligible Organization, means a Nonprofit Organization serving one or more of the following
functions: cultural, historical, educational, safety, social services, environmental or
economic;
Fair Market Value, means the price at which property would change hands between a willing
buyer and a willing seller, neither being under any compulsion to buy or to sell and both
having reasonable knowledge of all relevant facts;
New Owner, means the person or entity acquiring the City’s Surplus Equipment or Surplus
Property, as the case may be;
Nonprofit Organization means an organization formed under Section 501(c)(3) of the IRS
Code;
Surplus Equipment, means: equipment used by the City’s public works department, and
cellular phones and emergency medical and firefighting equipment that is no longer
needed by the City because it does not meet industry standards for emergency medical
services, police, or fire departments or has minimal or no resale value as defined in Minn.
Stat. § 471.3459 and is eligible for Donation;
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Surplus Property, means equipment and personal property used by the City that is no
longer needed by the City and has minimal or no Fair Market Value; and
Surplus Equipment Form, means the form that must be filled out by a Nonprofit
Organization requesting a Donation of Surplus Equipment.
Procedure
The City shall identify and dispose of all Surplus Equipment and Surplus Property in conformance
with the following guidelines.
Identify Surplus Equipment. Department Directors are responsible for monitoring their
equipment and shall identify and report all Surplus Equipment and Surplus Property to the
City Manager on an annual basis at a minimum.
Determine the Fair Market Value of Surplus Equipment and Surplus Property. The City
Manager shall work with City staff to determine the Fair Market Value of the Surplus
Equipment and Surplus Property.
Identify Surplus Equipment and Surplus Property Disposition Method. The City Manager
shall work with City staff to determine if Surplus Equipment and Surplus Property should
be transferred, sold, donated, disposed of, recycled, or made available free of charge.
Transfer. Prior to any disposition, all Surplus Equipment and Surplus Property must first be
considered for transfer in the following manners:
o Trade in the property toward the purchase of new property;
o Transfer the property between departments for the benefit of the City; and
o Transfer to another government entity through a state approved vendor or directly.
Sale. If the Fair Market Value of the Surplus Equipment or Surplus Property is deemed
greater than the cost to dispose of it or recycle it, the City may use applicable sources to
allow for bidding and sale going to the highest bidder (e.g. public auction, eBay,
propertyroom.com). If applicable, the City will determine the appropriate length of time an
item may remain available for bidding based on the need to remove the equipment and
personal property from the premises.
Disposal. If the Fair Market Value of the Surplus Equipment or Surplus Property is deemed
less than the cost to dispose of it or recycle it, the City may solicit offers to acquire at no
cost to the entity wanting to take possession. The City shall post the Surplus Equipment or
Surplus Property as available on the City’s website. The City may also use other reasonable
means to notify the general public about the availability of this Surplus Equipment or
Surplus Property.
Donation. The City may, but is not obligated to, donate Surplus Equipment. Only Surplus
Equipment may be donated. Applicable Department Directors are responsible for
coordinating the Donation of the Surplus Equipment in accordance with the terms of this
Policy. Surplus Equipment that is not donated may be sold, recycled, or discarded in the
discretion of the City Manager but consistent with this Surplus Donation Policy.
City Council Declaration. The City Manager will forward a list of all Surplus Equipment
regardless of Fair Market Value and Surplus Property with an estimated Fair Market Value
of $25,000 or more to the City Council, which shall approve or deny the designation of the
specific equipment as surplus and eligible for Donation or disposal pursuant to and in
accordance with this Surplus Donation Policy.
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Advertisement of Surplus Equipment for Donation. Surplus Equipment shall be posted as
available the City’s website. The City may also use other reasonable means to notify Eligible
Organizations about the availability of Surplus Equipment. The City shall wait at least 30
days after advertising Surplus Equipment before approving any Donation.
Surplus Equipment Form. Eligible Organizations interested in Surplus Equipment shall fill
out a Surplus Equipment Form and submit the form to the City Manager.
Prioritization of Donations. If more than one Eligible Organizations requests a Donation for
the same Surplus Equipment, the City shall consider factors it deems relevant including how
the Surplus Equipment will be used, the benefit to the Eligible Organization, the impact on
the City, how the Donation will accomplish goals of the City Council, and any previous
Donation to the Eligible Organization.
Conflict of Interest. All City employees and officials are prohibited from taking possession
of any Surplus Equipment or Surplus Property for personal use or on behalf of an Eligible
Organization.
As Is. The exchange of Surplus Equipment and Surplus Property is made “as is” with no
warranty, guarantee, or representation of any kind, express or implied, as to the condition,
utility, or usability of the Surplus Equipment and Surplus Property offered. The Surplus
Equipment and Surplus Property may be defective and cannot be relied up for safety
purposes. The New Owner shall sign the Disclaimer of Warranties Form prior to acquiring
Surplus Equipment and Surplus Property.
Title. The City Manager shall cause any title or other ownership documents to be transferred
to the New Owner at the time of transfer. Any fees required for the transfer the Surplus
Equipment and Surplus Property are the responsibility of the New Owner.
Transportation. The New Owner must provide a detailed plan for transporting the Surplus
Equipment and Surplus Property from the City. The New Owner must pay all expenses
associated with the removal and transportation of the Surplus Equipment and Surplus
Property.
The City Manager may delegate specific responsibilities for implementing this Surplus Donation
Policy. The City Clerk shall document the disposition of all Surplus Equipment and Surplus Property
and shall keep such records in accordance with the City’s Records Retention Schedule.
Municipal Liquor Store Donation Policy
The City, through Fridley Liquor, at the direction of the Finance Director or their designee, may
support non–profit organizations whose primary objective is to promote the general health and
well–being of the Fridley community consistent with public purpose expenditures authorized by
State law, Charter and all application City rules or regulations.
Consistent with OSA Statement of Position No. 2007–1017 as amended, non–profit organizations
formed under Section 501(c)(3) of the IRS Code, which also provide goods and/or services typically
associated with a public purpose shall be eligible for a donation, including, but not limited to:
Artistic organizations;
Historical causes;
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Animal shelters (or organizations for the prevention of cruelty);
Food shelves;
Senior and youth centers;
Public recreation programs; and/or
Community celebrations.
Support for such an organization, upon approval, shall take one or more of the following forms,
which cannot be used by the organization itself or those coordinating the event:
Through gift cards, issued in up to $50 increments, to be used as an auction item or door
prize;
Through donation of merchandise that is commonly known as a “dealer loader” to be used
for either a silent or live auction;
Through assistance with a fundraising event that promotes the organization in general or
for a specific fundraising need, as described below; and/or
Through the purchase of products typically offered for sale at the cost available to Fridley
Liquor.
Regardless of the type of support, the total cost of the donation to an individual organization may
not exceed $1,000 in retail value in any calendar year. Additionally, the organization(s) receiving
the donation shall include Fridley Liquor, and its corresponding logo(s), in all forms of advertising
and promotion of the event or occasion.
The City reserves the right to deny any request for a donation for any reason and in their sole
discretion. If the Finance Director determines that any such request to be unlawful or in violation
of this Manual or other City policies, the request shall be denied.
Fridley Liquor Event Participation
Fridley Liquor may participate in a fundraising activity or event for an eligible organization one or
more of the following forms:
Assist the eligible organization with assembling a group of vendors to provide and pour
samples of their products at a fundraising event;
Coordinate with aforementioned vendors before and during the event to assure that the
rules of the eligible organization, the City and applicable laws are followed; and assist with
the logistics of hosting such an event;
Provide support in age verification (i.e., carding) of attendees of the event;
Provide advertising for the event through normal channels and frequencies, which may
include: social media posts, in–store signage and e–mail “blasts” to Fridley Liquors e–mail
list;
o The e–mail addresses or any other information maintained by Fridley Liquor shall
remain the property of the City, and not distributed, communicated or disseminated
to a third–party or another operating unit of the City for any reason whatsoever,
consistent with the Minnesota Government Data Practices Act;
Fridley Liquor will, upon agreement between the eligible organization and Fridley Liquor,
sell or distribute tickets or other information in–store for the activity or event;
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Fridley Liquor will, upon agreement between the eligible organization and Fridley Liquor,
assemble a tasting guide for the event, which will detail the item(s) involved, suggested
retail price(s) and a place for tasting notes or other information;
o Additional information or items may be added to the tasting guide at the discretion
of both parties, which may include: other supporters of the event, description of
the eligible organizations and the description or purpose of the event; and
It will be the sole responsibility of the eligible organization to have the tasting guides and
any other information, such as in–store signage, printed and available for distribution.
Support for any eligible organization, activity and/or event will be determined on a case–by–case
basis, and upon an agreement between the eligible organization and the City acting on behalf of
Fridley Liquor. The number of fundraising activities and/or events that Fridley Liquor will participate
in may not exceed six events or a cost of $5,000 annually, unless otherwise approved by the Finance
Director.
Solicitations at Fridley Liquor
Solicitations by eligible organization for any purpose shall be limited to in–store signage, and shall
not include any in–person activities on behalf of the eligible organization, activity or event, except
for through the regular business of Fridley Liquor staff (i.e., mentioning the event to a patron during
check–out).
Fridley Liquor may also allow organization to fundraise through a point–of–sale
transaction/donation, whereby the customer may be asked to “add a dollar” or some other amount
to their purchase for an eligible cause and/or organization. Such request may only be made by
Fridley Liquor staff. Fridley Liquor may offer this service in its sole discretion.
Gather Space Usage
The Gather Space at Fridley Liquor 264 57th Avenue NE shall only be used for Fridley Liquor
sponsored events. No individual, group and/or organization shall have access to use the Gather
Space for any purposes.
Events will be held in accordance with Minnesota Statute § 340A.412 and other sections relevant
to municipal liquor operations. No food may be brought in, sold or consumed during Gathering
Space events.
Indemnification
Any party making use of a donation under this Municipal Liquor Store Donation Policy will agree
to defend, indemnify, and hold harmless the City, its officers, officials, employees and volunteers
from and against any and all claims, suits, actions or liabilities for injury or death of any person, or
for loss or damage to property, which arises out of the use of a donation, or from the conduct of
the party's business, or from any activity, work or thing done, permitted, or suffered by a party
using a donation, except only such injury or damage as shall have been occasioned by the sole
negligence of the City.
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Revenue and Collection
Revenue Policy
The Citywillendeavorto maintain a diversified andstable revenue system toshelter itfromannual
fluctuations in any one revenue source.
In order to maintain a stable and predictable tax base, the City shall support a mix of commercial,
industrial, and residential development. Consistent with this approach, the City will also review
properties within its jurisdiction at least every five years, pursuant to Minnesota Statute § 273.08.
The City shall establish all user charges and fees, pursuant to Section 7.02 of the Charter, for all
applicable funds and activities. It shall recoup estimated or actual costs at the full amount for
providing the goods or services. In order to determine the appropriate user charge or fee, the City
shall consider various sources:
Internal cost review and study;
Market rates and structures; and
Statutory requirements or case law established by the Minnesota Judicial Branch.
Consistent with Section 7.02.03 of the Charter, the City will establish all user charges and fees for
General Fund program activities at a level related to the full cost of providing the services, or as
adjusted for particular program goals. The City will review the full cost of activities supported by
user fees to identify the impact of inflation and other cost increases and will review these fees
along with the resulting net property tax costs with the City Council at budget time. The Finance
Director shall determine what defines and constitutes full cost.
The City shall annually review and adopt via ordinance or resolution a Comprehensive Fee
Schedule, consistent with Section 7.02 of the Charter, which shall be effective January 1 of each
year. It shall provide for all of the various user charges and fees authorized by the City Council. If a
user fee or charge has not been established by the Comprehensive Fee Schedule, the Finance
Director shall determine the actual cost for providing the good or service, and assign the charge(s)
and/or fee(s) accordingly, assuming doing so would not violate the aforementioned section of the
Charter.
Enterprise Funds
For the Enterprise Funds, the City shall set user charges and fees at a level that fully supports the
total direct and indirect costs of the activity, including depreciation of capital assets and debt
service, to ensure positive and stable cash flows, and provide for adequate working capital. Any
capital costs and/or debt service for any particular activity shall be supported by the applicable
Enterprise Fund. The City shall conduct external reviews of the user charges and fees associated
with the public utilities at least every five years.
Consistent with Section 7.10 of the Charter, any interfund loans and/or transfers from the Enterprise
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Funds to another City–controlled fund must be authorized by the City Council. Such interfund
loans and transfers shall only be authorized on an exceptional basis and to fund unusual or
extraordinary expenditures. The City may not authorize such transfers or interfund loans in
consecutive years from the same Enterprise Fund.
The Municipal Liquor Stores, and the associated Enterprise Fund, shall be regarded as
entrepreneurial in nature. The intent of these activities shall be to maximize revenues to the extent
the market allows, which permits it to support other areas of the City financially, such as capital
equipment purchases and park improvements.
Intergovernmental Revenues
Intergovernmental revenues, such as Local Government Aid and Municipal State Aid, are beyond
the direct control of the City and shall be relied upon conservatively to support ongoing operations
and activities. Since these revenues occur on a consistent and regular basis, they shall be accounted
for in the annual budget process. However, given the lack of control, intergovernmental revenues
shall not support more than 10% of General Fund budget. Any intergovernmental revenues in
excess of this amount shall be directed to the CIP or other one–time expenditures.
The City will strive to eliminate the use of Local Government Aid as a source of funding for the
annual, operating budget.
Grant Revenue or Funding
From time to time, the City or its component units may receive grants or similar awards to support
the cost of certain activities, projects and/or programs. Consistent with Section 6.05 of the
Charter, the City Manager may administratively accept such financial awards or grants assuming
they do not require a budget amendment as outlines in other sections of this Manual, specifically
the Operating Budget and Capital Investment Program policies.
Public Utilities Revenue and Remittance Policy
Generally, in order to ensure payment of user charges and fees, the City utilizes special assessments
for applicable, unpaid portions of a public utility billor invoice. The procedures and additional costs
associated with these and other situations are outlined in Chapter 402 of the Fridley City Code (City
Code) and are not addressed in greater detail in this section of the Manual.
In order to ensure the timely and accurate payment of user charges and fees associated with the
public utilities owned and operated by the City, the City shall utilize the following protocols and
procedures.
Discontinue of Services
Per Section 402.18 of the Code, the City reserves its right to discontinue public utility services
without notice for necessary repairs, additional connections or reconnections and non–payment of
user charges and/or fees. However, the City will generally refrain from discontinuance in the event
of non–payment and assess all applicable user charges, fees and penalties as authorized by Chapter
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402 of the Code.
However, the City may discontinue services for its public utilities in following circumstances:
Vacant properties;
Properties already disconnected from electric and/or gas utilities;
Properties where the owners failed to respond to multiple maintenance requests;
Properties presenting the potential of a backflow condition that may contaminate the
public water system; and
Properties presenting an emergency (e.g., significant damage) where the disconnection
will preserve the safety and well–being of the property and/or public.
Prior to the disconnection of any public utility services, the City shall provide a notice by first–
class mail to the property owner of record at least 20 days prior to any action, unless an emergency
prevents such a notice. The notice shall include an opportunity to discuss the pending action, and
possible steps to prevent disconnection, if appropriate. The Finance Director, or their designee,
shall act on behalf of the City, and shall have the authority necessary to correct or otherwise
resolve any payment concerns or issues, such as a repayment plan or other alternative.
User Charges and Fees
For the purposes of adjusting or modifying, including a dispute by a system user, the City shall
adhere to the following standards and practices. The Finance Director, or their designee, shall
administer and interpret this section.
Adjustment. If an adjustment may be required as the result of an error made by the City, a credit
will be applied to the account in question. The City shall not issue refund payments directly, unless
authorized by the Finance Director, or their designee. The City shall review up to three years of
account activity to determine any adjustments.
In the event of an “under charged” account, the City may seek to recover its costs for up to the
previous three years. When possible, the City will determine the recovery amount based on the
user charges and fees in effect during the billing period(s) in question. The City will allow the
account to repay the recovery amount in no more than three years, pursuant to a written
repayment agreement. Per Minnesota Statute § 216B.098, a public gas and electric utility may not
charge interest during a repayment period, and the City shall apply that standard to all of its public
utilities.
In the event of an “over charged” account, the City will determine the need for an adjustment based
on the last actual water meter reading for up to the previous three years. In the event of an
adjustment, the City will return the over charged amount with interest using an interest rate
determined by the Finance Director at the time of repayment. If the City or system user cannot
demonstrate with certainty that a meter has not “rolled over,” stopped, been tampered or any other
similar situation, the City will not adjust the billing amount.
In the event the City authorizes a refund, it shall not be applied to the account until at least seven
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banking days after the applicable deposit of the payment or activity in question, unless otherwise
authorized by the Finance Director.
No employee may unilaterally adjust or “write–off” their individual account(s) or the account(s) of
their friends and/or family members. The employee shall report to the Finance Director any
concerns or issues regarding their account(s) or the account(s) of their friends and/or family
members – the Finance Director shall report the same situation to the City Manager. Any unilateral
action by any employee concerning themselves or their friends and/or family members may result
in disciplinary action, up to and including involuntary termination.
Leaks and Winter Use. It shall be the responsibility of the property owner to inform the City of a
water leak or similar event. If such an event occurs during the Winter Quarter, the property owner
must provide the City will information about the event, including a written proof of repair. The City
will then adjust the sanitary sewer charges for the Winter Quarter and fees for up to the next three
quarters and shall not adjust the original bill as sanitary sewer usage has occurred.
Contested Bill or Invoice. If a customer wishes to formally contest their bill, invoice or the
response of the City, they must submit their request in writing, including: a description of the
situation; their specific request; and their rationale for it. The Finance Director, or their designee,
shall review the request and provide a written response with 10 business days.
The determination of the Finance Director, or their designee, may be reviewed upon written appeal
to the City Manager. Any such appeal must be received within five business days and include a
rationale for the appeal. The City Manager shall review the appeal and provide a written
determination within 10 business days. As the official representative of the City’s utilities, the
decision of the City Manager shall be final.
Any unpaid portions of a contested public utility bill or invoice may be assessed to the property
in question consistent with Minnesota Statute § 444.075. The City shall provide any party or
property subject to such an assessment with at least 20 days of notice prior to the certification of
the outstanding charges and fees to the County Auditor.
Penalties. The City shall only remove one penalty or similar charge per account holder, unless
otherwise authorized by the Finance Director, or their designee.
Finalized Accounts.In the event of a discontinuation of service, any account balances will be
reduced to zero (i.e., $0). The City will make a reasonable attempt to collect any outstanding
balances, including through special assessments, before writing–off an account balance. Any
credits or credit balances shall be processed quarterly. Any exception must be authorized by the
Finance Director, or their designee.
Title Inquiries. Any requests of a title company or similar organization with respect to the
outstanding public utility charges and fees shall be responded to in order of closing date. These
requests will be completed only once and as reasonably close to the closing date as possible. They
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City may charge the requesting party for this information based on a fee established by the City.
Meter Installation.Pursuant to City Code § 402.15.2.B, the City may provide a reasonable
repayment schedule for the costs associated with the replacement of a meter with a diameter of 1
½” or larger. The Finance Director, or their designee, shall determine the structure and interest rate
for such repayment schedules. However, no repayment schedule shall exceed one year.
In the event the customer fails to make timely payments consistent with an authorized repayment
schedule, the entire amount, including any unpaid principal and accrued interest, shall become
immediately payable and subject to the other sections of this Public Utilities Revenue and
Remittance Policy, including the assessment of any unpaid charges and fees at the discretion of
the City Council.
Other. Generally, the City will consider special assessments as a means for remittance on at least
an annual basis.
Special Assessment Deferment Policy
Pursuant to Minnesota Statutes § 435.193, a home rule or charter city may, at its discretion, defer
the payment of an assessment for any homestead property. Generally, the City Council has found
and determined that deferral of special assessment for certain senior citizens, persons with
disabilities and members of the military to be in the public interest. In each situation, the
requesting party must demonstrate that payment of the special assessment would constitute a
hardship.
Deferment Requirements
Based on these guidelines, the City shall consider the following factors to determine if a deferral of
a special assessment shall be granted:
The property for which deferment is requested must be classified and taxed as homestead
property by the City Assessor as of the date the application for deferment is made;
The applicant must be the fee simple owner of the property or must be a contract vendee
for fee simple ownership;
The applicant must be 65 years of age or older or retired by virtue of a permanent and total
disability;
o In the case of a married couple, one of the spouses must meet this requirement;
The first year's installment of the proposed special assessment must, either alone or in the
aggregate with installments of other special assessments due against the property and
payable in the first year of the proposed assessment, total more than two percent of the
applicant's total household income as defined by Minnesota Statutes, Chapter 290A.
The applicant for deferment must file a completed application and affidavit with the City Assessor
on or before November 15th of the year preceding the year for which deferral status is requested
in order to implement the deferral program for said year.
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The City Assessor shall include in any and all mailed notices of public hearings with respect to
special assessments, a statement explaining the deferment process. The City Assessor shall also
transmit all deferments granted pursuant to this section to Anoka County for proper recording, so
as to give notice of such deferment to all future owners and encumbrancers of the property for
which a deferment has been granted. The owner will make application for deferred payments on
forms prescribed by the Anoka County Auditor and the City.
Interest Rate. Any special assessment deferred pursuant to this Special Assessment Deferment
Policy shall bear interest at the interest rate applicable at the time the assessment was originally
levied.
Termination
Assuming approval, the deferment shall be terminated upon any of the following circumstances or
occasions:
The subject property is sold, transferred, subdivided, or in any way conveyed to another by
the fee owner qualified for deferral status;
The death of the fee owner qualified for deferral status unless a surviving joint tenant,
tenant in common, or contract vendee is eligible for the deferral benefit provided
hereunder;
The property loses its homestead status, as determined by the City Assessor, for any reason;
and/or
The City Council determines that there would be no hardship to require an immediate or
partial payment of the deferred special assessment.
Other Considerations
The City Council shall not be prohibited from determining that a hardship exists, and that a
deferment should be granted on the above terms and conditions, even if the eligibility
requirements are not met by an applicant, provided that the City Council finds that:
There are exceptional and unusual circumstances not covered by the foregoing standards
and guidelines;
If granted, the deferment will have been made in a non–discriminatory manner, and
The granting of the deferment will not give the applicant an unreasonable preference over
other applicants.
Only special assessments for permanent improvements, which are not requested by the property
owners, are eligible for deferment. Current and/or delinquent service charges are not eligible.
Service charges include, but are not limited to: water, sanitary sewer, and recycling fees; tree
removal costs; weed removal cost; storm drainage charges; street maintenance costs;
administrative citations; and nuisance abatement fines and costs.
The failure of the City to give notice pursuant to this Special Assessment Deferment Policy or the
granting or denial of any deferment shall not invalidate special assessment otherwise made and
levied by the City of pursuant to applicable statutory requirements. Upon approval, the City
Assessor shall notify the property owner(s) at least annually of the status of their deferment,
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including outstanding principal and any accrued interest.
The Finance Director or their designee shall administer and interpret this Special Assessment
Deferment Policy and the guidelines set forth herein.
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Adoptionand Implementation
Interpretation Policy
The City Manager or their designee, may waive any sections of this Manual, if doing so would not
violate any applicable sections of City ordinances, Charter, State and/or Federal laws, or resolutions
adopted by the City Council. Wavier of any particular policy or section does not constitute a wavier
for the entire Manual and the City Manager, or their designee, may end such waivers in their sole
discretion.
Apart for this Manual, certain activities and programs are also regulated by the Employee
Handbook (Handbook) for non–unionized employees and Collective Bargaining Agreements
(CBAs) for unionized employees. In any event when this Manual conflicts with either document, the
respective CBA or Handbooks shall control, unless such deference would violate applicable sections
of the City resolutions, ordinances, Charter, State and/or Federal laws.
In the event that any portion of this Manual shall conflict, or be interpreted to conflict, with the
Charter, the Charter shall control.
Discipline
Violation of this Manual or its corresponding regulations, incorporated herein by reference, by an
employee, may result in disciplinary action, consistent with the procedures outlined in the
Handbook, up to and including involuntary termination.
Adoption
This Manual shall be adopted by resolution of the City Council and any applicable component
units. It shall also be reviewed by staff on an ongoing basis and any administrative modifications
shall be approved by the City Manager, including: changes related to applicable laws and
regulations; subsequent actions of the City Council; clerical errors; and revisions to clarify but not
change the intent of this Manual. The City Manager shall notify the City Council or the governing
body of a component unit, in writing, of any administrative changes or modifications at least 10
days prior to any such revisions to this Manual. All other modifications shall be approved by the
City Council or the governing body of a component unit.
Adoption
Approved and adopted by the City Council on January 8, 2024, effective January 1, 2024.
Administrative Revisions
None at this time.
City Council Amendments
None at this time.
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