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Memo- Up-date on Status of Depot Coffee House RenovationMemorandum City Manager's Department To: Mayor Chuck Redepenning City Council Members City Manager Steve Mielke From: Jim Parsons Date: May 7, 1998 Copy: n. a. Subject: Up -date on Status of Depot Coffee House Renovation The Depot team is well into Phase II of the renovation, which is the interior of the building. Major donations of labor and materials from area businesses, valued at over $130,000, have moved the project forward. Much of the mechanical and electrical work is complete; wall framing and sheet rocking are progressing. Some significant contingent expenses remain for the Depot. A bill from Mortenson for Phase I work is expected; drywall expenses may increase; and kitchen equipment cost estimates are not firm. Similarly, significant Depot resources are pending. A possible major cost share by Metro Transit depends on approval of a park- and -ride lot at the site. Major donors are being approached by project partners on behalf of the Depot. And, grant requests are pending with four area banks. Phase III of the project is the site work required to open for business. The funding for these Phase III costs, estimated at $28,600, is not in place. The City will determine how much Phase III expense the Depot must incur prior to opening, such as installation of a gravel or paved parking lot. 1 Remaining Cost of Phase 11 Building Renovation Kitchen /Bathrooms $ 25,000 Doors/Drywall 10,500 HVAC 5,500 Miscellaneous /contingency 14,000 Mortenson (Phase 1 payable) 30,000 Total $ 85,000 Phase 11 Renovation Funds on Hand /Donations Pledged Funds on hand $ 77,000 Grant approved 5,000 Total $ 82,000 Phase 11 Funding Gap: $ 3,000 Phase 111 Cost: 28,600 Total Cost to Open $ 31,600 Hopkins Family Services Collaborative If the total cost to open can be raised quickly, through donations, Metro Transit cost share, or construction financing, then the Depot could be open for business in June. ## REQUEST FROM CHARTER COMMISSION FOR FEED BACK REGARDING PROPOSED CHARTER CHANGES Proposed Action Staff recommends approval of the following: Amend the City Charter, chapter six, to increase the required sealed bid amount to the level approved by Minnesota Statute. Adoption of this motion will result in an increased dollar level required for sealed bid process from $15,000 to $25,000. Overview Currently the charter requires sealed bids for amounts of a purchase or contract in excess of $15,000. Finance is recommending a change in this amount to $25,000 which is the amount recommended by Minnesota Statute. Primary Issues to Consider Inflation and various other factors have raised prices on services and materials purchased by municipalities over the years. This is one reason the State of Minnesota changed its' statute in regards to contracts and purchases. The city charter outlines that the council can change the bid limits to match whatever the state statute reads. Currently the charter requires sealed bids on purchases over $15,000. The Minnesota Statute requires sealed bids on purchases over $25,000 and quotes on purchases of more than $10,000. Staff Recommendation Finance recommends amendment of chapter six of the City Charter to allow for an increase in the amount of sealed bid process to $25,000. Supporting Information Chapter six of City Charter (amended) • Minnesota Statute #471.345 Yager Finance Director CONTRACTS Section 6.07. CONTRACTS/BIDS. In all cases of work to be done by contract, or for the purchase of personal property of any kind, where the amount involved is more than $15,000 $25,000 the City Manager shall advertise for bids in such manner as may be designated by the Council. Contracts over $- 5,000 $25,000 shall be let to the lowest responsible bidder. The Council may reject any and all bids. Competitive bids shall not be necessary in those cases where from the nature of the work to be done or the kind of property to be purchased it is apparent that competitive bids will not be received, and also in those cases where the Council shall by emergency ordinance otherwise provide, and except also in any contract for a local improvement made under M.S.A. 429.041 or any other law having an inconsistent provision relating to contract for local governments. Nothing contained in this section shall prevent the purchase of real or personal property on the installment payment plan. Further regulations for the making, receipt and opening of bids and letting of contracts may be made by motion, resolution or ordinance. If at any time in the future there should be enacted any statute by the State of Minnesota providing for an amount larger than $44,-000 $25,000 before the requirement of competitive bids, the City Council may pass and adopt ordinances in conformity with such statutes and thereafter proceed thereunder. 20 471.345 UNIFORM MUNICIPAL CONTRACTING LAW. Subdivision 1. Municipality defined. For purposes of this section, "municipality" means a county, town, city, school district or other municipal corporation or political subdivision of the state authorized by law to enter into contracts. Subd. 2. Contract defined. A "contract" means an agreement entered into by a municipality for the sale or purchase of supplies, materials, equipment or the rental thereof, or the construction, alteration, repair or maintenance of real or personal property. Subd. 3. Contracts over $25,000. If the amount of the contract is estimated to exceed $25,000, sealed bids shall be solicited by public notice in the manner and subject to the requirements of the law governing contracts by the particular municipality or class thereof provided that with regard to repairs and maintenance of ditches, bids shall not be required if the estimated amount of the contract does not exceed the amount specified in section 103E.705, subdivisions 5, 6, and 7. Subd. 4. Contracts from $10,000 to $25,000. If the amount of the contract is estimated to exceed $10,000 but not to exceed $25,000, the contract may be made either upon sealed bids or by direct negotiation, by obtaining two or more quotations for the purchase or sale when possible, and without advertising for bids or otherwise complying with the requirements of competitive bidding. All quotations obtained shall be kept on file for a period of at least one year after receipt thereof. Subd. 5. Contracts less than $10,000. If the amount of the contract is estimated to be $10,000 or less, the contract may be made either upon quotation or in the open market, in the discretion of the governing body. If the contract is made upon quotation it shall be based, so far as practicable, on at least two quotations which shall be kept on file for a period of at least one year after their receipt. REQUEST FROM CHARTER COMMISSION FOR FEED BACK REGARDING PROPOSED CHARTER CHANGES Proposed Action Staff recommends approval of the following: Amend the City Charter, chapter six, to change the eliminate City Council pre - approval of disbursing payments for expenditures and liabililties of the city. Adoption of this motion will result in staff eliminating the pre - approval procedure wherein council approves individual payments to vendors prior to disbursement. Overview The City of Hopkins is a Homerule Charter City. Minnesota Statute allows us to establish our own procedures for disbursing funds. Currently the council pre- approves all payments of the city. This procedure is the one described for non - homerule charter cities in the Minnesota Statutes, chapter 412. The city is limited to paying its' liabilities and expenditures on a by- monthly basis except when payment is essential for city operations, a manual check is disbursed. Staff is recommending a change in the disbursement of city funds to eliminate the pre - approval of expenditures and liabilities of the city. Primary Issues to Consider If the City of Hopkins eliminates the councils pre - approval of expenditures and liabilities procedure it will enable city staff to more efficiently disburse city funds. Staff would be able to pay city liabilities on a daily or weekly basis. Staff could then take further advantage of discounts offered by vendors, avoid late fee charges for bills overdue, and postpone payment of bills until date due. This creates an environment for better cash flow, more timely payment of liabilities and eliminates the need for issuing manual checks. The City of Hopkins, City Council approves an annual budget and delegates the enforcement of the annual budget to the city manager. There are internal controls providing for the safekeeping of city funds and the prevention of unauthorized disbursement of funds. Finance does not disburse payment without proper authorization and this procedure will continue. Annually external auditors scrutinize our policies and procedures to ensure that funds are spent accordingly. Only city council has the authority, with limitations (see section 7.06 of the city charter), to spend outside budgeted guidelines. The city council may request a list of checks issued by the City of Hopkins for review and ratification. Staff Recommendation Finance recommends amendment of chapter six and seven of the City Charter to allow for disbursement of city funds without pre - approval from city council. Supporting Information Article from League of Minnesota Cities • Chapter six and seven of City Charter (amended) ager Finance Director . Subdivision 6. The Manager shall recommend to the Council for adoption such measures as he or she may deem necessary for the welfare of the people and the efficient administration of the City's affairs. Subdivision 7. The Manager shall prepare the budget annually and submit it to the Council and be responsible for its administration after adoption; prepare and submit to the Council at the end of the fiscal year a complete report on the finances and administrative activities of the City for the preceding year; and keep the Council advised of the financial condition and future needs of the City. Subdivision 8. The Manager shall perform such other duties as may be prescribed by this Charter or required of her or him by ordinances or resolutions adopted by the Council. Section 6.03. DEPARTMENTS OF ADMINISTRATION. the City Manager may create such departments and divisions for the administration of the City's affairs as may seem necessary, and may from time to time alter the same. SUBORDINATE EMPLOYEES Section 6.04. SUBORDINATE EMPLOYEES. There shall be a City Clerk subordinate to the City Manager. The City Clerk shall be subject to the direction of the City Manager, and shall have such duties as provided by law. CITY ATTORNEY Section 6.05. CITY ATTORNEY. The City Council may appoint a city attorney to advise the Council on legal matters. PURCHASES AND CONTRACTS Section 6.06. PURCHASES AND CONTRACTS. The City Manager shall be the chief purchasing agent of the City. Contracts or purchases for the city for merchandise, materials, or equipment, if budgeted or for any kind of construction work, repair or maintenance of real or personal property or personal services may be made or let by the city manager when the amount of such contract or purchase does not exceed $10,000. All other purchases shall be made and all other contracts shall be approved by the council. Each contract made by the city manager shall be made or let in conformance with applicable state law and city ordinances. . All contracts , in excess of $10,000, to which the City shall be a party, shall be signed by the Mayor and by the City Manager in behalf and in the name of the City. 19 CONTRACTS Section 6.07. CONTRACTS/BIDS. In all cases of work to be done by contract, or for the purchase of personal property of any kind, where the amount involved is more than $4-5,000 $25,000 the City Manager shall advertise for bids in such manner as may be designated by the Council. Contracts over $ 4-5,000 $25,000 shall be let to the lowest responsible bidder. The Council may reject any and all bids. Competitive bids shall not be necessary in those cases where from the nature of the work to be done or the kind of property to be purchased it is apparent that competitive bids will not be received, and also in those cases where the Council shall by emergency ordinance otherwise provide, and except also in any contract for a local improvement made under M.S.A. 429.041 or any other law having an inconsistent provision relating to contract for local governments. Nothing contained in this section shall prevent the purchase of real or personal property on the installment payment plan. Further regulations for the making, receipt and opening of bids and letting of contracts may be made by motion, resolution or ordinance. If at any time in the future there should be enacted any statute by the State of Minnesota providing for an amount larger than $4-5 $25,000 before the requirement of competitive bids, the City Council may pass and adopt ordinances in conformity with such statutes and thereafter proceed thereunder. 20 TAXATION AND FINANCES Section 7.01. COUNCIL TO CONTROL FINANCES. Except as otherwise provided in this Charter, the Council shall have full authority over the financial affairs of the City. Section 7.02. FISCAL YEAR. The Fiscal year of the city shall be the calendar year. Section 7.03. BOARD OF EQUALIZATION. The Council shall constitute the Board of Equalization and shall meet as such in the usual place for holding Council Meetings not later than June 1 of each year to equalize the assessments according to law, or at such other adjourned meetings as it may designate. THE BUDGET Section 7.04. PREPARATION OF THE ANNUAL BUDGET. The annual budget shall provide a complete financial plan for the budget year by fund, showing all proposed expenditures and detailed estimates of all anticipated revenues applicable to proposed expenditures and any other information the Council may require or the City Manager may deem desirable. In parallel columns shall be shown the amounts, if any, granted and expended under similar heads for the past two complete fiscal years and, as far as possible, for the current year. The Council may include or exclude at its' discretion any fund, except the general fund. • .. ' • • ' , . CHAPTER 7 . The budget shall be submitted to the Council at a regular Council meeting, in a manner prescribed by state statute, not less than 30 days prior to final approval. It shall be a public record open to public inspection by anyone and the City Manager shall cause sufficient copies thereof to be prepared for distribution to the Mayor, members of the Council and interested persons. Section 7.05. PASSAGE OF THE BUDGET. The Council shall hold a public hearing on the budget and it shall make such changes therein as it deems necessary and adopt the budget by Resolution. Section 7.06. ENFORCEMENT OF THE BUDGET. Except as set forth in Section 7.16, the City Manager or the City Council shall not approve any expenditure uncovered by the budget. mess- The City Council may approve expenditures uncovered by the budget if there is sufficient unexpended balance left after deducting the total past expenditures and the sum of all outstanding bills, orders and encumbrances. No employee of the City shall place any orders or make any purchases except for the purpose and to the amounts authorized in the budget. Except as in this Charter otherwise provided, any obligations incurred by any person in the employ of the City for any purpose not authorized in the budget or for any amount in excess of the amount therein authorized shall be a personal obligation upon the person incurring the expenditure. 21 J Section 7.07. ALTERATIONS IN THE BUDGET. Except as set forth in Section 7.16, after the budget shall have been duly adopted, the Council shall not have power to increase the amounts therein fixed, whether by the insertion of new items or otherwise, beyond the estimated revenues, unless the actual receipts shall exceed such estimates, and in that event not beyond such actual receipts. The sums fixed in the budget are appropriated at the beginning of the fiscal year for the several purposes named therein. The Council may reduce salaries or the sums appropriated for any other purpose, or authorize the transfer of sums from unexpended balances to other purposes. TAXES Section 7.08. LEVY AND COLLECTION OF TAXES. On or before the last regular meeting in December each year the Council shall levy the taxes necessary to meet the requirements of the budget for the ensuing fiscal year. The City Manager shall transmit to the County Auditor annually a statement of all the taxes levied, and such taxes shall be collected and the payment thereof be enforced with and in like manner as State and County taxes. No tax shall be invalid by reason of any informality in the manner of levying the same, nor because the amount levied shall exceed the amount required to be raised for the special purpose for which the same is levied, but in that case the surplus shall go into the fund to which such tax belongs. Section 7.09. TAX SETTLEMENT WITH COUNTY TREASURER. The City Manager shall ascertain that all monies in the County Treasury belonging to the City are properly transferred to the City according to law. DISBURSEMENTS Section 7.10. DISBURSEMENTS. Tho City Manager, or her or his designees, shall issue and sign a Disbursement of city funds shall be made by a negotiable instrument bearing the actual or authorized facsimile signature of the authorized city officer. No such negotiable instrument shall be issued until the claim to which it relates has been supported by an itemized bill, payroll, time - sheet, voucher or the like approved and signed by the responsible city officer who vouches for its correctness and reasonableness. No check shall be issued until there is money to the credit of the fund out of which it is to be paid sufficient to pay the same. The council may by ordinance make further regulations for the safekeeping and disbursements of the funds of the city. 22 , commission. rather than from the tit) council. Delegation of auth rity for paying certain clams A city council may delegate its authority to pay certain claims to a city administrative official. City administra- tive officials include a city manager, administrator, treasurer, senior fiscal officer, clerk or clerk - treasurer. A city exercising this option must establish internal accounting and administrative control procedures to ensure the proper disbursement of public funds. These procedures must include periodic council review of the adminis- trative official's actions. When money is disbursed under these procedures, a list of expenditures must be submitted for the council's information at the next meeting. Cities delegating authority to pay claims must adopt a resolution specifying the administrative official to whom this authority is granted. Cities delegating authority, as described here, CSC CoNsULrr ; & SYS'i'i. ,s INTI GRSJ'IO YfOviD1Nc. 1NNOViVrivE SoLU'rioNs For over 35 years, CSC has partnered with public sector and commercial eliena to help them achieve their business gnats. fa 16 MINNF,o i x ZITtt 0C JCE F 199E CSC is a world leader in the science of information technology and its application to achieve clients' business objectives. Serving state and local governments as well as a wide range of industries, the CSC Minnesota office provides comprehensive services in management consulting, systems integration and technology consulting. Stuart L. Nelson Practice Manager Government & Financial Services 612.797.5710 5500 Wayzata Boulevard Suite 1100 Minneapolis, MN 55416 -1 242 LtHtaUt Ufr MN L 1 1 1 t5 financial statements. Moreover. these statements must be certified by an independent public accountant or the state auditor. Cities that do not prepare such statements may not delegate authority in this manner. Homerule charter cities The procedures for disbursing city funds described thus far are found in the statutory city code — Minnesota Statutes, chapter 412. Homerule charter cities often have their own unique procedures for disbursing funds. Such procedures may be written directly into the city charter, or the charter may direct that such procedures be established by ordinance. In either case, charter cities should adhere to their locally established procedures. Nonetheless, a charter city may gener- ally apply the procedures and exercise authority found in the statutory city code. For example, if a city's charter is silent on the matter of delegating authority to pay certain claims to an administrative official, then that city DUAL -WALL PIPE Corrugated PE Pipe with a Smooth Interior *STRONG 'COST-EFFECTIVE *DURABLE GOLDFLO'S lightweight and superior strength can lower total project costs by minimizing labor and machinery outlays. advancing construction schedules and reducing downtime due to ad- verse weather. Easier to install in tight places. Meets or exceeds AASHTO M 294 and ASTM F 667 and SCS 606 specifications, P.04/06 t %AIR, ' tI llt.tt.i %tit 11 .t i1C1Cg:tllc>lt It the manner described above. In such an instance, however, the city should probably eventually amend its charter or local ordinance to reflect the practice and avoid future procedural confusion. Conclusion It is important that cities follow the proper procedures for disbursing funds. The most obvious reason is because the procedures are prescribed by law. In addition, by following these procedures, a city can make its expendi- tures somewhat less susceptible to a successful legal challenge. Finally, cities that use the appropriate methods for d funds may find that financial audits are less costly and less time consuming because the auditor can more easily track past disbursements of funds. t' Marcus Miller is research analyst with the League of Minnesota Cities. Storm Drain or Culvert Applications 1 Manufactured in Minnesota J PRI NSCO IN Prinsburg, Minnesota 56281 1- 800 -992 -1725 Call fora free catalog. J REQUEST FROM CHARTER COMMISSION FOR FEED BACK REGARDING PROPOSED CHARTER CHANGES Proposed Action Staff recommends approval of the following: Amend the City Charter, chapter six, to increase the authorized amount of purchase made by the City Manager. Adoption of this motion will result in an increased level of purchase authorization by the City Manager from $5,000 to $10,000, without prior approval by city council. Overview Currently the charter limits the amount of a purchase or contract entered into by the City Manager to $5,000. Anything above this amount needs prior approval of the council. Finance is recommending a change in this amount to $10,000. Primary Issues to Consider If the City of Hopkins increases the authorized amount of purchases or contracts the City Manager can make it will enable management to more efficiently handle the operations of the city. Staff would be able to enter into agreements and make purchases that are approved in the budget up to $10,000 without prior approval from the council. The City Managers' purchasing authority is limited internally through the annual budget, which is approved by city council. Increasing the approval limit allowed by the City Manager enables city staff to accomplish tasks more efficiently and effectively. This also promotes professionalism and ownership in projects and tasks. The number and degree of importance, of items coming before the council will change. The annual budget lays out the direction and plan of the city on an annual basis. Internal controls prevent city staff from varying from that direction. In the charter, it states that the city council is the only authority that may approve expenditures not covered in the annual budget. The city council may request a list of checks issued by the City of Hopkins for review. Staff Recommendation Finance recommends amendment of chapter six of the City Charter to allow for an increase in the amount of authorized purchases and contracts the City Manager can make without pre - approval from city council. Supporting Information Chapter six of City Charter (amended) Lori Yager Finance Director Subdivision 6. The Manager shall recommend to the Council for adoption such measures as he or she may deem necessary for the welfare of the people and the efficient administration of the City's affairs. Subdivision 7. The Manager shall prepare the budget annually and submit it to the Council and be responsible for its administration after adoption; prepare and submit to the Council at the end of the fiscal year a complete report on the finances and administrative activities of the City for the preceding year; and keep the Council advised of the financial condition and future needs of the City. Subdivision 8. The Manager shall perform such other duties as may be prescribed by this Charter or required of her or him by ordinances or resolutions adopted by the Council. Section 6.03. DEPARTMENTS OF ADMINISTRATION. the City Manager may create such departments and divisions for the administration of the City's affairs as may seem necessary, and may from time to time alter the same. SUBORDINATE EMPLOYEES Section 6.04. SUBORDINATE EMPLOYEES. There shall be a City Clerk subordinate to the City Manager. The City Clerk shall be subject to the direction of the City Manager, and shall have such duties as provided by law. CITY ATTORNEY Section 6.05. CITY ATTORNEY. The City Council may appoint a city attorney to advise the Council on legal matters. PURCHASES AND CONTRACTS Section 6.06. PURCHASES AND CONTRACTS. The City Manager shall be the chief purchasing agent of the City. Contracts or purchases for the city for merchandise, materials, or equipment, if budgeted or for any kind of construction work, repair or maintenance of real or personal property or personal services may be made or let by the city manager when the amount of such contract or purchase does not exceed $10,000. All other purchases shall be made and all other contracts shall be approved by the council. Each contract made by the city manager shall be made or let in conformance with applicable state law and city ordinances. All purchases in . All contracts , in excess of $10, to which the City shall be a party, shall be signed by the Mayor and by the City Manager in behalf and in the name of the City. 19