HomeMy WebLinkAbout2007 06-04 FCA•
AGENDA
Brooklyn Center Financial Commission
Monday - 4 June 2007 - Following Joint Work Session
Palmer Lake Conference Room (Upper Level of City Hall)
I. Call to Order
II. Approval of Agenda
III. Meeting Minutes
a. 19 September 2006
0 IV. Introduction and Orientation of New Commissioners
V. Review of 2007 Work Program
a. RFP for Investment Custodian
b. RFP for Audit Services
c. Schedule of Budget Meetings
VI. Other Business
VII. Adjournment
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0 1 X
Financial Commission
Regular Meeting Minutes
19 September 2006
1. Call to Order
The meeting was called to order by Mr. Nemec at 6:34 PM
2. Roll Call
Members Present: Commissioners Nemec, Shogren-Smith and Maze and Council Member
Lasman. Staff present was Director of Fiscal & Support Services Jordet.
3. Adoption of the Aaenda
Ms. Shogren-Smith proposed and Mr. Nemec seconded a motion to adopt the agenda as
presented. With all voting in favor, the motion was adopted.
4. Minutes
Ms. Shogren-Smith proposed and Mr. Nemec seconded a motion to adopt the minutes of the
5 June 2006 meeting as presented. With all voting in favor, the motion was adopted.
5. Review of Proposed Chanaes in Financial Policies
Changes proposed to the Financial Policies and Investment Policies of the City Council were
reviewed and discussed. Mr. Jordet reviewed the major changes and indicated that the
balance were changes in wording that did not affect the intent of the policy. Discussion also
included the GNMA and FNMA type investments that would be allowed by the new Policy, in
accordance with Minnesota Statutes 118A. Mr. Jordet explained the nature of the
investment, its backing and its risk factors. The dollar increase in yield based on the new
policy was estimated in the range of $ 85,000 to $ 184,000 per year, depending on the
size of the investment pool and the spread in interest rates between money market funds
and Agency investments.
Ms. Shogren-Smith proposed and Mr. Maze seconded a motion to recommend the policies as
presented to the City Council for adoption. With all voting in favor, the motion was adopted.
6. Other Business
No other business was brought before the Commission.
10. Adiournment
0 With no other business to transact, the meeting was adjourned at 8:21 PM.
BROOKLYN CENTER FINANCIAL COMMISSION
Chairperson and six members
(revised April 2007)
•
Mark Nemec (Chairperson)
5538 Camden Avenue North
Brooklyn Center, MN 55430
Mark. NemecaState.MN.US
(763) 566-1415 (h); (651) 556-6788 (w)
Appointed: 6/ 14/ 1999
Term expires: 12/31/2009
Susan Shogren Smith (Vice Chairperson)
600 62nd Avenue North
Brooklyn Center, MN 55430
sssmith2estthomas.edu
(612) 812-8160
Appointed: 1/26/2004
Term expires: 12/3112009
Gene Maze
3000 Thurber Road
Brooklyn Center, MN 55429
sandamaz(abDeoplegc.com
(763) 503-7194 (h); (612) 669-3555 (w)
Appointed: 5/22/2006
Term expires: 12/31/2008
Rex Newman
3107 61st Avenue North
Brooklyn Center, MN 55429
RexNewmanacomcast. net
(763) 561-2760 (h); (763) 391-4921 (w)
Appointed: 1/8/2007
Term expires: 12/31/2008
Philip Berglin
601 Bellvue Avenue
Brooklyn Center, MN 5430
pberalin(abmninter.net
(763) 549-5542 (h); (763) 862-7300 (w)
Appointed: 4/23/2007
Term expires: 12/31/2007
Jessica Roerick
6119 Emerson Avenue North
Brooklyn Center, MN 55430
roerliftarknicollet.com
(763) 561-7143 (h); (952) 993-5066 (w)
Appointed: 4/23/2007
Term expires: 12/31/2007
Todd Boster
7105 Riverdale Road
Brooklyn Center, MN 55430
toddboster(a)olaaarish.orp
(612) 644-0053 (h); (952) 929-3317 (w)
Appointed: 4/9/2007
Term expires: 12/31/2008
2007 City Council Liaison:
Mark Yelich
(h) (763) 486-6001
councilmembervelich(alci.brookivn-center.mn.us
City Manager: Curt Boganey
(w) (763) 569-3303
cbo4anev aeci.brooklvn-center.mn.us
Director of Fiscal & Support Services: Daniel Jordet
(w) (763) 569-3345
diordet a(-)ci.brooklvn-center.mn.us
[June 1, 20071
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City of Brooklyn Center
Minnesota
Financial Policies
June 2007
0
Table of Contents
Enabling Resolution 1
Financial Policies 5
Capitalization 5
Financial Management 8
Investment 15
Budget Policies 21
Social Services 21
Capital Improvements 23
Capital Reserve 26
Purchasing Policy 27
Schedule for Professional Services Policy 31
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RESOLUTION NO. 91-115
RESOLUTION NO. 92-99
RESOLUTION NO. 92-168
RESOLUTION NO. 95-78
RESOLUTION NO. 98-13
RESOLUTION NO. 99-110
RESOLUTION ESTABLISHING A BROOKLYN CENTER FINANCIAL
COMMISSION AND DEFINING DUTIES AND RESPONSIBILITIES
WHEREAS, the Brooklyn Center City Council established by Resolution Nos. 91-115
and 92-99 an ad hoc task force for the express purpose of reviewing the fiscal impacts of State of
Minnesota budgetary problems on Brooklyn Center and assisting the City Council in formulating
priorities and responses to a limited fiscal resource situation; and
WHEREAS, on June 22, 1992, the ad hoc City Financial Task Force presented to the
City Council a report entitled "General Fund Budget Prioritization Process" which was accepted by
the City Council; and
WHEREAS, there is an ongoing need to formulate priorities and responses to
continuing limited fiscal resources.
• NOW, THEREFORE, BE IT RESOLVED by the Brooklyn Center City Council that
there is hereby established within the City of Brooklyn Center an advisory Financial Commission as
follows:
Subdivision 1. TITLE: This organization shall be known as the Brooklyn Center
Financial Commission.
Subdivision 2. SCOPE: The scope of activity of this Commission shall consist of
advising the City Council regarding matters relevant to the City's financial status.
Subdivision 3. PURPOSE: The Commission shall serve as an advisory body to assist
the City Council in evaluating and developing fiscal policies, fiscal procedures,
Mayor and Council Member total compensation, budgetary and capital matters, and
such other issues as may be assigned to the Commission by the City Council or
referred to it by the City Manager. The Commission may also identify and
recommend to the City Council issues and matters for Commission and/or staff
review.
Subdivision 4. COMPOSITION: The Commission shall be composed of a
chairperson and six (6) members, all of whom shall be appointed and serve as set
forth in Subdivision 5.
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Subdivision 5. MEMBERS METHOD OF SELECTION-TERM OF OFFICE-
REMOVAL:
Chairperson: The Chairperson shall be elected by majority vote of the Financial
Commission membership. The election shall be conducted at the Financial
Commission's first regular meeting of the calendar year, or in the case of a vacancy,
within two regularly scheduled Financial Commission meetings from the time a
vacancy of the chair occurs. The Chairperson may be removed by majority vote of
the Financial Commission membership. The Chairperson shall assure fulfillment of
the following responsibilities in addition to those otherwise described herein:
1. Preside over meetings of the Commission;
2. Appear or appoint a representative to appear, as necessary, before the City
Council to present the viewpoint of the Commission in matters relevant
to the City's financial status as it relates to business under consideration
by the City Council;
3. Review all official minutes of the City Council and other advisory
commissions for the purpose of informing the Financial Commission of
matters relevant to city finances.
Vice Chaimerson: A Vice Chairperson shall be appointed annually by the
Chairperson from the members of the Commission. The Vice Chairperson shall
perform such duties as may be assigned by the Chairperson and shall assume the
responsibilities of the chair in the absence of the Chairperson.
Members' Term of Office: Members of the Commission shall be appointed by the
Mayor with majority consent of the Council. The terms of office shall be staggered
three-year terms, except that any person appointed to fill a vacancy occurring prior to
the expiration of the term for which his or her predecessor was appointed shall be
appointed only for the remainder of such term. Upon expiration of his or her term of
office, a member shall continue to serve until his or her successor is appointed and
shall have qualified. Terms of office for members of the Commission shall expire on
December 31 of respective calendar years.
In the event an appointed Commissioner suffers from an extended illness, disability,
or other activity preventing proper fulfillment of duties, responsibilities, rules and
regulations of the Commission, the Commissioner may be temporarily replaced by an
interim Commissioner appointed by the Mayor with majority consent of the City
Council.
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Qualifications for Membership: Members of the Commission shall be residents of
. the City of Brooklyn Center while serving on the Commission and have an interest in
the financial operations of the City.
Representation Reouirements: Members shall be appointed upon the basis of
qualification and interest and to reflect a general representation of the diversity of the
community.
Conflict of Interest: Commissioners shall comply with provisions of the City of
Brooklyn Center's business ethics policy.
Resignations-Removal from Office-Vacancies: Commissioners may resign
voluntarily or may be removed from office by the Mayor with consent by majority
vote of the City Council. Three consecutive unexcused absences from the duly called
Commission meetings or unexcused absences from a majority of duly called
Commission meetings within one calendar year shall constitute automatic resignation
from office. The City Council liaison shall inform the Mayor and City Council of
such automatic resignations. Vacancies in the Commission shall be filled by Mayoral
appointment with majority consent of the City Council. The procedure for filling
Commission vacancies is as follows:
1. Notices of vacancies shall be posted for 30 days before any official City
Council action is taken;
2. Vacancies shall be announced in the City's official newspaper;
3. Notices of vacancies shall be sent to all members of standing advisory
commissions;
4. Applications for Commission membership must be obtained in the City
Clerk's office and must be submitted in writing to the City Clerk;
5. The City Clerk shall forward copies of the applications to the Mayor and
City Council;
6. The Mayor shall identify and include the nominee's application form in
the City Council agenda materials for the City Council nieeting at which
the nominee is presented;
7. The City Council, by majority vote, may approve an appointment at the
City Council meeting at which the nominee is presented.
Compensation: Commissioners shall serve without compensation.
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. Subdivision 6. RULES AND PROCEDURES: The Commission shall adopt such
rules and procedures not inconsistent with these provisions as may be necessary for
the proper execution and conduct of business.
Subdivision 7. MEETINGS: The initial meeting of the Commission shall be
convened at the call of the Chairperson within thirty (30) days after appointment by
the Council. Thereafter, regular meetings shall be held with date and time to be
determined by the Commission. Special meetings may be called by the Chairperson.
Subdivision 8. STAFF: The City Manager shall assign one member of the
administrative staff to serve as staff to the Commission. The staff member assigned
shall perform such clerical and research duties on behalf of the Commission as may
be assigned the City Manager.
Subdivision 9. EX OFFICIO MEMBERS: The Mayor, or his or her City Council
designee, shall serve as an ex officio member of the Commission, privileged to speak
on any matter but without a vote, and shall provide a liaison between the
Commission and the City Council.
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SECTION II - GENERAL POLICIES 5
City Council Code of Policies
is
FINANCIAL POLICIES
2.20 Capitalization and Depreciation Policy for Assets Held by the City of Brooklyn Center
The City of Brooklyn Center is required under Governmental Accounting and Standards Board
(GASB) pronouncements to record and account for fixed assets in 'accordance with approved
City policies within certain Internal Revenue Service (IRS) regulations. With the
implementation of GASB 34, it will be required that all fixed assets be capitalized and accounted
for in the fund that provided financing for asset acquisition and should be credited with the value
of that asset.
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Fixed Asset Capitalization and Depreciation Schedule
Asset Category Value Threshold
Land improvements (parking lots, sidewalks, $25,000
fencing)
Buildings/Building improvements (excludes $50,000
furnishings)
Furniture and furnishings I $10,000
Technology equipment (computers, $10,000
communication systems, printers)
Motorized . vehicles (squad cars, pickup trucks, $10,000
mowers)
Heavy equipment (plow trucks, fire trucks, $25,000
loaders, graders)
Infrastructure improvements (water, sewer, $250,000
storm sewer, street lights, streets)
Asset Type Examples
Useful Life
Non-infrastructure
Furniture and furnishings Desks, tables, chairs
5 years
Computer hardware I Monitors, CPUs, printers
1 3 years
Communication equipment Telephone systems, radio
10 years
systems
Motor Vehicles
Cars and light trucks
Fire trucks
Heavy duty trucks
Motorized equipment
Heavy construction equipment
Ground maintenance
Other equipment
improvements
Buildings
Cite of Brookl.vn Center
5 years
15 years
10 years
Dozers, loaders, graders 110 years
Mowers, tractors and 15 years
attachments
Recreation equipment, 10 years
custodial equipment,
engineering equipment
Parking lots, sidewalks, fences 1 25 years
1 Buildings, park shelters 1 25 years
08/14!06
SECTION II - GENERAL POLICIES
6
City Council Code of Policies
•
( Infrastructure
Water systems
Sewer systems
Storm sewer systems
Street light systems
Traffic control systems
Streets
( Trunks, mains, towers, pumps ( 25 years
Trunks, mains, lift stations 25 years
Trunks, mains, ponds 25 years
Street lights 15 years
( Signal lights 15 years
( Paved 1.25 years
Reference: City Council Resolution No. 2002-185
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City of Brooklyn Center
08/14/06
SECTION II - GENERAL POLICIES
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City Council Code of Policies
0 2.21 Financial Management Policies
1. Purpose
The City of Brooklyn Center has a responsibility to its citizens to carefully account for
public funds, to manage municipal finances wisely, and to plan the adequate funding of
services desired by the public, including the provision and maintenance of public
facilities. The City also has the responsibility to its citizens to provide both short-term
and long-term future financial stability. The City must ensure that it is capable of
adequately funding and providing local government -services needed by the community.
Further, the financial policies set forth herein, provide the basic framework for the overall
fiscal management of the City. Operating independently of changing circumstances and
conditions, these policies assist the decision making process of the City Council and
Administration.
Most of the policies represent long-standing principles, traditions and practices which
have guided the City in the past and have helped maintain financial stability over the past
years. The financial policies will be reviewed periodically to ascertain if modifications
are necessary.
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2. Objectives
In order to achieve this purpose, this plan has the following objectives for the City's
fiscal performance:
A. To protect the City Council's policy-making ability by ensuring that important
policy decisions are not controlled by financial problems or emergencies and to
prevent financial difficulties.
B. To provide sound principles to guide the important decisions of the City Council
and of management which have significant fiscal impact and to enhance the City
Council's policy-making ability by providing accurate information on program
costs.
•
C. To set forth operational principles which control the cost of local government, to
the extent consistent with services desired by the public and which lower financial
risk.
D. To employ revenue policies which mitigate undue or unbalanced reliance on
certain revenues, especially property taxes; which distribute the costs of
municipal services fairly; and which provide adequate funds to operate desired
program and assist sound management of the city government by providing
accurate and timely information on financial conditions.
E. To provide essential public facilities and prevent deterioration of the City's public
facilities and its capital plant.
City of Brooklyn Center , 10/23/06
SECTION H - GENERAL POLICIES
8
City Council Code of Policies
. F. To protect and enhance the City's credit rating and prevent default on any
municipal debts.
G. To ensure the legal use and protection of all City funds through a quality system
of financial and internal controls.
H. The City will maintain a Risk Management Program that will minimize the
impact of legal liabilities, natural disasters or other emergencies.
3. Financial Management Policies
A. Capital Improvement Budget Policies
1. The City will make all capital improvements in accordance with an
adopted Capital Improvement Budget.
2. The City will develop a multi-year plan for capital improvements and
update it at least biennially.
3. The City Council will adopt the annual Capital Improvements Budget
based on the multi-year capital improvement plan. Future capital
expenditures necessitated by changes in population, changes in real estate
development, or changes in economic base will be calculated and included
in Capital Budget projections.
4. The City will coordinate development of the Capital Improvement Budget
with the development of the operating budget. Future operating costs
associated with new capital improvements will be projected and included
in operating budget forecasts.
5. The City will use intergovernmental assistance to finance only those
capital improvements which are consistent with the adopted capital
improvement plan and City priorities and for which operating. and
maintenance costs have been included in operating budget forecasts.
6. The City will project its equipment replacement and maintenance needs
for the next several years and will update this projection each year. From
this projection, a maintenance and replacement schedule will be developed
and followed.
7. The City staff will identify the estimated costs and potential funding
sources for each capital project proposal before it is submitted to the City
Council for approval.
8. The City will determine the least costly financing method over the length
of all new projects.
City of Brooklyn Center 10/23/06
SECTION H - GENERAL POLICIES 9
City Council Code of Policies
0- B. Revenue Policies
1. The City will attempt to maintain a diversified and stable revenue system
to shelter it from short-run fluctuations in any one revenue source and to
minimize property taxes.
2. The City will estimate its annual revenue by an objective conservative
analytical process.
3. The City will project revenues for the next three years and will update this
projection annually. Each existing and potential revenue source will be
reexamined annually.
4. The City will maintain sound appraisal procedures to keep property values
correct. Property will be assessed at the legally mandated market value
for each type of property. Reassessments will be made of all property at
least every five years.
5. The City will follow an assertive policy of collecting property tax
revenues. The annual level of uncollected property taxes should generally
not exceed two percent.
6. Each year the City will recalculate the full costs of activities supported by
user fees to identify the impact of inflation and other cost increases.
7. The City staff will recommend revised user fees with review by the City
Council on an annual basis, to adjust for cost factors and inflation on the
City's cost of providing services.
8. The City will set fees and user charges for each Enterprise Fund, such as
Water and Sewer, at a level which fully supports the total. direct and
indirect costs of the activity. Indirect costs include the cost of annual
depreciation of capital assets.
9. User charges and fees determined to be appropriate for City services will
generally be established at a level which will recover the full cost of
providing the service, including administrative costs.
C. Debt Policies
1. The City will confine long-term borrowing to capital improvements or
projects which cannot be financed from current revenues.
2. When the City finances capital projects by issuing bonds, it will pay back
the bonds within a period not to exceed the expected useful life of the
project.
City of Brooklyn Center 10/23/06
SECTION H - GENERAL POLICIES
10
City Council Code of Policies
• 3. On all projects, at least 50% of the principal shall be retired within ten
years.
4. The City will make every attempt to keep the average maturity of General
Obligation Bonds at or below 20 years.
5. Total debt service payments for General Obligation debt will not exceed
five percent of total annual locally generated operating revenue in the
general, special revenue, and proprietary funds.
6. Total outstanding General Obligation debt will not exceed two percent of
the market valuation of taxable property.
7. Where possible, the City will use, special assessment, revenue or other
self-supporting bonds instead of General Obligation Bonds.
8. The City will not incur debt to support current operations.
9. The City will maintain good communications with bond rating agencies
regarding its financial condition. The City will follow a policy of full
disclosure in every financial report, official statement, and bond
prospectus.
10. Direct net-debt (gross debt less debt fully supported by non-property tax
revenues) per capita shall not exceed $600 per capita.
11. The City will require Minimum Assessment (Taxable Valuation)
Agreements on all projects in which the City is providing development
assistance through tax increment financing or committing its bonding
authority. This will ensure minimal cash flow (increment) to repay
obligations, provide another level of review before commitment (by the
City Assessor), and to the minimal - value agreed upon, eliminate tax
appeals during the agreement period.
12. For purposes of this section, tax increment revenues are classified as a
non-property tax revenue source.
D. Reserve Policies
1. The City shall manage its cash flow needs by having a target unreserved
and undesignated General Fund balance at the close of each fiscal year of
50 to 52% of the next year's General Fund operating budget.
2. Undesignated General Fund monies that are not required for cash flow
purposes may be transferred into other funds as may be appropriate or
needed during the fiscal year. It is specifically anticipated that transfers
will be made to the Street Reconstruction Fund, Capital Improvements
City of Brooklyn Center 10/23/06
SECTION II - GENERAL POLICIES
11
City Council Code of Policies
Fund, and the Technology Fund when operating results generate a surplus
of actual revenues over actual expenditures to serve as a recurring source
of funding for those three funds.
E. Investment Policies
1. The City will make cash flow analysis of all funds on a regular basis.
Disbursement, collection and deposit of all funds will be scheduled to
ensure maximum cash availability.
2. When permitted by law, the City will pool cash from several different
funds for investment purposes.
3. The City will invest at least 98% of its idle cash on a continuous basis.
4. The City will analyze market conditions and investment securities to
determine what yield can be obtained, and attempt to secure the best
possible return on all cash investments:
5. The City's accounting system will provide regular information concerning
cash position and investment performance.
6. The City will maintain a formal written investment policy which will
contain legal and administrative guidelines necessary to ensure that the
City's available funds will be invested to the maximum extent possible, at
the highest rates obtainable at the time of the investment, consistent with
minimizing credit and market risk and which provides proper safeguards
for the keeping of the City's investments.
F. Accounting, Auditing and Financial Reporting Policies
1. The City will establish and maintain a high standard of accounting
practices in conformance with generally accepted accounting principles.
2. The accounting system will maintain records on a basis consistent with
accepted standards for local government accounting using GASB 34 as the
basis of accounting for all governmental funds and an accrual basis of
accounting for Enterprise and Internal Service Funds. Accounting policies
will reflect the principle of charging current taxpayers and/or users for the
full cost of providing current services.
3. Regular monthly and annual financial reports will present a summary of
financial activity by major types of funds as determined by the prior year's
Comprehensive Annual Financial Report.
City of Brooklyn Center 10/23/06
SECTION H - GENERAL POLICIES
12
City Council Code of Policies
•
G
4. Where possible, the reporting system will provide monthly information on
the total cost of specified services by type of expenditure and, if necessary,
by fund.
5. An independent public accounting firm will perfonn an annual audit and
will publicly issue an opinion concerning the City's finances.
Risk Management Policies
1. The City will maintain a Risk Management Program that will minimize
the impact of legal liabilities, natural disasters or other emergencies
through the following activities:
a. Loss Prevention. Prevent negative occurrences.
b. Loss Control. Reduce or mitigate expenses of a negative
occurrence.
C. Loss Financing. Provide a means to finance losses.
d. Loss Information Management. Collect and analyze relevant data
to make prudent loss prevention, loss control and loss financing
decisions.
•
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2. The City's Risk Management Program will:
a. Analyze all the City's risks.
b. Avoid risks whenever possible.
C. Reduce risks whenever possible.
d. Transfer risks to other entities when possible.
e. Of those risks that must be retained, it shall be the City's policy to
fund risks which the City can afford and transfer all other risks to
insurers.
City" of Brooklyn Center
3. The City will maintain an active Safety Committee comprised of City
employees.
4. The City will periodically conduct educational safety and risk avoidance
programs, through its Safety Committee and with the participation of its
insurers, within its various departments.
5. The Safety Committee will report to the City Manager, at least annually,
on the results and costs of the City's Risk Management Program for the
preceding year. The City Manager shall report annually to the City
Council.
10/23/06
SECTION H - GENERAL POLICIES 13
• H. Operating Budget Policies
City Council Code of Policies
1. In accordance with Chapter 7, Section 7.06 of the City Charter, the total
sum appropriated in the General Fund annual budget shall be equal to the
total estimated General Fund revenue and any allocated General Fund
balance.
2. The City will pay for all current expenditures with current revenues. The
City will avoid budgetary procedures that balance current expenditures at
the expense of meeting future year's revenues, or rolling over short-term
debt, or that rely on accumulated fund balances to meet current
obligations.
3. The City will annually appropriate a contingency appropriation in the
General Fund budget, not to exceed five percent of the total budget, to
provide for unanticipated expenditure of a non-recurring nature.
4. The City Manager, when submitting the Proposed Budget to the City
Council, shall submit a balanced General Fund budget in which
appropriations shall not exceed the total of the estimated General Fund
revenue and any fund balance appropriated by the City Council.
5. Prior to adopting the General Fund Annual Budget, the City Council shall
review the Reserve Policy.
6. In the event that there is a shortfall of revenues in a current year budget,
the City Manager may recommend the use of a portion of the General
Fund balance not to exceed the amount available after deducting amounts
reserved for items not readily convertible to cash or reserved for working
capital.
7: The budget will provide for adequate maintenance of the capital plant and
equipment, and for their orderly replacement.
8. The budget will provide for adequate funding of all retirement systems.
9. The City.will maintain a budgetary control system to assist in adhering to
the budget.
10. The City administration will prepare regular monthly reports comparing
actual revenues and expenditures to the budgeted amount.
11. Each year the City will update expenditure projections for its Enterprise
Funds for at least the ensuing five years. Projections will include
estimated operating costs of future capital improvements included in the
Capital Budget.
City of Brooklyn Center 10/23/06
SECTION II - GENERAL POLICIES
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City Council Code of Policies
• 12. The Operating Budget will describe the major goals to be achieved, and
the services and programs to be delivered for the level of funding
provided.
13. Where possible, the City will integrate performance measurement and
productivity indicators with the budget.
14. Enterprise funds shall be budgeted to have positive net income plus a
sufficient margin to provide for replacement cost of property, plant, and
equipment.
I. Ethics Policy
The City will maintain, and periodically review, a formal written ethics policy for
all City employees and elected officials.
J. Role of Auditors
The City's independent auditors shall be required, in the course of their audit, in
the content of their Management Letter, to report any conditions that appear to be
violations of our financial management policy.
Reference: City Council Resolution Nos. 2006-120; 2004-189; 99-21; 98-48; City Council
Minutes 5/22/95; 6/8/92; 2/26/90; 12/22/80
•
City of Brooklyn Center 10i23/06
SECTION II - GENERAL POLICIES
15
City Council Code of Policies
• 2.22 Investment Policy
1. Scope
This investment policy applies to all of the investment activities of the City, except for
the proceeds of refunding bond issues where the investment of such proceeds is
specifically governed by the bond escrow agreement.
2. Objective
A. Safety
Safety of principal is the foremost objective of the investment program.
Investments shall be in a manner that ensures the preservation of capital in the
overall portfolio.
1. Credit Risk
Credit risk is the risk of loss due to failure of the security issuer or backer.
Credit risk may be mitigated by:
•
a. Limiting investments to the safest types of securities; and
b. Pre-qualifying the financial institution, broker/dealer,
intermediaries, and advisors with which an entity will do business;
and
c. Diversifying the investment portfolio so that potential losses on
individual securities will be minimized.
2. 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 rate. Interest rate risk
may be mitigated by:
a. 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; and
b. By investing operating funds primarily in shorter-term securities.
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City of Brooklyn Center 10/23/06
SECTION H - GENERAL POLICIES
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City Council Code of Policies
•
B. Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating
requirements that may be reasonably anticipated. This is accomplished by
structuring the portfolio so that securities mature concurrent with cash needs to
meet anticipated demands. Furthermore, since all possible cash demands cannot
be anticipated, the portfolio should contain a large component of securities with
active secondary or resale markets.
C. Yield
The investment portfolio shall be designed with the objective of attaining a
market rate of return throughout budgetary and economic cycles, taking into
account the investment risk constraints and liquidity needs. Return on investment
is of least importance compared to the safety and liquidity objectives described
above. The core of investments is limited to relatively low risk securities in
anticipation of earning a fair return relative to the risk being assumed. Securities
shall be held to maturity with the following exceptions:
Liquidity needs of the portfolio require that the security be sold.
•
2. A security of declining credit could be sold early to minimize loss of
principal.
D. Stable Earnings
Since investment earnings are included in the budgeted revenues of the City, it is
important that these earnings be stable and predictable through at least the next
budget cycle. This emphasizes the need to purchase securities of various
maturities so that at least half of the portfolio will remain for two or more years
with known interest rates.
3. Standards of Care
A. Prudence
0
The standard of prudence to be used by investment officials shall be the prudent
person standard described in Minnesota Statutes Chapter 118A. It will be applied
in the context of managing the overall portfolio. Investment officials acting in
accordance with this policy and exercising due diligence shall be relieved of
personal responsibility for an individual security's credit risk or market price
changes, provided deviations from expectations are reported in a timely fashion
and the purchase and sale of securities are carried out in accordance with the
terms of the policy.
Investments shall be made with judgment and care, under circumstances then
prevailing, which persons of prudence, discretion and intelligence exercise in the
City of Brooklyn Center 10/23/06
SECTION II - GENERAL POLICIES
17
City Council Code of Policies
i management of the City's affairs, not for speculation, but for investment,
considering the probable safety of their capital as well as the probable income to
be derived.
B. Ethics and Conflicts of Interest
Officials involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management of the
investment program, or that could impair their ability to make impartial decisions.
Officials shall disclose any material interests in financial institutions with which
they conduct business. They shall further disclose any personal
financial/investment positions that could be related to the performance of the
investment portfolio. Officials shall refrain from undertaking personal investment
transactions with the same individual with whom business in conducted on behalf
of the City.
C. Delegation of Authority
Authority to manage the investment program is derived from Minnesota State
Statutes, Chapter 118A and Brooklyn Center City Charter Chapter 6, Section 6.04
and is granted to the City Manager, City Treasurer, and Assistant Finance
Director. Responsibility for the operation of the investment program may be
delegated by the City Manager to the City Treasurer, who shall carry out the
program consistent with this policy. No person may engage in any investment
transaction except as provided under the terms of this policy. The City Treasurer
shall be responsible to the City Manager for all transactions undertaken and shall
establish a system of controls to regulate the execution of all investment
transactions.
D. Training
To ensure the competence of its investment officials, the City shall provide the
opportunity for the officials to attend such investment training programs as are
available and suitable.
4. Safekeeping and Custody
A. Authorized Financial Dealers and Institutions
A resolution shall be submitted to the City Council at least annually to designate
depositories of City funds. This shall include institutions and dealers/brokers,
where accounts are maintained for banking services, purchase and sale of
investment securities, and the custody of securities.
The City Treasurer shall provide to each broker or institution a written statement
of investment restrictions which shall include a provision that all future
investments are to be made in accordance with Minnesota Statutes governing the
City of Brooklyn Center 10/23/06
SECTION II - GENERAL POLICIES
18
City Council Code of Policies
investment of public funds, prior to completing an initial transaction, and annually
thereafter.
An annual review of the depositories shall be conducted by the City Treasurer.
Requests for Proposals for banking services and custodian for investment
securities shall be conducted on a periodic basis as defined in the Policy and
Procedure on Requests for Proposals for Financial Professional Services.
B. Internal Controls
The City Treasurer 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. The concept of reasonable
assurance recognizes that the cost of a control should not exceed the benefits
likely to be derived and the valuation of costs and benefits requires estimates and
judgments by management. Internal controls shall include the following:
1. Control of Collusion. Collusion is a situation where two or more
employees are working in conjunction to defraud their employer.
. 2. Custodial safekeepine. Securities purchased from any bank or dealer shall
be placed with an independent third party for custodial safekeeping or held
in an account with the Federal Reserve Bank of Minneapolis.
3. Avoidance of nhvsical deliverv securities. Book entry securities are much
easier to transfer and account for since actual delivery of a document
never takes place. Delivered securities must be properly safeguarded
against loss or destruction. The potential for fraud and loss increases with
physical delivered securities.
4. Clear delegation of authoritv to subordinate staff members. Officials must
have a clear understanding of their authority and responsibilities to avoid
improper actions. Clear delegation of authority also preserves the internal
control structure.
5. Written confirmation of telephone transactions for investments and wire
transfers. Due to the potential for errors and improprieties arising from
telephone transactions, all transactions should be supported by written
communications and approved by the appropriate official. Written
communications may be via fax on letterhead. Institutions and
brokers/dealers shall be provided with a list of authorized signers.
6. Development of a wire transfer agreement with institutions and
brokers/dealers. This agreement should outline the various controls,
security provisions, and delineate responsibilities of each party making
and receiving wire transfers.
City of Brooklyn Center 10/23/06
SECTION II - GENERAL POLICIES
19
City Council Code of Policies
7. Independent Audit. The City's independent auditors shall conduct a
thorough review of the City's investment portfolio and transactions as part
of their engagement.
C. Delivery Verses Payment
All trades where applicable will be executed by delivery verses payment (DVP).
This ensures that securities are deposited in the eligible financial institution prior
to the release of funds. Securities will be held by a third party custodian.
5. Suitable and Authorized Investments
A. Investment Types
Consistent with Minnesota Statutes Chapter I I8A, the following investments will
be permitted by this policy:
1. Securities that are the direct obligations or are guaranteed or insured issues
of the United States, its agencies, its instrumentalities, or organizations
created by an act of Congress; including governmental bills, notes, bonds,
and other securities.
2. Commercial paper issued by U.S. corporations or their Canadian
subsidiaries that is rated in the highest quality by at least two nationally
recognized rating agencies and matures in 270 days or less.
3. Time deposits that are fully insured by the Federal Deposit Insurance
Corporation or bankers acceptances ofU.S. banks.
4. Repurchase agreements and reverse repurchase agreements may be
entered into with financial institutions identified by Minnesota Statutes
Chapter 118A.
5. Securities lending agreements may be entered into with financial
institutions identified by Minnesota Statutes Chapter 118A.
6. Minnesota joint powers investment trusts may be entered into with trusts
identified by Minnesota Statutes Chapter 118A.
7. Money market mutual funds regulated by the Securities and Exchange
Commission and whose portfolios consist only of short term securities
permitted by Minnesota Statutes Chapter 118A.
8. Bonds of the City of Brooklyn Center issued in prior years, may be
redeemed at current market price, which may include a premium, prior to
maturity using surplus funds of the debt service fund set up for that issue.
City of Brooklyn Center 10/23/06
SECTION H - GENERAL POLICIES
20
City Council Code of Policies
Such repurchased bonds shall be canceled and removed form the
obligation of the fund.
B. Securities Not Purchased
Derivative securities, which obtain their value by the calculation of some portion
of the value of another security, shall not be purchased. Mortgage backed
securities, unless issued by a Federal Agency, shall not be purchased. Securities,
which represent the principal or interest payments stripped off from an original
issue security, shall not be purchased.
C. Collateralization
To the extent that deposits in bank accounts, certificates of deposit, and
repurchase agreements exceed the available federal deposit insurance, collateral
shall be furnished by the financial institution in accordance with Minnesota
Statutes Chapter 118A.
D. Maximum Maturities
When purchasing investments, the Treasurer will attempt to match the maturity to
future cash flow requirements. The City will not invest in securities maturing
more than five years from the date of purchase. No more than ten percent of the
City's portfolio at any time shall be invested in securities with maturities of more
than three years.
6. Reporting
A. The City Treasurer shall prepare a monthly investment report to the City Manager
which shall include a succinct management summary; a list of significant
transactions such as purchases, sales, and maturities of investments; a list of
investments by type, a list of investments by maturity, a calculation of average
yield on the portfolio, and a statement of interest earned. This report will be
prepared in a manner which will allow the City Manager to ascertain whether
investment activities during the month have conformed to the investment policy.
B. A statement of the market value of the portfolio shall be issued at least annually.
This will review the investment portfolio in terms of value and subsequent price
volatility.
Reference: City Council Resolution Nos. 2006-120; 97-60; 90-105
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City of Brooklyn Center I Oi23/06
SECTION H - GENERAL POLICIES 21
City Council Code of Policies
0 BUDGET POLICIES
2.40 Guidelines for Funding of Social Services
Social service funding will be divided into categories as follows:
1. Joint Powers Agreements. Services which the City is required to or otherwise would
provide itself and has chose to enter into joint powers agreements with other
governmental units to provide those services. Increased costs of providing these services
over time are to be anticipated in the budget process based on allocation of costs to the
City under the joint powers agreements.
Guideline: The services will be funded and included in the budget.
The City Council will review these services in February of even-numbered years to
determine if the delivery mechanism through joint powers is appropriate and effective.
Unless the Council directs notice of intent to leave the joint powers agreement by March
of any given year, the budget will include participation for the following year.
2. Services Dependent on City Funding. General services that the City could provide
itself and has chose to contract for its provision by another entity, where the provision of
the service in Brooklyn Center is dependent on the City's provision of financial support
at a given level. Increased costs of providing these services over time are to be
anticipated in the budget process based on allocation of costs to provide the service in the
City.
Guideline: The services will be funded and included in the budget at a level necessary
for the provision of the service.
The City Council will review these services in February of each year to determine if the
delivery mechanism through contract is appropriate and effective. Unless the Council
directs notice of intent to terminate contractual provision of services by March of any
given year, the budget will include participation for the following year.
3. Services Aided by City Funding. General services that the City could provide itself and
has chosen to contract for its provision by another entity and the provision of service in
Brooklyn Center would be aided by City financial support, but is not dependent on City
financial support.
Guideline: Based on a timely application for funding, the City Council will consider the
following factors in determining funding in this category and allocate funding up to a
total amount determined by the City Council
• service is unique in the City: that is, there is a rationale for funding the
organization's service provision, as opposed to funding one organization out of a
group of similar organizations without an objective basis for differentiating
between the organizations
City of Brooklyn Center 08/14/06
SECTION II - GENERAL POLICIES
22
City Council Code of Policies
• request meets an important community need
• service does not duplicate other services offered in the community
• number of residents served or benefit to community is high in relation to the
amount requested/provided from/by City
• program requires City support to provide level of service
• use of volunteers is reasonable and cost effective
• other funding sources have been explored/used
• budget request is reasonable in light of organization's overall budget
• administrative costs and program service costs are in reasonable balance
Reference: City Council Minutes 3/14/94; City Council Resolution Nos. 98-66; 99-186
•
9
City of Brooklyn Center 08/14/06
SECTION H - GENERAL POLICIES 23
City Council Code of Policies
2.41 Capital Improvements Fund and Infrastructure Construction Fund Expenditure Policy
1. Policy Objective
The City of Brooklyn Center makes large unrestricted capital expenditures through one of
two funds. Generally, small capital expenditures are funded through the general fund and
planned for as part of the annual budget process for the general fund. Large unrestricted
capital expenditures for municipal buildings and park improvements are funded through
the capital improvements fund based on City Council Resolution No. 68-246, which was
approved in 1968. Large unrestricted capital expenditures for street and utility
improvement projects are funded through the infrastructure construction fund. Capital
expenditures are also made through other funds such as the M.S.A. construction fund, the
street construction fund, the water utility fund, the sanitary sewer utility fund, and the
storm drainage utility fund._ These funds each have restrictions in place to guide their
expenditures.
The objective of this policy is to clarify funding for all unrestricted capital expenditures
by specifically defining which capital expenditures are eligible for funding through the
capital improvements fund and infrastructure construction fund. Unrestricted capital
expenditures not meeting the criteria for the capital improvements fund must be made
from the general fund operating budget.
Specifically excluded from this policy are capital expenditures that are to be reimbursed
by insurance proceeds. These may be accounted for through the capital improvements
fund at the discretion of the Director of Finance.
2. Source of Funds
The sources are ad-valorem taxes, issuance of bonds, state and federal grants, transfers of
unrestricted balances from other funds, and investment earnings.
3. Use of Funds
The infrastructure construction fund may be used, pursuant to this policy, for
expenditures on infrastructure improvements and similar projects having an aggregate
value in excess of $50,000. The types of expenditures contemplated by this policy
include projects such as:
• street repair, replacement, and construction
• bridge rehabilitation and construction
• water, sanitary sewer, storm drainage, and street light utility improvements
The capital improvements fund may be used, pursuant to this policy, for expenditures on
capital equipment, infrastructure improvements and construction, and similar projects
having an aggregate value in excess of $50,000. The types of expenditures contemplated
by this policy include projects such as:
City of Brook!}n Center 08/14'06
SECTION II GENERAL, POLICIES
24
City Council Code of Policies
• building construction, repair, reconstruction, and remodeling, including
component systems for heating, ventilation, and air conditioning
• equipment and furnishings, including furniture, lights, and communications
cabling
• park landscaping, shelter, and improvements
• computer, radio, and telephone systems
The expenditures from the capital improvements fund and infrastructure construction
fund are to be used for general governmental capital needs and not for enterprise fund
capital needs, except as the general governmental portion of a joint project for both
general and enterprise purposes.
Additionally, the capital improvements fund may be used to provide loans to other funds
maintained by the City. However, loans from the capital improvement fund may only be
made to proprietary funds which have the ability to generate revenue and repay the loan
within 10 years at prevailing interest rates.
4. Authority to Spend
Expenditures meeting the above criteria may be funded through the capital improvements
fund based on the following authority limits:
1. Expenditures from $0 to $50,000: Not eligible for funding from the capital
improvements fund. Funding is required through the general fund operating
budget.
2. Expenditures from $50,001 to $300,000: The City Council may, through simple
majority, approve these expenditures.
3. Expenditures over $300,001: Following a public hearing, the City Council may,
through a 4l5ths majority, approve expenditures in this category.
5. Spending Limitation/Fund Balance Requirement
The objective as described in Section i and previously defined in City Council
Resolution No. 68-246 requires the capital improvements fund and infrastructure
construction fund to be a permanent source of funding for planned major expenditures.
As such, the following criteria is established to comply with that intent:
1. Planned Expenditures: If the proposed capital expenditure is in excess of
$300,000, it must have been included in the fifteen-year Capital Improvement
Program for at least two years.
2. Additionally, the fifteen-year Capital Improvement Program must be approved by
the City Council at a public hearing on an annual basis.
City of Brooklyn Center 04/09/07
SECTION II - GENERAL POLICIES 25
City Council Code of Policies
i .6. Role of the Financial Commission
If a review of an expenditure is requested by the City Council from the Financial
Commission, the Financial Commission will respond on the basis of the following
questions:
1. Does the expenditure comply with the Capital Improvements Fund Expenditure
Policy?
2. Is the expenditure appropriate considering the financial condition of the City?
Reference: City Council Resolution Nos. 2007-56; 2006-46; 97-84; City Council Minutes
1/10/94
•
•
City of Brooklyn Center 04/09/07
SECTION II - GENERAL POLICIES 26
City Council Code of Policies
0 2.42 Capital Reserve Fund Policy
1. Policy Objective
The objective of this policy is to provide funds to meet emergency needs for capital
expenditures that may arise from time to time. While the City carries property and
casualty insurance, the City may need additional fiords beyond insurance proceeds in the
event of natural or other disaster impacting its buildings and their contents, as well as
other improvements to real property. Also, unanticipated failure of buildings or
improvements to buildings may require immediate expenditure of funds for repair or
replacement that are not covered by insurance. The funds placed in the Capital
Expenditure Reserve Fund are not to be considered a source for planned or recurring
capital needs, but only to deal with emergency needs as described due to damage, loss, or
failure of existing buildings and other improvements to real property.
2. Use of Funds
Funds may be expended from the Capital Expenditure Reserve Fund for the repair or
replacement of buildings or other improvements to real property and their contents where
the repair or replacement is necessitated by damage to such buildings or other
improvements to real property and their contents due to:
0 1. natural disaster such as a tornado, storm, flood, earthquake, or fire
2. fire, vandalism, terrorism, explosion, building or component collapse
3. Authority to Spend
Expenditures meeting the criteria for the use of funds may be fimded through the Capital
Expenditure Reserve Fund upon Resolution of the City Council fording that the criteria
for expenditure have been met and that the use of fluids would not otherwise be covered,
by insurance proceeds, except that the City Council may authorize the use of Capital
Expenditure Reserve Funds in anticipation of the receipt of insurance proceeds providing
that such funds used in anticipation of insurance proceeds are repaid to the Capital
Expenditure Reserve Fund from such insurance proceeds.
City of Brooklyn Center 08/14/06
SECTION II - GENERAL POLICIES 27
City Council Code of Policies
• 4. Fund Balance
The Capital Expenditure Reserve Fund shall be established at $1,000,000. Such fund
balance shall increase each year by the interest earned on the fund balance. In the event
that the fund would drop below $1,000,000, the City Manager shall prepare a plan for
restoring the balance to $1,000,000. The fund balance target should reflect an analysis of
the City's uninsured exposure to the losses identified in this policy. Such plan, as well as
whether the balance should be made higher or lower, shall be reviewed by the Financial
Commission and City Council. The plan adopted by the City Council shall be included in
the budgetary process if the fund's balance is not restored by transfer of existing funds
from another fund, such as the Capital Improvement Fund.
Reference: City Council Resolution No. 97-84
•
•
City of Brooklyn Center 08/14/06
SECTION II GENERAL POLICIES 28
City Council Code of Policies
• PURCHASING/DISPOSAL OF PROPERTY POLICIES
2.50 City Purchasing Policy
The policy of the City of Brooklyn Center shall be to follow the Uniform Municipal Contracting
Law set forth in Minnesota Statutes Section 471.345 as the same may be amended or renumbered
from time to time. The City Manager shall be the chief purchasing agent for the City; all
purchases for the City and all contracts shall be made or let by the City Manager for which State
Law does not require solicitation of bids.
The City Manager shall establish an administrative purchasing policy to implement the
provisions of the Uniform Municipal Contracting Law.
Reference: City Council Resolution Nos. 96-106; 83-172; 81-43; City Council Minutes 8/12/91
•
•
Crry of Brooklyn Center 08'14,'06
SECTION H - GENERAL POLICIES
29
City Council Code of-Policies
•
SCHEDULE FOR PROFESSIONAL SERVICES POLICIES
2.80 Policy and Procedure on Requests for Proposals for Financial Professional Services
1. Need for Policy
The City needs a policy and procedure to provide for the orderly conduct of requesting
proposals for professional services for handling financial affairs, to ensure that all
services will be periodically reviewed, and that the proper balance will be maintained
between cost and quality of services.
2. Policy
A. All professional services in the area of City finances will be periodically let out
for request for proposals (RFPs) according to an established schedule.
B. Service levels will be monitored by the City Council and Staff and if
unsatisfactory service is received, that contract will be re-advertised prior to the
year set in the schedule.
C. Quality of service will be the primary factor in awarding a contract for
professional service, but cost will also be a determinant.
3. Procedure
A. A schedule shall be established for the conduct of RFPs. The schedule should be
adhered to unless there is a performance problem or other justification for an
earlier RFP. Going to the market too frequently with RFPs expends Staff time,
requires extensive orientation of new professionals, and discourages quality firms
from submitting proposals at their most attractive price since they will expect to
only have the contract for a short time.
B. Specifications tailored to the professional service to be advertised will be
prepared by Staff, reviewed by the Financial Commission, and approved by the
City Council.
•
C. A review committee made up of the City Manager and Finance Director shall
review proposals for Banking Services, Insurance Agent, Risk Management
Consultant, and Custodian for Investment Securities. Proposals for Auditor and
Financial Advisor shall be initially screened by Staff, and then reviewed by a
committee of City Council Members and Financial Commission Members
appointed by the Mayor in consultation with the Chair of the Financial
Commission, with the approval of the City Council, which committee shall also
include the City Manager and Finance Director.
City of Brooklyn Center
10/23/06
. SECTION H - GENERAL POLICIES
30
City Council Code of Policies
•
0
D. The specifications will emphasize the abilities, qualifications, and experience of
the applicant firms to provide high quality service to the City. Price will be
considered after one or more applicants have been identified as providing the
desired quality of service. When appropriate, the specification shall require prices
to be submitted in a separate, sealed envelope to be opened after applicants have
been ranked according to quality.
E. The City Manager shall make a recommendation to the City Council of a provider
to be appointed to a multi-year engagement. It shall be written in the engagement
that the appointment may be terminated earlier.
Schedule for Requests for Pro iiosal's
~ in i1cial Services
'type of-Serf ice Financial Banking Insurance Agent Risk Management Custodian for Auditor
Advisor for Services Consultant Investment
Bond Sales Securities
Usual >Atelrvat
1
between RFl's
6 years
6 years 6 years 6 years 6 years
1 6 years
I Most Recepf RFP . " j
2004 12002 1 2003 1 2003 1 1998
1 2002
QOb I
i I I RFP
1
2OQ7
I I I I
I RFP
20Q8'
1
RFP I I 1
t
2A~9' 1
i
1 I RFP I 1
I~ lY } :
I I I RFP t
RFP I I I !
r 24 I
I I I I RFP
I
2~ 1
I I I
I RFP
211!4 I
I RFP I I I
{
2Q1 1
1 I RFP
z01G 1
I I I RFP i
I
t gpir _l
RFP I
*Awarded to Deloite Touche who subsequently withdrew after the FY 2001 audit.
Balance of engagement awarded to HLB Tautges Redpath for FY 2002 - FY 2006.
Reference: City Council Resolution Nos. 2006-120; 2000-120; 99-20; City Council Minutes
5/28/96
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City of Brooklyn Center
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