HomeMy WebLinkAbout2018 05-24 FCA
AGENDA
Brooklyn Center Financial Commission
Thursday, May 24, 2018 – 6:30 PM
All American Conference Room (Main Level of City Hall)
I. Call to Order
II. Approval of Agenda
III. Approval of Minutes for February 15, 2018
IV. Comprehensive Plan Engagement Activity
V. Mayor and City Council Compensation for 2019-2020
VI. City Investment Presentation
VII. Future Dates
a. City Council/Financial Commission Joint Work Session Schedule
VIII. Adjournment
Financial Commission Agenda Item No. 3
1
Financial Commission
Regular Meeting Minutes
February 15, 2018
1. Call to Order
The meeting was called to order by Vice Chairperson Ms. Burke at 6:32 PM.
Members Present:
Commissioners Burke, Kragness, Terefe, Van Der Werf, Dwapu, Hedenland
Members Absent: Commissioner Dobbs (excused)
Council Liaison Lawrence-Anderson was present.
Finance Director Reinhardt was present.
2. Adoption of the Agenda
Ms. Burke moved adoption of the February 15th, 2018 agenda. The motion was
seconded by Ms. Kragness. With all voting in favor, the agenda was adopted.
3. Financial Commission Background
Mr. Reinhardt provided a brief background on the history of the Financial
Commission and their recent assignments and activities.
4. Minutes
Ms. Kragness moved adoption of the minutes from the March 30th, 2017 meeting,
with an amendment to correct a typo in Section 4. The motion was seconded by Ms.
Hedenland. With all voting in favor, the motion was approved.
5. Election of Commission Chairperson
Ms. Kragness expressed her willingness to serve as the Chairperson for 2018. Mr.
Van Der Werf made the motion to nominate Ms. Kragness as Chairperson for 2018.
With all voting in favor, Ms. Kragness was affirmed Chairperson of the Financial
Commission for 2018.
6. Election of Commission Vice Chairperson
Financial Commission discussed the potential of Mr. Van Der Werf or Ms. Burke
serving in the role of Vice Chairperson. Ms. Kragness appointed Ms. Burke to Vice
Chairperson of the Financial Commission for 2018.
2
7. Request for Proposal: Custody/Trust Banking Services
Mr. Reinhardt reviewed the City Council policy that every six years the City will
request proposals for financial professional services. The adopted schedule indicates
that custody/trust banking services should be reviewed through the Request for
Proposals (RFP) process. The City’s custody/trust banking services are currently
being provided by Wells Fargo. The goal of the process is to maintain a proper
balance between cost and quality of service. The City currently utilizes a custody
account to hold City investments in one single location which simplifies the
reporting, tracking and buying/selling of these investments. Policy states that the
RFP is to be “prepared by staff, reviewed by the Financial Commission, and
approved by the City Council”. The average annual cost for these services over the
past three year is $7,653.
The Financial Commission discussed the RFP and Mr. Reinhardt responded to
questions about the timing of the RFP, how fees are charged, general questions
about the investments of the City, and whether we anticipate additional firms
responding to the proposal.
Ms. Burke made a motion that the Financial Commission to recommend the RFP for
Custody/Trust Banking Services be forwarded to City Council. That motion was
seconded by Ms. Hedenland and with all voting in favor, the motion was approved.
8. Future Meeting Dates
Commissioners were made aware of the all commission meeting on Wednesday,
April 5, 2018 at Constitution Hall and the joint work session with the City Council on
June 4th, 2018 to review the auditor’s report.
Adjournment
With no other business to transact, Ms. Kragness adjourned the meeting at 7:12 PM.
Financial Commission Agenda Item No. 4
FNANCIAL COMMISSION MEMORANDUM
Our Vision: We envision Brooklyn Center as a thriving, diverse community with a full range of housing, business, cultural and
recreational offerings. It is a safe and inclusive place that people of all ages love to call home, and visitors enjoy due to its
convenient location and commitment to a healthy environment
DATE: May 24, 2018
FROM: Nathan Reinhardt, Finance Director
SUBJECT: Comprehensive Plan Engagement Activity
Recommendation:
Meg Beekman, Community Development Director has asked if the Financial Commission would
be willing to participate in a comprehensive plan engagement activity.
Background:
The Community Development department is in the process of updating the City of Brooklyn
Center’s comprehensive plan. The comprehensive plan is a requirement of all municipalities in
the Twin Cities Metropolitan Area. The plan expresses and regulates public purpose policies on
transportation, utilities, land use, recreation and housing. This engagement activity has also been
recently completed by the Planning, Housing, Parks and Multi-Cultural Advisory Committees
(MAC). The actual activity will be a mapping exercise, which will feature a map of the City and
ask a series of questions related to community image, neighborhood characteristics, areas of
likely change, transportation, etc. The goal of the activity is to review elements that currently
exist, are missing or could be improved.
Ms. Beekman indicated the engagement activity will be approximately 30 minutes.
Financial Commission Agenda Item No. 5
FNANCIAL COMMISSION MEMORANDUM
Our Vision: We envision Brooklyn Center as a thriving, diverse community with a full range of housing, business, cultural and
recreational offerings. It is a safe and inclusive place that people of all ages love to call home, and visitors enjoy due to its
convenient location and commitment to a healthy environment
DATE: May 24, 2018
FROM: Nathan Reinhardt, Finance Director
SUBJECT: City Council Compensation for 2019 and 2020
Recommendation:
It is recommended that the Financial Commission review and provide a recommendation for City
Council Compensation for 2019 and 2020.
Background:
Every two years it is the responsibility of the Financial Commission to review the City Council’s
compensation and recommend a compensation level for the upcoming two years. The review
and recommendation was last provided in 2016. The Commission’s recommendation will be
forwarded to the City Manager to present to the City Council.
In the City Council Code of Policies, Section 2.05 deals with City Council compensation, a copy
of that section has been included with this memo. The Finance department has compiled a table
of comparative compensation numbers for the City Council of the Cities names in the policy.
In previous Commission reviews of Council compensation the goal of the recommendation has
been to keep Brooklyn Center’s City Council compensation at or above the average of the
comparison cities. The comparison chart indicates the average levels for both the Mayor and
Council Members for the past six years.
Budget Issues:
Total wages paid to Mayor and Council Members for 2017 were $49,087.
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Financial Commission Agenda Item No. 6
FNANCIAL COMMISSION MEMORANDUM
Our Vision: We envision Brooklyn Center as a thriving, diverse community with a full range of housing, business, cultural and
recreational offerings. It is a safe and inclusive place that people of all ages love to call home, and visitors enjoy due to its
convenient location and commitment to a healthy environment
DATE: May 24, 2018
FROM: Nathan Reinhardt, Finance Director
SUBJECT: Brooklyn Center Investment Policy/Process/Performance
Recommendation:
No action is required. The Finance Director will provide a presentation on the City’s investment
policy, process and performance.
Background:
At the previous Financial Commission meeting the Commission indicated a desire to learn more
about the City investment process.
The City, as of March 31, 2018, has a cash and investment balance of $47.1 million, which is
comprised of certificates of deposit ($24.3 million, 52%), federal agency securities ($14.7
million, 31.2%), municipal bonds ($2.8 million, 5.9%) and money market funds ($5.2 million,
11.0%).
The City’s investment policy and a power point presentation have been attached.
City of Brooklyn Center
Investment Policy
Approved 4-26-2016
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 and principal is the foremost objective of the investment program.
Investments shall be undertaken in a manner that seeks to ensure 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. Diversifying the investment portfolio so that potential losses from
any type of security or from any one individual issuer 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.
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. 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:
1. 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.
3. A security swap, of the same investment type, that improves the quality,
yield, or target duration in the portfolio.
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.
3. Standards of Care
A. Prudence
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 an 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
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 pr o g r a m m a y b e
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
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 m o r e
employees are working in conjunction to defraud their employer.
2. Custodial safekeeping. 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 physical delivery 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 authority 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 or email. 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.
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 118A, the following investments will
be permitted by this policy:
1. United States Securities: including bonds, notes, bills or other securities
which are direct obligations of the United States, its agencies, its
instrumentalities, or organizations created by an act of Congress, which
carry the full faith and credit of the United States.
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 90 days or less.
3. Certificates of Deposits (Time Deposits) that are fully insured by the
Federal Deposit Insurance Corporation.
4. Repurchase agreements and reverse repurchase agreements may be
entered into with financial institutions identified by Minnesota Statutes
Chapter 118A. Reverse repurchase agreements may only be entered into
for a period of 90 days or less and only to meet short-term cash flow
needs.
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.
Such repurchased bonds shall be canceled and removed form the
obligation of the fund.
9. General obligation bonds of state or local governments rated A or better
by a national bond rating service.
10. Revenue obligations of state or local governments rated AA or better by a
national bond rating agency.
11. The Minnesota Municipal Money Market Fund (4M) that was established
by the League of Minnesota Cities to address the investment needs of
Minnesota cities.
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 six 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 five 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. 2016-71; 06-120; 97-60; 90-105
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Financial Commission Agenda Item No. 7
City Council and Financial Commission
Budget Schedule for 2019-2020
June 4, 2018 Monday Work Session
CAFR Presentation and Auditors Report
July 16, 2018 Monday Work Session
Capital Improvement Plan and Capital Project Funds
July 30, 2018 Monday Work Session
2019 Budget Overview
August 8, 2018 Wednesday Work Session
General Fund – Department Requests
August 20, 2018 Monday Work Session
General Fund – Department Requests
September 17, 2018 Monday Work Session
General Fund – Recommended Preliminary Levy
September 24, 2018 Monday Regular City Council Meeting
Proposed adoption of preliminary levy and preliminary
governmental funds budgets
October 15, 2018 Monday Work Session
Special Revenue Funds, Debt Service Funds
Internal Service Funds
October 29, 2018 Monday Work Session
Utility/Enterprise Funds
November 26, 2018 Monday Regular City Council Meeting
Proposed adoption of the 2019 pay plan,
2019 cafeteria contribution and 2019 utility rates
December 3, 2018 Monday Special City Council Meeting
Public hearing on the recommended budget and levy
followed by proposed adoption of final tax levies and
budgets