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HomeMy WebLinkAbout04-14-14-WS-- Dave McClung www.cityofardenhills.org Ed Werner Arden Hills is a strong community that values its unique environmental setting, strong residential neighborhoods, vital business community, wellmaintained infrastructure, fiscal soundness, and our longstanding tradition as a desirable City in which to live, work, and play. CALL TO ORDER AGENDA ITEMS 1.A.Delinqent Utility Billing Account Sue Iverson, Director of Finance and Administrative Services Documents:MEMO.PDF,ATTACHMENT A.PDF, ATTACHMENT B.PDF 1.B.Discuss Purchasing Policy Sue Iverson, Director of Finance and Administrative Services Documents:MEMO.PDF,ATTACHMENT A.PDF Discuss Fund Balance Policy Sue Iverson, Director of Finance and Administrative Services Documents:MEMO.PDF,ATTACHMENT A.PDF AGENDA ITEM 1A MEMORANDUM DATE: April 14, 2014 TO:Honorable Mayor and City Council Members Patrick Klaers, City Administrator FROM: Sue Iverson, Director of Finance and Administrative Services SUBJECT: Delinquent UB Account Anil Khurana Background At the March 31, 2014 City Council meeting, the Mayor directed staff to put together together the required research and documents that are attached to this memo. Discussion Mr. Khurana contacted our Accounting Clerk, Pang Silseth, Public Works Director, Terry Maurer, and me several times over the course of the past few months. We can find no reason that there is a problem on our end and I informed him that I was not allowed to write off any of his bill without authority of the City Council if we could see no error on our end as we pay for all water coming from Roseville into our system. Attached is a summary of his usage, as well as the investigation we did into the account. Action Requested Council direction on Attachments Memo from Terry Maurer to Sue Iverson April 9, 2014, with attachments. Attachment A MEMORANDUM DATE: April 9, 2014 TO: Sue Iverson, Finance and Administrative Services Director FROM: Terry Maurer, Public Works Director SUBJECT: Anil Khurana-1280 Wynridge Drive Water Use At the March 31, 2014, City Council meeting, Mr. Anil Khurana of 1280 Wynridge Drive rd appeared at Public Inquires to express his concern over his water bill from the 3 Quarter of 2013. The Mayor directed staff to put together the information we had regarding this is background and summary of discussions that Accounting Clerk Pang Silseth and I have had with Mr. Khurana. rd Mr. Khurana contacted Pang by phone in mid-October after he received his 3 quarter 2013 water bill because it was much higher than what he was used to seeing. Pang explained that his water usage appeared to indicate a leak which was possibly in his irrigation system. Mr. Khurana asked why he was not notified if he was using all that water. Pang was not sure at that time if he was sent a leak notice but later looked back in the records and found that a notice was sent to Mr. Khurana on July 25, 2013 (copy of notice is attached). Pang offered to transfer Mr. Khurana to me to discuss further how he might determine if in fact his irrigation system was leaking. Mr. Khurana declined to be transferred and just asked Pang to discuss it with me. About a week later I did have a phone conversation with Mr. Khurana about the water usage. I explained that the graph (copy is attached) I was looking at showed a constant water usage from early July through early September when Mr. Khurana said he turned off his irrigation system. I suggested to Mr. Khurana that he contact Pang and arrange for his water usage to be monitored for 24 hours while he turns his irrigation system back on (feeds water to it but does not use it). Mr. Khurana did this on October 24, 2013, and the graph of his water usage does show an average usage of 65gallons per hour during that period (graph is attached). I also explained the water meter testing policy to Mr. Khurana. The policy states that the property owner pays for the cost of having an independent company test the water meter and if the meter is found to be inaccurate, the cost is refunded and the water usage issue is addressed. But, if the meter is found to be accurate, it is simply reinstalled and the 12 Page of water bill is not adjusted. Mr. Khurana chose not to have his water meter tested unless the City would do it for free. At the March 31, 2014, City Council meeting, Mr. Khurana provided a letter from Great Northern Landscapes, Inc. (copy is attached) of Elk River stating that they inspected Mr. d that they found no leaks. I did call Mitch Wettscheck, the author of the letter, on April 9, 2014. After explaining the above information to Mitch he stated that Mr. Khurana could have a leak in his irrigation main supply line which was not something they checked last fall. He went on to state that a leak of approximately one gallon a minute would be difficult to find. Mitch suggested that Mr. Khurana do a test (like the one done in October) when he starts his irrigation system to determine if there is a leak before letting the irrigation system run for the season . Based on all of this information, it is my opinion that Mr. Khurana has a leak, most likely rd in his irrigation system, and that all of the water he was billed for during quarter did actually flow through his meter. 22 Page of AGENDA ITEM 1B MEMORANDUM DATE: April 14, 2014 TO:Honorable Mayor and City Council Members Patrick Klaers, City Administrator FROM: Sue Iverson, Director of Finance and Administrative Services SUBJECT: Updated Purchasing Policy Background . Since that time, the State Legislature has revised Minnesota Statute 471.345 on Competitive Bidding and Quotes. Discussion The Financial Planning and Analysis Committee (FPAC) is doing a review of all of our policies and has recommended the following updates which are shown in the attached policy draft. The recommended updates to the policy are to: 1.Reflect current Minnesota State Statutes in regards to Competitive Bidding and Quotes. 2.Respond raised concerns regarding our internal controls and the ability of the departments to manage their budgets if they are not coding their own invoices. (We may receive an audit comment in this area for 2013, however it is not known yet at this time.) 3.New IRS regulations requiring the City to have a completed IRS Form W-9 on file before payments can be processed for vendors. Action Requested Council feedback on the proposed changes recommended by the Financial Planning and Analysis Committee. Attachments Attachment A: Draft Purchasing Policy Attachment A CITY OF ARDEN HILLS PURCHASING POLICY (Revised 3/31/2014) GENERAL PHILOSOPHY The City of Arden Hills is committed to be responsible, prudent, and wise in spending the The purchasing policy was developed by the City to be followed and enforced. It is difficult to identify every possible scenario in this document that might be considered prudent or imprudent. In addition, the city is cognizant of the value not only of the following spending policies, but also the public perception of prudence. The City employees should make every attempt to adhere to the policies and exercise good business judgment in spending. It is recognized that even the best policies will need to be revised periodically and modified as needed. PURCHASING POLICY: The s policy is to purchase goods and services at the most cost effective and competitive rates, yielding the desired service, turnaround and value for the dollar. This practice must ensure the best utilization of funds, vendor selection, and adherence to ethical business practices including integrity, honesty, and avoidance of conflict of interest. SCOPE: This policy applies to purchase of goods or services that includes: competitive bidding, vendor selection, signature authority, and purchase orders, and coding. COMPETITIVE BIDDING 1.Purchases between $7,500 and $50,000. Purchases of goods and services must be competitively bid. At least, two written bids must be obtained from the vendors. 2.Purchases over $50,000 must be advertised as sealed bids. 3.Purchases at and over $2,500, but under $7,500. Obtain a minimum of two verbal or faxed bids from vendors. 4.No bids required for purchases under $2,500 The City follows the rules pursuant to Minnesota State Statute 471.345. Purchasing Policy 1 M. Siddiqui, 7/21/04Revised 3/31/14 A few of the pertinent points are as follows but the current statute should be referenced to make sure there have not been any revisions by the legislature. 1.If the amount of the contract is estimated to exceed $100,000, sealed bids shal 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. 2.Purchases between $25,000 and $100,000, 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. 3.Purchases under $25,000 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. It is not the policy of the City to accept the lowest bidding vendor. The acceptance of the bid may be based on a number of factors, including: Cost, demonstrated working experience in the specific area, past experience with the City, overall quality of work, and in emergency situations. Exception to this policy may be made in order to maintain continuity of services, their in- or systems, the uniqueness of the services offered, and in emergency situations. Examples include, but not limited to: Auditing Services, Financial Services, Engineering Services, Legal Services, Maintenance Contracts, Building Maintenance, Architectural Services, and other similar services. Exception can also be made if the project requires unique skills or if bids cannot be obtained due to lack of interest from the vendors. It is the responsibility of the department head to document the rationale for the vendor selection, particularly when the lowest bid is not accepted and/or if a bid was only received or obtained from one vendor. Spending Not Requiring Council Action AUTHORIZATION LIMITS Individual $ Limit - Budgeted $ Limit - Unbudgeted City Administrator up to $ 7,500 up to $ 5,000 Finance Director/Treasurer up to $ 5,000 up to $ 2,500 Public Works Director up to $ 2,500 up to $ 1,000 Community Development Director up to $ 2,500 up to $ 1,000 Purchasing Policy 2 M. Siddiqui, 7/21/04Revised 3/31/14 Note: All payments in excess of $7,500 must be approved by the City Council, unless the project, in aggregate, was previously approved by the City Council. The department director, along with the concurrence of the Finance DirectorDirector of Finance and Administrative Services, may delegate signature authority to another individual in their department for a set dollar amount, which should be significantly lower than their own signing authority. This authority must be in writing and be kept in the Finance Department. Items not requiring Council authorization prior to payment, but is part of the approved budget and over the authorization limits as described above: Payroll and payroll related payments Employee Expense reimbursements Insurance Premiums Routine Operations (utilities, supplies, cleaning services, etc.) Items that were previously approved by the Council. Emergency payments or other payments to avoid late fees or interest charges. 1.Finance will process payments on a weekly basis. Payments that do not require Council authorization will be issued on Fridays. 2.Payments that require Council action will be issued after the approval. 3.A complete list of all paid and unpaid claims will be presented at the regular Council meeting under the consent agenda items. PURCHASE ORDERS & CODING INVOICES It is a prudent business practice to issue purchase orders prior to the purchase of goods and services. As a practical matter, no purchase orders are required for purchases under $1,000. Purchase orders can only be signed by the authorized individuals as outlined above with their respective signing authority. The City Administrator or the Director of Finance and Administrative ServicesDirector may co-sign a purchaser order if the order Purchase orders are issued by the individual departments and retained by them until the goods and services are received. Upon the receipt of the invoice, the department head will approve the invoice for payment and forward the invoice, along with the purchase order to the Finance Department for processing. All invoices are required to be coded and signed by the department head, or authorized delegate, before forwarding them to the Finance Department for processing. Purchasing Policy 3 M. Siddiqui, 7/21/04Revised 3/31/14 NEW VENDORS Selecting new vendors is at the discretion of the department head. When selecting a new vendor the department head is required to also obtain an IRS Form W-9 from the vendor. The City requires the IRS Form W-9 before payment can be processed for the vendor. Purchasing Policy 4 M. Siddiqui, 7/21/04Revised 3/31/14 AGENDA ITEM 1C MEMORANDUM DATE: April 14, 2014 TO:Honorable Mayor and City Council Members Patrick Klaers, City Administrator FROM: Sue Iverson, Director of Finance and Administrative Services SUBJECT: Updated Fund Balance Policy Background Fund Balance Policy was last updated in 2011 when the new GASB Standards took effect. Discussion The Financial Planning and Analysis Committee (FPAC) is doing a review of all of our policies and has recommended the following updates which are shown in the attached policy draft. The recommended updates to the policy are to: 1.Update titles and add in language for the internal service funds which we did not have at that time, and revision dates. 2.Change the language in item 3.a. under Policy Statements to have the Director of Finance and Administrative Services transfer any amount that exceeds 50% of the final fund balance after the audit number is known to the PIR Fund for the year. Action Requested Council feedback on the proposed changes recommended by the Financial Planning and Analysis Committee. Attachments Attachment A: Draft Fund Balance Policy Attachment A DRAFT CITY OF ARDEN HILLS COUNTY OF RAMSEY STATE OF MINNESOTA FINANCIAL POLICIES- FUND BALANCE (Revised 3/31/14) Fund Balance and Net Asset Guidelines (Fiscal Year-End) Purpose The purpose of the fund balance policies is to establish appropriate fund balance levels for each fund that is primarily supported by property tax revenues or user fees. These policies will ensure that adequate resources are available to meet cash flow needs for carrying out the regular operations of the City, as well The funds that will be addressed in this policy are: General Fund, Cable Fund, EDA Funds, Equipment, Building & Replacement Fund, Parks Fund, Public Safety Capital Fund, Permanent Improvement Revolving Fund (PIR), Risk Management Fund, and Enterprise Funds. Primary Policy Considerations 1. To meet the cash flow requirements of the City. 2. To maintain adequate fund balances and net assets in each individual fund of the City. 3. To provide for emergencies and contingency needs of the City. Policy Statements 1. The Finance DirectorDirector of Finance and Administrative Services as a part of the annual budget process shall prepare an analysis of this policy. The analysis shall project the status of the budget year ending fund balances and net assets. 2. The City Council authorizes the Director of Finance and Administrative Services and/or City Administ restricted resources, and then use unrestricted resources as they are needed. When unrestricted committed, 2) assigned, 3) unassigned. These fund balance classifications apply only to Governmental Funds, not Enterprise or Internal Service Funds. st 3. The General Fund balance shall be assigned as of December 31 for the following purposes in the amounts described below: a. The City will strive to maintain an unassigned balance in the General Fund of 50% of the (this reserve includes the designation for cash flows). Since a significant source of revenue in the General Fund comes from property taxes, maintaining a fund balance that is equal to at least six months of operating P:\Finance\Policies and Procedures\Policies\Fund Balance Policy -2014.docxP:\Finance\Policies and Procedures\Policies\Fund Balance Policy-2011.doc Revised 03/1431/2014 DRAFT expenditures ensures that sufficient resources are available to fund basic City functions between property tax settlements. This range is in conformance with guidance from the Office of the State Auditor (OSA). Amounts that exceed 50% may be transferred out to other funds. The Director of Finance and Administrative Services is authorized to transfer any amount that exceeds 50% to the Permanent Improvement Revolving Fund(PIR). An assignment or restriction of fund balance may be used to offset revenues earned in one year where substantial services are required to be performed in the next fiscal period. b. The City will maintain an amount sufficient to cover accumulated vacation and compensatory time balances and that portion of PTO leave that would be payable under annually as part of the year-end close and annual financial report process. c. For specific purposes as authorized by the City Council or funds. Funds shall be assigned first for compensated absences, second for cash flow needs and lastly for emergencies/contingencies. 4. The Cable Fund is a Special Revenue Fund that provides for cable and communication related expenses to disseminate information to the public. It receives the majority of its funding from franchise fees which are restricted for this use. The City will strive to maintain a fund balance in the Cable Fund in an amount sufficient to support the ongoing operating expenditures and capital expenditures planned in the CIP and in congruence with the Long Range Financial Management Plan. 5. EDA Funds are Special Revenue Funds that carryout economic and industrial development and redevelopment consistent with policies established by the City Council. It receives the majority of its funding from specific taxes or other earmarked revenue sources. The City will strive to maintain fund balances in the EDA Funds in an amount sufficient to support the ongoing expenditures, obligations and in congruence with the Long Range Financial Management Plan. Revenues not legally restricted will be committed. 6. Fund balances in Debt Service Funds for future debt payments are restricted. 7. Capital Funds are used to account for the financing of street rehabilitations projects, equipment replacement, public safety equipment, and facility rehabilitation or renovation. Revenue sources are provided mainly through property taxes, special assessments, Park dedication fees, and charitable gambling. Street projects, equipment purchases, and renovations are programmed into The City will strive to maintain fund balances in the Equipment Building & Replacement Fund, Public Safety Capital Fund, Parks Fund, and the Permanent Revolving Improvement Fund in an amount sufficient to support the ongoing capital expenditures planned in the CIP and in congruence with the Long Range Financial Management Plan. Revenues not legally restricted will be assigned. P:\Finance\Policies and Procedures\Policies\Fund Balance Policy -2014.docxP:\Finance\Policies and Procedures\Policies\Fund Balance Policy-2011.doc Revised 03/1431/2014 DRAFT 8. Enterprise Funds were established to account for the operation of Water, Sanitary Sewer, Recycling, and Surface Water Management. These operations are designed to be self-supporting from user charges. City enterprise funds shall have operating cash reserves sufficient to provide for monthly cash flow, and for a reasonable level of equipment and infrastructure replacement. Major reconstruction or system upgrades, may need to be funded from enterprise revenue bonds. Annual utility rate reviews will be made in regard to projected operating expenses and capital improvements. The Council will, on an annual basis, establish rates in accordance to operating cost recovery and the projected capital improvement. 9. Internal Service Funds were established to account for operations which are designed to be self- a. Risk Management Fund positive claims experience. This funds tracks dividend revenues and deductible costs for claims. The goal of this fund is to build a fund balance that would allow the City to increase insurance provider are also used to provide wellness programs. Funds received from the League of Minnesota Cities Insurance Trust are committed while funds received from the b. Engineering This fund is used to account for the provision of engineering services to development projects, infrastructure projects, and the City in general. This fund is financed predominantly through user charges both internally and externally to developers and is normally not expected to carry a fund balance at year-end. c. Central Garage and Equipment This fund is used to account for the materials, supplies, and expenses of the Central Garage and equipment of Public Works which is comprised of the following departments; Streets, Parks, Water, Sanitary Sewer, and Surface Water Management. This fund is financed predominantly through user charges internally to the public works departments. Fund balance is assigned for the purchase, replacement, and repair of equipment and vehicles used by public works. 10. Fund balances will be assigned according to the above guidelines up to the amount available after restrictions and other commitments. This policy is not intended to require the reporting of deficit unassigned fund balances. Nonspendable Fund Balances consists of amounts that are not in spendable form. The City has several amounts unavailable for appropriation such as: prepaid items, inventories, etc. Restricted Fund Balance and Restricted Net Assets consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions. It is the portion of fund balance that is not appropriable for expenditure or is legally segregated (restricted net assets) for specific future uses. P:\Finance\Policies and Procedures\Policies\Fund Balance Policy -2014.docxP:\Finance\Policies and Procedures\Policies\Fund Balance Policy-2011.doc Revised 03/1431/2014 DRAFT The City has several items that are legally restricted to a certain use such as: police forfeiture funds, federal and state economic development revolving loans, park dedication fees, and bond proceeds. Committed Fund Balance consists of internally imposed constraints. These constraints are established by Resolution of the City Council. Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. Assigned Fund Balance consists of internally imposed constraints. These constraints reflect the Council and/or management. Pursuant to City Council Resolut Administrative Services and/or City Administrator is authorized to establish assignments of fund balance. Unassigned Fund Balance is the residual classification for the general fund and also reflects negative residual amounts in other funds. General Fund The uassigned fund balance should be at a minimum 50% of operating expenditures (this strive to follow this recommendation. Enterprise Funds It is expected that unrestricted net assets will be large. These funds have large investment in infrastructure that needs to be maintained. The City will periodically complete a rate study for these funds to ensure rates and unrestricted net assets are sufficient to operate and maintain these activities. Review and Approval The fund balance policy shall be formally approved and adopted by resolution of the City Council and any future changes to the policy must be approved by the City Council. Approval by the City Council the 28th 31st Day of NovemberMarch, 20114. ________________________________ David Grant, Mayor ATTEST: _______________________________ Patrick Klaers, City Administrator P:\Finance\Policies and Procedures\Policies\Fund Balance Policy -2014.docxP:\Finance\Policies and Procedures\Policies\Fund Balance Policy-2011.doc Revised 03/1431/2014