ITEM 3.4 Revised purchasing policyOtSTY
F O
MINNESOTA V
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR:
MEETING DATE:
Administration
City Administrator/ Finance Director
Flaherty
August 28, 2017
PRESENTER(s)
REVIEWED BY:
ITEM #:
Consent Item
City Attorney MacArthur
3.4
AGENDA ITEM DETAILS
RECOMMENDATION:
City staff is recommending that the City Council adopt the revised purchasing policy.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
No
No
BACKGROUND/JUSTIFICATION:
It is important that the City periodically review existing policies. The City's existing purchasing policy was
approved by the City Council on April 23, 2012. Revisions to the purchasing policy are being recommended
for the following reasons:
1) To ensure an emphasis is placed on the budgeting process.
2) To provide department heads with more operational authority.
3) To reduce the time involved with multiple presentations (budget, sub -committee, council).
4) To ensure the policy is aligned with: state statutes, best practices and existing procedures.
The draft policy has been reformatted in comparison to the existing policy. For the most part, the content
of the draft policy is very similar to the existing policy. The primary changes within the draft policy include:
1) Purchasing authorization amounts have been increased in the instances where the purchases have
been specifically authorized in the budget. If purchases are not specifically outlined, they still need
to be approved by the City Council for any amounts over $5,001.
2) The use of purchase orders has been relaxed; however, purchases that are not specifically budgeted
or purchases that exceed $10,001 still require the use of purchase orders.
3) Narratives have been revised to more accurately reflect current procedures.
4) Statutory references have been revised and/or added where applicable to make authoritative
references easy to find.
This draft policy was presented and reviewed with the Administrative Sub -Committee on August 9, 2017.
There was concurrence for the draft revised purchasing policy to be placed on the agenda for a future City
Council meeting.
SUPPORTING DOCUMENTS ATTACHED:
• Existing Purchasing Policy—April 23, 2012
• Draft Revised Purchasing Policy
• Resolution 2017-72
on42CIP1 = Rfir)TIr)M
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to approve Resolution 2017-72 adopting the revised purchasing policy.
RI Irl( -'1=T IAI11:r1RMAT1()N
FUNDING: BUDGETED:
N/A
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO. 2012-36
RESOLUTION APPROVING REVISED CITY pURCHA.SING POLICY
WHEREAS, the City previously adopted a Purchasing Policy in April 23, 2007
and
WHEREAS, the City has made certain revisions in the P olicy including the:
following:
1. provisions for emergency purchasing under the Minnesota Emergency
Management Act.
2. Increase in Purchasing Levels for Department Heads and City
Administrator.
3. Expanded use of and additional restrictions on the Use of City Credit
Cards.
loyees and Supervisors sign an approved Credit Car
4. Requirement that emp
User Agreement.
NOW, THEREFORE the City Council of the City of Otsego, Wright County,
Minnesota resolves as follows:
1
The City of Otsego Purchasing Policy as attached hereto is hereby
adopted and is effective from h Offset o forward,
r chasing Policy is no longer in
2, The previously adopted City g
force and effect.
ADOPTED this 23rd day of April, 2012,
MOTION FOR. APPROVAL BY: CM HE'D'
SECONDED BY: CM SCHARBER
IN FAVOR: MAYOR 5TOCKAMP: COUNCILMmERS: HEIDNER, SCSARBER AND DARKENWALD
OPPOSED: NONE
CITY OF OTSEGO
res ca Stockamp, MaYor
Q�
Tami Loff, City Clff
2
2—
CITY OF OTSEGO .
PURCHASING POLICY
Section L P9008e
ty
The purpose of this policy is to establish the procedures dor purchasesmade
only- it does not ehalf of tapp yhe �
' lies to
employees and commission
of Otsego. This policy app p & attorneys. This policy has the
to contracted employees such as engineering, planning
following objectives:
1, To ensure that purchases comply with all applicable laws;
2. To ensure that taxpayers receive the lowestpriceand the best value for their tax dollars
when the City purchases goads and service ,
ent guidelines for authorized CATemployees/purchasers to
3. To provide clear and consist
follow;
A•. To limit the discretion of City officials and thus limit the possibility of fraud or
favoritism.
Section IT. Purchasing Oversi ht
The Finance Director or designee is responsible for the overall purchasing function. Department
ir
Heads shall be responsible for purchasing items h�hC n h respective lbe signed by the Mayor
bonds, and instruments of every kind to whichCity
is and/or -the City Clerk on behalf of the City and shall be executed in the name of the City. City
credit applications must be, approved by the City Clerk.
Section M. Pura asin� x`evels .
ses up to $2500
Depart
went Heads shall have the authority to authorize and/or approve s� for shall have he
based on appropriations contained in the City's Budget. ripe City d on appropriations contained
authority to authorize and/or approve purchases up to $1000 and items specifically identified
in the City's Budget. Purchases that are greater than $10,
through the annual budget must be approved by the City Council prior to the commencement of
the purchasing process.
Section IV. Use of purchase Orders
Purchase orders will be required for all purchases greater than $2,500 and maybe issued for
at basis fi-om the
lesser amounts if requested by the vendor. Certain t pitems rch s ude itemwiinssu h as bull fuel,
same vendor do not require a purchase order. These or/contractor,
etc. Before presentation of the purchase order to thvend
Put Purchase order. The Depra ment head
Finance Director, and City .Administrator must sign se complete the Purchase Order; the
must specify the *souree of funding for the purchase and fully p
Finance Director must ensure adequate funding is aor his/hex appioble from the vialas applicable, hasng source and the
Administrator must provide assurance that City Council
been obtained for the purchase.
These procedures apply
to the purchase of supplies, materials, equipment, or the rental thereof,
or the construction, alteration, repair, or maintenance of zeal or personal property. All purchases
City of Otsego
Purchasing Policy
Page Two
annual budget. All telephone or verbal quotes must be
must be consistent with the approved
followed with written confirmation.
Section. V, Purchasing Procedures
Purchases may be made by the following methods:
Regular purchasing procedures
® Price agreements
Emergency purchasing
a Cooperative purchasing
o Establish use of charge accounts
1. Purchases of less th-an $2,500 .
urchaser, The
The purchase may be made a hepe emplloyee with the approval of the Departmental
authorized purchaser may be y City encouraged to seep quotations from
Supervisor. Authorized purchasers are strongly
several vendors if the anticipated cost approaches
t$21500. thein e department to begin thginal invoices, e
slips or other dooumentation should be f
payment approval process as soon as possible,
2, Purchases from $2,501 to $10,000
The purchase should be based on a minimum of two (2) written quotations. Quotations
or ivery service, Or
may be obtained by telephone
a s written
d to and timecpeod forlwhich they are valid,
Internet, Quotations must havep
.A11 quotations shall be kept on file ode ��� ounts of l°e quotations, and each suceessfuls
ne (1) year and include
of vendors providing the quotations,
quotation signed and dated. Quotationion isles receivedethe reason for the devmaintained in the iation from. department.
If no quotations or only one quotation
standard policy guidelines should be documented in writing, such as sole source vendor,
and be, attached to the invoice to be paid in the finance department.
3, Purchases from $10,001 to $100,000
the
The proposed purchase MU sht benpreend to Council
purchase may be made er approval ither via sealed
commencement of the purchasing Process,
bids or by obtaining iwo (2) or more written quotations, without advertising for bids or
Quotations may
otherwise complying with1he requirementsitteft ompettiv
or in.zm via ibidding se vice, or Tntexne
be obtained by telephone
( Quotations must have a specific date and time period for which they are valid. All
quotations shall be kept on file for a minimum of one (1) year and include the names of
City of Otsego
Purchasing polioy
page Three
the vendors providing the quotations, the amounte obtained by phone, they mut be followed
quotation signed and dated. Tf quotations a
up with a signed quotation to be x selection
end aid aid approval.
This approval shall be tation. The quotations must be
forwarded to the City Council for Bele pp
accomplished by completion of a Requ�estpfort1Cz e councilust be completed. on form submittqot at a
regularly scheduled Council meeting.
4. purchases exceeding $100,000
The proposed purchase must be presented to Council for approval before the
commencement of the purchasing process: Purchases or contracts exceeding $100,000
require formal sealed bids solicited by public notice in accordance with Minnesota
Statute 471.345, Subd.3, The City shall prepare or cause to be prepared, the
specifications, the advertisement to solicit sealed bids, the opening and tabulation of bids,
and any necessary investigation of the, bidbidsis the lowest, City's
lresponsible b dated SThe City ive shall
recommend to the City Council which
Council shall determine the lowest responsible bidder and shall accept such bid: In. all
cases,
or reject any or all of the bids, and
the City Council reserves the right to ac
waive informalifies therein.
The City has reasonable discretion in determining the lowest responsible bidder. Not only
must a successful bidder submit the lowest bid price and
y meet the eaand
conditions of the specifications, the low bidder aEa ,responsible" terms and
have the capacity to perform the proposed contract. %esponsib a li includes 1ci such
considerations as the bidders' financial responsibility, integrity, ability,
likelihood of providing faithful and satisfactory performance. There is more latitude in
purchasing items of equipment not capable of exact specifications. In making such a
purchase, the City Council may exercise reasonable discretion in determining the lowest
responsible bidder. The City Council may consider, ins dndietiodnettot the bid price, the
quality, suitability, and adaptability of the article for
5, Purchasing through Cooperative purchasing agreements
7n accordance with Minnesota Statutes Section 471.3 5, Subd. 15, a municipality may
contract for the purchase of supplies, materials, or equipment without regard to the
h a national
competitive bidding requirements in ll ance or coopetatutes if rative ve created bypurchase is oagoint Powe s
municipal association's purchasing a
agreement that purchases items from more than one source on the basis of competitive
bids or quotations.
Under these programs, several governmental units can enter into an. agreement to
authorize one party to solicit bids and provide for fine purchase at the option of each
participating governmental unit. Once the governmental units agree on the specifications
tise for bids on behalf of all the parties that participate in
of the item, one party may adver
the agreement. Rather Than specify a specific number o£ items, the advertising participant
will advertise fora range of quantities estimated for the entire group. Each participating
City of Otsego
Purchasing Policy
Page Four
unit can make the final decision on whether to purchase the items from the successful
bidder. '
The City currently participates in the Cooperative Purchasing Venture (CPV)
administered by the Minnesota State Board of Administration.
6; Exclusions Brom Competitive Bidding Requirements
It is not necessary to advertise for bids for:
• Professional services such as those provided by engineers, lawyers, architects,
planners, accountants, and other services requiring technical, scientific or
professional training,
• The purchase of real estate, or roducts patented or
• The purchase of noncompetiti uspmeet sta u ory equirementsfor a sole, sourcce
source and this circumstance m
vendor.
Traver
All expenditures for Travel and training need prior approval for
the
DepartmeThe nt
has a. he trate 1
request will then be forwarded to the City Administrator pp
travel reimbursement policy detailing'thi.s process.
Invoice Approval
ces, whether
All invoices received at the City offiat onsmaa king slips and other pshallurchase hase arded to
the finance department, Original receipts, quotations, p
documentation should also be forwarded to the documentation,idartme znlvotices will be reviewed to
invoices will be matched with other supporting
determine the invoices are mathematically correct-
oeview and approval by the department
the to -viewed invoices will be head
separate folders in. the finance department for x
Department Heads will be notified of any deficiencies in the doouxnentation accumulated.
Department shall review all invoices for expenditures of their
departments
cod,invtoicesafter� e
validity of the charges. Department Heads shall sig.es
ascertaining that the goods or services have been deliveredlist or other. documentation. of receipt ishould
d
that the amounts charged axe correct. The packing hHead
be, attached to the signed invoice. Certain invoices axe
aexcluded d o Department
based oniev,�
and approval. These include monthly invoices which
,, life. insurance, dental insurance,
employee costs or other factors, e.., health
insurance efuse removal However, if 'unusual or non -
retirement funds, utilities, telephoneDepartment head approval should be obtained
F. recurring charges appear on any of these invoices, a mems fiom
prior to processing. Payments will only be made from the original invoice; p y
statements axe not allowed. Bmployee reimbursements must be submitted on the approved form
and must be signed by the employee and the Department dead, All non mileage reimbursements
must have the original receipts attached.
' City of Otsego
Purchasing Policy
Page Five
invoice Approval - continued
All purchases/payments shall be,
el reviewed and ratified bmt the red to be released prioouncil at their r to a City
and othe
meeting before payments ular
axe released, Some p
s payr
Council meeting.
In those instances, items such laim� listlof the
electronically will be listed for approval on the next city Council payments
Bade
price. Agreements
Price agreements may be used to acquire items the elyd nt is a cily purchases ill small on tract between the City and asp
i.e. gasoline, propane, and heating fuel. A pace agx
vendor. Under it, the vendor agrees to supply all of the City's requirements far he specified
commodity during the period of agreement. The price,
mdite dely be ivexyed rx duce paperwork, and
fixed variable,, such as a
discount from market price, Such price agreements p eement shall be
generally result in lower prices. The estimated annual cost of the price agr
considered in: determining the appropriate purchasing procedure.
Ec nergency Purchasing
Under Minnesota's Emergency Management Act, cities are given the authority to enter into
contracts during emergencies without foliaVere axe two types lly required
of emergencies that may the,
bidding requirements of state contract law.
relevant on the local level; an "emergency" and a"public, healtha emergency". diat `acttiion. to ay�i
is defined as an unforeseen combination of circa «disaster" is defined as a situation that
prevent a "disaster" from developing or occurring, A
creates an actual or imminent serious threat to t loss and 8 onmentafety of persons, or a iand for that
has resulted or is likely to result in a catastrophe lproperty or the env
of and assistance within the affected area are unable to repair oe
which traditional sources of reli
prevent the injury or loss.
11t threat of an illness or A "public health emergency" means an occurrence hat the, se of illness or health condition is
condition in Minnesota where there is evidence
bio -terrorism, or an airborne infectious agent or toxin
expat os �e toman airborne infeess poses a ctious agent
probability
of a large number of deaths or disabilities or widespreadp
that poses a significant risk to a large number of people,
When an emergency occurs that may jeopardize public safety or the health and welfare of
employees or citizens, the City Administrator ox appropriate department head may authorize a
emergent uxchase. Department head emergency purchases and the reason for he
necessary y p oiting documentation to the City
purchase must be reported in writing including supp
uncil as soon as
Administrator within.24 hoursofthequotations n and reported to the City should be btained whenever possible as part of
i possible. At least two compet tiv
the purchasing process. exists per the,
tions of the
If there is any question about whether an emergency
ncy Administrator ndhis/her designee Emergency Management Act, the City Co t3'
n111f VIT +I fkA, rte Alfomavwhenever nxacticable.
E, City of Otsego
Purchasing Policy
page Six
Disaster Purchasing
The Mayor may declare a local disaster or emergency-�uzT� The declaration constnt o%the Ci y Council Ag
for a period in excess of three (3) days except lir
disaster may result from fire, flood, tornado, blizzard, destructive winds, or other naiural causes,
or from sabotage, hostile action, or from hazardous material mishaps or catastrophic measures, or
emergencies that are technological in nature,
During a declared emergency, the City may enter into contracts and incur obligations necessary
g and providing
to combat the disaster f s ch disasters,
rs, T The mayx exercise such power a deemed necessary
assistance to victims of such drsasto the performance
without complying g with purchasing pxocedures prescribed by law pertaining
of public work, entering into rental equipment agreements, purchase of supplies and materials,
Iinnitations upon tax levies, and the appropriation expenditures for bids, provisions fan
of personnel including,
but not limited to, publication of resoluirons, publication
laws and rules, provisions related to low bids, and requirement for budgets.
-Use of City Credit Cards
edit card
In accordance with MIST Statute 471.3 82, the City o �e uncilmay on behalf ofta" or'zetheuseof e City The
by any official or employee otherwise authorized t purchase
City Administrator,, in consultation with the Pi d axcie Director nsdthat pertain t the individual
determine which personnel will be assigned an yar directs a
cardholder. Any official or employee l the tc
City who
able for rthe- amount of that purchase. akecAll
that is not approved by the City Council is personally
purchases by credit card must comply with the statutes, hment of all credit card acles and policies counts, ounts, The
purchases. The City Council shall approve th
finance department shall peep a xec Ordedit
of rdall credit loyees authorized to use a City issued and the offlOial 01 employee
card
properly authorized to use a City cxedrt car P
will receive and sign a credit card use agCOzm 1 tw° h the followings requiron ements:
emense Finance
Department. Credit card purchases must p Y
The credit card will be issued in the emploYee's name and must not be used where the
City has a store account.
Claims presented to the City for payment s. Bilin lirngs from credit card companiesiting, itemized and submitted do
the finance department within two busm y
not contain the necessary detail to satisfy this requirement and therefor,
ased by perred t
cardholder must retain original invoices and receipts for all items p
caxd.
creit
e
The City will not use a credit card for carr neib e fox interesity will pay at charges and
balances on a monthly basis. The City will ot be xespons
accruing as a result of untimely submission of credit card receipts and payment requests.
City of Otsego
Purchasing Policy
Page Seven
® No cash access (ATK is allowed,
ex use of the credit card will result in disciplinary action up to and including
Improper ersomet manual
termination from employment as outlined in the City's p
ent with the City terminates, the employee must
When the cardholdex's employm
immediately return the credit card to their Supervisor -
0 The Finance Department must be notified inunediately of any problems, issues or
discrepancies an employee has with use of the credit card.
0
The credit card user agreement must be signed by the, employee cardholder and their
supervisor.
o ard user agreement are considered a part of the coedit card and
The terms of the credit c
purchasing policies.
! Date
This policy becomes effective upon adoption by the City Council,
APPROVED BY TOE C , ON APRIL 23, 2012.
PURCHASING POLICY
ADOPTED: DRAFT — Presented to City Council on August 28th, 2017
1. POLICY
Assure that all City expenditures are lawful bysatisfyingthefollowing:
A. Public Purpose: There must be a public purpose for the expenditure.
B. Authority: There must be specific or implied authority for the expenditure in State Statute.
C. Procedure: The expenditure must be properly approved by the City Council.
2. OBJECTIVES
This policy has the following objectives:
A. To ensure that all City expenditures are lawful, as outlined in Section 1 of this policy.
B. To ensure that taxpayer dollars provide goods and services as economically as possible.
C. To established uniform purchasing procedures for all City staff and across all departments.
D. To ensure City expenditures are appropriately classified in the City's financial records.
3. PURCHASE ORDERS
Purchase orders may be used for any purchase, but requirements for their use are more
specifically outlined in Section 5 of this policy. In the instances where purchase orders are used,
the following procedures are set forth:
A. The vendor name, mailing address and contact information is required.
B. A sufficient description and exact quantities of the respective purchase.
C. A calculation of total cost, including applicable tax, shipping and handling charges.
a. In the instance where exact costs are not known, an estimate is acceptable.
b. In the instance where quotes were required, they should be attached.
D. The source of funding and applicable expenditure code for the respective purchase.
E. The purchase order shall be completed and signed prior to the respective purchase.
4. UNIFORM MUNICIPAL CONTRACTING LAW
The City will follow procedures as set forth in Minnesota Statute §471.345. Purchases should
not be separated into smaller components in order to eliminate an authorization threshold
requirement.
For the purchase of supplies, materials or equipment estimated to exceed $25,000, the City
must consider the availability, price, and quality of the supplies, materials, or equipment
available through the State of Minnesota's cooperative purchasing venture before purchasing
through another source.
Purchases of $25,000 or Less
If the amount of the purchase is estimated to be $25,000 or less, the purchase may be made
either upon quotation or in the open market, in the discretion of the governing body. If the
purchase 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.
Purchases Between $25,001 and $100,000
If the amount of the purchase is estimated to exceed $25,000 but not to exceed $100,000, the
purchase may be made either upon sealed bids or by direct negotiation, by obtaining two or
more quotations for the purchase 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 their receipt.
Purchases of $3.00,001 or More
If the amount of the purchase is estimated to exceed $100,000, sealed bids shall be solicited by
public notice in the manner and subject to the requirements of the law governing purchases by
the particular municipality.
Exceptions
The City may contract for the purchase of supplies, materials, or equipment without regard to the
competitive bidding requirements of this section if the purchase is through the State of Minnesota's
cooperative purchasing venture or a national municipal association's purchasing alliance or cooperative created
by a joint powers agreement that purchases items from more than one source on the basis of competitive bids
or competitive quotations.
Other exceptions may include: professional services, insurance contracts, purchases from other government
agencies, real estate, sole source vendors and others as defined by Minnesota Statute §471.345.
5. AUTHORIZATION
The following thresholds have been established to provide efficient procedures while still
retaining effective oversight.
Purchases of $5,000 or Less
Budgeted: If the respective purchase is specifically outlined in the department budget, the respective
Department Head is authorized to make the purchase, and purchase orders are not required.
Not Budgeted: If the respective purchase is not specifically outlined in the department budget, a purchase
order is required, and needs to be signed by the Department Head making the purchase and the City
Administrator.
Purchases Between $5,001 and $10,000
Budgeted: If the respective purchase is specifically outlined in the department budget, the respective
Department Head is authorized to make the purchase, and purchase orders are not required. .
Not Budgeted: If the respective purchase is not specifically outlined in the department budget, the proposed
purchase must be presented to the City Council for approval. A purchase order is required, and needs to be
signed by the Department Head making the purchase and the City Administrator.
Purchases Between $10,001and $25,000
Budgeted: If the respective purchase is specifically outlined in the department budget, a purchase order is
required, and needs to be signed by the respective Department Head making the purchase and the City
Administrator.
Not Budgeted: If th e respective purchase is not specifically outlined in the department budget, the proposed
purchase must be presented to the City Council for approval. A purchase order is required, and needs to be
signed bythe Department Head making the purchase and the City Administrator.
Purchases of $25,001 or More
The proposed purchase must be presented to the City Council for approval. A purchase order is required, and
needs to be signed bythe Department Head makingthe purchase and the City Administrator.
6. BILLING ADDRESS
Vendors should invoice the City, and not an individual department or person. The billing address
for the City is:
City of Otsego
Attn: Accounts Payable
1340090 th Street NE
Otsego, MN 55330
Invoices may also be directly emailed to the Finance Department using
accountspayable@ci.otsego.mn.us.
7. PAYMENT PROCEDURES
In accordance with Minnesota Statute §471.425, the City has 35 days from receipt of the invoice
to process payment.
All invoices received shall be forwarded to the Finance Department. The Accountant will match
invoices with other supporting documentation (Purchase Order, Quotations, Etc.) and distribute
into separate folders for each Department Head.
Department Heads are responsible for reviewing all aspects of the invoice and verifying the
validity of the expenditure. The Department Head is also responsible for providing the budget
account coding so that expenditures are appropriately classified in the City's financial records.
The Department Head will authorize the expenditure for payment by including a date stamp and
signature (or initials).
Department Heads should notify the Finance Department of any invoices in dispute and the
dispute should be documented on the invoice or with a memorandum accompanying the
invoice.
Certain routine transactions as defined by the Finance Director are excluded from Department
Head review and approval. Such transactions may include, but are not limited to: payroll,
employee benefits, workers compensation, and liability insurance and utility bills.
All payments shall be summarized within a Claims List that will be presented to the City Council
at their regularly scheduled meetings. The City Council will take action on the Claims List as part
of the Consent Agenda. Once the Claims List has been approved by the City Council, the Finance
Department will release payment to the vendor.
In some instances, payments may need to be released prior to City Council approval. Such
instances may include, but are not limited to: payroll, employee benefits, electronic funds
transfer (eft), to receive early payment discounts or to avoid late penalties. Such payments will
be authorized at the discretion of the Finance Director and will be presented to the City Council
within the Claims List at the next scheduled regular City Council meeting.
8. TRAVEL
All expenditures for travel will be in accordance with the City's travel reimbursement policy.
9. EXPENSE REIMBURSEMENT
Employee expense reimbursements (i.e. mileage), are to be submitted on claim voucher forms
with supporting documentation and should be provided to the Finance Department. The
procedures set forth in Section 7 of this policy will be followed for approval and payment.
10. SALES TAX
Most City purchases are exempt from sales tax. Vendors should be notified of this exemption
when making a purchase and each vendor should be provided a Certificate of Exemption (ST3
Form) available by request from the Finance Department.
11. CONFLICTS OF INTEREST
Employees are required to provide notice to the Finance Director of any conflicts of interest
prior to entering into transactions on behalf of the City. No employee, officer, or agent must
participate in the selection, award, or administration of a contract supported by a Federal award
if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise
when the employee, officer, or agent, any member of his or her immediately family, his or her
partner, or an organization which employs or is about to employ any of the parties indicated
herein, has financial or other interest in or a tangible personal benefit from a firm considered for
a contract. The officers, employees, and agents of the City must neither solicit nor accept
gratuities, favors, or anything of monetary value from contractors or parties to subcontracts.
12. EMERGENCY & DISASTER
Under Minnesota's Emergency Management Act (Minnesota Statute §12.37), the City has the
authority to make purchases or enter into contracts during emergencies without following many
of the, otherwise, normally required procedures.
The Emergency Management Act defines an "emergency" (Minnesota Statute §12.03 sub3) as
an unforeseen combination of circumstances that calls for immediate action to prevent a
"disaster" from developing or occurring.
The Emergency Management Act defines a "disaster" (Minnesota Statute §12.03 sub2) as a
situation that creates an actual or imminent serious threat to the health and safety of persons,
or a situation that has resulted or is likely to result in catastrophic loss to property or the
environment, and for which traditional sources of relief and assistance within the affected are
unable to repair or prevent injury or loss.
In the event of an emergency or disaster, the City will make declaration of a local emergency by
following procedures as outlined in Minnesota Statute §12.29:
A local emergency may be declared only by the Mayor. It may not be continued for a
period in excess of three days except by or with the consent of the City Council. Any
order or proclamation declaring, continuing, or terminating a local emergency must be
given prompt and general publicity and filed promptly by the City Clerk.
13. SPECIAL EMERGENCY
The City Attorney must be consulted with prior to making a purchase under this section.
Under Minnesota Statute §365.37, Towns have the authority during a special emergency to
make purchases without notice or competitive bidding. A special emergency is a situation
requiring immediate action essential to the health, safety or welfare of the town.
Although this exception is a Statute referring to Towns, Minnesota Statute §415.01, outlines that
Cities have and may exercise within its limits any of the powers conferred to Towns.
in the event a special emergency exists, the City Council has granted authority to the City
Administrator to make the necessary special emergency purchase. At the next regular scheduled
City Council meeting, the City Council will approve the respective purchase and will pass a
resolution specifically referring to the special emergency and declaring the special emergency
describing the reasons necessitating the immediate action for protection of the health, safety or
welfare of its citizens.
APPENDIX A: CREDIT CARD USE POLICY
1. USE OF CREDIT CARDS
The City has authorized the use of credit cards under Minnesota Statute §471.382 by City
employees to make purchases on behalf of the City.
2. AUTHORIZATION
The City Administrator in consultation with the Finance Director will determine which personnel
will be assigned a City credit card. The credit card will be issued in the employee's name. The
authorized employees include:
City Administrator
City Clerk
Finance Director
Streets Operations Manager
Parks and Recreation Director
Public Utilities Manager
Employees that are not authorized account holders as identified in this policy, shall not retain
credit card information or make purchases using a City issued credit card without prior approval
from an authorized account holder.
The Finance Director shall be responsible for the maintenance of the City credit card, including
account maintenance, setting purchase limits, issuing physical cards, etc.
3. USERS
All employees authorized to use a City credit card are required to sign a credit card user
agreement form, which will be retained on file by the Finance Director. The credit card user
agreement also needs to be signed by the City Administrator. The terms of the credit card user
agreement form are considered a part of this policy.
Upon termination of employment with the City, the City issued credit card will be returned to the
Finance Director on or before the employee's last day of employment.
The Finance Department must be notified immediately of any problems, issues or discrepancies
an employee has with the use of the City credit card.
4. PURCHASES
Each card holder will be responsible for ensuring that purchases made with their card comply
with Minnesota Statutes, the City's Purchasing Policy, and this Credit Card Use Policy.
Personal use of the City issued credit card is prohibited. Improper use of the credit card may
result in disciplinary action as outlined in the City's Personnel Policy.
Purchases that do not comply with City policies, or that are not approved by the City Council,
may become the personal responsibility of the card holder and/or purchaser.
In any instance where a product or service purchased with a City issued credit card is returned or
canceled the transaction must be refunded to the credit card account.
This policy does not restrict the use of personal credit cards for purchases/payments eligible for
reimbursement from the City in accordance with the City's Purchasing Policy.
5. DOCUMENTATION
The billing statement from the credit card issuer does not contain sufficient information to
document a purchase made. Appropriate documentation is required for all purchases to verify
compliance with this policy and the City's Purchasing Policy.
A copy of the invoice or receipt for payment must be included to verify the amount charged on
the card. Receipts from vendors that only list the total charged are not considered sufficient
documentation. The receipt must identify all products or services purchased, shipping charges,
and sales tax. A printed confirmation of an internet purchase may be sufficient to comply with
this requirement. If an invoice is not immediately available, the invoice must be forwarded to
the Finance department when it becomes available and another form of documentation must
accompany the original charge.
The City will not be responsible for interest charges accruing as a result of untimely submission of
credit card receipts.
Department Heads are responsible for reviewing all aspects of the invoice and verifying the
validity of the expenditure. The Department Head is also responsible for providing the budget
account coding so that expenditures are appropriately classified in the City's financial records.
The Department Head will authorize the expenditure for payment by including a date stamp and
signature (or initials).
6. REVIEW AND PAYMENT
All credit card statements will be reviewed by the Finance Department for compliance with this
policy and to ensure all charges have been accounted for. Additional documentation may be
requested from a card user to ensure compliance with this policy and the City's Purchasing
Policy.
The City will not use the credit card account for carrying debt, and payment of the entire
outstanding balance of City issued credit cards will typically be made through the City's normal
vendor payment process. The Finance Director reserves the right to pay the credit card bill
outside the normal vendor payment process if necessary to avoid finance charges.
7. CASH WITHDRAWALS
No employee of the City shall use the City credit card to access an ATM for cash withdrawals.
8. VENDOR CHARGE ACCOUNTS
The City has established charge accounts with a handful of vendors to expedite the purchasing
process with those respective vendors. These accounts may or may -not have physical cards
accompanying them. All sections of this policy are also attributable to the respective vendor
charge accounts.
If an account has been established with a vendor, all purchases should be made through that
process, unless extenuating circumstances exist.
CITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2017-72
APPROVING REVISED PURCHASING POLICY
WHEREAS, the City previously adopted a purchasing policy on April 23, 2012; and
WHEREAS, the City has made certain revisions within the purchasing policy; and
WHEREAS, the City Council has met to discuss and review the revised policy; and
WHEREAS, the City Council has determined that the revised policy shall be in force and effect upon the
date of adoption of this resolution.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OTSEGO,
MINNESOTA:
That the revised Purchasing Policy as attached hereto is hereby adopted effective immediately.
2. That the Purchasing Policy previously adopted on April 23, 2012 is no longer in force and effect.
ADOPTED by the Otsego City Council this 28th day of August, 2017.
ATTEST:
CITY OF OTSEGO
Jessica Stockamp, Mayor
Tami Loff, City Clerk
MOTION made by Council Member and SECONDED by Council Member
IN FAVOR:
OPPOSED: