[Adopted FCB 3-10-2009 (Title 4, Ch. 4.42, of the 1986 Code)]
A.
There shall be established in the City of Springfield a stabilization
reserve fund pursuant to MGL c. 40, § 5B, to be known
as the "Productivity Bank." This Productivity Bank shall be used to
provide loans to Springfield City departments that can justify projects
and/or initiatives that will generate additional revenues above current
certified levels, and/or will generate savings and/or which will significantly
improve the efficiency of service delivery.
B.
The Productivity Bank shall be managed by the Chief Administrative
and Financial Office of the City of Springfield and will be staffed
by that office and other City staff as determined appropriate by the
Chief Administrative and Financial Officer. The Chief Administrative
and Financial Officer shall be the custodian of the Productivity Bank.
A.
Requests for loans from the Productivity Bank shall be reviewed and
considered for approval by a Bank Loan Committee. Approval of an application
for a loan and issuance of a loan shall require a majority vote of
all then-existing members of the Bank Loan Committee, except as otherwise
provided herein. The Bank Loan Committee shall consist of seven members
as follows, none of whom shall be an employee of the Office of Internal
Audit:
(1)
The Mayor or his or her designee.
(2)
The President of the City Council or his or her designee.
(3)
The Chief Administrative and Financial Officer or his or her designee,
who shall serve as the Bank Loan Committee Chair.
(4)
The Budget Director or his or her designee.
(5)
The Comptroller or his or her designee.
(6)
One member of the public, not an elected official in the City of
Springfield and not appointed or employed by the City of Springfield
or Springfield School Department, with substantial experience in banking
and commercial lending, and who is appointed by the Mayor with the
approval of the City Council as set forth herein.
(7)
One member of the public, not an elected official in the City of
Springfield and not appointed or employed by the City of Springfield
or Springfield School Department, with substantial experience in project
finance, and who is appointed by the Mayor, with the approval of the
City Council as set forth herein.
B.
Approval of members of the public. The Mayor shall transmit to the
City Council, for a ten-day period of review, the nomination of the
two public members of the Bank Loan Committee. The City Council shall
be deemed to have approved the nomination if, during said ten-day
period, no member objects to the nomination by filing with the City
Clerk a letter objecting to the appointment setting forth specific
reasons for his or her objections. If a member files a letter objecting
to the appointment within the initial ten-day period, the City Council
shall have an additional 10 days to vote to approve or disapprove
of the nomination, or it will be deemed approved. In the event that
any member(s) of the City Council timely files a letter objecting
to any appointment and the City Council timely disapproves of any
nomination, the Mayor shall transmit to the City Council, within 10
days, the name of a substitute public member nominee, subject to the
same process set forth herein.
C.
The public members of the Bank Loan Committee may be removed without
cause by the Mayor upon written notice.
D.
The public member appointed pursuant to Subsection A(6) shall serve a term of three years, and the public member appointed pursuant to Subsection A(7) shall serve an initial term of two years, with all subsequent terms being three years such that the terms of the public members are staggered. Upon the vacancy of a public member so appointed, the Mayor shall within 10 days thereafter make another appointment, with the approval of the City Council as set forth herein, for the remainder of the unexpired term for said membership.
E.
The Bank Loan Committee shall meet no less than two times per year.
F.
The Bank Loan Committee shall be subject to the Massachusetts Open
Meetings Law, as it is amended from time to time.
A.
The maximum term of any Productivity Bank loan shall be determined
by the Bank Loan Committee, and in no event shall said loan term exceed
five years. The Bank Loan Committee shall determine the applicable
interest rate for any Productivity Bank loan, provided that the minimum
interest rate shall be no less than 5% per annum. The Bank Loan Committee
shall determine the applicable penalties and additional charges for
the failure to repay Productivity Bank loans in a timely manner. All
projects and initiatives financed, in whole or in part, by said loans
shall be projected to produce sufficient savings and/or new revenue
and/or efficiency improvements to enable the Productivity Bank loan
recipient to fully repay said loan within the applicable loan term,
plus accrued interest, penalties and charges.
B.
As determined by the Chief Administrative and Financial Officer,
loans from the Productivity Bank may be expended directly from the
Productivity Bank's funds by the City department that receives
a loan, or the loan proceeds may be transferred to the budget of the
City department receiving a Productivity Bank loan.
C.
Loans shall be repaid over the term of the loan on a schedule established
by the Bank Loan Committee. To the extent permitted by law, loan repayments,
plus accrued interest, penalties, and charges, shall be appropriated
in the budget of the department receiving the loan based upon the
terms of the applicable loan repayment schedule. The following shall
apply:
(1)
Loans whose projects and/or initiatives produce additional revenue.
Loans made to finance projects and/or initiatives that produce additional
revenue shall be repaid by dedicating 100% of new revenue generated
by the project and/or initiative to repaying the loan; except that
if new revenue in a year is greater than the loan repayment schedule
for that year, revenue in excess of the repayment schedule amount
shall be gain-shared in the following manner:
(a)
First year of the loan: To the extent permitted by law, 50%
of revenue in excess of the amount required to repay the loan shall
be appropriated to the department that has been issued the loan. Said
revenue may only be used to fund nonrecurring expenditures in that
department. Of the remaining 50%, to the extent permitted by law,
half shall be appropriated to the Productivity Bank and the remaining
half shall accrue to the General Fund.
(b)
Second year of the loan: To the extent permitted by law, 25%
of revenue in excess of the amount required to repay the loan shall
be appropriated to the department that has been issued the loan. Said
revenue may only be used to fund nonrecurring expenditures in that
department. Fifty percent of the revenue in excess of the amount required
to repay the loan shall accrue to the General Fund. The remaining
25% shall be appropriated to the Productivity Bank to the extent permitted
by law.
(c)
Third year of the loan and thereafter: All revenue in excess
of the amount required to repay the loan shall accrue to the General
Fund.
(2)
Loans whose projects and/or initiatives reduce costs. Loans made
to finance projects and/or initiatives that reduce or avoid costs
shall be repaid by dedicating 100% of the savings generated by this
improvement to repaying the loan; except that if savings are greater
than the loan repayment schedule, savings in excess of the repayment
schedule amount shall be gain-shared in the following manner:
(a)
First year of the loan: To the extent permitted by law, 50%
of the savings in excess of the amount required to repay the loan
shall be appropriated to the department that has been issued the loan.
Said savings may only be used to fund nonrecurring expenditures in
that department. Of the remaining 50%, to the extent permitted by
law, half shall be appropriated to the Productivity Bank and the remaining
half shall accrue to the General Fund.
(b)
Second year of the loan: To the extent permitted by law, 25%
of savings in excess of the amount required to repay the loan shall
be appropriated to the department that has been issued the loan. Said
savings may only be used to fund nonrecurring expenditures in that
department. Fifty percent of the savings in excess of the amount required
to repay the loan shall accrue to the General Fund. The remaining
25% shall be appropriated to the Productivity Bank to the extent permitted
by law.
(c)
Third year of the loan and thereafter: All saving in excess
of the amount required to repay the loan shall accrue to the General
Fund
(3)
Projects and/or initiatives that substantially increase the efficiency of service delivery. At any given time, the Productivity Bank may have outstanding no more than 20% of its authorized funding amount in loans that invest in projects and/or initiatives that only meet the requirements of this Subsection C(3) and do not also meet the requirements of Subsection C(1) or C(2). In reviewing such projects and/or initiatives, the Bank Loan Committee shall perform due diligence to determine whether services are likely to improve substantially and measurably without increasing costs. The justification for making such loans and the analysis of the resulting increase in efficiency shall be provided in writing by the applicant department to the City Council, with a copy to the Bank Loan Committee, no less than one week prior to the issuance of such a loan.
D.
Nothing in this section shall be construed to require the City to
dedicate or appropriate savings or revenue to any particular department
or purpose unless said savings or revenue is the direct product of
a project and/or initiative financed by the Productivity Bank.
E.
In the event that the purpose(s) of any project and/or initiative
financed by Productivity Bank loans can no longer be accomplished
or there is a substantial likelihood that the loan amount cannot be
repaid with interest within the applicable term, as determined by
the Bank Loan Committee, the Bank Loan Committee may require that
said recipient department immediately return any unexpended Productivity
Bank loan amounts. Any such returned amounts shall be reduced from
the recipient department's obligation to repay the corresponding
Productivity Bank loan.
A.
The Bank Loan Committee shall issue rules setting forth the criteria
by which it shall evaluate loan applications. The Bank Loan Committee
shall publish such rules no later than July 1, 2009. These rules may
be amended from time to time in accordance with the criteria set forth
herein. The Bank Loan Committee may create and furnish a form to applicant
departments which shall be used in conjunction with a Productivity
Bank loan application.
B.
Loans may only be made for projects and/or initiatives that increase
revenue and/or reduce costs and/or improve the efficiency of service
delivery where said projects and/or initiatives cannot otherwise be
funded from the City's capital budget or from a department's
operating budget without negatively impacting normal service levels.
C.
Applications submitted to the Bank Loan Committee shall include all
information requested by the Bank Loan Committee, including but not
limited to a description of the project and/or initiative that the
loan will fund, itemized and detailed costs of the project and/or
initiative (nonrecurring and recurring), all funding sources, the
benefits the project and/or initiative will provide and how the project
and/or initiative is intended to increase revenue and/or reduce costs
and/or improve the efficiency of service delivery, an assessment of
the project's and/or initiative's implementation risks and
the likelihood of success, and any other information required by the
Bank Loan Committee or the Productivity Bank staff. The applicant
shall also demonstrate its ability to repay the loan with interest
within the applicable term.
D.
Productivity Bank staff will work with each applicant department
to determine whether a project and/or initiative qualifies for a loan.
An application for a Productivity Bank loan may proceed to the Bank
Loan Committee only after the Productivity Bank staff has determined
that an application is complete and ready for its review and consideration.
A majority vote of all then-existing members of the Bank Loan Committee
is required for approval of a Productivity Bank loan.
E.
Loans shall be made by the Bank Loan Committee based on quantitative
measures, which shall at a minimum include a demonstrated ability
to produce additional revenue and/or reduce costs and/or substantially
increase the efficiency of service delivery. Qualitative measures
regarding the relative merits of projects and/or initiatives may be
used to break a tie in the ranking of projects and/or initiatives.
F.
The Bank Loan Committee shall use funds from loan repayments, interest
payments on loans, interest earnings on proceeds in the Productivity
Bank stabilization reserve fund, penalties and charges on loans, and
gain-sharing funds to make loans for other qualifying projects and
initiatives.
G.
All funds awarded shall be subject to audit by the Bank Loan Committee
and the Office of Internal Audit, or their successors in interest.
H.
The Bank Loan Committee shall require a department to execute an
agreement or a memorandum of understanding, containing the repayment
terms and all other pertinent provisions, as a condition of awarding
a Productivity Bank loan. In no instance shall any Productivity Bank
loan proceeds be disbursed or expended without a fully signed agreement
or memorandum of understanding being in effect.
A.
Staff of the Productivity Bank shall monitor and report on the progress
of each project and initiative made by the Productivity Bank to ensure
that the Productivity Bank will be repaid all outstanding loans plus
accrued interest, penalties and charges, that the City is deriving
the benefits originally projected for the project and/or initiative,
and that the loan amounts are being used in accordance with the underlying
purpose(s) of the project and/or initiative. The recipient department
shall provide periodic updates on project and/or initiative implementation
to the Productivity Bank staff as requested.
B.
No later than December 30 of each year, the Bank Loan Committee shall
issue a report of the Productivity Bank, the status of all loans made
from Productivity Bank funds, and the financial and operating performance
of the projects and initiatives financed by the Productivity Bank.
C.
All recipient departments shall provide the Bank Loan Committee and
Productivity Bank staff with all information required or requested
for evaluating the performance of any project or initiative financed
by a Productivity Bank loan.
