City of Washington, MO Financial Policy; Accounting Policy And Procedures Manual

Section 140.350 Anti-Fraud And Corruption Policy.

[Ord. No. 23-13883, 12-4-2023]

Purpose. The purpose of this Policy is to establish expectations, standards and procedures within the City of Washington (City) to minimize the risk of internal and external fraud as well as theft of City assets or fraudulent financial reporting. This Policy addresses the responsibility of employees for detecting and reporting fraud or suspected fraud, corruption, or dishonest activities, and provides a means for individuals outside of the City government organization to report improprieties to the City. The City is committed to protecting itself and the public from fraud, corruption, and dishonest activities through development and adherence to policies and procedures for the prevention and detection of fraud, corruption and dishonest activities. In order to set the proper tone and create and maintain a culture of honesty and high ethical standards, the City has adopted the following anti-fraud and corruption policy.

Policy. The City Council and management are responsible for the prevention and detection of fraud, misappropriations and other inappropriate conduct. City officials also recognize that a key preventative measure in the fight against fraud and corruption is to employ individuals who have the highest standards in terms of propriety, honesty and integrity. Further, all employees of the City government have a duty to the residents of the City to ensure that City resources are prudently used in accordance with the law and City policies. City Council and management is further committed to implementing sound financial management systems and procedures designed to safe-guard the financial resources of the City through its own initiatives and by positive and prompt response to independent audit recommendations. It is, therefore, the intent of the City Council and management of the City to promote and ensure the highest standards of integrity and ethical organizational behavior on their part by providing guidelines and assigning responsibility for the development of sound financial management controls, and engaging in such actions as necessary to prevent, detect, investigate and remedy instances of fraud and corruption against the City.

Fraud And Corruption. For purposes of this Policy, "fraud" is defined as an intentional, false representation or concealment of a material fact that leads to a financial advantage to the perpetrator or another upon whose behalf he/she or she acts. Fraud shall include acts of theft, larceny, embezzlement, fraudulent conversion, false pretenses, forgery, corrupt practices and falsification of accounts. For purposes of this Policy, corruption shall include the offering, giving, soliciting, or acceptance of any inducement or reward that may influence the actions taken by an employee, and shall include other acts as described herein.

Fraud or other wrongful acts may include:

Any dishonest or fraudulent act.

Forgery or alteration of a check, bank draft or other financial document or account.

Falsifying time sheets, expense reports, or other report documents.

Misappropriation of funds, securities, supplies or other assets.

Impropriety in handling or reporting of money or financial transactions.

Unauthorized disclosure of confidential, personal or proprietary information to others.

Accepting or seeking anything of material value from contractors, vendors, or persons providing services/materials to the City.

Destruction, removal, or inappropriate use of records, furniture, fixtures, equipment, and/or any similar or related irregularity.

Preventive Measures. The City recognizes that the implementation of preventive and deterrent measures guards against corruption and fraudulent activities occurring within the City government. In an effort to eliminate opportunities that serve as a catalyst for dishonest activities, management will continuously evaluate the effectiveness of internal control practices and procedures. Internal controls include documentation and consistent application of accounting procedures; careful adherence to City Code financial management requirements; maintenance of financial records in accordance with recognized governmental accounting standards; thorough documentation of financial transactions; segregation of financial duties among employees and officials to the extent practical for a small organization; securing financial records and documents including blank checks and access to credit cards; securing confidential personnel information; securing access to financial accounting systems through use of password protection and limiting access; periodically modifying passwords; requiring multiple signatures for payment of funds; implementing purchasing procedures which ensure proper authorization for approval of purchases; cash handling policies refined to provide for enhanced financial control over receipting and recognition; conducting internal auditing of financial transactions from time to time, and cooperating fully with external auditors. The City has adopted and enforces Conflicts of Interest (Chapter 117, City Code) policies and procedures to guard against conflicts of interest and other prohibited acts.

Reporting Suspicious Activities.

City employees and others have an obligation to report criminal conduct and/or suspicious activity without fear of retaliation or reprisal. When suspected fraud, corruption or dishonest incidents or practices are observed by or made known to any employee, the incident or practice is to be reported, in writing, promptly and directly to the Department Head for that department. Employees may anonymously file complaints or concerns. If the employee believes the Department Head is involved in the inappropriate activity, the employee should report the incident or practice to the City Administrator. If the employee believes the City Administrator is involved, then the employee would report to the Mayor or City Council.

The confidentiality of employees or others who submit reports of wrongdoing or suspected wrongdoing will be protected. However, employees and others must clearly understand that they have no absolute guarantees regarding confidentiality once the investigative report is turned over to the appropriate law enforcement agencies.

Reports should be presented with the following information: the date on which the criminal conduct and/or suspicious activity occurred if known, a description of the activity and the name(s) of anyone involved in the activity.

The reporting individual should refrain from further investigation of the incident, confrontation of the alleged violator, or further discussion of the incident with anyone unless requested to do so by management.

No Reprisals For Reporting Suspicious Activities. It is the policy of the City that no employee shall be subject to recrimination or any other form of punishment on the basis that they reported what was reasonably believed to be an act of wrongdoing, violation of policies, or violation of the City's Code of Ethics. However, an employee will be subject to disciplinary action if the City reasonably concludes that the report of wrongdoing was knowingly fabricated by the employee or was knowingly distorted, exaggerated or minimized to either injure someone else or to protect the reporting party or others. An employee whose report of misconduct contains admissions of personal wrongdoing will not, however, be guaranteed protection from the disciplinary action. The weight to be given to the confession will depend on all the facts known to the City at the time it makes its disciplinary decisions. In determining what, if any, disciplinary action may be taken against an employee, the City will take into account an employee's own admission of wrongdoing; provided, however, that the reporting employee's conduct was not previously known to the City or its discovery was not imminent and that the admission was complete and truthful.

Investigation. The City will promptly and thoroughly investigate situations involving possible fraud, corruption, or related dishonest activity utilizing such internal and external resources, including law enforcement officials and agencies, as may be indicated by the nature of the reported suspicious activity. The investigation requires the full cooperation of all City personnel. In addition, the investigation may require key City staff such as the Finance Director to provide specific professional assistance during the investigation. If this investigation uncovers evidence showing fraud, corruption or dishonest activities, the City Administrator (if not directly involved in the allegations) will recommend what disciplinary or legal actions may be taken to the City Council who will determine what disciplinary or legal actions should be taken. If the City Administrator is directly involved in the allegations, the Mayor and City Council will determine what disciplinary or legal actions should be taken.

Conclusion. The City shall constantly seek to improve its financial management, internal controls and monitoring systems in order to deter, detect, investigate and remedy fraud and corruption. The City will ensure that these policies and procedures are fairly administered, widely publicized and provided to all employees. The policies and procedures will be monitored and updated to keep pace with future developments in prevention, deterrence, and detection of fraud and corruption.

Section 140.360 Budget Policy.

[Ord. No. 23-13883, 12-4-2023]

Purpose.

The City of Washington has a responsibility to its citizens to carefully account for public funds, manage municipal finances wisely, and plan for the provision of services desired by the public. Sound financial policies are necessary to carry out this responsibility.

This budget policy provides a summary of significant budgetary policies required by State law, City Code and generally accepted accounting principles. It also incorporates GFOA's best practices and administrative practices.

This Policy is designed to provide conceptual standards for decision-making, enhance consistency in financial decisions, and establish parameters for City staff to use in directing the daily financial affairs of the City.

Budgeting And Financial Planning.

Financial Planning Elements. The major elements of the budgeting/financial planning process for the City are:

City Comprehensive Plan. This document establishes a policy framework to guide the expansion of the City and future development over a ten- to fifteen-year period.

Ten-Year Budget Plan. This plan projects operating funds' financial performance, estimates funding needs, identifies funding sources, identifies capital projects by estimating costs and related financing sources, ensures debt service requirements are met and expands upon the Comprehensive Plan by estimating the costs and funding for projects and programs that accomplish the long-term goals of the City.

Annual Operating And Capital Budgets. Annual financial plan of the City.

Long-Term Focus. The City recognizes the importance of long-term strategic planning as evidenced by its Comprehensive Plan and Ten-Year Budget Plan. In addition, it recognizes that prudent financial planning considers the multi-year implications of financial decisions. In order to strive for success, the City shall maintain a long-term focus in its financial planning that is mindful of the long-term goals and objectives of the City.

Forecasting And Estimation. The City shall take an objective and analytical approach to forecasting revenues, expenditures and expenses as accurately as possible utilizing a conservative approach overall.

Revenues will be projected considering:

Past experience and historical trends.

Volatility of the revenue source.

Inflation and other economic conditions.

Costs of providing the service.

One-time or special purpose revenues will be used to finance capital projects or for expenditures required by the revenue. They will not be used to subsidize recurring personnel costs or other operating costs.

Expenditures will be projected considering:

a.	Likelihood of events vs. "worst case scenario" approach.

b.	Specific identified needs of the program or service.

c.	Historical consumption and trends.

d.	Inflation and other economic trends.

Ten-Year Financial Plan. A ten-year financial plan will be updated annually. The plan shall include all funds of the City. The purpose of this plan is to:

Identify major policy issues for City Council consideration prior to the preparation of the annual budget.

Establish capital project priorities and make advance preparation for funding of projects within a ten-year horizon.

Make conservative financial projections and to provide assurance that adequate funding exists for proposed projects and services.

Identify financial trends in advance or in the early stages so that timely corrective action can be taken, if necessary.

Ensure debt service requirements are met and identify potential future need for debt service.

Communicate the City's plans to the public and provide an opportunity for the public to offer input.

Annual Operating And Capital Budget.

The operating and capital budget is the City's annual financial operating plan. All funds will be subject to appropriation by City Council.

The budget will be "balanced" for each fund. The proposed cash resources of each fund (beginning of year fund balance plus estimated revenues) will not exceed proposed appropriations. When necessary, the following budget-balancing strategies will be used, in order of priority:

(1)

Reduce expenditures through improved productivity.

(2)

Shift expenditures to other parties.

(3)

Create new service fee or increase existing fees.

(4)

Seek tax rate increases.

(5)

Reduce or eliminate services.

Budget Process.

Budget Format And Structure.

The policy of the City is to have the annual operating and capital budgets approved prior to October 1 of each year.

The City follows procedures prescribed by State law in establishing its budgets as follows:

(1)

All funds of the City have annual budgets legally adopted by the City Council.

(2)

Unencumbered appropriations lapse at year-end and may be reconsidered for subsequent budgets.

The City Administrator is responsible for submitting a proposed budget plan to the City Council on an annual basis. Public hearings are held as needed to obtain taxpayer input on both the property tax hearing as well as a budget hearing. The City Council enacts the budget through passage of an ordinance.

Budget Basis.

The budget will be prepared on a basis consistent with generally accepted accounting principles. All funds except for the enterprise funds are budgeted using the modified accrual basis of accounting. The basis of budgeting is the same as the basis of accounting except for changes in the fair value of investments which are not treated as adjustments to revenue in the annual operating budget. Depreciation is not budgeted for governmental funds.

For enterprise funds, full accrual basis of budgeting is used except for changes in the fair value of investments which are not treated as adjustments to revenue in the annual operating budget. The City budgets depreciation expense and debt service principal payments in these funds.

Legal Level Of Control. The legal level of budgetary control has been set as the budgeted appropriation amount at the fund level of expenditures.

Budget Amendments. Budget amendments will be made when deemed necessary as changing circumstances dictate. The following rules will apply to budget amendments:

Amendments between line items within the same department with no change in fund balance can be approved by the Finance Director.

Amendments between departments with no change in fund balance can be approved by the City Administrator.

All other budget amendments must be approved by City Council.

Capital Improvement Program/Capital Budget. The City shall prepare a ten-year capital plan including operations and maintenance costs. The plan will prioritize all anticipated capital projects and determine availability of funding. The City will identify the estimated costs and potential funding sources for each capital project and will use intergovernmental assistance and other outside resources wherever possible.

Section 140.370 Capital Asset Policy.

[Ord. No. 23-13883, 12-4-2023]

Generally.

A fixed asset accounting system is a system of policies, procedures and methods for recording and reporting monetary amounts associated with fixed asset transactions. This Policy provides guidelines for the City's capital assets as required by State law, City Code, and incorporates the Government Finance Officers Association (GFOA) best practices. It establishes procedures for the City's capital assets which is a system of procedures that addresses the acquisition, use, control, protection, maintenance, and disposal of all assets owned or leased by the City of Washington. This Policy is designed to implement the reporting requirements, to promote an understanding for City departments and agencies of the City's Capital Asset Accounting system, and to assist them in preparing the capital asset accounting documents used by the system. The Capital Asset system procedures are designed to insure that pertinent City staff is informed of all additions, transfers and disposals. Effective control of the Capital Asset system cannot exist without close cooperation and communication between all departments.

This Policy has been reviewed by the Finance Director and City Administrator. As changes in laws, policies, accounting standards occur or during annual audit review, this Policy will be reviewed by the Finance Director and Capital Asset Accountant with any recommendations for changes sent to City Council for approval.

Each Department Head will designate a custodian of all capital assets held by that department. The custodian will be responsible for monitoring the locations of all capital assets and facilitating the purchase, disposition, and transfer of any assets within their inventory. The custodian will work with the Finance Department during the annual inventory process.

Asset Capitalization Guidelines. These guidelines are being provided to assist management when making the determination between which asset related expenditures are/are not recommended to be capitalized in accordance with governing laws, rules and regulations. The Finance Director has the authority to decide if an item meets the capitalization policy and will ultimately be capitalized and also what the asset's depreciable life will be in years. The following guidelines, except where noted, apply equally to both Governmental and Proprietary Funds.

Capitalization Threshold. Capital assets are defined by the City as assets with an initial, individual cost of five thousand dollars ($5,000.00) or more and an estimated useful life of two (2) years or more. Infrastructure assets are reported when costs are twenty-five thousand dollars ($25,000.00) or more and an estimated useful life of two (2) years or more.

New Asset. Cost meets the capitalization threshold as an individual asset or to make an asset ready for its intended use should be capitalized.

Additions. Purchased additions to previously capitalized assets that meet the capitalization threshold, should be capitalized as add-ons to the existing property record.

Replacements/Improvements. The cost to replace or improve an existing asset should be capitalized if it meets the capitalization threshold and at least one (1) of the following criteria:

(1)

Extends the useful life of the existing asset by at least three (3) years, ten (10) years for infrastructure.

(2)

Increases the effectiveness or efficiency of an asset.

(3)

Cost of repair exceeds twenty percent (20%) of the original cost and at least fifteen percent (15%) of the replacement cost of the new asset.

Appendix C, Replacement Determination Form, a copy of which is held on file in the City offices, should be used when determining whether or not to repair or replace an asset. This form should be completed by the requesting department and turned into the Capital Asset Accountant in the Finance Department.

For replacements, the old asset should be removed from the fixed asset system if it can be separately identified or if a cost can be reasonably estimated for its original value and then adjusted in the fixed asset system.

Donated Assets. Assets with a market value in excess of five thousand dollars ($5,000.00) will be capitalized. Historical works of art or treasures will be recorded at historical cost and will not be depreciated as they do not depreciate in value.

Repairs And Maintenance. Costs that are associated with repairs and maintenance are not recommended for capitalization because they do not add value to the existing asset. However, major repairs that extend the useful life or increase the effectiveness or efficiency of an asset may be classified as improvements and therefore should be capitalized.

Specific Example: A new parking lot would be capitalized an improvement. Annual or biannual maintenance to fill in cracks or seal would be considered repair and maintenance even if it exceeds capitalization threshold. Adding on to the parking lot or replacing areas of the parking lot if capitalization criteria are met would be capitalized.

Tools And Equipment. Items that do not meet the capitalization threshold such as firearms, computer equipment, etc., will be maintained by each department on an inventory list.

Specific Example: City purchases fifty (50) computers at one time out of the Capital Fund. Since individually these do not meet the threshold and can be easily changed out they will not be capitalized. City purchases one hundred (100) cameras and puts in hardware related wiring to install cameras to create a "camera system." All this would be capitalized as the camera system. Future changes or trade outs of individual cameras would not be capitalized unless the entire "system" is being replaced.

Capital Asset Classes.

Land. Land acquired and intended for public use will be capitalized as the actual cost at the time of acquisition. Actual cost shall include purchase price and any fees for services related thereto, e.g., commissions, surveying fees, appraisal and negotiation fees, professional fees of engineers, attorneys, appraisers and financial advisors, damage payments, title preparation costs, site preparation costs and costs to demolish unwanted structures. For donated land, the fair value of the land as of the date of acquisition will be used for capitalizing. Easements, rights-of-way and other land improvements will be capitalized at the fair market value as of the date of acquisition.

Buildings. A building is a structure that is permanently attached to the land, has a roof, is partially or completely enclosed by walls, and is not intended to be transportable or moveable. Total project costs are accumulated in detail as one (1) asset in a construction in progress account, with depreciation calculated as of the date the building is placed into service. Capitalized costs of a building purchased by the City will include purchase price, professional fees of appraisers and attorneys, and any related costs necessary to put the building into its intended state of operation. Capitalized original cost on a constructed building will include the cost of constructing the asset, architects' and engineers' fees, permits, insurance and interest costs during construction and other administrative costs, such as clerical work and appraisals. In addition to the costs outlined above, the following expense items should be included in the original cost of the asset if they are not included in the primary construction contract or work order:

(1)

Built-in casework, walk-in coolers and freezers, built-in shelving, etc.

(2)

Bleachers and fixed gymnasium equipment.

(3)

Graphics and directories.

(4)

Bathroom accessories.

(5)

Carpets (other than moveable rugs).

(6)

Compressed air systems, plumbing systems, sprinkler systems, heating, venting and air conditioning systems which are fixed to the structure.

(7)

Emergency generator systems for building support.

(8)

Built-in public address systems, etc.

(9)

Demolition of an existing structure.

A donated building will be recorded at its fair market value as of the day of acquisition plus ancillary charges, if any.

Building Improvements. Additions and improvements to buildings (e.g., a new heating and ventilating system) should be added to the building account when these costs are considered betterments.

Improvements Other Than Buildings. These improvements are defined as betterments or facility/site improvements that increase the value of the building and should therefore be capitalized. A list of examples would be fencing, landscaping, parking lots, outside sprinkler systems, recreation areas and athletic fields, paths and trails, septic systems, stadiums, fountains, pavilions, and retaining walls.

Infrastructure. Assets are long-lived capital assets that normally are stationary and can be preserved for a significantly longer period than other capital assets. Examples of infrastructure include, roads, curbs, gutters, bridges, sidewalks, transmitting tower, lighting systems, drainage, signage, water, storm and sewer systems.

Machinery And Equipment. These are fixed or movable assets with are to be used for operations. This property valued at actual or estimated cost, including ancillary charges. Ancillary costs considered in determining the value of these assets include transportation charges, installation costs and extended warranty contracts or any other normal or necessary costs required to place an asset in its intended location and condition for use. If an asset is acquired through donation, an appraised value or an estimated cost using reasonable cost comparisons should be established as of the donation date and assigned to the asset. Examples include vehicles, off-road equipment, office equipment, furniture, business machines, communications equipment, maintenance equipment, computer equipment, upgrades, and software.

Computer software is an intangible asset if it is developed in-house by City employees or by a third party contractor on behalf of the government. This includes commercially available software that is purchased or licensed by the City and that the City must exert minimal incremental effort before the software can be put into operation per GASB 51. Such purchases will be capitalized if they meet the City's capitalization threshold. Yearly renewals, upgrades or annual maintenance costs of existing software will be considered an operating cost and expensed as incurred. The City will amortize software over three (3) to five (5) years, depending on whether the software is a component of an existing system or a brand new system.

An exception to the capitalization policy is provided for equipment acquired through grant funds but ownership of the asset remains with the granting agency. In these instances, the asset would not be capitalized.

Construction Work In Progress. This account should be used when a government reports amounts expended on an uncompleted building or other capital construction project. When the project is complete, the cumulative costs (purchase or construction costs plus costs incurred to place the asset in its intended location and use) are transferred to another appropriate Capital Asset Account. Only projects reported in enterprise funds will have interest costs capitalized during construction.

Depreciation.

Definition. The usefulness of most assets, other than land and historical works of art and treasures, declines over time. Depreciation is used to reflect the economic loss in the value of an asset. Depreciation is the loss in value from any cause. Some of these causes are:

Physical Deterioration. The loss in value caused by wear and tear in operation and exposure to the elements.

Functional Obsolescence. The loss in value within the property as a result of the development of new technology.

Economic Or Environmental Obsolescence. The loss of value resulting from influences external to the property itself such as governmental regulation.

In accounting terms, depreciation is the process of allocating the cost of tangible property over a period of time. Generally, at the end of an asset's life, the sum of the amounts charged for depreciation (accumulated depreciation) will equal the original cost less salvage value. Appendix A[1] contains a list of City Assets by Class with the depreciable lives in years that the City is going to use to calculate depreciation.

[1]

Editor's Note: Appendix A, Depreciable Life in Years, is set out as an attachment to this Chapter.

Policy. The City will use the straight-line depreciation method of depreciation which is the historical cost of an asset divided over the estimated useful life of an asset. It will also use a half-year convention. Under the half-year convention, an asset is treated as though it were placed in service or disposed of on the first day of the seventh month of the fiscal year. One-half (1/2) of a full year's depreciation is allowed for the asset in its first year placed in service, regardless of date it was actually placed in service during the year. Likewise, one-half (1/2) year of depreciation is allowed for the asset in its year of disposition, regardless of when it was disposed of or sold. The following useful life for each category of capital asset is defined as follows:

(1)

Buildings: fifteen (15) — fifty (50) years.

(2)

Improvements Other Than Buildings: ten (10) — fifty (50) years.

(3)

Machinery And Equipment: five (5) — twenty (20) years.

(4)

Furniture And Fixtures: five (5) — twenty (20) years.

(5)

Infrastructure: ten (10) — fifty (50) years.

Appendix A[2] contains a more detailed depreciation guide with the useful life that the City will use as a guideline to follow.

[2]

Editor's Note: Appendix A, Depreciable Life in Years, is set out as an attachment to this Chapter

Reporting. The City follows GASB guidelines and reports depreciation for Government-Wide Financial Reporting for all funds including all general capital assets and enterprise fund assets. For fund financial reporting, only enterprise funds report capital assets.

Property Records.

A governmental unit is to keep records of its capital assets. The record should include: asset number, project number (if applicable), description, asset class, location, responsible manager, manufacturer, model, method acquired, year made, serial number, license number (if applicable), vendor, warranty expire date, home fund and department, cost or estimated cost, date acquired, and asset life.

Only items meeting the capitalization thresholds stated in the policy above should be included on the property records and accounted for as a capital asset item. Lots or groups of items should not be included when individual items cost less than or do not meet these stated capitalization thresholds.

Any item of property that is readily separable and separately useful from a larger assembly of which it forms a part should be treated as a separate item.

The cost of replacing any property item that doesn't qualify as a capital asset or betterment should be charged to maintenance expense.

The Capital Asset Record will be maintained by the Capital Asset Accountant as the permanent record for the capital asset. The custodian of each department is responsible for reporting any changes to capital assets to the Capital Asset Accountant.

Items with a value of five hundred dollars ($500.00) to four thousand nine hundred ninety-nine dollars ($4,999.00) are to be inventoried annually and reported on an Inventory List to the Capital Asset Accountant. This would include computers, copiers, weapons, etc.

Acquisitions And Dispositions.

Current year additions are all assets recorded during the current fiscal year. These include purchases of new as well as used assets, all donated assets, and assets acquired through capital leases.

A department will initially request a capital asset purchase in the annual budget process. Before purchasing, the department will request formal approval for purchase from City Council via Ordinance. In the event a capital asset needs to be purchased and was not approved in the budget, the department will request approval first from the Finance Director or Purchasing Officer who will ensure there is an adequate funding source with funds available for the purchase. Next, the department will request approval from the City Administrator. Finally, the department may request approval of the City Council via Ordinance. Once approval is obtained, a purchase order (PO) is requested by the custodian in the department who is responsible for ensuring all approvals have been received and bid requirements have been met according to the City's Purchasing Policy. The General Ledger (G/L) Account and project number used on the PO will signify if the item qualifies as a capital asset. This is how the Capital Asset Accountant tracks asset purchases. A separate asset form is not completed because once the information is input into the accounting software by the Capital Asset Accountant, a cover sheet is printed with all the required information for each capital asset for the permanent record.

All vehicles purchased will be held solely in the name of the City. All capital assets will be insured under the City's insurance which will be maintained by the City Clerk who is responsible for risk management and maintaining adequate property insurance coverage.

(1)

Changes. Corrections to an existing record, can include, but not limited to:

(a)

Error in prior classification of asset.

(b)

Item disposed of and property record previously not deleted.

(c)

Correction of description, serial number, or model number.

(d)

Correction of cost.

(e)

Year of acquisition change.

(f)

Correction of asset tag number, equipment code number or service code number.

(g)

Change in estimated useful life.

(2)

Erasures. An erasure is the deletion of an item recorded as an asset in error. The erasure will remove the item from the master file along with all depreciation expense and accumulated depreciation as if it were never recorded and the item will not be reported on the disposal listing.

(3)

Transfers. A transfer is the movement of a capital asset due to a change in location either by account, department, or building. A transfer may be a complete or partial transfer of an item. If property is transferred to a new department, the transferring department must complete a Disposition form (Appendix B[3]) and the receiving department must sign as acknowledgment of receipt of capital asset.

[3]

Editor's Note: Appendix B, Capital Asset Disposition, is set out as an attachment to this Chapter

(4)

Disposals. Assets that are sold, traded-in, abandoned, or in any way removed from service are classified as disposals. Disposals can be either full or partial and records must be maintained. Annually, the Capital Asset Accountant will ask each department to review a report of fixed assets for their department to see if any items have been disposed of during the year. All disposals of capital assets must be reported by the custodian of the department on a disposition form (Appendix B[4]) and given to Capital Asset Accountant who will enter into the accounting software. Disposal of surplus property shall be in accordance with applicable provisions of the City Code.

All property acquisitions or dispositions including transfers, etc., require the approval of the Finance Director before posting in the accounting software.

[4]

Editor's Note: Appendix B, Capital Asset Disposition, is set out as an attachment to this Chapter

Asset Tag Control. Positive identification of a government's capital asset requires the use of identification number tags which should be physically attached to the property in a visible location whenever possible. The tag should be placed in an area where it will be easily available to see but not get in the way of the work day. Tagging is important for:

Providing an accurate method of identifying individual assets;

Facilitating the inventory process;

Controlling the location of all physical assets;

Assisting in maintaining capital assets;

Providing a common ground of communication for both the accounting department and the assets' users.

The asset number (Property ID number) will be assigned when the asset is entered into the accounting system. Asset tags will be issued to each asset by the Accounts Receivable Clerk who will send the tags out with an asset listing report to the custodian in each respective department. The custodians will be responsible for placement of the asset tags on the capital assets. The custodians should have the asset tags affixed to the capital assets timely and prior to any physical inventory.

An asset purchased or constructed as an accessory or modification to an asset that is already included in asset inventory should not be tagged; it should be treated as an improvement to the existing asset. However, if it is not a permanent addition to the existing asset, it should be tagged and monitored separately.

If a tag becomes misplaced, destroyed, or in need of replacement, it is the custodian's responsibility to notify the Accounts Receivable Clerk who will assign a replacement tag and send to the custodian for placement on the capital asset. The Accounts Receivable Clerk will notify the Capital Asset Accountant of the tag change for update in the accounting software.

If a tag cannot physically be affixed to the asset, a file should be kept detailing the asset description with serial number and location.

Annual Inventory.

The Department Head is responsible for all property purchased for, assigned to or otherwise provided to his/her department. Each Department Head will designate a custodian for their respective department.

Annually the Capital Asset Accountant will provide the Department Head and/or custodian with an asset listing report showing all capital assets for their department with location. This listing will include all property for which the department is responsible. A physical inventory of property should be taken and compared against the report, noting any discrepancies. If assets are recorded or added when acquired, and if retirements and transfers are accurately recorded as made, the inventory as disclosed by annual physical inspection should equal the amounts shown by the records. Departments should resolve any discrepancies with the Capital Asset Accountant. If it is discovered that capital assets are missing, the Finance Director should be contacted immediately and an investigation will be done. If the asset can not be located, the capital asset record must be reduced by the book value of the missing capital asset. Any asset greater than ten thousand dollars ($10,000.00) shall be reported immediately to City Council.

The Department Head should sign the asset listing report verifying the property on hand and return to the Capital Asset Accountant.

Definitions.

ASSET LISTING REPORT

Report out of the accounting system used for annual inventory of capital assets.

CAPITAL ASSET ACCOUNTANT

The person the Finance Director designates to act as the central coordinator over all accounting activities of the general ledger. Duties include:

Maintain the asset record and bear responsibility for the accuracy of the data contained in it.

Act as a collection point for all capital asset subsidiary reports (additions, dispositions, transfers, etc.).

Maintain the Construction Work in Progress Account and reconcile data annually.

Calculate depreciation on capital assets.

Ensure compliance with the City policies and procedures regarding capital assets.

Provide information for annual audit and financial reporting.

CUSTODIAN

The person the Department Head assigns responsibility for capital asset control, maintenance and reporting to for the department.

GENERAL LEDGER ACCOUNT (G/L)

Expense or Expenditure Account which the capital asset will be posted to in the accounting system.

PURCHASE ORDER (PO)

Purchase document issued by Finance Department once requesting department has received all bids, approvals, etc., required.

Conclusion. While no set of procedures or policies can address all circumstances, this has outlined some of the more basic areas. It is impossible to define a set of procedures that can be used without modification. The objective is to maintain and control government capital assets where an accurate record of capital assets is required. These policies should not be so inflexible so as to hinder the people charged with the responsibility of maintaining the property record, but instead should make their job easier by establishing standards for property control. Most important is the accuracy of the data contained within the system. Those who account for, purchase and use the assets must make sure the data is accurate.

Section 140.380 Cash Management Policy.

[Ord. No. 23-13883, 12-4-2023]

Purpose.

All aspects of financial management benefit significantly from strong internal controls, but none more than revenues and cash. Effectively managing cash helps create a sustainable financial position and helps ensure sound financial practices. This Policy establishes a framework from which all City departments and employees may work to maintain effective controls and practices including compliance with Federal, State and local requirements and industry standards. It also incorporates GFOA's best practices that will allow the City to meet present needs without impairing its ability to meet its future needs by depleting resources.

This Policy outlines the administrative policies with respect to the management of cash throughout the City. This includes all cash handling activities including deposits, disbursements, and other transactions. All employees of the City with cash handling responsibilities shall conduct all cash handling activities in compliance with rules and guidelines set forth by this Policy and by their respective departmental cash handling procedures. Any deviation from this Policy must be approved by the Finance Director, and detailed in written departmental cash handling procedures. Failure to follow any of these procedures may result in employee discipline, up to and including termination of City employment.

Cash Management Policies. The purpose of the cash management function is to fulfill the fiduciary responsibilities of the City and its departments in handling and safeguarding of cash.

The following elements of cash management will be specifically addressed:

Segregation of cash related duties.

Responsibilities of cash handling employees.

Timely receipts and deposits.

Scheduling disbursements.

Investing idle cash.

Reducing the need to borrow by building reserves.

Determine the timeliness of debt issuance to ensure available cash for capital improvements.

Periodic independent verification through an annual audit performed by external auditors.

Bonding the City Treasurer and Finance Director.

Cash Management Responsibilities.

Finance Director's Office.

Establish an adequate internal control system over City cash and cash equivalents.

Establish clearly written and approved procedures for all areas of cash handling operations.

Review the departmental cash handling procedures to ensure compliance.

Upon request, assist departments with developing controls to mitigate the potential effect of exceptions or deviations from this Policy.

Approve the establishment of change funds, including related amount of the fund.

Approve others authorized to inspect/review cash handling operations.

In the event of loss, determine who needs to be notified within the City and for reporting the fraud to the appropriate personnel.

Coordinate and collaborate with the Police Department where appropriate.

Conduct random, unannounced reviews/audits.

Establish and/or approve all City bank accounts and purchasing accounts for the City.

City Treasurer and Finance Director must have the ability to be bonded.

Department Heads.

Ensure the safeguarding of City funds.

Ensure procedures are in place to comply with this Policy and assume accountability for exceptions and deviations from this Policy.

Authorize each employee that has been assigned to designated cash handling positions to perform those duties after being trained in the department's cash handling procedures.

In the event of loss, immediately report fraud to the Finance Director.

Cash Handler.

Use due diligence in handling City assets so that reasonable protection is provided to those assets at all times.

Report to their Department Head, who should in turn alert the Finance Director, of any instance where a City employee has knowledge or suspicion of a defalcation or dishonest act by another City employee.

Request permission of the Finance Director to open any bank accounts in the City's name or with any affiliation with the City due to employment with the City.

Cash Management Controls.

General Cash Controls.

All City bank accounts shall be carried in the name of the City with additional secondary designations within the bank account name as to purpose of the bank account, where appropriate. The only exception to this would be any account which requires distinct wording due to legal restrictions placed on it.

The Finance Department is responsible for creating and closing bank accounts and determining if an additional bank account is necessary.

All employees with access to cash funds shall be covered under the City's Commercial Crime or Employee Dishonesty Insurance Policy as prescribed by the City Clerk who handles the City's risk management policies. In addition, the Finance Director and City Treasurer is required to carry separately bonded policies in accordance with Sections 115.210 and 115.440 of the City Code.

Cash handling sites shall have an individual designated by the Department Head as custodian with specific responsibility for cash handling at the respective locations during all shifts.

The number of employees with access to cash shall be limited for internal control purposes. Efforts shall be made for the physical separation of duties and responsibilities between the cash custodian and that of the individual or individuals that perform the accounting and record-keeping function pertaining to cash.

The City will encourage the use of wire, ACH, direct deposits, and other electronic forms of receipts, deposits, and payments whenever possible to reduce the risk of error, reduce the opportunity for misappropriation, reduce the level of returned checks, and ensure more rapid turn-around time on receivables.

The City will establish segregation of duties so that no one (1) employee has responsibility for every phase of cash receipting and depositing, disbursement, reconciliation, and reporting of cash transactions.

Where the separation of responsibility is precluded due to limited available personnel, the supervisor shall perform specific verification steps for sound cash handling controls. The supervisor shall not be involved in the original transaction steps which are to be verified. Departments should confer with the Finance Department to establish other mitigating controls where separation of responsibility is precluded.

At least two (2) people per cash handling site shall be involved in the cash handling process unless otherwise authorized by the Finance Director.

Where possible, cash handling duties shall be rotated on a periodic basis. This can help to prevent departments from becoming dependent upon one (1) person for a particular function and can make it easier to identify and correct procedural weaknesses and breaches.

When practicable, cash handling sites will have videotaped surveillance, and/or electronic microphone recording installed.

Physical protection of cash through the use of bank facilities, locked cash boxes, locked cash bags, locked drawers, and secured car transport (police transfer of cash) will be used at all times. The Finance Director in conjunction with other Department Heads, shall assess the reasonableness, practicality, and security in determining the use of the police transfer of cash bags.

In general, collections in the field are prohibited unless specifically authorized by the Finance Director.

Cash on the premises will be held to a minimum to reduce the amount of idle cash that is available, as well as for cash control purposes. Deposits shall be made within twenty-four (24) hours. The Finance Director, in conjunction with departments, shall assess the reasonableness, practicality, and security in determining the timing for deposits, especially when deposits exceed the twenty-four (24) hour time requirement noted above. Careful consideration will be given to the risk involved with holding idle cash in the department versus the cost to make more frequent deposits.

Authorized personnel within the department who do not have custodial accounting or recording duties and responsibilities, shall conduct periodic examination, count or other review of cash.

The Finance Department may also conduct random unannounced reviews and/or audits.

Safeguarding Funds.

Access to the cash drawer is limited to only one (1) or two (2) persons. Each cash drawer shall be counted and balanced at the beginning and ending of each day. Any overages or shortages should be immediately documented on a daily log.

All counting of money should be kept out of public view.

All monies should be secured after hours in the vault. Vault combinations should be limited to the smallest number of individuals practicable, given the business needs of the work unit.

Vault or safe combinations should never be written down in the cash handling area. Safe combinations held by individuals who serve as back up to the everyday users of the safe, who may need to write down this combination should keep the combination off-site.

When an individual who knows the vault or safe combination leaves the City employment, the safe combination should be changed promptly.

An individual may not serve in a City cash handling capacity with criminal history record information that reveals a recent [within the last ten (10) years] and relevant (theft conviction of any kind) conviction.

Change funds shall be established by the Finance Director and will be strictly revolving funds and require no replenishment. Change funds are established for the purpose of making change where cash is collected and shall not be used for petty cash purchases, loans, advances or check cashing.

Change funds are not to be commingled with any other monies.

Change funds that are no longer needed to conduct the business for which they were established are to be returned to the Finance Department within forty-eight (48) hours from the time it is determined that they funds are no longer required. They shall be deposited at the depository bank within the next daily deposit.

Receipting Of Payments.

Cash handlers shall be watchful for counterfeit bills, checks, etc.

Checks, traveler's checks, money orders and other negotiable financial instruments shall be endorsed as they are received.

All handwritten receipts shall be pre-numbered to account for lapses in sequence.

All checks shall be made payable to the City of Washington and shall be accepted only in the amount of the sale or transaction. Checks may not be written for more than the amount due to the City except for accounts receivable customers who wish to pay in advance on their accounts. Under no circumstances should any checks be cashed/and or substituted for cash on hand.

Only pre-printed temporary checks will be accepted by cash handlers.

Post-dated, third-party or payroll checks will not be accepted.

All departments with cash operations shall maintain a permanent collection record, such as a cash register tape, that has the record of all transactions including voids, refunds or cancellations. All revenues collected shall have a receipt or other proof of sale issued to the customer at the point of sale or collection whether handwritten or electronically generated.

There shall be a means of capturing and summarizing daily transactions, which will be reconciled to the amount deposited.

Deposits.

The general operating standard for depositing with the depository bank shall be within twenty-four (24) hours of receipt. Therefore, any daily funds or accumulation of funds in excess of five hundred ($500.00) received must be deposited daily. At a minimum, weekly deposits must be made even when the weekly accumulation of funds does not exceed five hundred ($500.00). Any exceptions to this must be approved by the Finance Director. All amounts that are not deposited on a daily basis shall be secured in a safe or vault.

Each cash handler should reconcile on a daily basis. A formal reconciliation should be prepared by the cashier and then approved by a supervisor or individual not involved in the daily cash handling activities. The review should confirm that the amount of cash indicated on the reconciliation is accurate. Furthermore, the supervisor should ensure that the total receipts equal the cash totals. Finally, the supervisor should review and approve voids.

The City will make a reasonable effort to determine the cause of any shortage or overage and correct it when balancing the daily cash drawer. Significant [over ten dollars ($10.00)] or frequent overages or shortages must be reported to the Finance Director. Employees experiencing high amounts of overages and/or frequent overages/shortages will be relieved of cashier duties.

The cash handling and accounts receivable functions should be separate.

Independent of the cash handling operation, periodic reconciliation of bank accounts should be performed and reconciling items should be identified. Management information reports should be prepared and submitted to the Finance Director to ensure that all reconciling items are appropriately resolved.

Cash receipt documents should be prepared promptly and should be dated the same day as the funds are deposited in the bank. Additionally, the documents should be forwarded to the Finance Department for prompt recording into the general ledger.

All security and bid deposits received in negotiable form as well as escrowed funds shall be deposited and held until final disposition is made.

All performance bonds shall be kept in the safe in the Finance Department for safekeeping until which time the Engineering Department releases the bond and removes it from the safe.

Credit card processing and on-line payments will be recorded into the bank account via ACH transfer. Cashiers in the Finance Department will import these transactions reconcile and import these transactions daily into the accounting system along with cash and check transactions.

Returned Checks.

Occasionally, a deposited check may not clear the bank for one (1) of several reasons: non-sufficient funds, account closed, stop payment, funds held, stolen checks, forgery, endorsement, or signature.

The Finance Department will attempt to collect the funds for the returned check along with the City's returned check processing fee by mailing a demand letter to the writer of the returned check.

Only cash, certified checks or money orders will be accepted for payment of returned checks. Any exceptions to this would need to be approved by the Finance Director or designee.

The Finance Assistant and the Accounts Receivable Clerk can waive the check processing fee for unforeseen circumstances such as fraud on the account or death in the family. Any other exceptions must be approved by the Finance Director.

If collection efforts are unsuccessful after ten (10) days from the date of the demand letter, then customer may have service shut-off or may be referred to an outside collection agency.

Transferring And/Or Transporting Funds.

When transferring funds between cash handlers within a work unit or transporting funds between locations, individual accountability can only be maintained by protecting the chain of custody.

A cash count and reconciliation will occur whenever City funds change hands.

Whether transferring funds between cash handlers within a work unit or transporting funds between locations, never allow the relinquishing custodian of the cash to leave before the receiving custodian has completed a cash count and reconciliation.

Both the relinquishing and receiving custodian of the cash will sign off on the cash count and reconciliation to complete the transfer of funds.

All transports of cash between locations will be made in locked transport bags or sealed bank security bags. Couriers will not have keys to the transport bags; only the sending and receiving units will have the keys.

General Cash Disbursements.

The City will ensure that all disbursements will be made in an accurate and timely manner from the City's automated accounts payable system. Any exceptions to this must be approved by the Finance Director.

The City will ensure that all disbursements are made in accordance with Federal and State regulations, generally accepted accounting principles, and other industry standards, to ensure the availability of cash for disbursement purposes.

The City will ensure that all disbursements are made in accordance with applicable Federal, State, and local laws, City disbursement policies and procedures, and industry standards.

The City will disburse all payments through the Finance Office with proper documentation. At no time is it acceptable to issue payments from a cash register or without proper justification shown through documentation or without appropriate budget appropriation.

The City will schedule disbursements in such a manner that sufficient cash will be on hand to avoid overdrafts.

There will be two (2) signatories on all checking accounts. Finance Director/Treasurer or City Administrator/Deputy City Treasurer and City Clerk or Mayor.

The City currently uses electronic signatures for disbursements up to four thousand nine hundred ninety-nine dollars and ninety-nine cents ($4,999.99). For checks over this amount, two (2) manual signatures are required in accordance with (D)(7)(f) above.

No member of staff has authority to approve their own reimbursements.

Payroll.

Department Heads or designee shall review and approve employee's time and/or payroll changes for their staff but will not prepare payroll checks or other transactions.

Staff preparing payroll transactions shall not have approval authority for initiating payroll changes or increasing or decreasing staffing levels.

Refunds.

Cash or credit card refunds are permitted only upon presentation of the receipt or other proof of purchase issued at the point of sale.

Check refunds will be issued through the accounts payable process. Departments will submit a request to the Finance Department following the purchasing policy guidelines.

Refunds shall be completed by charging the revenue General Ledger Account that was originally credited.

Section 140.390 Debt Bond Compliance Policy.

[Ord. No. 23-13883, 12-4-2023]

Definitions. Capitalized words and terms used in this Compliance Procedure have the following meanings:

ANNUAL COMPLIANCE CHECKLIST

A questionnaire and/or checklist described in Section 140.390(F)(1) that is completed each year for a Tax-Exempt Bond issue.

BOND COMPLIANCE OFFICER

The issuer's Finance Director or, if the position of Finance Director is vacant, the person filling the responsibilities of the Finance Director for the issuer.

BOND COUNSEL

A law firm selected by the issuer to provide a legal opinion regarding the tax status of interest on Tax-Exempt Bonds as of the issue date or the law firm selected to advise the issuer on matters referenced in this Compliance Procedure.

BOND RESTRICTED FUNDS

The funds, accounts, and investments that are subject to arbitrage rebate and/or yield restriction rules that have been identified in the Tax Compliance Agreement for a Tax-Exempt Bond issue.

BOND TRANSCRIPT

The "transcript of proceedings" or other similarly titled set of transaction documents assembled by Bond Counsel following the issuance of Tax-Exempt Bonds.

CITY COUNCIL

The City Council of the issuer.

CODE

The Internal Revenue Code of 1986, as amended.

COMPLIANCE PROCEDURE

This Bond Compliance Policy and Procedure.

CONTINUING DISCLOSURE UNDERTAKING

The Continuing Disclosure Agreement(s), Continuing Disclosure Undertaking(s), Continuing Disclosure Instructions or other written certification(s) of the issuer setting out covenants for satisfying the issuer's requirements for providing information to the MSRB pursuant to SEC Rule 15c2-12 on an ongoing basis for one (1) or more Tax-Exempt Bond issues.

COST or COSTS

All costs and expenses paid for the acquisition, design, construction, equipping or improvement of a project facility or costs of issuing Tax-Exempt Bonds.

EMMA

The Electronic Municipal Market Access system for municipal securities disclosures established and maintained by the MSRB, which can be accessed at www.emma.msrb.org.

FINAL WRITTEN ALLOCATION

The Final Written Allocation of Bond proceeds prepared pursuant to Section 605.390(E)(4) of this Compliance Procedure.

FINANCED ASSETS

That part of a Project Facility treated as financed with Tax-Exempt Bond proceeds as reflected in a Final Written Allocation or, if no Final Written Allocation was prepared, the accounting records of the issuer and the Tax Compliance Agreement for the Tax-Exempt Bond issue. "Intent Resolution" means a resolution of the City Council stating: (a) the intent of the issuer to finance all or a portion of the Project Facility; (b) the expected maximum size of the financing; and (c) the intent of the issuer to reimburse the costs paid by the issuer from proceeds of the Tax-Exempt Bonds.

IRS

The Internal Revenue Service.

ISSUER

The City of Washington, Missouri.

MSRB

The Municipal Securities Rulemaking Board, or any successor repository designated as such by the Securities and Exchange Commission in accordance with Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

PLACED IN SERVICE

That date (as determined by the Bond Compliance Officer) when the Project Facility is substantially complete and in operation at substantially its design level.

PROJECT FACILITY

All tangible or intangible property financed in whole or in part with Tax-Exempt Bonds that is: (a) functionally related or integrated in use; (b) located on the same physical site or proximate sites; and (c) expected to be placed in service within one (1) year of each other.

REBATE ANALYST

The rebate analyst for the Tax-Exempt Bonds selected pursuant to the Tax Compliance Agreement.

REGULATIONS

All regulations issued by the U.S. Treasury Department to implement the provisions of U.S. Code §§ 103 and 141 through 150 and applicable to tax-exempt obligations.

TAX COMPLIANCE AGREEMENT

The Federal Tax Certificate, Tax Compliance Agreement, Arbitrage Agreement, or other written certification or agreement of the issuer setting out representations and covenants for satisfying the post-issuance tax compliance requirements for the Tax-Exempt Bonds.

TAX-ADVANTAGED BOND(S)

Any bond, note, installment sale agreement, lease or certificate intended to be a debt obligation of the issuer, another political subdivision or government instrumentality, the proceeds of the which are to be loaned or otherwise made available to the issuer, and the interest on which is taxable to bond owners, but is based on a lower rate due to the advantages of a Federal program (such as Build America Bonds). A list of all Tax-Advantaged Bonds outstanding and subject to this Compliance Procedure as of June 1, 2022, is set out in Subsection (H) of this Section.

TAX-EXEMPT BOND FILE

Documents and records which may consist of paper and electronic medium, maintained for the Tax-Exempt Bonds. Each Tax-Exempt Bond File will include the following information if applicable:

Intent Resolution.

Bond Transcript.

Final Written Allocation and/or all available accounting records related to the Project Facility showing expenditures allocated to the proceeds of the Tax-Exempt Bonds and expenditures (if any) allocated to other sources of funds.

All rebate and yield reduction payment calculations performed by the Rebate Analyst and all investment records provided to the Rebate Analyst for purposes of preparing the calculations.

Forms 8038-T together with proof of filing and payment of rebate.

Investment agreement bid documents (unless included in the Bond Transcript) including:

(1)

Bid solicitation, bid responses, certificate of broker;

(2)

Written summary of reasons for deviations from the terms of the solicitation that are incorporated into the investment agreement; and

(3)

Copies of the investment agreement and any amendments.

Any item required to be maintained by the terms of the Tax Compliance Agreement involving the use of the Project Facility or expenditures related to tax compliance for the Tax-Exempt Bonds.

Any opinion of Bond Counsel regarding the Tax-Exempt Bonds not included in the Bond Transcript.

Amendments, modifications or substitute agreements to any agreement contained in the Bond Transcript.

Any correspondence with the IRS relating to the Tax-Exempt Bonds including all correspondence relating to an audit by the IRS of the Tax-Exempt Bonds or any proceedings under the Tax-Exempt Bonds Voluntary Closing Agreement Program (VCAP).

Any available questionnaires or correspondence substantiating the use of the Project Facility in accordance with the terms of the Tax Compliance Agreement for the Tax-Exempt Bonds.

For refunding bond issues, the Tax-Exempt Bond File for the refunded Tax-Exempt Bonds.

TAX-EXEMPT BOND(S)

Any bond, note, installment sale agreement, lease or certificate intended to be a debt obligation of the issuer, another political subdivision or government instrumentality, the proceeds of the which are to be loaned or otherwise made available to the issuer, and the interest on which is excludable from gross income for Federal income tax purposes. A list of all Tax-Exempt Bonds outstanding and subject to this Compliance Procedure as of June 1, 2022, is set out in Subsection (H) of this Section. For purposes of this Compliance Procedure, any reference to "Tax-Exempt Bond(s)" includes Tax-Advantaged Bonds.

Purpose And Scope.

Purpose Of Compliance Procedure. The issuer uses Tax-Exempt Bonds to fund costs of a Project Facility. The issuer understands that in exchange for the right to issue Tax-Exempt Bonds at favorable interest rates and terms, the Code and Regulations impose ongoing requirements related to the proceeds of the Tax-Exempt Bonds and the Project Facility financed by the Tax-Exempt Bonds. These requirements focus on the investment, use and expenditure of proceeds of the Tax-Exempt Bonds and related funds as well as restrictions on the use of the Project Facility.

The issuer recognizes that the IRS has stated that all issuers of Tax-Exempt Bonds should have separate written procedures regarding ongoing compliance with the Federal tax requirements for Tax-Exempt Bonds.

The issuer is required under the Continuing Disclosure Undertaking to provide disclosures of certain financial information and operating data and to file notices of certain material events to the marketplace to facilitate informed secondary trading in Tax-Exempt Bonds issued by the issuer. The issuer is committed to full compliance with the tax and securities law requirements for all of its outstanding and future tax-exempt financings. This Compliance Procedure is adopted by the City Council to comply with the IRS and SEC directives and to improve tax and securities law compliance and documentation.

Scope Of Compliance Procedure; Conflicts. This Compliance Procedure applies to all Tax-Exempt Bonds currently outstanding and all Tax-Exempt Bonds issued in the future. If the provisions of this Compliance Procedure conflict with a Tax Compliance Agreement, the Continuing Disclosure Undertaking or any other specific written instructions of Bond Counsel, the terms of the Tax Compliance Agreement, the Continuing Disclosure Undertaking or specific written instructions of Bond Counsel will supersede and govern in lieu of this Compliance Procedure. Any exception to this Compliance Procedure required by Bond Counsel as part of a future issue of Tax-Exempt Bonds will be incorporated in the Tax Compliance Agreement for the future issue. Any requirements imposed on the issuer in the Tax Compliance Agreement, will be noted by the Bond Compliance Officer and incorporated into the Annual Compliance Checklist. The issuer acknowledges that the Continuing Disclosure Undertaking may also apply to one (1) or more issues of taxable securities issued by the issuer.

Amendments And Publication Of Compliance Procedure. This Compliance Procedure may be amended from time-to-time by the City Council. Copies of this Compliance Procedure and any amendments will be included in the permanent records of the issuer.

Bond Compliance Officer; Training.

Bond Compliance Officer Duties. The Bond Compliance Officer is responsible for implementing this Compliance Procedure. The Bond Compliance Officer will work with other employees that use the Project Facility to assist in implementing this Compliance Procedure. The Bond Compliance Officer will consult with Bond Counsel, legal counsel to the issuer, accountants, tax return preparers and other outside experts to the extent necessary to carry out the purposes of this Compliance Procedure. The Bond Compliance Officer will report to the City Council as necessary, and at least annually review this procedure, making any recommendations for changes or amendments to this Compliance Procedure.

Training. When appropriate, the Bond Compliance Officer and/or other employees of the issuer under the direction of the Bond Compliance Officer will attend training programs offered by the IRS or other industry professionals regarding tax-exempt financing that are relevant to the issuer. At the time the individual acting as the Bond Compliance Officer passes the responsibilities for carrying out the provisions of this Compliance Procedure to another individual, the outgoing Bond Compliance Officer is responsible for training the incoming individual acting as Bond Compliance Officer to ensure the issuer's continued compliance with the provisions of this Compliance Procedure and all Tax Compliance Agreements for any outstanding Tax-Exempt Bonds.

Tax-Exempt Bonds Currently Outstanding.

Tax-Exempt Bonds Covered By This Subsection's Procedures. This Subsection applies to all Tax-Exempt Bonds issued prior to the date of this Compliance Procedure that are currently outstanding. These Tax-Exempt Bonds are listed in Subsection (H) of this Section..

Tax-Exempt Bond File. As soon as practical, the Bond Compliance Officer will attempt to assemble as much of the Tax-Exempt Bond File as is available for the Tax-Exempt Bonds listed in Subsection (H) of this Section.

Annual Compliance Checklists. As soon as practical following the adoption of this Compliance Procedure, the Bond Compliance Officer will work with Bond Counsel and/or legal counsel to the issuer and cause Annual Compliance Checklists to be completed for all outstanding Tax-Exempt Bonds and will follow the procedures specified in Subsection (F) of this Section to complete the Annual Compliance Checklists and thereafter include each completed Annual Compliance Checklist in the Tax-Exempt Bond File.

Correcting Prior Deficiencies In Compliance. If the Bond Compliance Officer determines a deficiency in compliance with a Tax Compliance Agreement for an outstanding Tax-Exempt Bond listed in Subsection (H) of this Section, the Bond Compliance Officer will direct the issuer to follow the procedures described in the Regulations or the Tax-Exempt Bonds Voluntary Closing Agreement Program (VCAP) to remediate the non-compliance. If remediation of the non-compliance requires the issuer to submit a request under VCAP, the Bond Compliance Officer will undertake this step only after reporting the violation to the City Council and obtaining its approval.

Compliance Procedure For New Tax-Exempt Bond Issues.

Application. This Subsection (E) applies to Tax-Exempt Bonds issued on or after the date of this Compliance Procedure.

Prior To Issuance Of Tax-Exempt Bonds.

Intent Resolution. The City Council will authorize and approve the issuance of Tax-Exempt Bonds. Prior to or as a part of this authorizing resolution or ordinance, the City Council may adopt an Intent Resolution.

Directions To Bond Counsel. The Bond Compliance Officer will provide a copy of this Compliance Procedure to Bond Counsel with directions for Bond Counsel to structure the documentation and procedural steps taken prior to issuing the Tax-Exempt Bonds so that they conform to the requirements of this Compliance Procedure, except to the extent Bond Counsel determines that different procedures are required. The Bond Compliance Officer will consult with Bond Counsel so that appropriate provisions are made to fund or reimburse the issuer's costs and expenses incurred to implement this Compliance Procedure.

(1)

Tax Compliance Agreement. For each issuance of Tax-Exempt Bonds, a Tax Compliance Agreement will be signed by the Bond Compliance Officer. The Tax Compliance Agreement will: (1) describe the Project Facility and the anticipated Financed Assets; (2) identify all Bond Restricted Funds and provide for arbitrage and rebate compliance by the issuer; (3) for new money financings, require the issuer to complete a Final Written Allocation; and (4) contain a form of the Annual Compliance Checklist for the Tax-Exempt Bonds. The Bond Compliance Officer will confer with Bond Counsel and the issuer's counsel regarding the meaning and scope of each representation and covenant contained in the Tax Compliance Agreement.

(2)

Preliminary Cost Allocations. For new money financings, the Bond Compliance Officer in consultation with Bond Counsel, will prepare a preliminary cost allocation plan for the Project Facility. The preliminary cost allocation plan will identify the assets and expected costs for the Project Facility, and, when necessary, will break-out the portions of the Costs that are expected to be financed with proceeds of the Tax-Exempt Bonds (the "Financed Assets") and the portions, if any, expected to be financed from other sources.

(3)

Tax Review With Bond Counsel. Prior to the sale of Tax-Exempt Bonds, the Bond Compliance Officer and Bond Counsel will review this Compliance Procedure together with the draft Tax Compliance Agreement to ensure that any tax compliance issues in the new financing are adequately addressed by this Compliance Procedure and/or the Tax Compliance Agreement. If Bond Counsel determines that this Compliance Procedure conflicts with the Tax Compliance Agreement, or must be supplemented to account for special issues or requirements for the Tax-Exempt Bonds, the Bond Compliance Officer will ask Bond Counsel to include the written modifications or additions in the final Tax Compliance Agreement. The Bond Compliance Officer will request Bond Counsel to prepare a form of Annual Compliance Checklist for use in monitoring the ongoing compliance requirements for the Tax-Exempt Bonds.

Accounting And Recordkeeping.

Accounting For New Money Projects. The Bond Compliance Officer will be responsible for accounting for the investment and allocation of proceeds of the Tax-Exempt Bonds. The Bond Compliance Officer will establish separate accounts or subaccounts to record expenditures for Costs of the Project Facility. Where appropriate, the Bond Compliance Officer may use accounts established as part of the issuer's financial records for this purpose. In recording Costs for the Project Facility, the Bond Compliance Officer will ensure that the accounting system will include the following information: (1) identity of person or business paid, along with any other available narrative description of the purpose for the payment; (2) date of payment; (3) amount paid; and (4) invoice number or other identifying reference.

Allocation For Refunded Bonds And Related Refunded Bond Accounts. For Tax-Exempt Bonds that refund prior Tax-Exempt Bonds, the Tax Compliance Agreement will set out special allocation procedures for the proceeds of the financing, and if necessary proceeds of the refinanced Tax-Exempt Bonds.

Tax-Exempt Bond File. The Bond Compliance Officer will be responsible for assembling and maintaining the Tax-Exempt Bond File. The Annual Reports, other reports and notices of certain material events filed by the issuer with the MSRB will be publicly available on EMMA and need not be separately maintained in the Tax-Exempt Bond File.

Final Allocation Of Bond Proceeds.

Preparation Of Final Written Allocation: Timing. The Bond Compliance Officer is responsible for making a written allocation of proceeds of Tax-Exempt Bonds to expenditures and identifying the Financed Assets. This process will be memorialized in the Final Written Allocation. For a new money financing, the Bond Compliance Officer will commence this process as of the earliest of: (1) the requisition of all Tax-Exempt Bond proceeds from any segregated Tax-Exempt Bond funded account; (2) the date the Project Facility has been substantially completed; or (3) four and one/half (4 1/2) years following the issue date of the Tax-Exempt Bonds. For Tax-Exempt Bonds issued only to refund a prior issue of Tax-Exempt Bonds, the Bond Compliance Officer will work with Bond Counsel to prepare and/or document the Final Written Allocation for the Project Facility financed by the refunded Tax-Exempt Bonds and include it in the Tax Compliance Agreement.

Contents And Procedure. The Bond Compliance Officer will consult the Tax Compliance Agreement and, if necessary, contact Bond Counsel to seek advice regarding any special allocation of Tax-Exempt Bond proceeds and other money of the issuer to the Costs of the Project Facility. If no special allocation is required or recommended, the Bond Compliance Officer will allocate Costs of the Project Facility to the proceeds of the Tax-Exempt Bonds in accordance with the issuer's accounting records. Each Final Written Allocation will contain the following: (1) a reconciliation of the actual sources and uses to Costs of the Project Facility; (2) the percentage of the cost of the Project Facility financed with proceeds of the Tax-Exempt Bonds (sale proceeds plus any investment earnings on those sale proceeds); (3) the Project Facility's Placed in service date; (4) the estimated economic useful life of the Project Facility; and (5) any special procedures to be followed in completing the Annual Compliance Checklist (e.g., limiting the Annual Compliance Checklist to specific areas of the Project Facility that the Final Written Allocation or the Tax Compliance Agreement treats as having been financed by Tax-Exempt Bonds).

Finalize Annual Compliance Checklist. As part of the preparation of the Final Written Allocation, the Bond Compliance Officer will update the draft Annual Compliance Checklist contained in the Tax Compliance Agreement. The Bond Compliance Officer will include reminders for all subsequent arbitrage rebate computations required for the Tax-Exempt Bonds in the Annual Compliance Checklist.

Review Of Final Written Allocation And Annual Compliance Checklist. Each Final Written Allocation and Annual Compliance Checklist will be reviewed by legal counsel to the issuer or Bond Counsel for sufficiency and compliance with the Tax Compliance Agreement and this Compliance Procedure. Following the completion of the review, the Bond Compliance Officer will execute the Final Written Allocation.

Ongoing Monitoring Procedures.

Annual Compliance Checklist. An Annual Compliance Checklist will be completed by the Bond Compliance Officer each year following completion of the Final Written Allocation. Each Annual Compliance Checklist will be designed and completed for the purpose of identifying potential non-compliance with the terms of the Tax Compliance Agreement or this Compliance Procedure and obtaining documents (such as investment records, arbitrage calculations, or other documentation for the Project Facility) that are required to be incorporated in the Tax-Exempt Bond File. The Bond Compliance Officer will refer any responses indicating a violation of the terms of the Tax Compliance Agreement to legal counsel to the issuer or Bond Counsel and, if recommended by counsel, will follow the procedure set out in Section 140.390(D)(4) to remediate the non-compliance.

Arbitrage And Rebate Compliance. The Bond Compliance Officer will monitor the investment of Bond Restricted Funds and provide investment records to the Rebate Analyst on a timely basis. The Bond Compliance Officer will follow the directions of the Rebate Analyst with respect to the preparation of and timing of rebate or yield reduction computations.

Continuing Disclosure.

Annual Disclosure Filings. For each issuance of Tax-Exempt Bonds, the Bond Compliance Officer will review the Continuing Disclosure Undertaking to determine the financial information and operating data required to be included in the Annual Report to be filed by the issuer with the MSRB on EMMA. The Bond Compliance Officer will cause the Annual Report to be filed with the MSRB on EMMA within the timeframe provided in the Continuing Disclosure Undertaking for the Tax-Exempt Bonds.

Material Event Disclosure Filings. For each outstanding issue of Tax-Exempt Bonds, the Bond Compliance Officer will review the Continuing Disclosure Undertaking to determine the "material events" that require prompt notice to be filed with the MSRB. Generally, the occurrence of any of the following events with respect to the Tax-Exempt Bonds represents a "material event":

Principal and interest payment delinquencies;

Non-payment related defaults, if material;

Unscheduled draws on debt service reserves reflecting financial difficulties;

Unscheduled draws on credit enhancements reflecting financial difficulties;

Substitution of credit or liquidity providers, or their failure to perform;

Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

Modifications to rights of bondholders, if material;

Bond calls, if material, and tender offers;

Defeasances;

Release, substitution or sale of property securing repayment of the Bonds, if material;

Rating changes;

Bankruptcy, insolvency, receivership or similar event of the obligated person;

The consummation of a merger, consolidation, or acquisition involving the obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

Appointment of a successor or additional trustee or the change of name of the trustee, if material.

After obtaining actual knowledge of the occurrence of any event that the Bond Compliance Officer believes may constitute an event requiring disclosure, the Bond Compliance Officer will contact Bond Counsel to determine if notice of the event is required to be given to the MSRB under the Continuing Disclosure Undertaking. If it is determined that notice should be provided to the MSRB or is required to be provided to the MSRB by the Continuing Disclosure Undertaking, the Bond Compliance Officer will cause the appropriate notice to be filed with the MSRB on EMMA within ten (10) business days after the occurrence of the event or as otherwise directed by Bond Counsel.

Exhibit A To This Section 140.390.

Tax-Exempt Bonds Covered By This Compliance Procedure.

Certificates of Participation (City of Washington, Missouri, Lessee), Series 2019.

Tax-Advantaged Bonds Covered By This Compliance Procedure.

Sewerage System Revenue Bonds (State Revolving Fund Program), Series 2007.

Section 140.400 Debt Management Policy.

[Ord. No. 23-13883, 12-4-2023]

Purpose.

The City of Washington has enacted the following policies in an effort to standardize and rationalize the issuance and management of debt. The City's primary objective is to establish conditions for the use of debt and to create procedures and policies that minimize the City's debt service and issuance costs, retain the highest practical credit rating, and maintain full and complete financial disclosure and reporting. The policies apply to all general and limited obligation debt issued by the City of Washington, including bonds, notes, leases, debt guaranteed by the City, and any other forms of indebtedness. This Policy applies to debt issued directly by the City and debt issued on behalf of the City by its agencies. This Policy also provides guidelines regarding the execution of capital leases between conduit issuers and the City to finance capital improvement projects.

Regular, updated debt policies are an important tool to ensure that City resources are used to meet its commitments, to provide needed services to the citizens of Washington, and to maintain sound financial management practices. These policies are therefore guidelines for general use, and allow for exceptions in extraordinary conditions.

The City will manage its cash to help prevent any borrowing to meet needed operating expenses and will seek to incur debt for capital financing only. When possible and as cash is available, the City will use a pay-as-you-go approach to purchase smaller capital items. The City will maintain its fund balance reserves according to the City's fund balance policy and only use reserves in the event of an emergency.

Creditworthiness Objectives.

Credit Ratings. The City of Washington seeks to maintain the highest possible credit ratings for all categories of short and long-term debt that can be achieved. This will be accomplished without compromising delivery of basic City services, by following adopted City policy objectives, and by complying with Missouri and Federal law. In addition, the City will maintain communication with bond rating agencies to keep them abreast of its financial condition by providing them with the City's Annual Comprehensive Financial Report.

Financial Disclosure. The City is committed to full and complete financial disclosure, and to cooperating fully with rating agencies, institutional and individual investors, City departments and agencies, other levels of government, and the general public to share clear, comprehensible, and accurate financial information. The City is committed to meeting secondary disclosure requirements on a timely and comprehensive basis. Official statements accompanying debt issues, Annual Comprehensive Financial Reports, and continuous disclosure statements will meet (at a minimum), the standards articulated by the Municipal Securities Rulemaking Board (MSRB), the Governmental Accounting Standards Board (GASB), the National Federation of Municipal Analysts (NFMA), the Securities and Exchange Commission (SEC) and Generally Accepted Accounting Principles (GAAP). In addition, the City has considered Government Finance Officers Association (GFOA) "best practices" in this debt policy and will incorporate any ongoing changes in the future. The City's Finance Department shall be responsible for ongoing disclosure and for maintaining compliance with continuing disclosure requirements promulgated by State and Federal regulatory bodies.

Capital Planning. To enhance creditworthiness and prudent financial management, the City of Washington is committed to systematic capital planning, intergovernmental cooperation and coordination, and long-term financial planning. Evidence of this commitment to systematic capital planning will be demonstrated through annual update and adoption of the City's Ten-Year Capital Improvement Program (CIP).

Debt Limits. The City will keep outstanding debt within the limits prescribed by the Missouri Constitution and State laws and at levels consistent with its creditworthiness objectives.

Types Of Permitted Debt. The City has numerous choices regarding types of debt available to meet its financing objectives. The following is a listing of the types of permitted debt and general guidelines as to their use.

General Obligation Bonds (G.O.). These bonds provide the investor with its most secure City transaction because of the City's pledge of its unlimited authority to levy property taxes for debt service.

The sum of all G.O. debt outstanding (regardless of type) is governed by the City's constitutional legal debt margin. Article VI, Sections 26(b) and 26(c) of the Constitution of Missouri, limit the net outstanding amount of authorized general obligation bonds for a City, exclusive of neighborhood improvement district bonds and notes, to ten percent (10%) of the assessed valuation of the City. Article VI, Sections 26(d) and 26(e), of the Constitution of Missouri; however, provide that a City may, with the required voter approval, issue general obligation bonds in an amount not to exceed an additional ten percent (10%) of assessed valuation for the purpose of acquiring rights-of-way; constructing, extending and improving streets and avenues; constructing, extending and improving sanitary or storm sewer systems; or purchasing or constructing waterworks or electric light plants. This additional ten percent (10%) is permitted provided that the total general obligation indebtedness of a City, including neighborhood improvement district bonds and notes, does not exceed twenty percent (20%) of the City's assessed valuation. The City must obtain voter authority to issue these bonds.

Revenue Bonds. These bonds may be issued to fund proprietary activities that generate adequate revenue sources from user fees to support operations and debt service requirements. These bonds will include written legal covenants which require that a dedicated revenue source be adequate to fund annual operating expenses and annual debt service requirements.

Leasehold Obligations. These are structured as a lease-purchase agreement where the City enters into an agreement to pay a fixed amount annually to a third party, subject to annual appropriation. These are commonly known as Certificates of Participation (COPs). These do not require voter approval.

Conduit Debt. Conduit debt is a bond or other debt obligation issued by the City to finance a project for use by a third party. This arrangement is typically used for non-profit organizations. The term "conduit" refers to the fact the issuer assumes no commitment to pay or guarantee payment of the debt service underlying the debt. As a result, these bonds are not included in the City's debt burden.

Capital Leases. Capital leases may be used to purchase buildings, equipment, furniture and fixtures. The term of any capital lease shall not exceed the useful life of the asset leased.

BANs/TANs/GANs/RANs. Bond Anticipation Notes (BANs), Tax Anticipation Notes (TANs), Grant Anticipation Notes (GANs) or Revenue Anticipation Notes (RANs) are examples of short-term borrowing instruments.

Other Debt. Bank loans, lines of credit, and other short-term debt will be considered when the amount of funding is under ten million dollars ($10,000,000.00) and payoff is typically shorter than five (5) years.

Special Assessment or Special Improvement Bonds involves an assessment on levied properties benefitting from project.

Tax Increment Financing (TIF) involves establishing a district where debt service is paid from incremental tax revenue which is created in the district. Other economic debt options such as Neighborhood Improvement District (NID), Transportation Development District (TDD) and Community Improvement District (CID) are all public financing methods which involve formation of a district. Each of these options would be handled on a case-by-case basis by the City depending on the needs at the time.

City Uses Of Debt.

Capital Financing. The City normally will rely on internally generated funds and/or grants and contributions from other governmental entities or agencies to finance its capital needs. Debt will be issued for a capital project when it is an appropriate means to achieve a fair allocation of costs between current and future beneficiaries or in the case of an emergency. In general, debt shall not be used for projects solely because insufficient funds were budgeted at the time of acquisition or construction.

Asset Life. The City will consider long-term financing for the acquisition, maintenance, replacement, or expansion of physical assets (including land) only if those assets have a useful life of at least five (5) years. Debt will be used only to finance capital projects and equipment, except in case of an emergency. Debt will only be issued for periods less than or equal to the useful lives of the assets or projects to be financed.

Debt Guarantees. To the extent allowed by Federal and State law and that does not negatively impact the City's creditworthiness, the City may consider, on a case-by-case basis, the use of its debt capacity for capital projects benefiting the City by authorities or other special purpose units of government.

Debt Standards And Structure.

Length Of Debt. Debt will be structured for the shortest period consistent with a fair allocation of costs to current and future beneficiaries or users.

Debt Structure. Debt will be structured to achieve the lowest possible net cost to the City given then-prevailing market conditions, the urgency of the capital project, and the nature and type of security provided. Moreover, to the extent possible, the City will structure the repayment of its overall debt so as to recapture rapidly its credit capacity for future use. Whenever possible and/or feasible, the City will seek to structure debt service schedules with level principal and interest costs — over the life of the debt. "Backloading" of costs will be considered only when natural disasters or extraordinary or unanticipated external factors make the short-term cost of the debt prohibitive, when the benefits derived from the debt issuance can clearly be demonstrated to be greater in the future than in the present, when such structuring is beneficial to the City's overall amortization schedule, or when such structuring will allow debt service to more closely match project revenues during the early years of the project's operation.

Fixed Rate Debt. The City will generally issue its debt on a fixed interest rate basis.

Variable Rate Debt. The City may choose to issue securities that pay a rate of interest that varies according to a pre-determined formula or results from a periodic remarketing of the securities, consistent with State and Federal law, covenants of pre-existing bonds, and depending on market conditions. The City will have no more than fifteen percent (15%) of its outstanding debt in variable rate form.

Subordinate Debt. The City shall issue subordinate debt only if it is financially beneficial to the City or consistent with creditworthiness objectives.

Derivatives. The City will consider the use of derivative products on a case-by-case basis and consistent with State and Federal law and financial prudence.

Refundings. Periodic reviews of all outstanding debt will be undertaken to determine refunding opportunities. Refunding will be considered when it is in the best financial interest of the City to do so and usually if and when there is a net economic benefit of the refunding or the refunding is essential in order to modernize covenants essential to operations and management of City facilities. In general, refundings for economic savings will be undertaken when a net present value savings of at least two percent (2%) to three percent (3%) of the refunded debt can be achieved. Current refundings that produce a net present value savings of less than this will be considered on a case-by-case basis. Refundings with negative savings will not be considered unless there is a compelling public policy objective.

Refunding for restructuring purposes will be limited to restructuring to alleviate debt service during difficult budgetary years, achieve cost savings, mitigate irregular debt service payments, release reserve funds or remove unduly restrictive bond covenants and will be considered on a case-by-case basis.

BANs/TANs/GANs/RANs. Use of these instruments will be undertaken only if the transaction cost plus interest on the debt are less than the cost of internal financing, or available cash is insufficient to meet working capital requirements. Any negotiable note issued by the City will be payable within one (1) year from the issuance date.

Credit Enhancement. Credit enhancement (letters of credit, bond insurance, sureties, etc.) may be used, but only in cases where the net debt service payments on the debt secured thereby will be reduced by more than the costs of the credit enhancement.

10.

Conduit Debt. The City may issue special limited obligations of the City, on behalf of another party, for the express purpose of providing capital financing for a specific third party that is not a part of the City's financial reporting entity. These bonds will not constitute a debt or pledge of the faith and credit of the City.

Debt Administration And Process. The following policies apply to all City debt issuance, including all general obligation and revenue bonds, except where specifically noted.

Investment In Bond Proceeds. All general obligation, revenue, and leasehold obligation proceeds shall be invested consistent with existing state and Federal law and the City's investment policies.

Costs And Fees. Whenever feasible, bond proceeds should include sufficient funds to cover all costs and fees related to issuance of the bonds.

Methods Of Sale.

Competitive Sale. Competitive Sale Bonds are marketed to a wide audience of investment banking (underwriting) firms. Their bids are submitted at a specified time. All competitive sale bonds of the City will be sold at a public sale through a competitive bidding process. Bids will be awarded on a true interest cost (TIC) basis, provided other bidding requirements are satisfied. The underwriter is selected based on its bid for its securities. In such instances where the City deems the competitive bids received unsatisfactory, it may reject all bids.

Negotiated Sale. The City selects the underwriter or group of underwriters of securities in advance of the bond sale. The Finance Director works with the Municipal Financial Advisor and/or underwriter to bring the issue to the market and negotiates all rates and terms of the sale. In advance of the sale, the City determines compensation and liability of each underwriter employed and the designation rules and priority of orders under which the sale itself will be conducted (e.g., retail, group net, net designated, etc.). The Finance Director and City Administrator are authorized to sign the bond purchase agreement on behalf of the City fixing the interest rates on bonds sold on a negotiated basis. Negotiated sales of debt other than bonds will be considered in circumstances when the complexity of the issue requires specialized expertise, when a change of underwriter may result in losses, when the negotiated sale would result in substantial savings in time or money, or when market conditions or City credit are unusually volatile or uncertain.

Private Placement. The City sells its bonds to a limited number of sophisticated investors, and not the general public. The City has issued private placement bonds in the past to a small group of local banks usually when the funding is less than five million dollars ($5,000,000.00).

Selection Of Service Providers. The City recognizes the nature of the municipal bond industry such that specialized consultants may need to be retained. The City will strive to retain those consultants who will best advise them on individual issues and the overall City debt program in a manner which will most advantageously position the City on both a short and long-term basis. In general, a competitive selection process will be used in the retention of consultants; however, the Finance Director may also directly engage consultants on a case-by-case basis.

Professional service providers selected in connection with the City's capital planning and debt issuance program may be chosen through a request for qualifications process. If this process is used, the request for qualification process will be designed to select providers that offer the City the best combination of expertise and price. The objectives of the process will be to promote competition, independence, cost-effectiveness and to result in the selection of the most qualified firm(s).

Municipal/Financial Advisors. When deemed necessary, the Finance Director may select a Municipal Financial Advisor to assist them on a case-by-case basis with debt issuance or other related matters.

Underwriters. For all negotiated sales, underwriters or purchasers will be required to demonstrate sufficient capitalization and experience related to the debt issuance and, if the debt is to be underwritten, a strong ability to market the debt securities. Underwriters or purchasers in a negotiated sale are to be held accountable, after the sale of the debt securities is complete, by demonstrating to City staff and the City Council how the firm achieved the most favorable interest rate possible for the City, given market conditions at the time the debt securities were purchased or underwritten.

For more complex negotiated bond issues, the City may engage both a Senior Manager underwriter and a Co-Manager. This will be decided on a case-by-case basis by the Finance Director.

Bond Counsel. The City will retain nationally recognized Bond Counsel for all debt issues. All debt issued by the City will include a written opinion by Bond Counsel affirming that the City is authorized to issue the debt, stating that the City has met all State constitutional and statutory requirements necessary for issuance, and determining the debt's Federal and State income tax status. Bond Counsel will be required to have comprehensive municipal debt experience in the State of Missouri.

Compensation For Services. Compensation for Bond Counsel, underwriter's counsel, financial advisors, and other financial-related services will be as low as possible, given desired qualification levels, and consistent with industry standards. Compensation will be calculated using an hourly or retainer basis instead of contingent basis.

Arbitrage. The City's Finance Department shall be responsible for maintaining a system of record keeping and reporting that meets the arbitrage rebate compliance requirements of the Federal tax code. The City may use Bond Counsel to calculate annual arbitrage to insure compliance. Any resulting positive arbitrage will be rebated as necessary according to Federal guidelines.

Post-Compliance. The City has adopted a Bond Compliance policy to insure that all post-compliance requirements are met. In addition, the City at times hires Bond Counsel to prepare annual reports to meet these requirements.

Section 140.410 Fund Balance Policy.

[Ord. No. 23-13883, 12-4-2023]

Purpose. The City of Washington has enacted the following policy in an effort to ensure financial security through the maintenance of a healthy reserve fund that guides the creation, maintenance, and use of resources for financial stabilization purposes. The City's primary objective is to maintain a prudent level of financial resources to protect against reducing service levels or raising taxes and fees due to temporary revenue shortfalls or unpredicted one-time expenditures. The City of Washington also seeks to maintain the highest possible credit ratings which are dependent, in part, on the City's maintenance of a healthy fund balance. This Policy is also being adopted to conform to GASB Statement No. 54 — Fund Balance Reporting and Governmental Fund Type Definitions. As GASB 54 states, this Policy impacts only governmental funds and does not impact proprietary funds, fiduciary funds, or government-wide funds.

Definitions. As used in this Section, the following terms shall have the meanings indicated:

ASSIGNED FUND BALANCE

The portion of a governmental fund's net assets that the City intends to use for a specific purpose, intent expressed by the governing body or by an official to which the governing body delegates the authority.

The City Council designates authority to assign fund balance to the City Administrator or Finance Director who will determine the proper amounts to be assigned for purposes as they determine necessary.

COMMITTED FUND BALANCE

The portion of a governmental fund's net assets that are constrained to specific purposes by a government itself using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purposes unless the government takes the same highest-level action to remove or change the constraint.

The City of Washington's highest level of decision making authority is the City Council.

City Council will determine amounts to be committed initially during the budget process with the Ordinance accepting the annual budget. Should the balance fall below the committed amount, the board will identify a plan to restore the committed fund balance to its target as part of the budget process.

City Council may at any time throughout the budget year, establish, modify or rescind fund balance commitments by passing an Ordinance.

FUND BALANCE

The excess of assets over liabilities in a governmental fund.

NON-SPENDABLE FUND BALANCE

The portion of a governmental fund's net assets that are not in a spendable form (such as inventory, prepaids and long-term receivables) or are legally or contractually required to be maintained intact.

RESTRICTED FUND BALANCE

The portion of a governmental fund's net assets that are constrained to specific purposes by their providers (such as creditors, grantors, bondholders, and higher levels of government) either externally imposed restrictions or imposed by law through constitutional provisions or by enabling legislation.

UNASSIGNED FUND BALANCE

Amounts that are available for any purpose, these amounts are reported only in the General Fund.

Policy Statement.

The Fund Balance of the City's General Fund and Enterprise Funds are to be maintained to provide stability and flexibility to respond to unexpected adversity and/or opportunities. The target is for unassigned fund balance to be twenty percent (20%) to forty percent (40%) of annual operating expenditures. The minimum unassigned fund balance in the General Fund shall be twenty percent (20%) of the annual operating expenditures (excluding transfers, debt service and capital outlay) and the minimum in the Enterprise Funds shall be twenty-five percent (25%) of the annual operating expenditures (excluding transfers, debt service and capital outlay). Should the balance fall below the minimum set, the City will identify a plan to restore the Fund Balance within three (3) fiscal years to its target amount as part of the annual budget proposal. Special revenue funds are not subject to the minimum fund balance policy since the special revenue source used to establish the fund supports the fund one hundred percent (100%) and expenditures are only budgeted up to the amount of revenue available to spend. Capital and debt service funds are not subject to the minimum fund balance policy since by nature they do not have operating expenditures or have minimal expenditures. Even though not required, the City may calculate the minimum target for these funds for annual budget planning purposes.

The City's basic goal is to maintain annual expenditure increases at a conservative growth rate, and to limit expenditures to anticipated revenues in order to maintain a balanced budget. The decision to set and retain a minimum unassigned fund balance stems from the following considerations:

It provides adequate funding to cover approximately three (3) months of operating expenses.

It provides the liquidity necessary to accommodate the City's uneven cash flow, which is inherent in its periodic tax collection schedule.

It provides the liquidity to respond to contingent liabilities.

The Government Finance Officers Association recommends the General Fund unrestricted fund balance to be maintained at a minimum level of two (2) to three (3) months of regular operating revenues or expenditures.

Fund balance may be utilized under the following conditions:

(1)

To draw down the City's fund balance to the recommended funding rate by using these funds for capital expenditures, long-term obligations, or debt service needs.

(2)

To respond to emergency funding necessities that are not expected to occur routinely. Examples of an emergency funding necessity is:

(a)

A revenue shortfall resulting from a natural disaster or man-made emergency resulting in more than a fifty percent (50%) decrease in total revenue of a particular fund for more than three (3) consecutive months.

(b)

If annual growth in certain economic indicators (i.e., cost of living) is expected to fall below one percent (1%) or is close to no growth at all.

The City will spend the most restricted dollars before less restricted in the following order, except as noted above:

Non-spendable (if funds become spendable).

Restricted.

Committed.

Assigned.

Unassigned.

Amounts encumbered for a specific purpose which have not been previously restricted, should be classified as either committed or assigned based on the criteria for each.

Fund Type Definitions.

Special Revenue Funds. To account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The term "proceeds of specific revenues sources" establishes that one (1) or more specific restricted or committed revenues should be the foundation for a special revenue fund and this sources or sources should comprise a substantial portion of the inflows reported in the fund.

Capital Project Funds. To account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities and other capital assets.

Debt Service Funds. To account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.

Section 140.420 Identity Theft Prevention Program.

[Ord. No. 23-13883, 12-4-2023]

Program Adoption. The City of Washington, Missouri ("Utility") developed this Identity Theft Prevention Program ("Program") pursuant to the Federal Trade Commission's Red Flags Rule ("Rule"), which implements Section 114 of the Fair and Accurate Credit Transactions Act of 2003, 16 C.F.R. § 681.2. After consideration of the size and complexity of the Utility's operations and account systems, and the nature and scope of the Utility's activities, the City Council determined that this Program was appropriate for the City of Washington, Missouri, and therefore originally approved this Program and adopted it on February 17, 2009.

Program Purpose And Definitions.

Fulfilling Requirements Of The Red Flags Rule. Under the Red Flag Rule, every financial institution and creditor is required to establish an "Identity Theft Prevention Program" tailored to its size, complexity and the nature of its operation. Each program must contain reasonable policies and procedures to:

Identify relevant Red Flags for new and existing covered accounts and incorporate those Red Flags into the Program;

Detect Red Flags that have been incorporated into the Program;

Respond appropriately to any Red Flags that are detected to prevent and mitigate Identity Theft; and

Ensure the Program is updated periodically, to reflect changes in risks to customers or to the safety and soundness of the creditor from Identity Theft.

Red Flags Rule definitions used in this Program.

The Red Flags Rule defines "Identity Theft" as "fraud committed using the identifying information of another person" and a "Red Flag" as a pattern, practice, or specific activity that indicates the possible existence of Identity Theft.

According to the Rule, a municipal utility is a creditor subject to the Rule requirements. The Rule defines creditors "to include finance companies, automobile dealers, mortgage brokers, utility companies, and telecommunications companies. Where non-profit and government entities defer payment for goods or services, they, too, are to be considered creditors."

All the Utility's accounts that are individual utility service accounts held by customers of the utility whether residential, commercial or industrial are covered by the Rule. Under the Rule, a "covered account" is:

(1)

Any account the Utility offers or maintains primarily for personal, family or household purposes, that involves multiple payments or transactions; and

(2)

Any other account the Utility offers or maintains for which there is a reasonably fore-seeable risk to customers or to the safety and soundness of the Utility from Identity Theft.

"Identifying information" is defined under the Rule as "any name or number that may be used, alone or in conjunction with any other information, to identify a specific person," including: name, address, telephone number, social security number, date of birth, government issued driver's license or identification number, alien registration number, government passport number, employer or taxpayer identification number, unique electronic identification number, computer's Internet Protocol address, or routing code.

The Program Administrator shall be the Finance Director.

Identification Of Red Flags. In order to identify relevant Red Flags, the Utility considers the types of accounts that it offers and maintains, the methods it provides to open its accounts, the methods it provides to access its accounts, and its previous experiences with Identity Theft. The Utility identifies the following red flags, in each of the listed categories:

Notifications And Warnings From Credit Reporting Agencies.

Red Flags.

Report of fraud accompanying a credit report;

Notice or report from a credit agency of a credit freeze on a customer or applicant;

Notice or report from a credit agency of an active duty alert for an applicant; and

Indication from a credit report of activity that is inconsistent with a customer's usual pattern or activity.

Suspicious Documents.

Red Flags.

Identification document or card that appears to be forged, altered or inauthentic;

Identification document or card on which a person's photograph or physical description is not consistent with the person presenting the document;

Other document with information that is not consistent with existing customer information (such as if a person's signature on a check appears forged); and

Application for service that appears to have been altered or forged.

Suspicious Personal Identifying Information.

Red Flags.

Identifying information presented that is inconsistent with other information the customer provides (example: inconsistent birth dates);

Identifying information presented that is inconsistent with other sources of information (for instance, an address not matching an address on a credit report);

Identifying information presented that is the same as information shown on other applications that were found to be fraudulent;

Identifying information presented that is consistent with fraudulent activity (such as an invalid phone number or fictitious billing address);

Social security number presented that is the same as one (1) given by another customer;

An address or phone number presented that is the same as that of another person;

A person fails to provide complete personal identifying information on an application when reminded to do so (however, by law social security numbers must not be required); and

A person's identifying information is not consistent with the information that is on file for the customer.

Suspicious Account Activity Or Unusual Use Of Account.

Red Flags.

Change of address for an account followed by a request to change the account holder's name;

Payments stop on an otherwise consistently up-to-date account;

Account used in a way that is not consistent with prior use (example: very high activity);

Mail sent to the account holder is repeatedly returned as undeliverable;

Notice to the Utility that a customer is not receiving monthly statements and/or other mail sent by the Utility;

Notice to the Utility that an account has unauthorized activity;

Breach in the Utility's computer system security; and

Unauthorized access to or use of customer account information.

Alerts From Others.

Red Flag.

Notice to the Utility from a customer, identity theft victim, law enforcement or other person that it has opened or is maintaining a fraudulent account for a person engaged in Identity Theft.

Detecting Red Flags.

New Accounts.

In order to detect any of the Red Flags identified above associated with the opening of a new account, Utility personnel will take the following steps to obtain and verify the identity of the person opening the account:

Detect.

(1)

Require certain identifying information such as name, date of birth, residential or business address, principal place of business for an entity, phone number, social security number, or driver's license number, or other identification;

(2)

Verify the customer's identity (for instance, review a driver's license or other picture identification card);

(3)

Require proof of address (for instance, different utility bill, lease/rental contract, closing statement);

(4)

Review documentation showing the existence of a business entity; and

(5)

Independently contact the customer.

Existing Accounts.

In order to detect any of the Red Flags identified above for an existing account, Utility personnel will take the following steps to monitor transactions with an account:

Detect.

(1)

Verify the identification of customers if they request information (in person, via telephone, via facsimile, via email or online) by requesting specific pieces of personal identifying information;

(2)

Verify the validity of requests to change billing addresses by requesting proof of address (for instance, different utility bill, lease/rental contract, closing statement);

(3)

Verify changes in banking information given for billing and payment purposes; and

(4)

If applicable, require the establishment of security questions during the initial setup of the account for online and automated phone system access of utility account.

Preventing And Mitigating Identify Theft. In the event Utility personnel detect any identified Red Flags, such personnel shall take one (1) or more of the following steps, depending on the degree of risk posed by the Red Flag:

Prevent And Mitigate.

Continue to monitor an account for evidence of Identity Theft;

Contact the customer;

Change any passwords or other security devices that permit access to accounts;

Not open a new account;

Close an existing account;

Reopen an account with a new number;

Notify the Program Administrator for determination of the appropriate step(s) to take;

Notify law enforcement; or

Determine that no response is warranted under the particular circumstances.

Protect Customer Identifying Information. In order to further prevent the likelihood of identity theft occurring with respect to Utility accounts, the Utility will take the following steps with respect to its internal operating procedures to protect customer identifying information:

Ensure that its website is secure or provide clear notice that the website is not secure;

Ensure computer virus protection is up to date;

Ensure that office computers are password protected and that computer screens lock after a set period of time;

Keep offices clear of papers containing customer information;

Ensure complete and secure destruction of paper documents and computer files containing customer information;

Require and keep only the kinds of customer information that are necessary for utility purposes;

Request only the last four (4) digits of social security numbers (if any);

Limiting access to accounts to only employees that require access;

Ensuring that computer screens are only visible to the employee accessing the account; and

Requiring customers to authenticate addresses and personal information rather than account representatives asking if the information is correct.

Program Updates. This Program will be periodically reviewed and updated to reflect changes in risks to customers and the soundness of the Utility from Identity Theft. The Program Administrator will consider the Utility's experiences with Identity Theft situation, changes in Identity Theft methods, changes in Identity Theft detection and prevention methods, changes in types of accounts the Utility maintains and changes in the Utility's business arrangements with other entities. After considering these factors, the Program Administrator will determine whether changes to the Program, including the listing of Red Flags, are warranted and make any proposed changes or recommendations to City Council for approval.

Program Administration.

Oversight. Responsibility for developing, implementing and updating this Program lies with the Program Administrator or his/her appointee. The Program Administrator will be responsible for the Program administration, for ensuring appropriate training of Utility staff on the Program, for reviewing any staff reports regarding the detection of Red Flags and the steps for preventing and mitigating Identity Theft, determining which steps of prevention and mitigation should be taken in particular circumstances, and considering periodic changes to the Program.

Staff Training And Reports.

Utility staff responsible for implementing the Program shall be trained as needed either by or under the direction of the Program Administrator in the detection of Red Flags, and the responsive steps to be taken when a Red Flag is detected.

A report shall be made by utility staff documenting all incidents or suspicions of identity theft. These reports shall be promptly given to the Program Administrator for review.

Service Provider Arrangements. In the event the Utility engages a service provider to perform an activity in connection with one (1) or more accounts, the Utility will take the following steps to ensure the service provider performs its activity in accordance with reasonable policies and procedures designed to detect, prevent, and mitigate the risk of Identity Theft.

Require, by contract, that service providers have such policies and procedures in place; and

Require, by contract, that service providers review the Utility's Program and report any Red Flags to the Program Administrator.

Section 140.430 Investment Policy.

[Ord. No. 23-13883, 12-4-2023]

Purpose. Effective cash flow management and cash investment practices are essential to good fiscal management. This Policy provides guidelines for the prudent investment of the City's temporarily idle cash in all Funds, and outline the policies for maximizing the efficiency of the City's cash management system. The investment program shall be operated in conformance with governing legislation and other legal requirements.

Scope.

This Policy applies to the investment of all funds of the City of Washington. Longer-term funds including investment of employee's retirement funds and proceeds from certain bond issues are covered by those contractual agreements rather than this Policy. For purposes of this Policy, investment portfolio includes all City investments except any pension investments and municipal bond proceeds.

Pooling Of Funds. Except for cash in certain restricted and special funds, the City of Washington may consolidate cash and reserve balances from all funds to maximize investment earnings and to increase efficiencies with regard to investment pricing, safekeeping and administration. Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.

External Management Of Funds. Investment through external programs, facilities, and professionals operating in a manner consistent with this Policy will constitute compliance.

Objectives. The primary objective is to provide guidelines for insuring the safety of funds invested while maximizing investment earnings to the City. The three (3) principles of investment activities, Safety, Liquidity and Yield, will be considered, in the order specified, when making investment decisions.

Safety of 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. The objective will be to mitigate credit risk and interest rate risk.

Credit Risk, defined as the risk of loss due to failure of the issuer of a security, shall be mitigated by only investing in very safe or "investment grade" securities and when feasible, diversifying the portfolio so that potential losses on individual securities will be minimized.

Interest Rate Risk, defined as market value fluctuations due to overall changes in interest rates. The City will minimize the risk that the market value of securities in the portfolio will fall due to changes in general interest rates by:

(1)

Structuring the 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.

(2)

Investing operating funds primarily in shorter-term securities, money market funds, or similar pools.

Liquidity refers to the ability to convert an investment to cash promptly with minimum risk of losing some portion of principal or interest. 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 (static liquidity). Furthermore, since all possible cash demands can not be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity). A portion of the portfolio also may be placed in bank deposits or repurchase agreements or overnight investments that offer same-day liquidity for short-term funds.

Yield is the average annual return on investment based on the interest rate, price, and length of time to maturity. The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the investment risk constraints and liquidity needs. Return on investment is of secondary importance compared to the safety and liquidity objectives described above. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall be held to maturity with the following exceptions:

A security with declining credit may be sold early to minimize loss of principal.

A security swap would improve the quality, yield, or target duration in the portfolio.

Liquidity needs of the portfolio require that the security be sold.

Standards Of Care.

Prudence. The standard of prudence to be used by investment officials shall be the "uniform prudent investment act" standard and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and this Investment Policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided the following requirements are met.

Deviations from expectations are reported in a timely fashion to the City Council.

Liquidity and the sale of securities are carried out in accordance with the terms of this 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 their own affairs, not for speculation, but for investment, considering the probable safety of their capital and probable income to be derived.

Ethics And Conflicts Of Interest. Officers and employees 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 could impair their ability to make impartial decisions. Employees and investment 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. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the City.

Delegation Of Authority. Authority to manage the investment program is hereby delegated to the City Treasurer and Deputy City Treasurer. Responsibility for the operation of the investment program is hereby delegated to the Finance Officer (Investment Officer), who shall act in accordance with established procedures and internal controls for the operation of the investment program consistent with this investment policy. At a minimum, procedures should include references to safekeeping, delivery versus payment, investment accounting, repurchase agreements, wire transfer agreements and collateral/depository agreements. No person may engage in an investment transaction except as provided under the terms of this Policy and the procedures established by the Finance Director. The Finance Director shall be responsible for all transactions undertaken and shall establish a system of controls to regulate all investment activities.

Investment Transactions.

Authorized Financial Dealers And Institutions. Financial dealers and institutions, including security broker/dealers, must be creditworthy. Security broker/dealers may include "primary" dealers or regional dealers that qualify under Securities and Exchange Commission (SEC) Rule 15C3-1 (uniform net capital rule).

All financial institutions and broker/dealers who desire to become qualified for investment transactions must supply the following as appropriate:
a.	Audited financial statements.
b.	Proof of Financial Industry Regulatory Authority (FINRA) certification.
c.	Proof of Missouri State registration.
d.	Certification of having read and understood and agreeing to comply with City's investment policy.
e.	Evidence of adequate insurance coverage.
A periodic review of the financial condition and registration of qualified financial institutions and broker/dealers will be conducted by the Finance Director.

Internal Controls. The Finance Director 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: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. The internal control structure will be reviewed annually with the City's independent auditor to assure compliance with policies and procedures. The internal controls shall address the following points:

Control of collusion.

Separation of transaction authority from accounting and recordkeeping.

Custodial safekeeping.

Avoidance of physical delivery securities.

Clear delegation of authority to subordinate staff members.

Written confirmation of transactions for investments and wire transfers.

Development of a wire transfer agreement with the lead bank and third-party custodian.

Delivery vs. Payment And Safekeeping And Custody. All trades, where applicable, will be executed by delivery vs. payment (DVP) to ensure that securities are deposited in eligible financial institutions prior to the release of funds. All securities will be held by an independent third-party custodian selected by the City with all securities held in the City of Washington's name. The safekeeping institution shall provide a copy of their most recent report on internal controls (SAS 70).

Authorized And Suitable Investments.

Investment Types. In accordance with and subject to restrictions imposed by the Constitution and the laws of the State of Missouri, the following investments represents the entire range of permissible investments for a political subdivision:

Governmental And Agency Debt. Those securities issued by and are guaranteed by the Federal Government or an Agency or Instrumentality of the Federal Government:

(1)

U.S. Treasury Securities. The City may invest in obligations of the United States Government for which the full faith and credit of the United States are pledged for the payment of principal and interest.

(2)

U.S. Agency Securities. The City may invest in obligations issued or guaranteed by any agency of the United States Government. The list includes U.S. Government Agency Coupon and Zero Coupon Securities, U.S. Government Agency Discount Notes, U.S. Government Agency Callable Securities, U.S. Government Agency Step-Up Securities. This list would include but not be limited to the following:

(a)

Federal Farm Credit Banks (FFCB).

(b)

Federal Home Loan Bank Mortgage Corporation (FHLMC).

(c)

Federal Home Loan Bank (FHLB) or its banks.

(d)

Government National Mortgage Association (GNMA).

(e)

Federal National Mortgage Association (FNMA).

(f)

Student Loan Marketing Association (SLMA).

Fixed Income Investments Secured By The FDIC Insurance And/Or Collateral.

(1)

Certificates Of Deposit. Instruments issued by financial institutions which state that the specified sums have been deposited for specified periods of time and at specified rates of interest. The certificates of deposit must be FDIC insured or collateralized by acceptable securities as dictated by State Statute.

(2)

Repurchase Agreement. The City may invest in contractual agreements between the City and commercial banks. The purchaser in a repurchase agreement enters into a contractual agreement to purchase U.S. Treasury and government agency securities while simultaneously agreeing to resell the securities at predetermined dates and prices.

Other Fixed Income Debt Issued By Commercial Enterprises. It should be noted that investment in the following instruments require an additional level of care and prudence when undertaken by the Finance Director. Because these investments are in commercial credits as opposed to governmental credit, or subject to the added safety of collateral, the risk of loss of principal is significantly higher for the following investments than in the four (4) prior categories. Added financial training and education is recommended and/or outside professional management of the program is highly recommended.

(1)

Banker Acceptances. Bills of exchange or time drafts on and accepted by a commercial bank, otherwise known as bankers' acceptances. An issuing bank must have received the highest letter and numerical ranking (i.e., A1/P1) by at least two (2) nationally recognized statistical rating organizations (NRSROs). Must be issued by domestic commercial banks. Purchases of bankers' acceptances may not exceed one hundred eighty (180) days to maturity. No more than five percent (5%) of the total market value of the investment portfolio may be invested in the bankers' acceptances of any one (1) issuer and no more than twenty-five percent (25%) of the entire investment portfolio may be invested in bankers' acceptances.

(2)

Commercial Paper. Commercial paper which has received the highest letter and numerical ranking (i.e., A1/P1) by at least two (2) nationally recognized statistical rating organizations (NRSROs). Eligible paper is further limited to issuing corporations that have a total commercial paper program size in excess of five hundred million dollars ($500,000,000.00), have long term debt ratings, if any, of "A" or better from at least one (1) NRSRO, and must be domiciled in the U.S. Purchases of commercial paper may not exceed two hundred seventy (270) days to maturity. Approved commercial paper programs should provide some diversification by industry. Additionally, purchases of commercial paper in the industry sectors that may from time to time be subject to undue risk and potential illiquidity should be avoided. The only asset-backed commercial paper programs that are eligible for purchase are fully supported programs that provide adequate diversification by asset type (trade receivables, credit card receivables, auto loans, etc.). No securities arbitrage programs or commercial paper issued by Structured Investment Vehicles (SIVs) shall be considered. No more than ten percent (10%) of the total market value of the investment portfolio may be invested in Commercial Paper of any one (1) issuer and no more than twenty-five percent (25%) of the entire investment portfolio may be invested in commercial paper. Commercial paper issuers must be subject to weekly credit reviews and daily news research and analysis and a monitoring program must be established to promulgate best practices in credit monitoring.

Other Restrictions And Prohibited Transactions. To provide for the safety and liquidity of the City's funds, the investment portfolio will be subject to the following restrictions:

Borrowing for investment purposes ("Leverage") is prohibited.

Instruments known as variable rate demand notes, floaters, inverse floaters, leveraged floaters, and equity-linked securities are not permitted.

"Derivative" Instruments (e.g., options, futures, swaps, caps, floors, and collars) is prohibited.

Contracting to sell securities not yet acquired in order to purchase other securities for purpose of speculating on developments or trends in the market is prohibited.

Collateralization. Certificates of deposit and repurchase agreements are to be properly collateralized with acceptable collateral. The market value (including accrued interest) of the collateral should be at least one hundred percent (100%).

Certificates Of Deposit. The market value of collateral must be at least one hundred percent (100%) or greater of the amount of certificates of deposits plus demand deposits with the depository, less the amount, if any, which is insured by the Federal Deposit Insurance Corporation (FDIC).

Repurchase Agreements. The securities for which repurchase agreements will be transacted will be limited to U.S. Treasury and government agency securities that are eligible to be delivered via the Federal Reserve's Fedwire book entry system. Securities will be delivered to the City's custodial agent. Funds and securities will be transferred on a delivery vs. payment basis.

All securities, which serve as collateral against the deposits of a depository institution, shall be held by a third-party custodian as evidenced by safekeeping receipts. Depository institutions pledging collateral against deposits must, in conjunction with the custodial agent, furnish the necessary custodial receipts within five (5) business days from the settlement date.

The City shall have a depositary contract and pledge agreement with each safekeeping bank that will comply with the Financial Institutions, Reform, Recovery, and Enforcement Act of 1989 (FIRREA). This will ensure that the City's security interest in collateral pledged to secure deposits is enforceable against the receiver of a failed financial institution.

Investment Parameters.

Diversification. The investments shall be diversified to minimize the risk of loss resulting from over concentration of assets in specific maturity, specific issuer, or specific class of securities. Diversification strategies shall be established and periodically reviewed.

Maximum Maturities. The City will attempt to match its investments with anticipated cash flow requirements. Investments in repurchase agreements shall mature and become payable not more than ninety (90) days from the date of purchase. Unless otherwise stated in this Policy, all other investments shall mature and become payable not more than five (5) years from the date of purchase. The weighted average maturity limitation shall not exceed four (4) years.

Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio will be continuously invested in readily available funds such as bank deposits or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations. Maintaining funds in liquid time investments will allow the City to meet unexpected cash flow needs.

Reporting.

Methods. The Finance Director shall prepare an investment report at least annually at the close of the fiscal year including a management summary that provides an analysis of the current investment portfolio and transactions made over the year. This management summary will be prepared in a manner which will allow the City to ascertain whether investment activities during the reporting period have conformed to the investment policy. The report will include the following:

Listing of individual securities held at the end of the reporting period.

Realized and unrealized gains or losses resulting from appreciation or depreciation by listing the cost and market value of securities over one (1) year duration.

Any monetary gain received from said investments during the reporting period.

Listing of investment by maturity date.

Percentage of the total portfolio which each type of investment represents.

Performance Standards. The investment portfolio will be managed in accordance with the parameters specified within this Policy. The portfolio should obtain a market average rate of return during a market/economic environment of stable interest rates. A series of appropriate benchmarks may be established against which portfolio performance shall be compared on a regular basis. In addition, the market value of the portfolio shall be calculated on a regular basis.

Policy Considerations.

Exemption. Any investment currently held that does not meet the guidelines of this Policy shall be exempt from the requirements of this Policy. At maturity or liquidation, such monies shall be reinvested only as provided by this Policy.

Section 140.440 Journal Entry Policy.

[Ord. No. 23-13883, 12-4-2023]

Automatic Journal Entries (System-Generated).

Most of the individual accounting modules require clerks to post transactions through the module using system generated journal entries. Clerks post transactions to the individual module then a journal entry number is assigned by the system. After this is done, the system posts the amount to the individual module and sends an amount to the General Ledger module for final automatic posting. Clerks print an End of Day Journal Register report that is filed in the Finance Department.

The Finance Assistant views the End of Day Journal Register Report and verifies the date, amounts, account numbers, and funds. Once confirmed, the Finance Assistant initials the report and files with daily documentation.

These system-generated entries can not be changed by staff as they are posted automatically by the system. Staff can only review to see if there is anything "out of balance" which would require a call to software support.

Manual Journal Entries.

Manual journal entries can be created by anyone but is usually done by someone in the Finance Department. General journal entry forms are used to create the journal entry. All manual journal entries require preparer to initial the journal entry form and attach proper backup documentation. If no backup attached, preparer must document reason for not attaching.

The Finance Director or Finance Assistant are the only people with authority to enter journal entries.

Finance Assistant receives manual journal entries and reviews journal entry for accuracy, correctness and proper documentation. Next, the journal entry is entered into General Ledger module (Journal Entry Process) and the Finance Assistant confirms that there are no "net differences." A Journal number is assigned and put on the manual journal entry form for cross referencing. If no "net differences," Journal Entry Register is printed.

Finance Director receives the Journal Entry Register along with all of the manual journal entries and the backup paperwork. Finance Director reviews and initials the manual journal entries in accordance with this Policy. In addition, the packet is updated and approved in the General Ledger Module which then posts in the system. The Journal Entry Register is initialed and given back to the Finance Assistant for filing along with the manual journal entries and backup documentation.

The City will maintain separate internal controls by keeping preparation, approval, and posting duties segregated. If for any reason the same person does two (2) of these functions, someone independent will review and initial manual journal entry and journal post reports to verify correctness and approval of the posted journal entry.

The Finance Director and the Finance Assistant roles are interchangeable in order to keep separation of duties for the purposes of this Policy. For example, at no time can the same person both prepare and approve their own journal entry.

Section 140.450 Purchasing Policy.

[Ord. No. 23-13883, 12-4-2023]

Introduction.

This Purchasing Policy shall provide full information concerning the purchasing strategy, rules, and regulations applicable to the City of Washington. This Policy ensures standardized procedures to provide fiscal control and allow the City to obtain quality goods and services at the lowest possible cost and receive maximum value for each public dollar spent.

Each Department Head is responsible for the procurement of goods and services necessary for the operations of their respective department, subject to approval levels defined in this Policy.

It is the responsibility of each Department Head to ensure that all purchases are made in a cost-effective manner, and that no funds are expended above appropriated amounts without prior authorized approval.

If any designated individual in this Policy will be temporarily unavailable (i.e., vacation, short-term leave, etc.), before leaving they may appoint a designee during their absence. If any designated individual in this Policy is not available due to unforeseen circumstances, a designee shall be recommended by the Finance Director and assigned by the City Administrator or Mayor (segregation of duties and internal control will still be top priority) so the City may continue to function and provide the same level of City services.

A list of forms is provided in the Appendix, same is held on file in the City offices, as a tool for staff to utilize. These forms will be updated as needed to accommodate changes in workflow, staffing, etc. Changes to the forms will be made by internal staff and do not require formal Council approval.

Goals. The basic goals of the City of Washington purchasing policy are:

Coordinate purchasing activities between various departments, Finance and Administration.

Comply with legal requirements of public purchasing.

Ensure the integrity of public procurement.

Ensure consistent use of purchasing procedures.

Provide assurance that equal and impartial treatment will be afforded to all who wish to do business with the City.

Receive maximum value for each public dollar spent.

Optimize the City's fiscal controls and cash flow.

Provide City departments required supplies and services at the time and place needed in the proper quantity and quality.

If the procedures and guidelines established in this manual are followed, each department will efficiently manage, control, and plan their available resources to meet present and future departmental needs and help the City meet these goals.

The City Administrator will act as the City's Purchasing Agent and the Finance Director will act as the City's Purchasing Coordinator.

Any employee found in violation or not meeting the goals or guidelines set for in this Policy, may be subject to disciplinary action, up to and including termination.

General Guidelines. Planning for purchases should be done on both a short-term and long-term basis. Procurement begins with the preparation of the Annual Budget including the Long-Range Budget Plan. The following guidelines will be considered in all City purchasing:

Local Vendors. It is the objective of the City of Washington to purchase products and/or services at the best prices. Whenever feasible, Washington vendors may be contacted. Washington vendors are those businesses possessing a Washington business license, or if a license is not required, located within the City limits of Washington.

Missouri Domestic Products Procurement Act. It is the desire of the City to encourage the purchase of products manufactured, assembled, or produced in the United States, if the quality and price are comparable with other goods, in accordance with Chapter 34 of the Missouri Statutes.

Recycled Products. It is the desire of the City to encourage the purchase and use of products manufactured from recycled materials, if the quality and price are comparable with other goods. Consistent with purchasing and using recycled goods, the City will observe the recycling requirements listed in Chapter 34 of the Missouri Statutes whenever feasible.

Budgetary Limits. Budget Amendments between line items from the same department with no change in departmental fund balance must be requested using a Departmental Budget Amendment/Adjustment Form (Appendix A[1]) and approved by the Finance Director or the City Administrator. Budget Amendments between departments in the same fund with no change in fund balance must also be requested using a Departmental Budget Amendment/Adjustment Form and be approved by both the Finance Director and the City Administrator. All other budget amendments must be approved by City Council. Department Heads contemplating a purchase that will exceed a budgetary account should contact the Finance Director to ensure that provision is made for the necessary budget adjustment prior to initiating the purchase.

[1]

Editor's Note: Appendix A, Depreciable Life in Years, is set out as an attachment to this Chapter

Best Price. Purchases shall be awarded to the vendor or provider that is deemed to be in the best interest of the City, not necessarily the lowest price. The following criteria will be considered when determining what is in the best interests of the City:

Price.

The level or quality of the service or product offered, including green considerations.

The demonstrated ability to provide the service or product.

Timeliness of delivery.

Location and distance from facility.

Level of fit.

To successfully document "best interest," when purchase is to be made from a vendor other than the low bidder, appropriate justification shall be documented on the Bid/Quote Summary Form (Appendix D), a copy of which is held on file in the City offices, by the requisitioning department.

Quality Buying. Vendor selection shall also include consideration of service quality. Quality and service are just as important as price and it is the responsibility of the requisitioning department to secure the best quality for the purpose intended. In some instances, the primary consideration is durability. With other purchases, it may be a question of immediate availability, ease of installation, frequency of repair, or efficiency of operation that must be given primary consideration. The purchase of goods or services that will meet but not exceed the requirements for which they are intended defines quality buying. In the case of motor vehicles and other capital expenditures, departments may want to investigate life cycle costs or repair time turnaround to compare bids/quotes as opposed to utilizing prices as the sole criterion for determining the lowest responsible bidder. It is the responsibility of each Department Head to become familiar enough with the department to develop specifications and bid/quote analysis which will result in quality buying.

Ethics/Bribery. All employees of the City of Washington have chosen to serve the public. No employee shall accept or be influenced in his/her duties by an offer of any payment, gift or favor from any source, other than his/her regular compensation from the City. It is particularly important that employees refrain from accepting gifts where it might be construed as evidence of favoritism or unfair advantage relative to any supplier or vendor. Attempts to influence decisions regarding the expenditure of public funds may be directed towards any employee who has influence over the selection of vendors. The penalty for accepting a bribe will be immediate disciplinary action up to and including termination.

No endorsements of products or services shall be permitted using an employee's name or position or the City's name without the approval of City Council.

Any employee who feels pressured by any City vendor should immediately report the vendor to the Purchasing Agent and Coordinator.

Conflicts Of Interest. Every officer or employee of the City shall comply with the provisions of Sections 105.450 to 105.496, RSMo. No elected or appointed official or employee of the City shall:

Act or refrain from acting in any capacity in which he/she is lawfully empowered to act as such an official or employee by reason of any payment, offer to pay, promise to pay, or receipt of anything of actual pecuniary value paid or payable, or received or receivable, to himself/herself or any third person, including any gift or campaign contribution, made or received in relationship to or as a condition of the performance of an official act, other than compensation to be paid by the City; or

Use confidential information obtained in the course of or by reason of his/her employment or official capacity in any manner with intent to result in financial gain for himself, his/her spouse, his/her dependent child in his/her custody, or any business with which he/she is associated;

Disclose confidential information obtained in the course of or by reason of his/her employment or official capacity in any manner with intent to result in financial gain for himself/herself or any other person;

Favorably act on any matter that is so specifically designed so as to provide a special monetary benefit to such official or his/her spouse or dependent children, including but not limited to increases in retirement benefits, whether received from the State of Missouri or any third party by reason of such act. For the purposes of this Subsection, "special monetary benefit" means being materially affected in a substantially different manner or degree than the manner or degree in which the public in general will be affected or, if the matter affects only a special class of persons, then affected in a substantially different manner or degree than the manner or degree in which such class will be affected. In all such matters such officials must recuse themselves from acting, except that such official may act on increases in compensation subject to the restrictions of Section 13 of Article VII of the Missouri Constitution; or

Use his/her decision-making authority for the purpose of obtaining a financial gain which materially enriches himself, his/her spouse or dependent children by acting or refraining from acting for the purpose of coercing or extorting from another anything of actual pecuniary value.

No elected or appointed official or employee of any political subdivision shall offer, promote, or advocate for a political appointment in exchange for anything of value to any political subdivision.

Sales Tax. The City is exempt from paying all local and State sales tax. The Finance Department can provide the necessary exemption documents to any vendor, upon request.

The City's Missouri sales tax exemption number is 12494267, and has no expiration date.

10.

Shipping. Shipping, delivery, transportation, installation and similar costs are to be included in determining the best price. Specifications should specify FOB Washington, Missouri. It is important for shipping to be "FOB Washington," for if there is damage during shipment or the goods are defective, the vendor is obligated to rectify the situation.

11.

Personal Purchases. Personal purchases for employees by the City generally are prohibited. Exceptions may be made where the Purchasing Agent or Purchasing Coordinator determines that the purchase benefits the City, such as allowing employees to purchase clothing with the City's logo on it, sale of surplus property, etc. If an employee does make a personal purchase, the appropriate amount of applicable sales tax shall be charged and remitted to the State of Missouri. For example, when a Police Officer retires, he/she may like to purchase the firearm used during City service. In this case, the City Administrator may approve the sale of City property and the City will charge the applicable sales tax rate at purchase time. City employees are also prohibited from using the City's name or the employee's position to obtain special consideration in personal purchases. Exceptions may be made by the Purchasing Agent or Purchasing Coordinator for special discounts extended by outside agencies such as a discount for government employees for phone service, exercise fitness programs, etc.

12.

Planning. Planning of purchases should be completed by each department on a short-term and long-term basis. Small orders and last-minute purchases should be minimized, thereby increasing the capability of each department to purchase its goods and services in larger quantities. Large quantities typically encourage the maximum discount possible and therefore improve pricing. Planning will also reduce the time expended on pickups, documenting purchases, and will allow the City to improve its fiscal control and optimize cash flow.

13.

Vendor Selection. Vendors and suppliers of the City shall be carefully selected. Before selecting a vendor, departments should assure themselves that the vendor has a proper license, is an authorized dealer for the given product, or is a qualified provider of the services sought. If the vendor is within City limits and is required to have a business license, departments must check with the Finance Department to insure they have a valid license. In addition, if required, departments must obtain a current certificate of insurance.

14.

Public Review. All specifications, bid/quote documentation, purchase orders, and other supporting documents that are public records are available to citizens, vendors, media, etc., upon reasonable request. Public records will be available for public review during normal operating hours, and may require advance notice per the Missouri State Statutes regarding Freedom of Information Act. All requests should be made through the City Clerk's office.

Definitions. The following are definitions of words, terms, and phrases used in the City's procurement of supplies and services:

BID OPENING/FORMAL BID

The bid for certain items, projects, contracts, etc., is advertised in a newspaper along with a deadline date and time. If a bid is received after the date and time advertised, it is not considered in the bid opening. All bidders are welcome at the public bid opening. Bids are usually required for items greater than ten thousand dollars ($10,000.00) as specified in Section 140.460(C) and (E). The Purchasing Agent or Coordinator may request formal bids for items less than this amount or may waive the requirements for formal bids if deemed necessary due to timing, emergency, etc.

BID PACKET

In order to maintain consistency among the departments a standard bid packet should be used. The following should be included in the packet: prevailing wage report, illegal alien's policy, insurance requirements, etc. The department may want to add their own specifications, reports, policies, etc., as needed.

CONSTRUCTION

The construction, reconstruction, improvement, enlargement, alteration, painting and decorating, or major repair to all fixed works constructed for public use or benefit or paid for wholly or in part out of public funds. Construction does not include the repair, but not the replacement, of existing facilities when the size, type or extent of the existing facilities is not thereby changed or increased.

CONTRACT

All types of agreements, regardless of what they may be called, for the procurement or disposal of supplies, services, or construction.

CREDIT CARD

All credit cards issued in the City's name. This includes the purchasing card program as well as any other store credit cards.

EMERGENCY PURCHASES

An immediate expenditure is necessary for repairs to City property in order to protect against further loss of, or damage to, City property, to prevent or minimize serious disruption in City services or to ensure the integrity of City records. Emergency procurements shall be made with as much competition as is practicable under the circumstances. After an emergency procurement is made by the City Council, the nature of the emergency and the vote approving the procurement shall be noted in the minutes of the next regularly scheduled meeting.

FINANCIAL INTEREST

Ownership or involvement in any relationship from which, or because of which, a person within the past twelve (12) months, is presently or in the future entitled to receive, more than five hundred dollars ($500.00) per year, or its equivalent.

GREEN PROCUREMENT

The procurement of products and services that have a lesser or reduced effect on human health and the environment when compared with competing products or services that serve the same purpose. This comparison may consider raw material acquisition, production, manufacturing, packaging, distribution, operation, maintenance, disposal and re-use of the product or service. Green procurement encompasses the concept of the procurement of goods and services that provide for basic human needs and bring a better quality of life, while minimizing the use of non-renewable natural resources and toxic materials and the emission of wastes and pollutants over the life cycle, so as not to jeopardize the ability of future generations to meet their own needs.

GREEN PRODUCT

A product that is less harmful than the alternative, having characteristics, including, but not limited to, the following:

Recyclable — local facilities exist that are capable of recycling the product at the end of its useful life.

Biodegradable — decomposes at a faster rate in landfill.

Contains recycled material (post-consumer recycled content).

Minimal packaging and/or for which there will be take-back by the manufacturer/supplier of packaging.

Reusable or contain reusable parts.

Minimal content and use of toxic substances in production.

Produce fewer and/or less polluting by-products during manufacture, distribution, use and/or disposal.

Produce the minimal amount of toxic substances during use or at disposal.

Make efficient use of resources — a product that uses energy, fuel or water more efficiently or that uses less paper, ink or other resources.

10.

Durable — have a long economically useful life and/or can be economically repaired or upgraded.

INVITATION TO BID/QUOTE

All documents, whether attached or incorporated by reference, utilized for soliciting Bids/Quotes. A Bid is a call for pricing offers from companies, corporations, etc. by the city for certain items, projects, etc. Bids may be formal, informal (calls, internet, etc.), or written. There is a specific deadline to receive the product or the project to be completed.

MAP MILEAGE

Mileage from workplace to destination using MapQuest, Google Earth, etc.

MINOR INFORMALITY

A mistake, excluding judgmental errors that have negligible material effect on price, quantity, delivery or contractual terms and waiver or correction of such mistake does not prejudice other bidders or offers.

OFFICER

An officer of the City as defined in the City Code.

PROFESSIONAL SERVICES

Those services requiring specialized knowledge, education or skill and where the qualifications of the person(s) rendering the services are of primary importance. Professional services shall include but not be limited to appraisers, land surveyors, attorneys, architects, engineers, physicians, health practitioners, auditors, systems and software analysts and other professional consultants.

PUBLIC NOTICE

The distribution or dissemination of information to interested and relevant parties using methods that are reasonably available. Such methods may include publication in newspapers of general circulation, electronic or paper mailing lists, and web sites designated and maintained for that purpose.

PURCHASING AGENT

The person authorized at the City to enter into agreements and contracts. For the City of Washington, this person is the City Administrator or designee.

PURCHASING COORDINATOR

The person authorized at the City who oversees the entire purchasing process. For the City of Washington, this person is the Finance Director or designee.

QUOTE

A figure that the City receives from a contractor, corporation, etc., that is good for a limited time only.

REQUEST FOR PROPOSALS

All documents, whether attached or incorporated by reference, utilized for soliciting proposals.

REQUEST FOR QUALIFICATION

All documents, whether attached or incorporated by reference, utilized for soliciting requests from companies, corporations, etc. This is not a bid, but is a qualification-based selection process.

REQUISITION

An internal document or process by which a department sends details of supplies, services, or materials requested to the Finance Department, including documentation of authority to commit funds for the purchase.

RESPONSIBLE BIDDER

A person who has the capability to fully perform the contract requirements and has the integrity and reliability that will assure good faith performance.

RESPONSIVE BIDDER

A person who has submitted a bid/quote that conforms in all material respects to the invitation to bid/quote.

SERVICES

The furnishing of labor, time, or effort by a contractor, not involving the delivery of specific end product other than reports or drawings.

SPECIFICATION

Any description of the physical or functional characteristics, or of the nature of a supply, service, or construction item. It may include a description of any requirement for inspecting, testing, or preparing a supply, service, or construction item for delivery.

SUPPLIES

All property, including but not limited to commodities, equipment, materials, printing, insurance, and leases of real property.

SURPLUS SUPPLIES

Any supplies other than expendable supplies no longer having any use to the City. This includes obsolete supplies, worn out or scrap materials, and non-expendable supplies that have completed their useful life cycle.

SUSTAINABLE (GREEN) SERVICE

A service acquired from a supplier who has a green operational policy and whose internal practices promote sustainability.

THRESHOLD

The dollar value of contracts, above which a formal record is kept on file showing that environmental and/or other criteria were considered when requirements were defined.

WRITTEN OR IN WRITING

The product of any method of forming characters on paper, other materials, or viewable screens that can be read, retrieved, and reproduced, including information that is electronically transmitted and stored.

Section 140.460 Purchasing Procedures.

[Ord. No. 23-13883, 12-4-2023]

Purchasing Procedures. The City has established policies regulating the degree of formality to be followed in the purchase of supplies and services, depending on the cost of the items to be purchased. Subdividing purchases or the splitting of purchases into smaller orders to avoid these requirements is strictly prohibited. When seeking bid/quotes, the practice of "auctioneering" or "whipsawing" should be avoided by refusing to disclose to a vendor the price bid/quoted by competitors.

Purchase Orders. Purchase orders when required will be secured prior to purchasing all goods and services. The City's purchase order system is computerized. A purchase requisition must be completed by entering necessary data via computer terminal and be approved by the Department Head, Finance Director, and City Administrator under the approval procedures established in this manual. To ensure expeditious processing of purchase orders, it is important that the requisitioning department complete all forms and data entry accurately and verify the purchase is a budgeted item.

Purchase order requisitions (Appendix B[1]) must contain the following items minimum:

Date.

Vendor name and address.

Complete description of the goods or services requisitioned including quantities, item/model numbers, prices, discounts, shipping, delivery information.

Account number.

Project number, if required.

Budget amount.

Approval of the Department Head (or another authorized person).

[1]

Editor's Note: Appendix B, Capital Asset Disposition, is set out as an attachment to this Chapter

The purchase requisition shall be accompanied by all forms of appropriate backup documentation including ordinances, completed bid/quote forms (written and verbal), copies of agreements/contracts, etc. These back up items may be scanned in and attached to the purchase requisition by the requesting department in the City's accounting system. The Department Head must approve all purchase requisitions. Once approved, the purchase requisition will be entered into the accounting system and then routed in accordance with the Purchasing Requirements in Section 140.460(C). Once all signatures are obtained, the purchase requisition should be forwarded to the A/P Clerk.

After reviewing the requisition for accuracy and completeness and verifying proper approval has been obtained, the Finance Department will issue a Purchase Order and return a yellow copy to the requisitioning department for order placement with the vendor. It is the responsibility of the originating department to provide vendors a purchase order copy if needed.

All purchase order requests require the appropriate approval and signatures prior to commitments being made or order placement. A purchase order is a contract between the City and a vendor. The contract is not binding until it is accepted by the vendor.

Exceptions May Be Made For Emergency Purchase. An additional exception may be made for monthly utility payments, monthly agreement/contracted amounts, multi-year contracts, etc., but require the approval of the Finance Director and City Administrator. These exceptions would be valid until revoked by the City Administrator. The Accounts Payable Clerk would maintain all purchase order waiver forms waived for future time periods in a permanent file for future reference. Some specific examples may be, annual software maintenance fees, monthly vehicle leases, monthly electric, annual primacy and sewer connect fee, etc.

When an account is over budget in the line item for a requested purchase(s), the purchase order may be processed, but will require approval of the purchase order by the Finance Director and/or City Administrator.

The issuance of purchase orders by unauthorized individuals will not be recognized by the City and payment for these obligations will not be approved.

Unauthorized purchases may be classified as personal expenses to be paid by the employee.

Purchasing/Bid Requirements.

Purchasing Limits, Bid Requirements, and Approval Levels.

Budget purchases for less than ten thousand dollars ($10,000.00) may be obtained in the most advantageous method of purchasing with due regard for competitive prices and quality. Department Heads should designate employees who will be allowed to make purchases and following internal control procedures to ensure that all purchases are for legitimate public purposes, that monthly statements from vendors are reconciled, and all purchases are properly accounted for in accordance with this Policy.

Budgeted purchases exceeding ten thousand ($10,000.00) but less than fifteen thousand dollars ($15,000.00) require three (3) bids/quotes to be solicited by email, regular mail, telephone or fax. If a Department Head is unable to secure three (3) verbal or written bids/quotes, a notation explaining why fewer than three (3) qualified vendors were available should be made on the Bid/Quotation Summary Form (Appendix D), a copy of which is held on file in the City offices. An online price comparison will be accepted if three (3) bid/quotes could not be obtained through the other means listed above. The department making the purchase is required to obtain the bids/quotes and complete all necessary paperwork including any contracts, etc., and enter purchase information into the City's accounting system as stated in Section 140.460(B). The Finance Director, prior to an order being placed with a vendor, must approve purchase order requests for supplies or services having a value exceeding ten thousand dollars ($10,000.00). A purchase order will be issued once all appropriate approval/signatures are obtained.

Budgeted purchases exceeding fifteen thousand dollars ($15,000.00) but less than fifty thousand dollars ($50,000.00) require three (3) written bids/quotes to be solicited. Department Heads are reminded that the use of written bids/quotations requires appropriate planning to ensure that adequate lead time is available to satisfy the purchasing requirements. The department making the purchase is required to obtain the bids/quotes and complete all necessary paperwork including any ordinances, contracts, etc., and enter purchase information into the City's accounting system as stated in Section 140.460(B). Both the Finance Director and City Administrator prior to an order being placed with a vendor, must approve purchase orders for supplies or services having a value exceeding fifteen thousand dollars ($15,000.00). A purchase order will be issued once all appropriate approval/signatures are obtained.

Budgeted purchases exceeding fifty thousand dollars ($50,000.00) require formal bids. Specifications should be reviewed and approved by the Department Head or designee before an invitation to bid is submitted. The City Administrator may request to review the bid specifications before the invitation is sent out. The Department Head should submit a list of qualified vendors along with the specifications. After approval, an invitation to bid will be sent to those vendors who have requested inclusion in the City's prospective vendor file, as well as those that respond to the legal notice. Department Heads are reminded that the formal bid process requires appropriate planning to ensure that adequate lead time is available to satisfy purchasing requirements. The department making the purchase is required to follow the formal competitive bid requirements in Section 140.460(E) through (J) and complete all necessary paperwork including any ordinances, contracts, etc., and enter purchase information into the City's accounting system as stated in Section 140.460(B). Both the Finance Director and City Administrator prior to an order being placed with a vendor, must approve purchase orders for supplies or services having a value exceeding fifty thousand dollars ($50,000.00). A purchase order will be issued once all appropriate approval/signatures are obtained.

City Council Approval To Purchase. The following items require City Council approval before items can be purchased.

Any capital item per the definition below (twenty-five thousand dollars ($25,000.00) for infrastructure, five thousand dollars ($5,000.00) all other).

Any contract or agreement (non-capital) which is more than fifteen thousand dollars ($15,000.00). (City Administrator purchasing limit established in Section 140.460(B).)

Any budget amendment which changes Fund Balance.

Capital Items—Special Approval.

Definition.

(1)

Capital assets are defined by the City as assets with an initial, individual cost of five thousand dollars ($5,000.00) or more and a useful life of two (2) or more years. Infrastructure assets are reported with an initial, individual cost of twenty-five thousand dollars ($25,000.00) or more. These items are required to be recorded as a capital asset of the City. At the time of final payment, a Disposition Form must be completed and sent to the Finance Department. In addition, if a capital asset is traded in, sold, auctioned, or otherwise disposed of, this should be documented on the Capital Asset Form which will remove the asset from the City's asset list.

(2)

Examples Of Capital Assets Are:

(a)

Land.

(b)

Construction in progress.

(c)

Buildings and building improvements.

(d)

Improvements other than buildings.

(e)

Infrastructure (streets, water and sewer lines, sidewalks, curbs and gutters, alleys, rights-of-way, easements, street and traffic lights).

(f)

Machinery and equipment (including vehicles and furniture and fixtures).

Capital Budget. All capital items are originally requested and approved for the year in the annual budget. However, for various reasons, priorities or needs may change or shift and different items need to be purchased than what was originally budgeted or the amount originally budgeted may not be enough funds anymore. Therefore, the following guidelines are established to help staff better manage these variances.

(1)

Budget Reserve. A budget reserve amount will be established every year in the annual budget for each of the following capital funds:

(a)

Vehicle Equipment Replacement Fund.

(b)

Stormwater Fund.

(c)

Capital Improvement Sales Tax Fund.

(d)

Transportation Sales Tax Fund.

(2)

Parameters For Use Of Reserve.

(a)

Must be approved by Purchasing Coordinator, Purchasing Agent, or City Council.

(b)

Limit of five thousand dollars ($5,000.00) per capital asset purchase.

(c)

Construction contracts are excluded from use.

(3)

Budget Change Requests/Amendments. The following guidelines are to assist with the decision of whether a budget amendment is necessary. This Subsection does not determine if an item needs to be bid out or needs to go to City Council for approval for purchase.

(a)

Item not in original budget:

(i)

Must inform City Council.

(ii)

Fund balance would increase more than five thousand dollars ($5,000.00) so budget amendment would be needed.

(b)

Item in original budget but you want to switch items:

(i)

Must inform City Council.

(ii)

If fund balance doesn't increase, no budget amendment is needed.

(iii)

If total overage is less than City Administrator's purchasing limit of fifteen thousand dollars ($15,000.00) or if total fund balance increases less than five thousand dollars ($5,000.00) budget reserve, then budget amendment is not needed as long as budget reserve is approved by Purchasing Coordinator and Purchasing Agent.

(iv)

If total overage is more than City Administrator's purchasing limit of fifteen thousand dollars ($15,000.00) or if total fund balance increases more than five thousand dollars ($5,000.00) budget reserve, then budget amendment is needed.

(c)

Item over amount originally budgeted:

(i)

Must inform City Council.

(ii)

If total overage is less than City Administrator's purchasing limit of fifteen thousand dollars ($15,000.00) or if total fund balance increases less than five thousand dollars ($5,000.00) budget reserve, then budget amendment is not needed if budget reserve is approved by Purchasing Coordinator and Purchasing Agent.

(iii)

(4)

Budget Amendments.

(a)

The City will follow the rules for budget amendments as lined out in the City's Budget policy. Specifically, the following rules will apply:

(i)

Amendments between line items within the same department with no change in fund balance can be approved by the Finance Director.

(ii)

Amendments between departments with no change in fund balance can be approved by the City Administrator.

(iii)

All other budget amendments must be approved by the City Council.

(b)

The City Administrator may delegate the budgeted transfer authority to the Finance Director when the transferred amount is less than fifteen thousand dollars ($15,000.00). At any time, the Finance Director has the authority to correct administrative errors to ensure proper posting and accounting procedures are maintained. The Finance Director or City Administrator may request staff to submit a budget amendment at any time for City Council approval even if it meets the above guidelines.

Special Procurement Procedures. Periodically, the City may need to purchase goods or services under circumstances that do not clearly fit the patterns of normal public procurement and for which normal competitive shopping procedures do not apply. The following guidelines are provided for making such purchases:

Sole Source Purchases.

The City Purchasing Agent or City Purchasing Coordinator may waive the requirement of competitive bids or proposals for supplies when the City Purchasing Agent or City Purchasing Coordinator has determined in writing and entered into the minutes of a City Council meeting, that there is only a single feasible source for the supplies. Immediately upon discovering that other feasible sources exist, the City Purchasing Agent or City Purchasing Coordinator shall rescind the waiver and proceed to procure the supplies through the competitive processes as described herein. A single feasible source exists when:

(1)

Supplies are proprietary and only available from the manufacturer or a single distributor; or

(2)

Based on past procurement experience, it is determined that only one (1) distributor services the region in which the supplies are needed; or

(3)

Supplies are available at a discount from a single distributor for a limited period of time.

On any single feasible source purchase where the estimated expenditure is over fifteen thousand dollars ($15,000.00), the City Purchasing Agent or City Purchasing Coordinator shall post notice of the proposed purchase and advertise the City's intent to make such purchase in at least one (1) weekly newspaper of general circulation in the City and may provide such information through an electronic medium available to the general public at least ten (10) days before the contract is to be let.

Notwithstanding Subsection (D)(2) of this Section to the contrary, on any single feasible service purchase where the estimated expenditure is over fifteen thousand dollars ($15,000.00), the City Purchasing Agent or City Purchasing Coordinator shall post notice of the proposed purchase and advertise the City's intent to make such purchase in at least one (1) weekly newspaper of general circulation in the City and may provide such information through an electronic medium available to the general public at least ten (10) days before the contract is to be let.

Cooperative Procurement Programs/State Bids. Cooperative purchasing programs or vendors offering "State bid" pricing, such as those available through the State of Missouri, should be used whenever the desired products or services are comparable. Purchases made through these programs have met the requirements of competitive shopping and will not require further documentation. The cooperative program and contract number should simply be noted on the purchase order requisition. Many of these cooperative procurement programs are available and good judgment should still be used in keeping the price competitive. Department Heads are encouraged to competitively shop these cooperative purchasing programs as experience has shown there is at times a noticeable difference in pricing when utilizing these programs. As the number of "State bid" vendors or programs increases, it is strongly suggested and encouraged that bids/quotes are obtained as there is a competitive market among these programs. The Purchasing Agent and/or Purchasing Coordinator may request a bid/quote sheet be prepared if they deem it is in the best interest of the City to obtain a competitive price.

Green Procurement.

Preference in procurement will be given to green products and services, however all factors, including, but not limited to, quality, level of service, price, and budget should be considered.

A green product is one (1) that is less harmful than the alternative as defined in Section 140.450(D).

Where available and cost effective, green products and services that are of equal or better performance and quality should be considered. In determining cost effectiveness, a department should consider the cost and benefits that accrue, in the shorter and long term, to the City.

Further, it is City policy, where economically feasible, to purchase supplies made of recycled materials, preferably post-consumer, and to make every effort to separate and properly dispose of these materials.

Professional Services.

Normal competitive procedures cannot be utilized in securing professional services as defined in Section 140.450(D), Definitions, Professional Services such as attorneys, engineers, banks, certified public accountants, physicians, auditors, insurance advisors and brokers, public relations consultants, real estate brokers, appraisers, planners, and other professionals who, in keeping with the standards of their discipline, will not enter a competitive bidding process.

The Purchasing Agent is authorized to approve contracts for professional services under fifteen thousand dollars ($15,000.00). Contracts exceeding fifteen thousand dollars ($15,000.00) requires a formal RFP/RFQ to be prepared and requires City Council approval. A bid/quotation Summary Form summarizing the qualifications and proposed costs along with the Department Head's recommendation must be submitted with purchase order requisition.

A Request for Proposal (RFP) or a Request for Qualifications (RFQ) can be prepared much the same way as formal bid specifications, including requirements and minimum standards for the services to be provided. An RFP or RFQ should request information regarding the background and experience of the submitting party for the specialty task to allow the City to determine which party is best qualified to provide the services requested. Requests for Proposals or Qualifications should be submitted to at least three (3) qualified professionals known to the City. In securing professional services, it is the primary goal of the City to obtain the services of a professional who has a proven record or documented capability of providing, in a professional way, those services required.

A contract will be negotiated with the professional deemed to best meet the City's needs. If an agreement on the cost and conditions cannot be reached, then these negotiations will be terminated and negotiations will commence with the next most qualified professional.

Notwithstanding anything contained herein to the contrary, the City Purchasing Agent shall negotiate contracts for architectural, engineering and land surveying services on the basis of demonstrated competence and qualifications for the type of services required and at fair and reasonable prices.

In the procurement of architectural, engineering or land surveying services, the City Purchasing Agent shall encourage firms engaged in the lawful practice of their professions to annually submit a statement of qualifications and performance data to the City Purchasing Agent. Whenever a project requiring architectural, engineering or land surveying services is proposed for the City, the City shall evaluate current statements of qualifications and performance data of firms on file together with those that may be submitted by other firms regarding the proposed project. In evaluating the qualifications of each firm, the City Purchasing Agent shall use the following criteria:

(1)

The specialized experience and technical competence of the firm with respect to the type of services required;

(2)

The capacity and capability of the firm to perform the work in question, including specialized services, within the time limitations fixed for the completion of the project;

(3)

The past record of performance of the firm with respect to such factors as control of costs, quality of work, and ability to meet schedules;

(4)

The firm's proximity to and familiarity with the area in which the project is located.

The City Purchasing Agent shall list three (3) highly qualified firms. The City Purchasing Agent shall then select the firm considered best qualified and capable of performing the desired work and negotiate a contract for the project with the firm selected.

For a basis for negotiations the City Purchasing Agent shall prepare a written description of the scope of the proposed services.

If the City Purchasing Agent is unable to negotiate a satisfactory contract with the firm selected, negotiations with that firm shall be terminated. The City Purchasing Agent shall then undertake negotiations with another of the qualified firms selected. If there is a failing of accord with the second firm, negotiations with such firm shall be terminated. The City Purchasing Agent shall then undertake negotiations with the third qualified firm.

If the City Purchasing Agent is unable to negotiate a contract with any of the selected firms, the City Purchasing Agent shall reevaluate the necessary architectural, engineering or land surveying services, including the scope and reasonable fee requirements, again compile a list of qualified firms and proceed in accordance with the provisions of this Policy.

Emergency Purchases. The City's Purchasing Agent may waive the requirement of competitive bids or proposals for supplies when the City Purchasing Agent has determined that there exists a threat to life, property, public health, or public safety or when immediate expenditure is necessary for repairs to City property in order to protect against further loss of, or damage to, City property, to prevent or minimize serious disruption in City services or to ensure the integrity of City records. Emergency procurements shall be made with as much competition as is practicable under the circumstances. After an emergency procurement is made by the City Purchasing Agent or City Purchasing Coordinator, the nature of the emergency shall be noted in the minutes of the next regularly scheduled City Council meeting. Department Heads faced with an emergency purchase are to obtain approval from the City's Purchasing Agent as quickly as possible using the Purchase Order Waiver form. In addition, the City Purchasing Agent's and/or the City Purchasing Coordinator's signature must be obtained on the Purchase Order Waiver prior to the purchase according to the regular purchasing requirements as established in Section 140.460(C).

Charge Account/Card Purchases. All charge accounts will be coordinated through the Finance Department. Charges, lines of credit, or accounts are not to be opened except as approved by the Purchasing Agent or Coordinator. Departments are responsible for assigning the privilege to charge on City accounts as they see fit for their department. The Finance Department is responsible for making changes to the account. The Accounts Payable Clerk keeps the master list of employees allowed to charge.

Credit Cards. All credit cards must be approved by the Finance Director and obtained through the Finance Department.

Designated Vendors. On occasion, the City will select a primary vendor for specific products (i.e., supplies, salt). The processing of purchases will be arranged on an individual case basis and coordinated through the Purchasing Coordinator.

Blanket Purchase Orders. Blanket purchase contracts are for long-term contracts for supplies or services awarded after receiving competitive bids/quotes. The contract remains open for a period of up to one (1) year to purchase the supplies or services specified on an "as needed" basis. Examples of where these types of contracts would be appropriate are emergency plumbing services, construction materials such as rock, trees, and other landscaping materials, automotive supplies, hardware, and office supplies. These items are ones that are frequently or routinely used by the City and for which the initiation of competitive shopping each time the supplies or services are required would be cumbersome and inefficient.

10.

Bulk Fuel Purchases. Due to the nature of daily pricing changes, bulk fuel purchases for vehicles may be made without approval of a purchase order, provided that three (3) bids/quotes are obtained, and the lowest cost vendor is selected. Bids/quotes can be submitted via fax or email due to the nature of daily pricing changes. In the event three (3) bids/quotes are not obtainable, the Purchasing Coordinator must approve prior to purchase. Documentation of the purchase including invoice and bid/quote sheets should be scanned into the accounting system and submitted to the Accounts Payable Clerk. With Department Head approval, City employees who drive City vehicles are issued a pin number and vehicle number to utilize the bulk fuel system. The employee may be required to enter the odometer reading in order to get fuel. The Public Works department monitors the system, prints reports, prepares departmental allocations and reconciles on a monthly basis. They also send each department a report to review monthly. Each department is responsible for reviewing to ensure accuracy of fuel usage by vehicle and employee. Any discrepancies or suspicions of fraud should be brought to the attention of the Purchasing Coordinator immediately. Any personal use of fuel system is strictly monitored and prohibited and may result in disciplinary action up to and including termination of employment. On a rare occasion when employees cannot be fueled through the City's bulk purchasing program, purchases may be made at any commercial service station.

11.

Purchase Of Used Equipment. New equipment is generally preferred over used equipment. However, there are situations where the purchase of used equipment should be considered. These situations include:

Price is of prime importance and the difference in cost between new and used goods is significant.

Equipment will be used infrequently, for a limited time, for training or auxiliary operation.

Better delivery is essential.

Compliance with green guidelines.

The purchase of used equipment requires careful shopping. The requisitioning department should make every effort to secure a minimum warranty or guarantee that the equipment will perform as needed and that service or replacement parts are available. All used equipment purchases must be approved in advance by City Administrator.

12.

Lease Of Vehicles Or Equipment. When leasing a vehicle, it is sometimes necessary to place the order for the vehicle well in advance of the time that the vehicle will be made and ready for transition to the City. Often, there isn't very much lead time or advance notice when a vehicle becomes available to get City Council approval to place the order. Therefore, only Purchasing Agent and Purchasing Coordinator approval is required for placing the order for leasing vehicles or equipment. If these items are not budgeted, City Council budget approval should be obtained as quickly as possible after placing the order for the leased items.

13.

Purchase Of Flowers.

To minimize the duplication of good intentions, please coordinate all of your plant/flower purchases for illness, funerals, etc., through the Human Resource office. All flowers will be purchased and given from the entire "City of Washington." If a department/individual wishes to do something in addition to the City, it shall be at their personal expense.

14.

Petty Cash.

Petty cash funds will be issued to departments in varying amounts depending on the needs of the department but will typically be less than five hundred dollars ($500.00). All requests for initial petty cash or any changes to petty cash amounts must be approved by the Purchasing Coordinator. Petty cash funds should be used for the following:

(1)

To set up a cash drawer.

(2)

Maintain a cash change bag.

Petty cash reimbursement request should be completed by the person requesting funds and must be signed by the Department Head. This should then be forwarded to the Accounts Payable Clerk for review and approval of the Purchasing Coordinator and Finance Director.

The Finance Department may conduct unannounced audits of petty cash funds to assure proper accounting of funds. The use of petty cash funds for personal use, even for very short periods, is contrary to City policy and may result in disciplinary action and/or termination of employment.

15.

Change Orders. Change orders are amendments to contracts for the purchase of supplies or services that are made after the contract has been awarded. Change Orders result from the discovery of unforeseen conditions. Change Orders may not be used to overdraw a budgetary account, to avoid the City's competitive bidding process, or to materially alter the purpose of the original bid/quote or contract. All change orders must first be approved by the Purchasing Agent. In addition, all change orders must be approved by the City Council. After City Council approval, the Finance Department enters the change order in the accounting system and obtains the appropriate approvals in the system.

16.

Final Payments. Final payments for construction including payments under a contract agreement require a final pay request approved by the City Council before a final payment is made. The requisitioning department shall submit all final pay requests to the City Clerk for City Council approval. Once approved, the requisitioning department may scan in the final pay request and all other paperwork to the Finance Department for approval and payment under the purchasing guidelines established in this manual. If a balance remains on the purchase order when the final payment is made, the requisitioning department should make a note on the purchase order that it is now closed, and the Accounts Payable Clerk will adjust the Purchase order to a zero balance. The City Administrator may request that other types of final payments be presented to the City Council for approval before payment.

Formal Competitive Bidding. When goods or services are bought under the formal competitive bidding process, written specifications must be prepared. Each department shall use the City's standard bid packet and revise or add to as needed in the bid process. Specifications, whatever the type, should accomplish five (5) objectives:

Identify minimum requirements;

Allow for a competitive bid/quote;

Provide data for an objective review;

Provide for an equitable award at the "best" possible cost; and

Provide for indemnification of the City, as appropriate.

The Purchasing Agent or Purchasing Coordinator may request to review bid specifications prior to release in order to ensure consistency and compliance with the City's Purchasing Policy. If review is desired, a minimum of five (5) business days should be allowed.

Competitive Bidding Guidelines.

Keep specifications as simple as possible while maintaining the accuracy required to keep bidders from using a loophole to avoid providing the quality or services required or to, in some manner, take advantage of their competitors.

All specifications must contain language allowing the City to reserve the right to accept, reject, or modify any and/or all bids/quotes.

Whenever possible, identify the equipment or material required by an accepted standard specification or a name brand on the market. All specifications that utilize a brand name must include the term "or equivalent" to avoid being restrictive and eliminating fair competition from the bidding process.

Specifications should promote competition. Specifications drafted in this manner will allow several bidders to provide the City with alternatives and insure that the City obtains the best price for the goods or services required.

Flexibility in the specifications is desirable, especially in instances where new technologies are being sought. Specifications should be specific enough to guarantee the quality required but sufficiently flexible to allow vendors to be creative in their proposals. If a proposal does not meet the City's needs, it can be rejected and the bid/quote that closely follows the specifications accepted.

Specifications should be reasonable in their tolerance. Unnecessary precision can frequently escalate the bid/quote price.

Specifications should be written with clear simple language, free of vague terms or those subject to a variety of interpretations.

When possible, consideration for green purchasing should be incorporated in the bidding specifications.

Formal bids/quotes should be advertised in at least one (1) general distribution publication a minimum of ten (10) business days in advance of the bid/quote submission deadline.

10.

Specifications should include proper indemnification notices, when appropriate.

Types Of Specifications.

Specifications By Performance, Purpose, Or Use. Specifications that include a set of performance criteria for the goods or services required will provide flexibility for vendors to design products or programs specifically aimed at meeting the purpose or performance standards the City has established. Generally, specifications, which center on performance standards, generate competition since they allow vendors to exercise some creativity in the types of services or goods included in their bids/quotes. Department Heads are cautioned to exercise care by including some specific technical specifications that will provide floor or bottom line quality determination. The use of performance specifications without minimum standards could result in items being installed, paid for, and later being determined not to meet City expectations. It can be very difficult to go back to a vendor and argue that the item did not meet the performance criteria established. At that point, the determination of satisfactory performance can become extremely subjective with the vendor insisting that his/her item is acceptable although actual experience indicates otherwise.

Specifications By Samples. Whenever appropriate, a sample is always a good way to make your requirements perfectly clear. A good example would be printing bids/quotes for which artwork, or an existing form would be attached. Whenever samples are utilized, Department Heads should provide an adequate supply so that originals can be included with all bid invitations, and some maintained in the file for vendors who request bidding documents.

Specifications By Identification With Industry Standards. Specifications will often refer to industry-wide standards or to standards met by other public jurisdictions. Some examples of these would be lumber grading standards set by the National Hardwood Lumber Association (NHLA) or by referencing standard specifications of Missouri or Federal agencies.

Specification By Drawings Or Dimension Sheet. Specifications of construction projects for everything from buildings and streets to custom-built cabinets, furniture or other equipment should be written to reference the drawings or dimension sheets prepared and sealed by an architect or engineer, when appropriate. Such specifications provide an appropriate method of evaluating all bids/quotes, and later of verifying the quality of the construction work or the equipment of fixtures delivered.

Qualified Products Or Acceptable Brands List. These lists are developed only where it is not possible to write specifications adequately to identify the quality and performance required of the goods or services to be purchased. Acceptable brand lists are also used when tests necessary to determine compliance with technical specifications are lengthy, costly or require complicated technical equipment.

Specification By Brand Or Trade Name. Brand or trade names should be used only where brand name products have been found superior to others for the purpose intended, or when their composition is secret, unknown, or patented. The use of brand names establishes a quality standard but is not intended to limit or eliminate competition. Whenever this method of establishing specifications is used, the specifications should specifically be provided for bidding of competitive or equal grades. It is incumbent on a vendor who bids/quotes on goods of supposed equal quality to those specified to document that the goods or services that he/she is bidding are, in fact, of equal quality.

Specification By Chemical Analysis Or Physical Properties. Specifications that include the chemical analysis or physical properties of the goods requested clearly place responsibility on the supplier to provide exactly those items requested. Again, care must be taken in preparing specifications using this method to ensure that competition remains a part of the bidding process. If the specifications are drawn too narrowly and only one (1) bidder is qualified to meet the technical specifications the cost of obtaining these items may be higher than necessary due to the lack of competition.

Bidding Procedures. The following procedures must be adhered to in relation to all formal bids/quotes:

All public notices and invitations to bid/quote must state the time and place for opening.

All bids/quotes must be submitted sealed to the City official designated in the invitation to bid/quote and identified as a "bid" on the envelope or may be submitted electronically using a bidding program which follows the same basic competitive bidding requirements as paper bids.

All "sealed" bids must be opened in public in the presence of one (1) or more witnesses at the time and place stated in the public notice.

A tabulation of all bids received as well as each bid must be made available in City Hall for public inspection.

The City Administrator has the authority to reject any and all bids or any part of any bid and may readvertise or resolicit bids whenever he/she deems it to be in the best interest of the City. Invitations to bid will state this Policy.

A written request for the withdrawal of a bid, or any part thereof, will be granted if the contact person for the bid submission receives the request prior to the specified time bids are due.

Bids, amendments to bids, or requests for withdrawal of bids received after the specified time of the bid opening shall not be considered.

Request For Bid (RFB)/Request For Proposal (RFP).

A legal notice inviting bids and/or proposals shall be published in at least one (1) local newspaper for at least one (1) day. The legal notice must appear a minimum of ten (10) business days preceding the deadline for the receipt of bids or proposals. In addition, formal bids will be advertised on the City's website for at least ten (10) business days prior to bid opening.

To be accepted, bids and/or proposals must be received by the requesting department prior to the specified deadline. After the bids are opened in public, the Department Head will review them. Request for proposals are not required to be publicly opened but should not be opened before the specified deadline. Telephone, fax, or email submission of formal bids is strictly prohibited unless otherwise specified in this manual. The Department Head will prepare a written tabulation of all bids and draft a memorandum to the City Administrator and Purchasing Coordinator that will include the Department Head's recommendation for the bid award.

If required and as specified in the RFB, a bid security in the form of a certified check, cashier's check, or a bid bond for a specified amount shall accompany each and every bid/proposal accepted and read. A performance bond, if required, is submitted after the award of the contract and shall met contract specifications.

Per the Missouri Sunshine Law specifications for competitive bidding are closed records, until either the specifications are officially approved by the City or the specifications are published for bid. Sealed bids and related documents are also closed records until the bids are opened. Sealed proposals and related documents or any documents related to a negotiated contract are closed records until a contract is executed, or all proposals are rejected. Requests for copies of bids, proposals, and related documents or any documents related to a negotiated contract shall be submitted to the City Clerk.

During inclement weather, the Purchasing Agent may extend a deadline for up to twenty-four (24) hours without rebidding. Bids or proposals received prior to the original deadline will remain sealed.

Where a change to a RFB or RFP has been made through an addendum, the requesting department reserves the right to extend a deadline to allow all bidders adequate time to respond. The new deadline will be clearly indicated in the addendum. Addendums should be issued no later than three (3) business days prior to bid closing.

Determining The Lowest Responsive And Responsible Bidder. All contracts based on RFB shall be awarded to the lowest responsive and responsible bidder. It is the responsibility of the Department Head and/or the Purchasing Agent to review and investigate all bids received and to make a report to the City Council regarding the lowest responsible and responsive bidder for the entire contract or for any part thereof. The City reserves the right to waive minor informalities in determining the lowest responsible and responsive bidder.

In determining the lowest responsible and responsive bidder, the City will consider the following:

Conformity to the specifications contained in the invitation to bid. Prior experience with the vendor may be used to determine the capability to do the work. (Note: When a hired vendor is not responsible, it should be documented by the department with a copy forwarded to the City Clerk, Purchasing Agent, and Purchasing Coordinator).

Compliance with the specifications, terms and conditions and instructions established for a particular RFPB/RFQ.

The ability, capacity, and skill of the bidder to perform the work or provide the services required.

The character, integrity, reputation, and experience of the bidder.

Whether the bidder can perform the contract to provide the services promptly or within required time periods without delay or interference.

The quality and satisfaction of any previous work or services performed for the City.

The financial resources available to promptly provide the insurance and bond requirements, if applicable.

The number and scope of any conditions or exceptions included in the bid or quote.

The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service.

10.

The quality, availability and adaptability of the supplies or services.

11.

The ability of the bidder to provide future maintenance and service for the use of the subject of the contract.

12.

Consideration of green factors, and American made and/or recycled products.

Unreasonable Or Unacceptable Bids. When bids are received that are unreasonable or unacceptable as to the terms and conditions, non-competitive, or the low bid exceeds available funds and it is determined in writing by the Purchasing Agent that time or other circumstances will not permit the delay required to again solicit competitive bids, a contract may be negotiated pursuant to the policy. In such a circumstance, the City Administrator shall have the discretion to discuss modifications with the bidders that would bring the price down to the level of available funds or to determine unilaterally what such modifications should be, provided that, if modifications are made, each responsible and responsive bidder who submitted an initial bid under the original solicitation is notified of the determination and is given opportunity to modify their bid and submit a best and final bid. If no modifications are made, or in cases where the best and final bids received are non-competitive or the low bid still exceeds available funds, the City Administrator may negotiate with the lowest responsive and responsible bidder to secure the best price possible, which shall in all cases be lower than the lowest rejected bid of any responsible and responsive bidder under the original solicitation. After negotiation, the proposed bid must still be submitted to City Council for approval if bid amount is greater than fifteen thousand dollars ($15,000.00).

Delivery And Performance.

A purchase order and contract that is complete in all respects and is accepted by the parties concerned still must produce the intended results or objectives before it can be considered a successful or completed purchase. The terms and conditions must clearly define the delivery and performance requirements of the services, supplies, or equipment.

The importance of the delivery schedule should be emphasized to the vendor. Delivery requirements must be clearly written and fully understood by all contract participants. If several items are required by the contract, there may be a different delivery schedule for each item. The delivery schedule will normally be shown in calendar days from a specific date or transaction, such as receipt of order by the vendor. It is also important that you clearly show the place for delivery and the receiving time schedule at the delivery points. If the delivery is to be to a second floor office only, for instance, that should be noted as well. If there is liquidated damages for non-delivery or late delivery, call these terms to the attention of the vendor and stress their importance. All parties should know where the material will be accepted, either at origin or destination point (FOB). The FOB location is where title to the supplies pass from the vendor to the City. Generally, the FOB location will be City Hall, public safety building, library, public works building, wastewater treatment plant, the park building or job site but, in some cases, vendors do not ship or deliver.

Follow-Up And Expediting. Follow-up normally is the monitoring of the delivery schedules to assure compliance. Expediting involves an attempt to improve or reduce the contractually stipulated delivery time for various reasons, and the vendor is not legally obligated to comply.

(1)

The primary objectives of the follow-up function are:

(a)

To assure full compliance by the vendor.

(b)

To develop documentation for future evaluation of the vendor's performance.

(2)

The early identification of possible delivery delays will provide the City with a greater opportunity for resolving the problem and for developing satisfactory alternatives.

(3)

The initial follow-up action would be to reaffirm the delivery schedule and to establish a proper liaison with the seller's representative. If delivery problems do develop, the following techniques may be used to help solve them:

(a)

Contact the salesperson for assistance.

(b)

Initiate phone calls, letters, or emails to the supplier/manufacturer.

(c)

Escalate the concern to management levels with the vendor, or manufacturer.

(d)

Visit the vendor's business or plant, which may help solve the problem and will help in verifying any reasons for the delay.

(e)

Cancel the contract for non-performance.

Delinquent Deliveries.

(1)

When follow-up efforts have failed, and deliveries have become delinquent, one (1) of two (2) actions must be taken:

(a)

Authorize additional time for delivery; or

(b)

Cancel and order from another source.

(2)

In considering the decision about which of these actions should be taken, several factors must be considered:

(a)

Needs and requirements of the City;

(b)

Agreements with the vendors;

(c)

Availability of the items from other sources; and

(d)

The time required for delivery if reordered from another source.

(3)

In all cases, the reasons for delinquent deliveries should be documented. This information may be needed in evaluating future bids submitted by that vendor.

Partial Deliveries And Payments. Some Purchase Orders may list several items. In this event, it may be possible for the vendor to complete timely delivery on some of the items, which would be referred to as "partial delivery" on the complete bid. If these items can be used separately, partial payments can and should be authorized. Partial payments would also be allowed for a phased delivery schedule. However, if the separate items are part of a system, then partial deliveries would be of little value to the City. In this case, partial payments should not be authorized.

When appropriate, partial payments and/or partial units can be authorized for payment on a Partial Pay Request form (Appendix E), a copy of which is held on file in the City offices. The completed form must be approved by the Department Head or his/her or her designee. This form along with any other backup documentation (invoice, etc.) may be scanned and entered in the accounting system and submitted to the Accounts Payable Clerk in Finance for partial payment against the purchase order. Normal purchasing procedures and requirements apply per Section 140.460(C).

Exceptions to this would be special circumstances where a down payment is required or in construction projects that are paid by the percentage of work completed.

Substitutions. To meet the contractual delivery schedule, it may be appropriate in some situations to consider substitute items. The specifications should cover this eventuality and would govern the legality of the transaction. However, substitutions may be necessary, regardless of the specifications, if it is necessary for the City to have the material by a specified date. Other reasons for substitution may be design changes, raw material shortages, and health and safety priorities.

Whenever substitutions are necessary, due to shortcomings of the vendor, it is the responsibility of the originating department to seek and obtain an adjustment for lower prices on the substituted items. Authorized substitutions should be documented in the bid file and/or the consolidated bid sheet, on the purchase order and on the fixed asset record, if applicable. This action will serve to discourage future substitutions by the same vendor. In addition, this action will serve notice to the other bidders that no favoritism was shown and that compliance with specifications is expected from all vendors. If the renegotiated amount causes the project to be over budget, then City Council approval is required. If substitutions are negotiated and are within the budgeted amount, the purchase order will need to be adjusted by the Finance Department. Department Heads should attach appropriate backup documentation and submit the change order to the Accounts Payable Clerk for processing after obtaining all necessary signatures for approval.

Deposits And Performance Bonds.

(1)

A bid deposit or bid bond may be required for certain large sum purchases to protect the City in the event that the low bidder attempts to withdraw his/her bid or to serve as a barrier to financially irresponsible bidders. The bid deposit, which may be in the form of a certified or cashier's check, represents what the bidder agrees to forfeit to the City as liquidated damages in the event of failure to sign a contract or to provide a satisfactory performance bond, if required.

(2)

It is hereby made the duty of the City, in making contracts for public works, the cost of which is estimated to exceed fifty thousand dollars ($50,000.00), to be performed for:

(a)

The City; or

(b)

The City's lessee, agent, designee, or representative on work for nongovernmental purposes,

To require every contractor for such work to furnish to the City a bond with good and sufficient sureties, in an amount fixed by the City. Such bond, among other conditions, shall be conditioned for the payment of any and all materials, incorporated, consumed or used in connection with the construction of such work; all insurance premiums, both for compensation, and for all other kinds of insurance, on said work; and for all labor performed in such work whether by a subcontractor, a supplier at any tier, or otherwise.

(3)

All bonds executed and furnished under the provisions of this Subsection shall be deemed to contain the requirements and conditions as herein set out, regardless of whether the same be set forth in said bond, or of any terms or provisions of said bond to the contrary notwithstanding.

(4)

The City accepts payment and performance bonds from firms licensed by the State of Missouri and that have an "AA" rating from an appropriate rating service.

Non-Performance. Should the vendor fail to meet any requirement of the specifications, the vendor can be cited for non-performance. The seriousness of non-performance must be evaluated based on the circumstances surrounding each violation. However, there should always be some recourse to the City when a vendor fails to perform in accordance with the terms and conditions of the contract.

Recourse would include:

(1)

The City may exercise its right under a liquidated damages clause or under the terms of a performance bond.

(2)

The City may obtain the needed items from another source and charge the delinquent vendor the excess difference in cost. However, obtaining the delinquent items from another source is not always an acceptable solution, since additional delivery time may be required. A revised delivery schedule with the vendor may be the best remedy.

(3)

The City may terminate the contract for default if it is in the best interest of the City, if the items can be obtained under more favorable conditions from other sources.

When a vendor does not perform at the expected and acceptable level, the Purchasing Agent and Purchasing Coordinator must be notified, preferably in writing. Evaluation of vendor performance is critical to the ongoing procurement process and those vendors with whom the City has problems, depending on circumstances, may not be asked for further bids or quotes and removed from the vendor bid list.

Invoice Pricing. The Department Head must make sure that the invoices paid equal the bid or quote amount.

Exceptions to this would be if the quote or bid did not include shipping and it was noted on the vendor's quote or bid or if a change order was done and the amount paid would be different than the quote or bid.

If the amounts don't equal, it is the responsibility of the Department Head to call the vendor and work out the discrepancy.

Inspection And Testing. Human lives as well as the success of expensive projects may depend upon how well the purchased items meet the design and performance specifications. Supplies and materials should be checked at the time of receipt to detect any shortage, damage, or defect. Inspection also includes assuring that the material complies with the specifications. A variety of tests may be conducted to determine if the merchandise meets specifications. Certain forms of inspection and testing will only be conducted on a percentage of the items, as the procedure followed may make the items unusable. Inspecting or testing every item received is neither economical nor practical. Inspection and testing may be performed at the origin or destination. These tests are classified as sampling, chemical/lab, functional, and endurance tests. In some cases, a certification of compliance will be accepted. All requirements for inspection and testing must be clearly stated in the specifications. Both inspection and testing are costly, but the benefits far outweigh the expense when defects can be detected before they cause loss of life, injury or equipment failure. Inspection, testing, and acceptance are conclusive, except for latent defects or fraud.

Reports, Rejection And Return Authorization. Whenever an inspection is performed, all reports to properly support claims or actions must be thoroughly documented. Sufficient time should be scheduled to allow for an inspection immediately upon arrival of the supplies, taking into consideration required tests as necessary. Supplies should be inspected for damage, quantity, quality, and for all other requirements listed in the specifications. The receiving copy of the purchase order with the inspection report, if any, will normally be used to substantiate payment for the goods and verification of receipt. In the event of rejection, for whatever purpose, certain steps must be taken to inform the vendor and to protect the rights of the vendor as well as of the City. Reasons for rejection must be documented and the reasons should reference specific requirements of the contract.

Damage During Shipment. One (1) major reason for inspection at the time of receipt is to detect any visible damage. It is important that all the damage be completely described on the receiving report. Any evidence of concealed damage should also be noted at this time. This notification is necessary to support the filing of damage claims against a carrier. The carrier should be notified immediately, and a joint inspection should be scheduled with the representatives of the carrier. When it is apparent that the extent of the damage renders the goods worthless, they should not be accepted. If the shipment is FOB Washington, the vendor is responsible for assisting with the settlement of the claim and for full replacement of the damaged items. Payment will be withheld until the claims are settled.

If specific liability for a defect cannot be determined between the carrier, the vendor, or the manufacturer, the City may have to file a claim against all parties, seeking their cooperation in resolving the situation. The situation should be clearly documented and referred to the City Administrator for possible referral to the City Attorney.

Latent Defects. Latent defects may be the result of damage in transit or of failure of the manufacturer to conform to specifications. Consequently, it is sometimes very difficult to fix responsibility for the defective material. If the carrier is suspected of being the one (1) at fault, then the carrier's representative should be invited to come in for a joint inspection. Subsequently, a claim describing the situation should be filed with the respective carrier.

A similar procedure should be followed if the vendor or manufacturer is suspected to be at fault. Specifying the destination at which the City accepts delivery of shipments (FOB destination) is important because the vendors are responsible for rectifying the situation or for correcting the defect. If specific liability for the defect cannot be determined between the carrier, the vendor, or the manufacturer, the City may have to file a claim against all parties, seeking their cooperation in resolving the situation.

Retainage. Retainage will be withheld from construction payments per the respective agreement with the vendor. Typically, City policy will be to withhold five percent (5%) retainage. Certain agencies may have their own retainage policies, such as the Missouri Department of Transportation.

Release of retainage will be made once substantial completion is obtained and City staff have inspected and approved release pending compliance with the contract. If the final pay request is going to be paid, final retainage will be released pending City Council approval.

Legal And Contractual Remedies.

Right To Protest. Any actual or prospective bidder or contractor who is aggrieved in connection with the solicitation or award of a contract may protest to the City Administrator. The protest must be submitted in writing within fourteen (14) days after such aggrieved person knows or should have known the facts giving rise to the protest.

Authority To Resolve Protest. The City Administrator has the authority, prior to the commencement of an action in court concerning the controversy, to settle and resolve a protest arising out of these regulations. This authority is limited to settlement within the scope of the solicitation and the City's procurement regulations.

Decision. If the protest is not resolved by mutual agreement, the City Administrator will promptly issue a decision in writing. The decision will state the reasons for the action taken and inform the protestant of its right to review by the City Council. A copy of the decision will be mailed or otherwise furnished immediately to the protestant.

Finality. A decision by the City Administrator is final and conclusive unless the protestant submits a written appeal to City Council within three (3) working days of the receipt of the City Administrator's decision.

Stay Of Procurement During Protests. In the event of a timely protest, the City will not proceed further with the solicitation of or the award of a contract until the City Administrator makes a written determination that the award of the contract without delay is necessary to protect substantial interests of the City.

Debarment Of Suppliers. The City Administrator has the authority, after conferring with the City Attorney, to debar suppliers from receiving any business from the City for a stated period, not to exceed three (3) years. The causes for debarment include:

Conviction for commission of a criminal offense as an incident to obtaining or attempting to obtain a public or private contract or subcontract, or in the performance of such contract or subcontract.

Conviction under State or Federal Statutes of embezzlement, theft, bribery, falsification or destruction of records, receiving stolen property, or any other offense indicating a lack of business integrity or business honesty that seriously and directly affects responsibility as a City contractor.

Conviction under State or Federal anti-trust Statutes arising out of the submission of bids or proposals.

Deliberate failure without good cause to perform in accordance with the specifications or within the time limit provided in a contract.

A recent record of failure to perform or of unsatisfactory performance in accordance with the terms of one (1) or more contracts; provided, that said failure to perform was caused by acts beyond the control of the contractor.

Any other cause the City Administrator determines is so serious and compelling as to affect responsibility as a City contractor, including debarment by another governmental agency for any cause listed in regulations.

A decision by the City Administrator to debar shall be final and conclusive, unless the debarred person submits a written appeal to the City Council within three (3) working days of the receipt of the City Administrator's decision.

Disposal Of Surplus Goods. Supplies become obsolete or they wear out. Occasionally, they are overstocked. Changing technology, accumulation of waste, and fulfillment of the useful life of supplies make the activity of handling surplus inevitable. The City is interested in full realization of the value of supplies it purchases or receives as a gift. The City wishes to ensure surplus is disposed of to the economic advantage of the City. Surplus property will be disposed of in accordance with the provisions of Section 103.100 of the City Code.

Purchase Of Construction Services And Materials.

Tax Exemption. It is the policy of the City to take advantage of its tax-exempt status by authorizing contractors to purchase construction materials for City projects utilizing the City's tax exemption. Bid specifications shall include clear instructions regarding the manner in which the City will authorize vendors to purchase construction materials.

All requests for a project exemption certificate should be forwarded to the Finance Director for completion.

Prevailing Wage. It is hereby declared to be the policy of the State of Missouri that a wage of no less than the prevailing hourly rate of wages for work of a similar character in the locality in which the work is performed or the public works contracting minimum wage, whichever is applicable, shall be paid to all workers employed by or on behalf of the City engaged in public works, exclusive of maintenance work. To that end, all contracts for the construction of public works are required to comply with the provisions of Section 290.210 through 290.340, RSMo. All Bid Specifications on construction projects where the cost is expected to exceed seventy-five thousand dollars ($75,000.00) must include this requirement.

Immigration Law Requirement. According to Section 285.530, RSMo., there are several new requirements for employers and City governments relating to "unauthorized alien workers." Specifically, when awarding a contract in excess of five thousand dollars ($5,000.00) the City must make it a condition of the award that the successful bidder shall swear in an affidavit that:

It is currently participating in E-Verify, a Federal work authorization program or another equivalent electronic verification of work authorization program; and

It does not knowingly employ any person who is an unauthorized alien; and

It has performed an electronic verification check as described above on all workers hired since January 1, 2009, or obtained documents required for completion of a Federal I-9 form before it began participating in E-Verify.

In order to comply with the Statute, all departments should now add the above conditions to their bidding documents. Failure to comply with this requirement shall result in disqualification of the vendor's bid.

Anti-Discrimination Against Israel. The City shall not enter into a contract with a company to acquire or dispose of services, supplies, information technology, or construction unless the contract includes a written certification that the company is not currently engaged in and shall not, for the duration of the contract, engage in a boycott of goods or services from the State of Israel; companies doing business in or with Israel or authorized by, licensed by, or organized under the laws of the State of Israel; or persons or entities doing business in the State of Israel. This Subsection shall not apply to contracts with a total potential value of less than one hundred thousand dollars ($100,000.00) or to contractors with fewer than ten (10) employees.

Section 140.470 Credit Card Policy.

[Ord. No. 23-13883, 12-4-2023]

Overview. Credit cards have been issued to expedite the purchase of items from vendors saving staff time, decreasing paperwork, and reducing the percentage of checks drafted and mailed. The Finance Director is responsible for issuing cards to authorized City staff and for overall management of the program. The success of the program requires the cardholder's adherence to established guidelines as presented in this manual.

Card Use.

Below are basic policies regarding the use of the card:

The card is issued in the employee's name and is to be used for business expenditures only; it may not be used by anyone else. Each employee must sign a Credit Card Acceptance Letter before receiving the card.

The card can be used to make purchases only within the parameters established by the City's purchasing policy.

Each transaction must adhere to the cardholder's purchase limit. A purchase split into two (2) or more credit card transactions to circumvent the City's purchasing policy is not allowed. Such activity constitutes improper use of the card.

Despite the City's responsibility to remit payment to the bank, cardholders will be responsible for security of the card and any transaction made against the card. If there is a dispute about a transaction, the cardholder should first try to resolve it with the supplier. If this is unsuccessful, cardholders should contact the Finance Director.

Cardholders agree to surrender and cease use of the card upon termination of employment. The cardholder is responsible for ensuring the card is returned. All cards will immediately be forwarded to the Finance Director for cancellation.

In the event a card is lost or stolen, immediately contact the credit card vendor using the phone number on the back of the credit card to cancel the card or call the Finance Director who will cancel the card immediately.

If you suspect fraud or become aware of a fraudulent charge, immediately contact the credit card vendor using the phone number on the back of the credit card to cancel the card immediately.

Purchase Types.

The following types of purchases are allowed:

In person.

Telephone.

Fax orders.

Mail orders.

Internet orders.

Employees must maintain the appropriate documentation confirming the date, amount, supplier, and other data required for the purchase.

It is the responsibility of the cardholder to make every effort to ensure that sales tax is not charged on any purchases by providing the City's tax-exempt status per the Purchasing Policy. Accounts Payable will not be able to make any sales tax adjustments in payment processing. The City does recognize that sometimes it isn't feasible to provide a tax-exempt letter and in these cases sales tax will be incurred. For example, some online purchases don't have a place for tax exempt. In most cases the total purchase amount including sales tax will be cheaper than paying in person, etc.

Under no circumstances may the card be used for the following, unless approved by the City Administrator:

Alcoholic beverages (unless approved by the City Administrator or other designated City official in the conduct of business).

Construction, renovation, installation.

Personal purchases.

Cash advances.

Weapons and ammunition (except for Police Department).

Purchase of any electronic, video, or social media containing sexual or other illegal content, etc., (except for Police Department for official work capacity).

Any employee found to be using the card for these items may be subject to disciplinary action up to and including termination.

Purchase Limits. Each card has a preset spending limit. The Finance Director is responsible for establishing the purchase limits.

Records. To facilitate reconciliation and approval of the monthly statements, it is mandatory that cardholders obtain and retain supplier documentation for purchases. Examples of acceptable documentation are:

Invoice.

Original receipt with itemized description of products purchases.

Internet order confirmation with pricing shown.

Account Reconciliation.

Once a month, the card vendor will send statements to the Finance Department. These statements summarize charges billed during the month or billing cycle and will contain the date, supplier name, and the amount charged.

The Accounts Payable Clerk will match up documentation received from various departments for these monthly charges. If any unreconciled items are left after reconciliation, the Accounts Payable Clerk will notify the department. All exceptions should be followed up with card vendor immediately.

Resolving Errors And Disputes.

Errors with merchandise delivery or incorrect billing will occasionally arise with the card system such as the following:

Lost or misrouted items.

Incorrect quantities.

Defective products.

Incorrect pricing.

Billing for item(s) not received.

The solution to these problems can be achieved by following the steps outlined below. When applicable, the Cardholder will receive the appropriate credit amount applied to their card account. All disputed amounts should be reported to the Purchasing Coordinator immediately.

Lost Or Misrouted Items. If enough time has elapsed and the Cardholder has not received an item, the following steps should be taken:

Contact the supplier and inquire when the item was delivered and to what location.

Verify that the item was not received at that location.

If no record of receipt of the item is found, the Cardholder must call the supplier and request proof of delivery.

If the supplier cannot supply this documentation, the supplier should arrange to deliver the item or issue a credit for the transaction.

If no satisfactory resolution can be reached, contact the Purchasing Coordinator immediately.

Incorrect Quantity Or Defective Product.

Employees should always check any incoming material as soon as it is received to ensure that the product matches the item ordered in quantity and quality. If any discrepancies are noted, the following steps should be taken.

Contact the supplier and attempt to resolve the issue over the phone.

If no settlement can be reached, call the phone number listed on the back of the credit card, complete the necessary documentation, and sends the information to the credit card vendor.

The card vendor pledges to resolve all disputes as soon as possible; usually within ninety (90) days. It may be necessary to reorder items in the interim. If this is necessary, the card vendor must be notified so that the proper credit is received. If material must be returned to the supplier, it should be shipped through an identifiable source.

Credit Card Statement Discrepancies.

If discrepancies are noted on the monthly statement (for quantity, price, duplicate billing, no credits from prior transactions, billing for items not received, etc.), the following steps should be taken:

Cardholders should contact the supplier to reconcile the difference. Records should be kept of all telephone calls to the supplier.

If the supplier does not agree that an error has been made, the Cardholder should contact the credit card vendor using the phone number on the back of the card and state that they would like to dispute a charge on their Card. Complete the Cardholder Dispute Form and either fax or mail the form to the credit card vendor. Send a copy of this form to the Purchasing Coordinator immediately. Cardholders are responsible for the transactions identified on each statement. During this dispute resolution process, the Cardholder must be able to produce receipts and/or proof that the transaction occurred. If an error is discovered, it is the Cardholder responsibility to provide proof that the error or dispute resolution process has begun.

Returns. If a return is necessary for an item purchased using a credit card or purchasing card, the following steps should be taken:

Prepare the necessary documentation for all returns of merchandise purchased on the card.

Notify the supplier that a return is being initiated and request that credit be issued on the card.

Keep a copy of the shipping ticket or other documentation to verify credit is issued by vendor and correct amount appears on the monthly billing statement.

Send a copy of the return documentation to the Accounts Payable Clerk.

Accounts Payable Review.

All monthly credit card statements and receipts will be reviewed by Accounts Payable to ensure that credit card procedures are properly practiced. Failure to follow the proper procedures may result in revocation of card privileges or other appropriate disciplinary action including possible termination of employment.

The primary purpose of this review is to ensure the proper expenditure of funds under this program. A secondary purpose is to track data on how, where, and for what purpose the cards are used. This is an employee empowerment program based on cardholder commitment and trust. Failure to follow all procedures outlined in this manual will result in revocation of card.

Credit Card And Purchasing Card Authorizations. In order to have solid internal controls, every card purchase should contain the following signatures of approval. Approval may be written or electronic.

Signature of the Cardholder.

Signature of the responsible Department Head.

Signature of the Purchasing Coordinator or the Purchasing Agent per Section 140.460(C).

Section 140.480 Travel Policy.

[Ord. No. 23-13883, 12-4-2023]

Overview.

The City's goals are to allow travel arrangements that conserve public funds, provide equitable treatment of all personnel, and allow travel in a manner that is dignified. City employees may be reimbursed for travel and related expenses, as outlined below, while carrying out official duties or attending professional conferences and training courses which benefit the City. These regulations are applicable for all travel expenses incurred on behalf of the City. Where these regulations do not adequately cover a travel situation, the City Administrator may authorize exceptions.

No personal expenses will be reimbursed by the City. There is no objection to a spouse, other family member, or significant other traveling on an official trip, but no expenses directly attributable to them will be reimbursed or paid directly by the City, unless previously authorized by the City Administrator.

Policy.

All employees authorized to attend a conference, seminar, or other event pertaining to City business, shall be reimbursed for actual transportation fare to and from the travel destination from City Hall, actual room cost for overnight lodging, taxi fares, tips and other travel related expenses upon presentation of proper documentation and itemized receipts.

When necessary, one (1) day prior and one (1) day following a meeting or conference shall be allowed for travel to and from an approved meeting or conference. Scheduled returns shall be made on the day the conference or meeting ends unless it ends late in the evening. In that event, the following day may be allowed for travel. In some cases, it may be cheaper to fly the next day as well. Good judgment should be used in these cases and either the Purchasing Agent or Coordinator should be consulted.

Employees should not drive to meetings and conferences when travel time to the destination requires more than one (1) day unless prior approval is received from the City Administrator. The use of a train, plane, or bus is recommended.

When an employee chooses to extend travel time to and from an approved site, any excess time shall be considered vacation and any expenses will be considered personal and shall be paid by employee.

All overnight travel including detailed documentation on the event/conference being attended must be approved in advance by the employee's Department Head and the City Administrator on using a Travel Request and Expense Report (Appendix F), a copy of which is held on file in the City offices. Travel requests shall be submitted one (1) week or more prior to the travel date, whenever possible. The form must be updated, and receipts provided upon completion of travel, prior to any reimbursement. This form should still be completed even if a credit card was used for travel expenses. Each individual department may have additional restrictions beyond those noted in this Policy. Once complete with all receipts and backup documentation, Department Head approval has been received and invoice has been entered into accounting system, requesting department will forward to Accounts Payable Clerk for review, payment, and routing in accordance with the Purchasing Requirements in Section 140.460(C).

Travel Authorization Procedure. For all City-related travel, employees should adhere to the following process:

No expenditure should be made until proper authorization is received from all necessary parties.

A Travel Request and Expense Report (top portion of form) should be completed by the employee showing estimated costs associated with travel. Department Head authorization is required on all travel requests. In addition, the City Administrator's authorization is required for all overnight travel trips where the employee must travel a distance of fifty (50) miles or more, or for in town travel where the employee anticipates an expenditure of five hundred dollars ($500.00) or more, including registration costs and/or expenses. Travel distance is calculated as the distance from City Hall to the event round trip. MapQuest or another online direction app can be used to substantiate the mileage. Mileage during the conference for travel to different business locations will be reimbursed if documentation is provided.

If a travel advance was requested, this amount should be recorded on the Travel Request and Expense Report.

Once approval has been provided by the Department Head and City Administrator, a copy of the travel request report should be kept on file until the employee returns from the conference and attaches receipts and backup documentation and completes the form.

While traveling, all employees should adhere to this Policy. In addition, employees should retain all receipts for expenditures.

The employee needs to put all expenses for their travel on their completed Travel Request and Expense Report (i.e., paying a registration fee).

The requesting department may scan and enter into the accounting system and forward to the Accounts Payable Clerk in the Finance department for review, payment, and routing in accordance with the Purchasing Requirements in Section 140.460(C).

Reimbursable Expenses.

When traveling for City business, all efforts shall be made to keep travel expenses to a minimum. City-provided vehicles should always be utilized when possible in lieu of individual reimbursement for mileage. The following expenses for approved travel shall be reimbursed when accompanied by receipts or other documentation as required and appropriate:

Direct travel includes air, bus, train, and taxi fares.

(1)

All travel via airplane should be in the Coach or Economy class.

(2)

All rental cars should be standard size unless there is a need to carry multiple passengers. Prior approval from the City Administrator is required to rent a vehicle. Rental cars will be approved only when specifically required for City business. When a rental car is utilized, it will be necessary that the insurance be purchased from the rental agency.

(3)

Tips incurred as a part of travel, i.e., for taxis, baggage handlers, etc., will be reimbursed, however, are expected to be kept at a reasonable amount.

Direct travel by personal vehicle will be reimbursed at the IRS established rate. Every reasonable effort should be made to carpool to conserve public funds. When two (2) or more people travel in the same private vehicle, reimbursement will be paid to the owner of the vehicle. Mileage reimbursement will be based on the actual number of miles driven while traveling on City business. Receipts will be required for tolls and parking that exceed ten dollars ($10.00).

Overnight lodging when travel extends beyond fifty (50) miles from City Hall.

(1)

Hotels should be purchased at the conference rate or less whenever possible. If no conference rate is available, employees are expected to keep hotel costs as reasonable as possible, including considering other lodging facilities. Employees shall request the government rate, all available discounts, and tax exemptions, where applicable.

(2)

All hotel rooms should be standard rooms (i.e., no suites unless no difference in price).

Meals And Tips.

(1)

Tips for meals should be reasonable considering the level of service provided and location of service. In most cases, the City will reimburse up to twenty percent (20%) for excellent service, and can be less when appropriate. Receipts for meals and associated tips are required. Exceptions to this must be approved by the Purchasing Coordinator.

Other Reasonable And Related Expenses.

(1)

Other expenses will be considered on a case-by-case basis and must be approved by the Finance Director and City Administrator.

Though expenses will vary depending on the nature and location of travel, it is expected that all reasonable efforts will be made to keep expenses at or below the U.S. Government recommended daily per diem amount. The Finance Department will provide the U.S. Government daily rate for any City to which an employee is traveling.

Non-Reimbursable Expenses. The following travel expenses shall not be reimbursable:

Costs incurred by a spouse, other relative, or guest accompanying an employee, unless approved by the City Administrator. For example, if an employee must upgrade from a single occupancy to a double occupancy hotel room to accommodate a family member, they are responsible for the difference in cost.

Non-conference hosted or related entertainment costs.

Personal expenditures such as laundry and cleaning, entertainment, or side trips not provided by the conference.

Purchase of alcoholic beverages, (unless approved by the City Administrator or other designated City official in the conduct of business) while traveling.

Costs for traffic violations and/or parking tickets received while.

Mileage Reimbursement.

Whenever possible, employees should use a City-provided vehicle for official City duties. If an employee utilizes a City vehicle for travel or a rental vehicle, there will be no mileage reimbursement; however, parking, tolls, and cost of gasoline are reimbursable at actual cost with vendor issued receipts.

If a City vehicle is not available or feasible and an employee is authorized by his/her Department Head to use a personal vehicle in the performance of official City duties for travel, the employee shall be compensated for the actual cost of parking and tolls. In addition, mileage to/from the closer of City Hall or point of departure will be reimbursed. Employees are to use map mileage (MapQuest, Google Earth, etc.) to determine the number of miles. Any mileage other than travel to/from conference must be documented and approved by the City Administrator before reimbursement will be made. All mileage will be reimbursed at a rate established by the Internal Revenue Service (IRS). Mileage for overnight conferences or seminars will go on the Travel Request and Expense Report. Any other mileage will be recorded on the Daily Mileage/Reimbursement Form (Appendix G), a copy of which is held on file in the City offices.

All reimbursements related to daily travel expenses must be submitted along with all receipts and other backup documentation. Both employee and Department Head signatures are required. Once all is obtained, the requisitioning department may scan and enter in the accounting system and forward to Accounts Payable Clerk in the Finance Department for review, payment, and routing in accordance with the Purchasing Requirements in Section 140.460(C).

Specific Travel Policies.

City Provided Vehicles. Employees authorized by the City Administrator may take City vehicles home as they can be called to conduct City business after hours and on weekends. Generally, this includes Department Heads who live within City limits or a reasonable distance from City limits. These employees are required to track and report their personal/commuting miles to the Human Resource Manager quarterly. These personal/commuting miles are considered taxable and are reported in the salary/wages of the respective employee. City vehicles are not to be used for vacations and any personal time.

Emergency Personnel.

The Police Chief and Fire Chief always utilize their City Vehicles, unless they are on vacation, sick leave, etc. As they qualify as an exception under IRS guidelines, no personal/commuting use is considered taxable.

In addition, the Deputy Fire Chief and Assistant Fire Chief are eligible to receive mileage reimbursement at the IRS rate for City business miles driven on their personal vehicles. The maximum amount they will be reimbursed is one hundred dollars ($100.00) per month. A mileage log containing date, purpose and mileage must be turned into the Finance Department to be reimbursed.

Service Organizations. Regarding local service organizations, if the City pays either an annual membership fee or all meal expenses associated with meetings of such an organization, mileage expenses incurred in attending the meeting or events of any such organization shall not be reimbursed. In addition, employee attendance at special events will be paid or reimbursed by the City. Any guests of the employee are considered personal and will need to be paid by the employee.

Travel Expense Reimbursement. Upon completion of authorized travel, an employee must submit all proper paperwork as described above including itemized receipts. Failure to provide adequate documentation of expenses may result in the withholding of reimbursement. Missing documentation requires Department Head, Finance Director, and City Administrator approval for reimbursement. All reconciling reports and receipts must be submitted for approval and reimbursement within five (5) business days after the employee returns to work.

Section 140.490 Revenue And Debt Collection Policy.

[Ord. No. 23-13883, 12-4-2023]

Purpose.

The City of Washington has a responsibility to its citizens to account for public monies and to establish proper control over all receipts and receivables to ensure sound financial management practices. The City has the responsibility to ensure all services they provide meet the community's expectations in terms of cost and quality. Debtor management is an essential element of the City's budget monitoring and control strategy. Rates and charges account for a considerable percentage of the total operating income of the City. Inconsistent and ineffective collection of the City's revenue and debts has the potential to negatively impact the City's cash flow and consequently diminish the level of service to the community.

This revenue policy provides guidelines for revenue control and management policies required by State law, City Code and generally accepted accounting principles. In addition, it provides guidelines for billing and collection practices, accounts receivable management, budget review responsibilities, and debt collection. It also incorporates GFOA's best practices and administrative practices.

Revenue Policies. The City will strive to maintain as diversified and stable a revenue system as permitted by law to shelter it from short-run fluctuations in any one (1) revenue source. The revenue mix should combine elastic and inelastic revenue sources to minimize the effect of an economic downturn. In addition, the City will fund current expenditures with current revenues, avoiding procedures that balance current budgets by postponing needed expenditures or accruing future revenues. One-time revenue sources will not be used to fund operating expenditures but will be used for capital purchases or one-time expenditures.

Estimates And Projections. Because revenues are sensitive to both local and regional economic activities, revenue estimates shall be conservative. The City will estimate its annual revenues by an objective, analytical process using best practices as defined by the Government Finance Officers' Association and in accordance with the City's budget policy. The City will also project revenues for ten (10) years in the annual budget process and will update this projection annually.

Revenue Types.

User Fees. The City will establish all user charges at a level related to the cost of providing the service and within policy parameters established by the City Council. In each odd numbered year or sooner if necessary, the City will review user fees to adjust for the effects of inflation, changes in the service delivery costs and other factors as appropriate. In instances where State or other regulations limit the level of fees charged for City services, the user fee cost recovery principles may not apply. The City will set fees at a level to support the direct and indirect costs of the activity recognizing that a reasonable fee may or may not fully support the total cost of the program and this will vary depending on the type of user fee.

User Fee Cost Recovery. In setting user fees and cost recovery levels, the following factors will be considered:

(1)

Community-Wide Versus Special Benefit. The level of user fee cost recovery should consider the program or activity when determining cost recovery fees. The use of general-purpose revenues is appropriate for community-wide services, while user fees are appropriate for services that are of special benefit to easily identified individuals or groups.

(2)

Service Recipient Versus Service Driver. After considering community-wide versus special benefit of the service, the concept of service recipient versus service driver should be considered. For example, it could be argued that the applicant is not the beneficiary of the City's development review efforts; the community is the primary beneficiary. However, the applicant is the driver of development review costs, and as such, cost recovery from the applicant is appropriate.

(3)

Effect Of Pricing On The Demand For Services. The level of cost recovery and related pricing of services can significantly affect the demand and subsequent level of services provided. At full cost recovery, this has the specific advantage of ensuring that the City is providing services for which there is genuinely a market that is not overly stimulated by artificially low prices. Conversely, high levels of cost recovery will negatively impact the delivery of services to lower income groups. This negative feature is especially pronounced, and works against public policy, if the services are specifically targeted to low income groups.

(4)

Feasibility Of Collection And Recovery. Although it may be determined that a high level of cost recovery may be appropriate for specific services, it may be impractical or too costly to establish a system to identify and charge the user. Accordingly, the feasibility of assessing and collecting charges should also be considered in developing user fees, especially if significant program costs are intended to be financed from that source.

Factors Favoring Low Cost Recovery Levels.

(1)

There is no intended relationship between the amount paid and the benefit received.

(2)

Collecting fees is not cost-effective or will significantly impact the efficient delivery of the service.

(3)

There is no intent to cover the cost of the service. Examples may include park pavilion and auditorium rental.

(4)

The service is non-recurring, generally delivered on a "peak demand" or emergency basis, can not reasonably be planned for on an individual basis, and is not readily available from a private sector source.

(5)

Collecting fees would discourage compliance with regulatory requirements and adherence is primarily self-identified, and as such, failure to comply would not be readily be detected by the City. Small-scale licenses and permits might fall into this category.

Factors Favoring High Cost Recovery Levels.

(1)

The service is similar to services provided through private sector and private or other public sector alternatives could or do exist for the delivery of the service.

(2)

For requested service that requires added costs, it is intended that there will be a direct relationship between the amount paid and the level and cost of the service received. An example is higher fees for utility hook-up after normal working hours.

(3)

The service is regulatory in nature and voluntary compliance is not expected to be the primary method of detecting failure to meet regulatory requirements. Building permit, plan checks, subdivision review fees for large projects would fall into this category.

General Concepts Regarding Fee Structure.

(1)

Revenues should not exceed the reasonable cost of providing the service.

(2)

Cost recovery goals should be based on the total cost of delivering the service, including direct costs, departmental administration costs, and organization-wide support costs such as accounting, personnel, data processing, and insurance.

(3)

The method of assessing and collecting fees should be as simple as possible in order to reduce the administrative cost of collection.

(4)

Rate structures should be sensitive to the "market" for similar services as well as to smaller, infrequent users of the service.

(5)

A unified approach should be used in determining cost recovery levels for various programs based on the factors discussed above.

Low Cost Recovery Services. Based on the criteria discussed above, the following types of services should have very low cost recovery goals. In selected circumstances, there may be specific activities within the broad scope of services provided that should have user charges associated with them. However, the primary source of funding for the operation as a whole should be general-purpose revenues, not user fees.

(1)

Delivering public safety emergency response services such as police, fire and dispatching services.

(2)

Maintaining and delivering public facilities that are provided on a uniform, community-wide basis such as streets, parks and general-purpose buildings.

(3)

Providing social service programs and economic development activities.

Recreation Programs. The following cost recovery policies apply to the City's recreation programs:

(1)

Cost recovery for activities directed to adults should be relatively high.

(2)

Cost recovery for activities directed to youth and seniors should be relatively low. Although ability to pay may not be a concern for all youth and senior participants, these are the desired program activities, and the cost of determining need may be greater than the cost of providing a uniform service fee structure to all participants. Further, there is a community-wide benefit in encouraging high levels of participation in youth and senior recreation activities regardless of financial status.

(3)

In those circumstances where services are similar to those provided in the public sector, cost recovery levels should be higher.

The City Parks and Recreation Department will work with the Parks and Recreation Board to review recreation programs and establish specific cost recovery targets for broad program classifications. Fees will be reviewed by staff and by the Parks and Recreation Board every odd numbered year with any recommendation taken to City Council for approval.

Planning And Building Programs. The following cost recovery policies apply to the Planning and Building programs:

(1)

Services provided under this category include:

(a)

Planning (planned development permits, parcel maps, rezonings, general plan amendments, variances and use permits, etc.)

(b)

Building and safety (building permits, inspections, etc.)

(c)

Engineering (subdivision requirements, encroachments, etc.)

(2)

Cost recovery for these services should generally be very high.

Comparability With Other Communities. In setting user fees, the City will consider fees charged by other agencies in accordance with the following criteria:

(1)

Surveying other comparable communities provides useful background information in setting fees:

(a)

They reflect the market for these fees and can assess where the City compares.

(2)

If prudently analyzed, they can serve as a benchmark for how cost-effectively the City provides its services.

(3)

However, fee surveys should never be the sole or primary criteria in setting City fees as there are many factors that affect how and why other communities have set their fees at their levels. For example:

(a)

What level of cost recovery is their fee intended to achieve compared with our cost recovery objectives?

(b)

What costs have been considered in computing the fees?

(c)

When was the last time that their fees were comprehensively evaluated?

(d)

What level of service do they provide compared with our service or performance standards?

(e)

Is their rate structure significantly different than ours and what is intended to achieve?

These can be very difficult questions to address in fairly evaluating fees among different communities. As such, the comparability of our fees to other communities should be one (1) factor among many to be considered in setting City fees.

Enterprise Fund Fees And Rates.

Since Enterprise Funds are intended to be fully self-supported from user fees and self-sustaining, the City will establish all fees and user charges for each Enterprise Fund at a level that fully supports the total direct and indirect cost of the activity including operations, capital outlay, capital improvements and debt service.

The City will use the ten-year capital budget plan as a guide to determine and identify the timing and level of possible rate changes. User Rates will be reviewed by staff and by the Board of Public Works Board every odd-numbered year or sooner if deemed necessary with any recommendation taken to City Council for approval.

Interfund Transfers And Advances.

In order to achieve public policy goals, the City has established various special revenue, capital project, debt service and enterprise funds to account for revenues whose use should be restricted to certain activities according to governmental standards.

Accordingly, each fund exists as a separate fund with its own resources, expenditures/expenses and fund equity/net position.

Any transfers between funds for operating purposes are clearly set forth in the annual budget. With an operating transfer, financial resources are transferred from one (1) fund to another. Conversely, an advance is made for temporary cash flow reasons and is not intended to result in a transfer of financial resources by the end of the fiscal year.

In summary, interfund transfers result in an immediate change in fund equity with no expectation of repayment; advances, do not, as the intent is to repay the loan in the near term.

Grant Funding Revenues. The City will actively seek grant funding to fund both operating and capital expenditures. Prior to acceptance of grant funding, an evaluation of the grant must determine the following:

The grant purpose is compatible with the City's mission, strategic priorities, and program objectives.

The benefits provided by the grant exceed the cost of administration. To ensure this objective, a multi-year cost/benefit analysis should be prepared by the department outlining any matching funds, direct costs, in-kind contributions, etc., that will be incurred by the City. In addition, a funding source should be identified.

The grant does not commit the City to long-term tax funded expenditures after the completion of the grant period. The City will evaluate the cost and funding source to determine whether to continue the service when the grant period ends. The decision to continue to fund or drop will be made prior to accepting the grant. Alternatively, the City could choose to continue the service using available revenues after the grant period ends.

Each department is responsible for seeking grant opportunities, preparing a cost/benefit analysis, obtaining pre-approval, seeking budgetary approval and funding, assigning properly trained staff to carry out the grant and obtain reimbursement, and applying for them. All grants should have approval of the City Administrator and City Grant Administrator before application is made to ensure the above guidelines are met. Some grants have even more restrictive guidelines for approval and may require City Council approval before application is made.

Once approved, departments must forward approved application to Finance Department designated grant staff who will assign project number to ensure proper posting and reporting. Departments will manage the grants through the project period and will submit timely requests for reimbursement to the grantor. All reimbursement requests and backup documentation must be forwarded to Finance Department designated grant staff to ensure proper posting of revenues.

The City appoints the Finance Director to serve as the City's Grant Administrator who will review and monitor all grants to ensure proper annual reporting in the City's Annual Comprehensive Financial Report (ACFR) and Single Audit Report if required.

Annual Budget Review. During the annual budget process, budget staff will incorporate any recommendations received for fee or rate changes and incorporate into future budget projections based on the above revenue policies to ensure the City is working with the most accurate and current projections in the budget process.

Accounts Receivable Billing And Collection Policies.

General Accounts Receivable Controls.

The City will establish segregation of duties so that one (1) employee does not have the ability to initiate and authorize transactions, execute transactions, record transactions, reconcile, and maintain custody.

The staff person responsible for entering the billing will not have the ability to record cashiering transactions on customer's accounts or reconcile accounts.

All accounts receivable adjustments to any customer's account must have proper backup documentation and must be approved by Finance Director, Finance Assistant, or City Administrator. All utility accounts receivable adjustments to any customer's account must have proper backup documentation and must be approved by Finance Director, Finance Assistant, or Water and Waste Water Superintendent.

Accounts Receivable Billing (Excludes Utility Billing).

The City will use a monthly billing cycle. Customers will be invoiced on a monthly basis or as needed for special billing situations.

Due date will be thirty (30) days from the date of the billing.

Statements will be prepared and mailed out monthly for any balances not paid by the due date.

Delinquent Accounts.

(1)

Penalty And Interest — Landfill Billing Only. A delinquent bill shall be subject to a penalty of ten percent (10%) applied to the delinquent balance in addition to interest at the rate of one and one-half percent (1 1/2%) per month on the delinquent balance.

(2)

Landfill Billing Only. For any bill not paid within fifteen (15) days after the bill becomes delinquent, the customer's service shall be discontinued until the bill is paid.

Utility Billing. City Code dictates this Policy in much more depth and detail for the utility billing. In this Policy, only a few general basics are covered.

The City will use a monthly billing cycle. Customers will be invoiced on or around the fifteenth (15th) of the month for the previous month's usage.

Due date will be twenty (20) days from the date of the billing.

Penalty And Interest. A delinquent bill shall be subject to a penalty of ten percent (10%) applied to the delinquent balance in addition to interest at the rate of one and one-half percent (1 1/2%) per month on the delinquent balance.

Deposits will be required for new customers and delinquent customers in accordance with City Code.

Any bill not paid within fifteen (15) days after becoming delinquent, is subject to shut-off.

Debt Collection Policies (Excludes Utility Billing).

The City will make every effort possible to collect accounts receivable in a time efficient manner. The Finance Director has the authority to set up reasonable payment arrangements with customers who need extra time do to unforeseen circumstances. If the customer has set up written payment arrangements with the Finance Director, they will be exempt from debt collection practices as long as they remain in good standing with the arrangements that they have set up.

Staff will print an aging report monthly and follow the below guidelines for debt collection practices in order to try to collect debt owed to the City as quickly and as efficiently as possible.

Ninety (90) days delinquent — Initial Recovery. Notification will be made using any one of the following methods: mail, email or telephone. Telephone or email are preferred methods.

One hundred twenty (120) days delinquent — Intermediate Recovery. If Initial recovery has been exhausted and all or a substantial part of the debt remains unsatisfied, notification will be made using any two (2) of the following methods. Mail, email or telephone. Telephone or email are still the preferred methods of communication. A minimum of two (2) attempts shall be made to contact the debtor before the debt is progressed to the Advanced Recovery stage.

After one (1) year, the debt is considered to be in the Advanced Recovery stage. In this stage, the A/R Clerk will provide an aging list to the Finance Director and City Administrator who will consider the following factors for each account:

(1)	The security afforded the debt.
(2)	Prospects of successfully recovering the debt.
(3)	The cost effectiveness of the recovery method undertaken.
After consideration of the above on either the class of debt or an individual basis, the following solutions may be employed:
(1)	Turn over to collection agency.
(2)	Legal action.
(3)	Write-off the debt.
(4)	Sale of land action.