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City C.o:U;n,cil Wo.rksbo.p.. I. 20"Q.O
Thursday, February 10th (5pm -10pm)
At: Prior Lake Library Conference Room
PARTICIPANTS: Councilmembers, City Manager & City Attorney
I. PARK PROPERTY ACQUISITION
II. COMPETITIVE PROCUREMENT
III. PRIOR LAKE TRANSIT OPTIONS
IV. FRANKLIN! TH13! TORONTO! TOWER
DEVELOPMENT ISSUES.
V. CITY MANAGER EVALUATION CRITERIA FOR
2000.
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CITY OF PRIOR lAKE
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February 10, 2000 (5pm - 10pm)
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HISTORY
At the time the $7.8 million Park and Library Referendum was passed, we anticipated the
purchase of one 80 to 100 -acre parcel to construct a combination of athletic fields (baseball,
softball, soccer, football) which would meet City needs for the foreseeable future.
We conducted an evaluation of more than 20 possible parcels of this size based upon criteria
such as location, topography and cost. Ultimately, we were unable to secure a site 80 - 100
acres in size. We then began looking at smaller sites which could be used for youth only or
adult only fields.
In 1998, we acquired the 38.4 acre Busse parcel located immediately south of The Ponds in
Spring Lake Township adjacent to Mushtown Road (see attached map). This park has been
earmarked for youth only and is currently under construction. The park will contain 4 baseball /
softball fields and 4 soccer/football fields.
The Council has directed that cost estimates be prepared for a permanent restroom or
restroom / concessions building for this park together with cost estimates and funding
recommendations. A conceptual design with cost estimates is in preparation which, if
approved by the City Council, could be the "prototype" for park concession/restroom buildings
for future parks we construct. This information will be submitted to the Council by April with the
intent that this facility will be operational when the park opens in the spring of 2001.
With respect to the Park on the former Busse property, we are working with the neighbors to
identify and implement traffic safety measures when the Park opens (see attached). The
Busse property only meets one-half of our athletic field needs as articulated in the
Referendum.
CURRENT CIRCUMSTANCES
For nearly a year, we have been discussing with Scott County and Hennepin Parks staff the
possibility of purchasing a portion of the undeveloped 345 acre Spring Lake Park located in
Prior Lake (see attached map).
The Spring Lake Regional Park is unique in the Twin City Metropolitan area in that it was
purchased outright by Scott County without the use of Regional money. If regional money had
been used, covenants would have been placed on the property restricting its use for regional
park purposes only. This would have precluded the City from acquiring any portion of the park.
Since Scott County owns the property outright, it is within their jurisdiction to sell any portion to
the City. The County Administrator has discussed this proposal with his Commissioners and
they are open to the idea of pursuing such action. The previous City Council supported this
proposal as well. This City Council needs to determine if there is a consensus to proceed.
We have worked with the Hennepin Parks staff who are responsible for developing and
operating Spring Lake Regional Park. As a result of numerous meetings, a concept plan has
been prepared of the 25.5 acre park/athletic field the City would acquire and how such action
would integrate with the remaining 320-acre Regional Park.
The attached concept is acceptable to Scott County, Hennepin Parks and the City of Prior
Lake staff. You will note that the proposed park/athletic complex is located at the northwestern
boundary of the site, within Prior Lake boundaries and accessible via CSAH 82 and Howard
Lake Road. Given the rural nature of the area, the location would affect a minimum number of
homeowners. The facility is intended for adult usage which will allow us to utilize the Ponds
primarily for youth. We have analyzed the advantages of developing the park from various
perspectives as shown on the attached "Advantages" sheet.
In 1998, an appraisal was done of the 94.7-acre Menden property. That appraisal yielded a
land value of $10,000 per acre. The County has suggested $13,000 per acre. I have indicated
that while I have no City Council authority, I do not believe that the Council would support any
more than $12,000 per acre, if that. Total land costs for 25.5 acres at $12,000 per acre is
$306,000. At $13,000 per acre it is $331,500.
The Scott County Assessor has asked for comparable land sales. I expect to have his
response by the Thursday Workshop.
If the City proceeds with this acquisition, we could ask the County to commit all, or some, of
the purchase money to begin development of Spring Lake Park. In this fashion, the taxpayer
receives numerous benefits, including development of the park/athletic complex; and
accelerated development of a regional park which is not programmed for any time in the near
future. The Scott County Board members and the Scott-Hennepin Parks Advisory Board have
informally agreed that this proposal should continue to be explored.
CONCLUSION
I am seeking Council direction on this acquisition. If the Council concurs with acquiring the
property, the next step is to prepare a written purchase agreement subject to completing a
public information and meeting process. This process would publicize the proposal on TV,
through the Prior Lake American and, if properly timed, in the County and/or City newsletters.
The public would be invited to attend and share their comments. We expect that the two or
three property owners living adjacent to the park may be less than supportive.
1:\COUNCIL\WKSHOPOO\SUM#1.DOC
On December 15, 1999, a Public Hearing was concluded for residents living within a 1/1 mile
radius of the proposed park. Of the 300 households invited, 30::1: residents attended the public
meeting.
The purpose of the meeting was to explain the results of the traffic study to interested
residents and solicit input regarding improvements that could be made to traffic safety in the
area once the Park is in operation. The traffic safety enhancements are shown on the attached
map keyed by number.
Shown below are the improvements requested by attendees of the December 15th meeting
and the actions the City will take in response to each request.
(1) How does the study account for parental drop-offs and pick-ups of children at
the Park?
The traffic generation figures were estimated using the Institute of Traffic Engineers
Trip Generation Manual and comparisons with The Ponds Park actual trip generation.
The traffic counts are estimates only and could vary by ::1:10%. This is a generally
accepted method of estimating traffic. These estimates are for peak use periods such
as weekend tournaments.
Park personnel have observed over many years that parental drop-offs and pick-ups of
children occur more frequently during practices which are typically during weekday
evenings. (non-peak usage). During tournaments and league games on weekends,
parents typically stay and watch the games which would not add to the trip generation.
Using this basis, the number of parental drop-offs/pick-ups would not have a significant
affect on the estimated traffic counts. When the park is fully operational, actual traffic
counts can be taken which will provide a more scientific basis for any additional traffic
remediation projects.
(2) Determine whether a stop sign can be installed at Mushtown and Maple
[stopping all three legs).
The City will request that the Township determine whether criteria are met for stop
signs in this area. If so, the City will provide and install the signs, but the Township will
be responsible for sign maintenance and traffic enforcement.
. (1)
.
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Spring Lake Park Acquisition Process Advantages
(~'
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Metropolitan Parks and Trails:
· Provides funding to accelerate the development of a new regional park
. Is not contrary to their policy
. Sets no undesirable precedent
. Encourage Scott County participation in Regional Park affairs
(2)
Hennepin Regional Parks and Scott Hennepin Park Board
. Accelerates development of regional park by 15 years
. Facilitates Scott County Capital Park Fund Contribution
. Non-precedent setting
. Provides operating assistance for Regional Park
. Facilitates CSAH 12 realignment
. Retains usable Regional Park meeting policy
. .f;)oes not reduced treed area of Park
(3)
Spring Lake Township
· Only a small portion of the Park property is located in the Township
· Brings Community Park and amenities closer than presently available
. Does not reduce taxable property
. Minimizes impact to adjacent residents
. Accelerates Regional Park development in Township
(4) Scott County
· Seeds Capital Park Fund for use throughout the County.
· Provides fair market value for property to the County
. Accelerates Regional Park development
· Accelerates redevelopment of Howard Lake Road
(5) Prior Lake
. Provides developable land at marketable cost
· Provides needed Community Park and Athletic Fields and accelerates Regional Park
. Minimizes impact upon adjacent residents
. Near Prior Lake main transportation systems
· The majority of the Park property is within Prior Lake
(6) Property Tax Payer
· Does not reduce taxable property
· Provides Community Park and Regional Park sooner
· Maximizes use of property tax dollar (Referendum dollar obtains park land and will be
used by Scott County to accelerate Regional Park Development)
· Maximizes money for development rather than acquisition
· Facilitates completion of Howard Lake Road
i:\frank\memos\slpk.doc (draft-1/8/99)
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On December 15, 1999, a Public Hearing was concluded for residents living within a III mile
radius of the proposed park. Of the 300 households invited, 30:t residents attended the public
meeting.
The purpose of the meeting was to explain the results of the traffic study to interested
residents and solicit input regarding improyements that could be made to traffic safety in the
area once the Park is in operation. The traffic safety enhancements are shown on the attached
map keyed by number.
Shown below are the improvements requested by attendees of the December 15th meeting
and the actions the City will take in response to each request.
(1) How does the study account for parental drop-offs and pick-ups of children at
the Park?
The traffic generation figures were estimated using the Institute of Traffic Engineers
Trip Generation Manual and comparisons with The Ponds Park actual trip generation.
The traffic counts are estimates only and could vary by :t10%. This is a generally
accepted method of estimating traffic. These estimates are for peak use periods such
as weekend tournaments.
Park personnel have observed over many years that parental drop-offs and pick-ups of
children occur more frequently during practices which are typically during weekday
evenings. (non-peak usage). During tournaments and league games on weekends,
parents typically stay and watch the games which would not add to the trip generation.
Using this basis, the number of parental drop-offs/pick-ups would not have a significant
affect on the estimated traffic counts. When the park is fully operational, actual traffic
counts can be taken which will provide a more scientific basis for any additional traffic
remediation projects.
(2) Determine whether a stop sign can be installed at Mushtown and Maple
[stopping all three legs].
The City will request that the Township determine whether criteria are met for stop
signs in this area. If so, the City will provide and install the signs, but the Township will
be responsible for sign maintenance and traffic enforcement.
.
.
.
Busse Athletic Park - Traffic Safety Improvements
(3) Could additional directional signage be installed directing traffic from TH13 to
the park?
Yes. Directional signs will be installed along Duluth at TH13 to Tower and at Tower to
Toronto. Signs will also be installed at Panama and TH13 directing traffic to Tower and
Toronto. When the ring road is completed and when the CSAH 23 intersection is
reconfigured, directional signs will direct traffic to Toronto and 170th to access the
parks.
(4) What impact will the ring road have?
With appropriate directional signage, the ring road will actually help encourage traffic to
acces~nhe park via Toronto.
(5) Could the 30 mph zone on Mushtown Road be extended to the East (along the
gravel portion) to increase safety at the entrance?
Yes. The City will attempt to move this speed zone as far as possible to the east in
cooperation with the Township. Additional signage will be installed to advise motorists
and pedestrians.
(6) Could "30 mph" be printed on the roadway?
Yes. The City will complete and maintain the "30mph" markings west of the park
entrance on the blacktop segment of Mushtown.
(7) Could more consideration be given to pedestrians walking along Mushtown
Road westerly?
Yes, the City would be willing to evaluate trail costs within the City and program as
funding is available if the Township will do the same for the trail segments within their
corporate limits leading to CSAH 23.
(8) Would the City maintain or provide financial support for the maintenance of
Township road used to access the site?
Most of the roads accessing the site are City roads or have been upgraded at the
City's expense. The City currently completes the snow and ice control on Mushtown
Road from CSAH 23 to The Ponds park entrance even though half of the road is
Township responsibility. A written agreement on shared maintenance will be explored.
2
I :\FRAN K\NOTES\OO\BUSSETRA.DOC
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Busse Athletic Park - Traffic Safety Improvements
(9) What can the City do to improve safety on Toronto Avenue at the Woodridge
Neighborhood Park?
The City will consider prohibiting parking on the east side of the street adjacent to
Woodridge park and will post more speed limit signs along Toronto.
(1 O)Could a blinking amber light be installed at the park entrance?
The City will mark the crossing on the street. It will also place stop signs at the roads
and trails exiting the two parks at the crosswalk, and install "park entry ahead" type
signage as appropriate, all of which will be in conformance with the Uniform Traffic
Control Manual. A street light will also be installed at the intersection for night safety.
Amber'blinking lights are not being considered at this time. After the park is in use,
traffic counts and experience may justify further consideration of this installation.
3
I:\FRANK\NOTES\OO\BUSSETRA.DOC
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February 10,2000 (5pm - 10pm)
II.
HISTORY
Purchasing by the City is governed by: (1) Minnesota Statutes Section 471.345; (2) Prior Lake
City Code; (3) Case Law; and (4) Prior Lake's Purchasing Policy. A copy of a League of
Minnesota Cities bulletin on purchasing is attached which addresses key statutory provisions.
The City Code is also attached, together with the City Purchasing Policy including proposed
revisions in legislative format.
During the past year, there has been a concern about the purchases made by the City and the
process used. The concerns expressed include:
. Justification of purchases could improve.
. Specifications could do more to encourage competition.
. Greater employee accountability for purchasing is necessary.
CURRENT CIRCUMSTANCES
The staff and I have discussed possible steps to address each of the above concerns. The
most straight-forward solution is to hire a Purchasing Director who would be responsible to the
City Manager for assuring that each City purchase addresses the above listed concerns. The
cost of this personnel addition is estimated to be $50,000 to $60,000. Given the number of
purchases we make yearly and the cost, I believe that a more cost-effective solution is to
examine other options.
Shown below are solutions the staff intends to implement to resolve the identified
shortcomings of our existing purchasing process:
Improve Justification Process: Councilmember Ericson has suggested training which could be
beneficial to the City staff in their purchasing decision-making process. The training focuses
on questions of whether acquisition is the best course of action or if other alternatives would
be more appropriate. Attached is a worksheet from the training program. Staff regeived an
overview of the program on Tuesday, Feb. 8th. With respect to mobile equipment, information
about the equipment to be replaced will be solicited from Fleet Maintenance Coordinator Jon
Donovan.
Specifications Should Encourage Competition: The purchasing specifications are proposed to
be reviewed by a three person purchasing committee to reduce barriers to vendors bidding. In
some cases, it will be appropriate to share the specifications with vendors before actual
bidding takes place to determine if bids will be submitted. The Purchasing Policy is attached
showing proposed revisions. It is also recommended that each year at the annual meeting, the
Council re-adopt the Purchasing Policy.
Increase Accountabilitv for Purchasing: The performance evaluation forms for Management
and Executive employees do not presently include criteria regarding conformance to bidding
policies, laws and guidelines. Such criteria should be added on the Budget and Expenditure
Control page which are presently part of the evaluation form. Attached is the language which I
am recommending for addition to the evaluation form.
CONCLUSION
These steps are intended to refine City purchasing procedures. I am seeking the City
Council's feedback on these revisions.
I :\COU NCI L \WKSHOPOO\SUM#2.DOC
MEMORANDUM
TO:
FROM:
SUBJECT:
DATE:
APPROVED BY:
Department Heads & Supervisors
Finance Department
City Purchasing Policy
Revised 2/15/00
Resolution 00-
PURCHASE POLICY GUIDELINES
Minnesota Statutes 471.345 and Prior Lake City Code 106.500 set forth the laws regulating
purchasing h.Minnesota Municipalities. Attached is an information document from the League of
Minnesota Cities regarding competitive bidding and statutory references. These guidelines are
intended to clarify and expand upon these legal requirements.
There are ffiHe eight basic thresholds of dollar amounts that have been established either by policy,
city code or statutory authority for the purpose of purchasing city goods and services. They are
identified as follows:
.
Blanket Purchases
Purchases of $50.00 or less may be made at the following vendors who have been issued a year-
long blanket purchase order whereby the purchase may be simply approved without a purchase
order. The receipt should be signed by the individual so that the when the invoice is received it may
be directed to the appropriate department for account code assignment.
The vendors with 2000 Blanket Purchase Orders are:
Astleford Equipment
Bob's Personal Coffee
Bryan Rock
BT Office Products
C.H. Carpenter Lumber
Camas Shiely Division
Carquest
Catco Parts & Service
Coast to Coast Stores
County Market
Delegard Tool
Grossman Chevrolet
Hawkins Water Treatment
Kraemer & Sons
Lano Equipment
Monnens Supply
NAPA Parts Dept.
Patton Fasteners
Prior Lake Aggregates
Prior Lake Rental
Prior Prints
R&R Carpet Service
Snyder Drug
Steve Tupy's Tire
Terminal Supply Co.
Toll Company
William Mueller & Sons
Wolf Motors
Purchases Less Than $1000
Expenditures within this category should generally be preceded by a minimum of two quotes if the
expenditures are anticipated to be on a re-occurring basis as opposed to a one-time occasional
purchase. These may be obtained verbally from vendors. The purpose is to obtain the best price
available initially subject to established quality standards. The purchase order process is the same
with the 3dditional requiroment that a completed quote form (see 3ttached) is to 3ccompany the
purchase order form need not include written quotations. The Deoartment Head mav aoorove
such purchases.
.
16200 Eagle Creek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (612) 447-4230 / Fax (612) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
.
Purchases Between $1000 $5000
Expenditures within this category must ba accomp::miad by :I minimum of two quotas. These may be
obtained verb311y from vendors. The purpose is to obtain the best price aV3i13ble subject to
established quality stand:1rds. The purchase order process is the S3me with the 3ddition31
requirement that 3 completed quote form (see 3tt3ched) is to accomp3ny the purchase order form.
Purchases Under $1000 - $2500
Purchases approved within the current year's operating budget shall be authorized by the Department
Head via a purchase order with two quotes on the quote form where there is more than one
feasible source. The required procedure is to complete a purchase order prior to acquisition to
insure accountability, provide amount verification and avoid any misunderstanding with respect to
cost between the vendor and the City.
Normally all purchase orders are to be completed before a requisition number is provided unless
reason C:1n be demonstr3ted othervvise. The process involves the following chronological steps:
1. Complete the Purchase Order as to vendor, date, material description, unit price, total
department and account code.
2. Attach completed quote form.
3. Department Head authorizes by signature and sends to Accounting.
4. Purchase Order number assigned by Accounting Department.
5. Purchase order sent by originating department.
.
Field employees will be expected to plan and coordinate their acquisitions with their respective
supervisors and department heads to eliminate verbal P.O. numbers unless situations occur where it
would not be practical because of time constraints. There are four general exceptions to the rule:
1. Routine items costing $50 or less that occur on a daily basis may continue to be
purchased under a blanket purchase order.
2. Service repairs on equipment and vehicles do not generally require a purchase order
unless price quotations are necessary.
3. Sand, rock, bituminous etc., because of quantity uncertainties, may be purchased under a
blanket purchase order number.
4. If an emergency situation should occur, acquisition may be followed up by a purchase
order.
When a verbal purchase order number is used, the following information is absolutely necessary:
1. Receipt/invoice of purchase.
2. Receipt/invoice must indicate description of purchase (parts # is not acceptable).
3. Receipt/invoice must indicate dollar amount.
4. Receipt/invoice must be signed.
5. Receipt/invoice must display Purchase Order number.
6. Salesman shall not be given verbal P.O. number.
7. All verbal Written purchase orders will be submitted in completed form within one week
of verbal authorization or issu3nce.
.
Purchases $2500 and Above to $5000
City purchases approved within the current year's operating budget shall be authorized by the
Department Head via a purchase order. In addition, all such expenditures of $2500 or greater must
also be approved by the City Manager in the form of his signature upon the purchase order. The
R:\COUNCILIRESOLUTI\FINARES\2000IPURCHAS2,DOC 2 2/4/00
.
required procedure is to complete a purchase order prior to acquisition to insure accountability,
provide amount verification and avoid any misunderstanding with respect to cost between the vendor
and the City. Written quotes or a completed quote form must be attached where there is more
than one feasible source.
Normally. all purchase orders are to be completed before a requisition number is provided unless
reoson con be demonstrotod otherwise. The process involves the following chronologicol steps:
1. Complete the Purchase Order as to vendor, date, material description, unit price, total
department and account code.
2. Written quotes or completed quote form are attached.
3. Department Head authorizes by signature and sends to Accounting City Manager..
4. City Manager approval by signature on purchase order.
5. Purchase Order number assigned by Accounting Department.
6. Purchase Order sent by originating department.
Purchases Belween $5,000 and $15,000
When there is more than one feasible source of supply for an item having a cost of five thousand
dollars ($5,000) or more, the City Monoger [Deportment Hood] shall request written price quotations
from at least two (2) sources and shall place the order at the lowest price quoted, provided the items
are of comparable quality. The quotes shall be submitted in written format or completed on quote
forms (ottached) provided by tho Finonco Deportment. Purchases of $15,000 or Loss The City
Manager shall have the authority to make or let purchase contracts for routine service equipment or
supplies for which the cost does not exceed fifteen thousand dollars ($15,000). Prior Lake Code
106.500(5).
.
Purchases Between $15.000 . $25,000
Purchase contracts in excess of $15,000 must be approved by the City Council and include at least
two written quotations unless the product or service is available from one source only. The
authorizing resolution shall be attached to the signed purchase order. If the amount of the contract
does not exceed $25,000 then the contract may be made by obtaining two or more written
quotations or by direct negotiations subject to Council approval.
Purchases Exceeding $25,000
There are three processes available that would satisfy statutory requirements for purchases that are
above $25,000.00.
I. Purchases Through Cooperative Purchasing Organizations
.
The City is a member of various cooperative purchasing organizations: State of Minnesota
Cooperative Purchasing Venture. Hennepin County Cooperative Purchasing GroufJ and a
Street Maintenance Joint Powers Agreement. From time to time the City. together with other
public agencies (cities and counties) will Jointly purchase goods and services. Each of these
organizations is created to facilitate cost effective purchasing using the bid system. Each
organization prepares specifications based upon the needs of the members. solicits bids.
evaluates bid proposals and awards a contract to the lowest responsible bidder. Member
agencies then purchase from the authorized vendor without the need to prepare individual
specifications for each and every purchase and complete otherwise required statutory
purchasing procedures.
A product or service in the approved operating budget or capital improvement program may
be acquired using cooperative purchasing agreements as follows:
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.
1.... A copy of the cooperative agency specifications and bid award contract document
for the product or service is acquired.
L The department making the purchase determines that the specifications and bids
received conform to their needs and represent cost effective acquisitions by
reviewing the proposed acquisition with cooperative purchasing acquisition
professionals. department personnel. city fleet maintenance mechanic and others
as appropriate.
1..... An agenda report is prepared for City Council consideration authorizing acquisition
of the product or service. If the equipment is replacement. the item being replaced
is made available for viewing at the Fire Station before and during the City Council
meeing.
II. Purchases Made Outside of the Cooperative Bidding Process
If the amount of the contract is estimated to exceed $25,000 100.000, and funds are appropriated
within the current operating budget or capital improvement program, sealed bids shall be solicited
by public notice at least 10 days before scheduled bid opening following preparation of bid
specifications as authorized by the City Council. The successful bid is to be awarded by the City
Council to the lowest responsible bidder. (Minnesota Statutes 471.345)
The basic process for competitive bidding is outlined below. This process does not aoo/y to
public improvement proJects financed through special assessments pursuant to Minnesota
Statutes Chapter 429 which prescribes the process to be followed.
.
1. Solicit Council authorization to prepare procurement documents.
2. Prepare specifications.
1..... Share draft specifications with Competitive Bid Committee consisting of Police
Chief. Finance Director and Assistant City Manager. Committee sends draft
specifications to potential bidders to determine if they can bid and if not. what
modifications could be made.
~ Purchasing department modifies the specifications as requested by the
Competitive Bid Committee.
~ Solicit Council approval of plans and specifications. request for proposals and
authorization for advertisement for bid.
6. Prepare a public notice for Prior Lake American.
7. Publish 10 days in advance of bid opening.
8. Purchasing department analyzes bids for conformance with specifications and prepares
bid tabulation.
~ Recommendation is provided to Competitive Bid Committee together with the draft
agenda report and recommendation.'
10. Committee provides comments for inclusion in agenda report.
11. City Council considers the recommendation and acts upon the purchase. If the
purchase is for replacement equipment. the item being replaced is made available
for viewing at the Fire Station before and during the Council meeting and
maintenance and other pertinent information is supplied by Fleet Maintenance
personnel.
12. Standard City Contract is prepared.
13. Execute contract with Mayor and City Manager signatures.
.
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4
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.
III. Non-Competitive Supplies or Equipment.
If the City is purchasing a product or service which is available from only one source (such
as street lights in an electrical franchise area>. the acquisition will be made in the same
fashion as a purchase between $15.000 and $25.000.
Purchases Exceeding $100.000
The process is the same as above except the publication must be at least 21 days before bids are
publicly opened for improvement projects that are assessed under Minnesota Statute Chapter 429.
Also the advertisement must be published at least once in the official newspaper and at least once in
the Construction Bulletin.
Contract Changes
A contract approved by the City Council for construction/professional services may be increased or
decreased by written change order up to $25,000 provided such modification does not exceed 25% of
the original contract amount in the aggregate and the item which is increased or decreased was
part of the original bid award.. Any change order exceeding $25,000 must be approved in advance
by the City Council. The City Manager may approve a change order not exceeding $25,000 if one of
the following circumstances exists provided the contractor/vendor apprises the staff of the necessary
changes, an estimate of the costs and reasons for the changes prior to actually conducting the work:
1. A delay in obtaining prior City Council approval will impede the progress of the project and a
delay in obtaining prior City Council approval may, subject to the contract documents, result in a
claim by the contractor for additional costs caused by the delay.
.
2. Where the public health and safety are in jeopardy, the City Manager may authorize a change
order in excess of $25,000. In such a case, the City Manager shall endeavor to contact as many
members of the City Council as practical under the circumstances. The Open Meeting Law
prohibits the City Manager from disclosing to any Council member his or her discussion with
another Councilmember.
3. In cases where approving the change order will result in a savings to the City.
Any request for change order must be certified as true, correct and accurate by the maker to
avoid fraudulent requests.
The staff will schedule each change order for City Council consideration as soon as practicable. The
Change Order request shall include a staff report identifying the pertinent facts surrounding the
change order, the original contract amount, amount of the change order and cumulative change order
amount in dollars and percentage terms.
Contract Documents
Construction Projects A standard contract (see attached contract form) shall be used for all city
public improvement projects. The City Attorney will insert the appropriate information and will review
the necessary supporting contract documents as to form and compliance. The following documents
are typically required as part of the contract process:
.
1. Request for Proposals
2. Specifications
3. Plans and drawings
4. Bid bond
5. Performance bond
6. Payment bond
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.
7. Insurance provisions;
a) Workers' compensation
b) Liability
c) Owners' protective
Professional Services. A standard contract (see attached contract form) shall be used for
professional services Le., architectural, engineering, construction management etc. The City Attorney
will insert the appropriate information and will review the necessary supporting contract documents as
to form and compliance.
Exceptions to Competitive Bidding
The following are some of the more common exceptions to the competitive bidding requirements:
1. Contracts less than $25,000.00
2. Intergovernmental contracts
3. Noncompetitive supplies and equipment
. 4. Real estate purchases
5. Professional services including;
a) Architectural
b) Auditing
c) Engineering
d) Legal
e) Group insurance
Procedures for Verifying Receipt of Goods or Services for Payment
. Each Department Head will review and approve all invoices pertaining to their department purchases.
Upon completion of a purchase order, a purchase order number will be assigned from the Finance
Department. The white copy of the purchase order should be forwarded to the Vendor and the yellow
copy of the purchase order retained by the department for validation with the invoice.
The Vendor should be instructed to send the invoice to the appropriate Department personnel (either
Department Head or Supervisor). Make sure the Vendor is instructed to reference the Purchase
Order Number on the invoice. The Department Head or Supervisor acknowledges the product or
service received by initialing the invoice received from the Vendor. Attach the yellow copy of the
purchase order to the back of the invoice and submit it to the Finance Department for payment
processing.
Statements from Carquest, NAPA, Amoco Oil, Subway, County Market, Le. on blanket purchase
orders will be reviewed by the Finance Department. Please turn in all invoices IMMEDIA TEL Y upon
receipt.
Purchase Order Completion Procedures:
.
1)
2)
3)
4)
5)
6)
7)
Enter the Vendor's name, address, contact person, and phone number.
Enter the date the order was placed with the Vendor.
Enter the ship to address if different than 16200 Eagle Creek Avenue SE.
Enter the quantity of the item ordered.
Enter the description of the item ordered.
Enter the unit price of the item ordered.
Enter the total cost of the line item ordered (quantity times unit price).
R:\COUNCILIRESOLUTl\FINARES\2000\PURCHAS2,DOC
6
214/00
8)
. 9)
10)
11)
12)
13)
14)
15)
16)
17)
.
.
Enter the words Sales Tax and the dollar amount for sales tax in the Total column. Tax is
calculated: total dollars times 6.5% (exclude freight and labor charges).
Enter shipping and handling charges if applicable.
Enter the grand total of all the charges in the Total column.
Enter the person's name ordering the product or service.
Enter the department accounting number and the accounting object code.
The Department Head's signature is required.
The City Manager's signature is required if the order is $2,500.00 or above.
If the check is to be returned to the person ordering the product or service, enter "Return
check to " and circle the return instructions.
If the item ordered is $500.00 or over and is an equipment asset, write the word "ASSET"
here. After the invoice is received, an asset number will be assigned to the item and
an asset sticker with the number will be returned to be affixed to the asset.
Request a purchase order number from the Finance Department before placing the order
with the Vendor.
If a line item is backordered, enter B/D next to the line item on the white and yellow copy of
the .'purchase order. Submit the yellow copy of the purchase order with the invoice to the
Finance Department for payment. Copy the white purchase order on yellow paper and hold
the paperwork for the backordered item to be shipped. When the backordered item is
shipped, attached the invoice with the backordered item to the yellow copied purchase order
and submit the paperwork to the Finance Department for processing the payment.
R:\COUNCILIRESOLUTI\FINARES\2000IPURCHAS2.DOC
7
2/4/00
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OVERALL RATING
1. Budgets are based upon prioritized needs and reflect departmental goals.
2. Management is encouraged to implement cost reduction programs. Cost reduction and revenue
enhancement programs are imvlemented.
3. Budgets are prepared in prescribed format and submitted at scheduled time with no errors.
4. Actual expenditures correspond to budget schedules.
5. No budget overruns occur without prior justification and approval from supervisor.
6. With regard to accountability. all purchases and construction project oversight conform to state
statute. case law. Citv Code and City Purchasing Po/icv.
COMMENTS:
PERFMGMT.DOC
4
Revised November. 1998
\>r-~ov- L~
C\~~
.
Administrative
s, ordinances and resolutions of the City are enforced. Z
r v I: The Ci~ nager shall
appoint pon the basis of merit and fitness and any applica e civil service
provisions, and except as hereinafter provided, remove the a rk, all heads of
department and all subordinate officers and employees; but e appointment and
removal of the Horney shall be subject to the approval of t Council.
(2)
(3)
(4) A
(5)
.
(6) Advise" Annual Bud : The City Manager shall ep the Council advised as to
the financial conditio and needs of the City, and sh prepare and submit to the
Council the annual udget.
(7) when directed to do
(8) Ad i nal D i : The City Manager shall perform such other duties
pre cribed by the Minnesota Statutes as relating to Optional Plan B Citi
r uired by ordinance or resolutions adopted by the City Council.
106.500: PURCHASES AND ACQUISITIONS: All purchases and acquisitions made for, or
in the name of the City, other than those made from petty cash funds shall be
made under the direction of the City Manager unless otherwise directed by the
Council. All such purchases shall meet the conditions as set out herein, unless
otherwise directed by the Council:
(1) The head of the department or division for which the service, equipment or
supplies are ordered must recommend that the order be placed.
(2) The service, equipment or supplies must be necessary to the operation of the
.
City of Prior Lake
106/p2
.
.
.
YV""\c-r' Lt.l~ ,c.:v~ ~
Administrative
department.
(3) Where equipment is ordered to replace obsolete, damaged, or worn out
equipment, the new equipment shall, as nearly as possible equal that which it
replaced in design and function.
(4) Where there is more than one feasible source of supply for an item having a cost
of five thousand dollars ($5,000.00) or more, the City Manager shall request price
quotations from at least two (2) sources and shall place the order at the lowest
price quoted, provided the items are of comparable quality, unless the City Council
otherwise directs.
(5) The City Manager shall have authority to make or let purchase contracts for routine
service equipment or supplies for which the cost does not exceed fifteen thousand
dollars ($15,000.00).
(6) The expenditure must be within the limits established by the department budget.
(7) All claims resulting from orders placed by the City Manager shall be audited for
payment by the City Council.
(8) Where bidding is required to be used, bidding procedures shall be consistent with
Minnesota Statutes.
(9) The City Council expressly retains its power to disaffirm any order or contract
entered into by the City Manager on behalf of the City in the same manner and to
the same extent that such power existed prior to the effective date hereof.
(This Space Intentionally Blank
For Future Amendments)
City of Prior Lake
106/p3
I
i
f
t
I
!
\
,.
.
.
~
....
$
./
Competitive Bidding Highlights
1. What kinds of contracts are subject to competitive bidding?
+ Contracts estimated to cost over $25,000 for the sale, purchase, or
rental of materials or equipment;
+ Contracts estimated to 'Cost over $25,000 for the construction,
, ' alteration, repair, or maintenance ofrea1 or personal property.
2. What are the dollar amounts for competitive bidding?
. +
Contracts that are estimated to exceed $25,000 must use
competitive bidding;
Contracts estimated to be above $10,000 but not above $25,000
may be made by:
- competitive bidding OR
- direct negotiation (must obtain at least two quotations);
+ Contracts estimated to be $10,000 or less may be made:
- upon quotations (must obtain at least two) OR
- on the open market.
+
3. What are the exceptions to competitive bidding?
+
Contracts estimated to be $25,000 or less can be made using the
alternate procedmes listed above;
Certain shared hospital purchases;
Fuel contracts for the generation of municipal power;
Guaranteed energy savings contracts;
Noncompetitive supplies and equipment;
Purchase or sale of real property;
Contracts for professional services; and
Contracts made under emergency circumstances.
.
+
+
+
.+
+
+
i
'.
o
.
,I.
.
7. How long must a city advertise for bids?
Notice requirements may vary depending upon the city and the type of
the contract:
. Statutory Cities - For most contracts, bids must be solicited by
notice published once in the official newspaper, at least 10 days
before the last day for submitting bids.
. Home Rule Charter Cities - Home rule charter cities should
consult their charters.
. Contracts made under the special assessment statutes - These
contracts have nvo different requirements:
- If the improvement contract is estimated to exceed
$25,000, the city may advertise in its official newspaper
for as long as the council deems advisable. However, the
publication must occur at least 10 days before the bids
are opened.
- If the contract will exceed $100,000, the publication
must be made at least three weeks before the last day to
submit bids. The publication must occur at least once in
the official newspaper and also in a trade paper or in a
newspaper published in a first class city.
8. What elements should be considered when the bids are opened?
The clerk should keep the bids until the bid opening. The bids should be
opened at a public meeting. After all the bids have been opened, the
council should consider the following for each bid:
. Does the bid comply with the specifications?
. Is the bid reasonable?
. Is the bid responsible?
. Does the bid meet any other conditions that may be important to
the council?
9. What about when the city selects a bid?
After the council has opened the bids, it may accept one or reject all bids.
Generally, the contract will be awarded to the "lowest responsible
bidder." The successful bid must conform to the bid specifications. !fit
does not, it is a new proposition and must be rejected. Minor
iIregu1arities may be overlooked. However, whether an irregularity is
minor or significant must be considered on a case-by-case basis.
III
'.
Table of Contents
Competitive Bidding Highlights i
I. Purpose of competitive bidding 1
ll. Scope of statutory requirement 1
A. Contracts required to be competitively bid 1
.. '. B. Exceptions to competitive bidding . 3
C. Common problems in applying the statute 4
Ill. Procedure 7
A. Preparation of specifications 7
B. Advertising and publication requirements 8
c. Opening and tabulation of bids 10
D. Investigation of bids 10
E. Disposition of bids 12
. IV. Award of bid 12
A. Conformity to plans and specifications 12
n. Changes and mistakes in bids 13
v. Contract 15
A. Bonds 15
B. Miscellaneous considerations when contracting 16
C. Types of contracts 18
D. Changes in contracts after award 22
E. Contracts let in violation of bid requirements 24
VI. 'City contracts in relation to federal anti-trust legislation 25
VTI. Sample/model forms 28
.'
v
.
.
.
MiDD. Stat.
~ 471.345; MinD.
Stat. ~ 471.345,
subds. 3, 4. and 5;
MiDD.Stat.~
471.345, subd. 6
Foley Bros., rtfc. v.
Marshllil, 266
Minn. 259, ID
N.W.2d 387 (1963)
R..E. Short Co. v.
City of
Minneapolis, 269
N.W.2d 331 (Minn.
(978)
Griswold v. County
of RtUmey, 242
Minn. 529, 65
N.W.2d 647 (MinD.
1954)
MinD. Stat. ~
471.345, subd. 2
I.
Purpose of competitive bidding
The Uniform Municipal Contracting Law requires that certain
contracts must be let using the competitive bidding process. This law
establishes uniform dollar limitations for the purposes of the competitive
bidding process. It supersedes all inconsistent laws and charter
provisions governing contracts by political subdivisions. If a contract is
estimated to exceed $25,000, a city must use the competitive bidding
process. Generally, the competitive bidding process involves publication
of an advertisement to solicit sealed bids and the award of the contract to
the "lowest responsible bidder." See the discussion below for the
exceptions to this general rule:
There are three general purposes behind this law. First, it is
intended to ensure taxpayers the lowest price and best value for their tax
dollars when the city makes a contract. Second, it allows contractors a
level playing field on which to compete for ci.ty contracts. Third, it limits
the discretion of contract-making officials and thus reduces the possibility
of fraud or favoritism.
ll. Scope of statutory requirement
A. Contracts subject to competitive biding
There are basically two elements that a city must consider to
determine if the competitive bidding law applies to a particular contract
Both elements must be present to a certain degree in order for a contract
to be subject to the competitive bidding requirements. However, there are
also some exceptions to this general rule which will be discussed in
further detail later in this document. The two elements that must be
considered are:
.
The t)'tJe of the contract. The definition of the term "contract" is
broad, but it does not include all contracts. Generally, a
"contract" is an agreement entered into by a municipality for the
sale or purchase of supplies, materials, equipment or the rental
thereof, or the construction, alteration. repair, or maintenance of
real or personal property.
Competitive Bidding Requirements in Cities
MIIlII. Stat.
f 471.345, subd. 3
MbaIL Stat.
t 471.345, subd. 4;
Grlsr.oUI v. CoUllty
of RIIIIrUy, 24Z
Mbua. 5.Z9, 65
N.W.2d 647 (1954)
MlaIL Stat. ~
471.59, subd. 3.
CODtKt the
Department of
AdmiaistratioD at
196-2600 for
iaformatioD OD the
CPV program.
A.G.op. 1007,
March 22, 1971
GrirNold V. COlUfty
ofRiJlrUey, 242
MIDIL 519, 65
N.W.2d647 (1954)
2
The dollar amount of the contract. If the contract is estimated
to exceed $25,000, the amount would be sufficient to trigger the
competitive bidding requirements if the type of contract is one that
is included under the definition of "contract" in the competitive
bidding law.
If the contract is estimated to exceed $10,000 but not to exceed
$25,000, competitive bidding is allowed but not required. The city has
the option of either using the competitive bidding process OR making the
contract by direct negotiation. However, if the city chooses to use the
competitive bidding process, it must follow through with the procedure
even though it was not originally required. See the discussion under the
Exceptions section for the procedure that must be followed if the contract
is made by direct negotiation.
.
.-
Government entities may jointly contract to undertake projects
and purchase services. It is sufficient if the bid requirements of one unit
are met. An example of this is the State's Cooperative Purchasing
Venture (CPV) Program. Cities that participate in this program are
allowed to purchase equipment under state contracts at prices that the
state has already competitively bid.
The Attorney General has ruled that the competitive bidding
requirement is applied to the total amount of the joint contract, not to the
individual participant's share. Thus, if the total amount of the contract is
above $25,000 and is the type of contract that is subject to the
competitive bidding statute, sealed bids must be sought even if the city's
share is less than that amount.
As stated previously, the definition of "contract" does not include
all contracts. If there are no statutes or charter requirements that require
competitive bidding, it is not necessary that a city advertise for bids.
However, it should also be noted that the Minnesota Supreme Court has
held that once a county board had chosen to use the competitive bidding
method, it was required to follow through with that process even though
there was no statute requiring competitive bidding.
The law makes no distinction between contracts on the basis of
the funds from which payments are made. Thus, a contract that is
payable from the municipal liquor store fund must use the competitive
bidding process if the dollar amount is expected to exceed, $25,000.
.
.
League of Minnesota Cities
.
.'
.
HublHuri
Broadctzsting v.
Metropoiihur SpOTtS
Commission. 381
N. W.2d 84% (MinD.
1986)
Minn. Stat. ~
471.345. subd. 4
Minn. Stat. ~
471.345. subd. 5
MinD. Stat. g
471..345. subd. 10
MiDD. Stat. g
471.345. subd. 11
MinD. Stat. ~
471..345. subd. 13
Minn. Stat. ~
471.36
MinD. Stat. ~
471.64 and MinD.
Stat. ~ ~5.035;
A.G. Op. S9-A-lS,
Mar. 30, 1965
Minn. Stat. ~
471.345. subd. 1
and A.G. Op. 707a-
15. Sept. 14, 1987
B. Exceptions to competitive bidding
The following are some of the more common exceptions to the
competitive bidding requirements:
.
An agreement that does not meet the definition of a "contracf'
under the competitive bidding law. For example, an agreement
with a company to supply a special scoreboard system and sell or
lease advertising space on it was exempt from the competitive
bidding requirements because it was found not to be a contract for
"materials, supplies, or equipment";
.
Contracts that are estimated to be more than $10,000 and not more
than $25,000. The city may make the contract using the
competitive bidding process OR by direct negotiation. lfthe
latter method is used, the council must seek at least two quotations
and keep them on file for at least one year,
Contracts estimated to be $10,000 or less. The city has the choice
of making the contract upon quotation or in the open market. If
the city makes the contract upon quotations, the city must obtain
at least two quotations and keep them on file for at least one year
after their receipt;
Certain hospital purchases made through a shared service
purchasing agreement;
Fuel contracts for generation of municipal power;
+
+
+
.
Guaranteed energy savings contracts;
.
Noncompetitive supplies and equipment;
.
Intergovernmental contracts for the sale, lease, or purchase of real
or personal property between federal, state, or political
subdivisions;
.
The purchase or sale of real property;
Competitive Bidding Requirements in Cities
3
KroImlHrg v. Ptm,
187 MIDIL 73, 244
N.W. 329 (1932);
SdIwtuuil
SIuriIluioll V. C"q of
PayrresvilU, 423
N.W.2d 59 (MinD..
App. 1988); A.G.
Op. 707 A. Feb. S.
1999
MiDD.. Stat. ~
4-71.6161;
Abo He sectioa
eat:ltIed Reqrum
fo,. p,."posllis
Layn~ Mbrtr. Co. V.
TOIllII of Stuntz. 257
N.W.2d 295 (Mian.
1977)
VUlage of Excelsio,.
Yo F. W. PeJU'Ce
Corp.. 303 MinD..
llS. 226 N.W.2d
316 (1975)
53 A.L.R old 498;
A.G. Op. April 29,
195Z
4
.
Professional services, such as those provided by doctors,
engineers, lawyers, architects, accountants; and other services
requiring technical, scientific, or professional training such as
refuse hauling;
.-.
.
Group insurance for 25 or more employees. This type of insurance
must be solicited through requests for proposals. The request for
proposal must be in writing and must include the coverage to be
provided, the criteria for evaluation of carrier proposals, and the
aggregate claims records for the appropriate period. The request
for proposal must be published in a newspaper or trade journal for
at least 21 days before the final day for submitting proposals;
.
Contracts made under emergency circumstances. However, if the
facts of the situation do not support that a true emergency exists,
such a contract would likely be void;
A cooperative agreement to construct a project with the state or
with another political subdivision of the state or when the other
unit does the construction. This applies only where there is an
agreement prior to the initial advertising for bids on the project.
.
.
C. Common problems in applying the statute
1. Splitting contracts
Generally, competitive bidding requirements may not be avoided
by splitting a contract into several smaller contracts, each of which is less
than $25,000. A court will probably find a contract to be void if it is split
for the purpose of avoiding the competitive bidding process.
However, if materials or work should be split into two separate
contracts because they involve separate transactions, it may be more
acceptable. An example 9f this type of situation might be one where the
services of different specialty contractors are necessary to complete a
particular project. In such a case, there would appear to be no reason why
the work or material may not be contracted without advertising for bids if
each of the contracts does not exceed $25,000.
League of Minnesota Cities
.'
.
Another example might be two separate contracts for different
sidewalk improvements, each involving less than the competitive bid
minimum. In this type of situation, it would appear that the contracts
could be let without advertising if the two contracts involve separate
improvements on two different streets. However, it will usually be more
advantageous to combine like improvements in a single contract and this
will probably result in the total contract amount being large enough to
require advertising.
Similar considerations apply in determining whether it is possible
to purchase materials and contract for labor separately. The Minnesota
Supreme Court has not consid~red this question. Whether facts support
splitting a contract in a given situation must be determined on a case-by-
case basis.
. A.G. Ope 107A-15,
Jan. 29, 1962
2. Used equipment and trade-in values
Bids must be solicited if the cost is estimated to exceed $25,000,
even when used items are being purchased. The statutes do not
distinguish between new and used equipment or materials.
If the city will be trading in old equipment when purchasing
replacement equipment, the trade-in value should not be subtracted from
the contract price for the purpose of avoiding the competitive bidding
requirement. In short, the contract price will be the total cash value of the
new item, not the total that is paid after the trade-in is made.
3. Sales tax and the dollar amounts
.
Cities should probably include the cost of sales ta.."( when
estimating the amount of a construction contract. This will result in a
closer estimate of the total cost ofa construction project. Sales taxes on
materials, as well as withholdings for the contractor's workers, will be
included by the bidder in the total amount for a construction contract.
Although it is unclear whether the sales tax should also be
included when estimating the cost of a contract to purchase equipment,
cities may wish to include this amount. For example, suppose the city is
going to purchase office equipment priced at $24,900 without sales tax
and the city opts not to use the competitive bidding process because the
amount is under $25,000. However, the addition of the sales tax brings
the amount to more than $25,000. It is certainly possible that someone
could argue that the contract should have been let using the competitive
bidding process.
.
Competitive Bidding Requirements in Cities
5
4. Bids sent by facsimile .--
Mhm. Sbt. 3 It would appear that cities cannot accept a bid sent to them via a
47L34!. 5Ubd. 3 facsimile machine. According to the competitive bidding statute, bids
must be "sealed." It would also be impossible to submit a negotiable bid
bond or check in this manner.
5. Pre-qualification of bidders
The authority of cities to require bidders to pre-qualiry before
allowing them to bid on a contract is unclear. Requiring bidders to meet
certain minimum qualifications in advance would appear to be for the
". purpose of eliminating unresponsible bidders and reducing the total
number of bids that the city will need to consider. It also may give
potential bidders an idea of the criteria that the council will use to
determine the responsibility of the bids.
Although it is arguable that a pre-qualification requirement is
within a city's powers, it is not possible to cite any direct authority for
such a practice at this time. However, decisions in cases from other states
suggest that pre-bid criteria are permissible when established under a
state policy. Cities may want to have their city attorneys consider any
pre-qualification criteria that are being considered for bidders.
6. Requests for proposals (RFP's) .
See oudiDe or lID The competitive bidding statute does not provide for an alternative
RFP purchasing procedure such as a "request for proposal" (RFP.) Ifa
contract is required to be let through competitive bidding, cities may not
accept RFP's instead of sealed bids. However, RFP's are commonly used
for contracts that are not required to be competitively bid (such as
professional services.)
An RFP broadly defines the scope of the contract and asks
interested persons for proposals that specifically define the services that
will be offered and the amount that they will cost. To contrast, a sealed
bid is basically a bidded dollar amount for a specific contract defined by
the city.
MinD. SCat. 3 Group insurance for 25 or more employees must be solicited
471.6161 through requests for proposals. This RFP must be in writing and must
include the coverage to be provided, the criteria for evaluation of carrier
proposals, and the aggregate claims records for the appropriate period. It
must be published in a newspaper or trade journal for at least 21 days
before the final day for submitting proposals.
.
6 League of Minnesota Cities
..
.
.
.
Coller v. C"JJy of SL
Paul. m MinD.
376. 26 N. W.2d 835
(1947); A.G. Op.
memo to pubUc
officials Feb. n.
1974.
Davies v. Village of
MadeJia. 205 MinD.
526. 287 N.W. 1
(1939)
Minn. Stat. ~
471.35: Otter. Tail
Power Co. v.
rrdJage of Elbow
Lake. 234 MinD.
419. ~9 N.W.2d 197
(1965)
Otur Tail Power
Co. v. Village of
Elbow Lake. :!34
Minn. ~19. ~9
N.W.2d 191 (1965);
Otter Tail Power
Co. v. MacKichan.
270 MinD. 262. 133
N.W.2d 511 (1965);
A.G. Op. 101a-l2.
May 23.1962.
See discussion
under section
entitled C"JJy
contrtU:tS in
relation to federal
lUIli-ll'USt laws.
ID. Procedure
A. Preparation of specifications
Before seeking bids, the city must prepare plans and
specifications. The specifications should provide bidders a basis on
which to bid that attracts as many bidders as possible and treats all of
them fairly. Cities should keep the following two general rules in mind
when preparing specifications:
The specifications must be sufficiently definite so as to give
prospective bidders a "reasonable basis" on which to bid.
Whether or not a set of specificatIons is sufficiently definite must
be determined on a case-by-case basis.
The specifications may not be drawn in such a way as to exclude
all but one type or kind of equipment. The specifications must
permit free and unrestricted bidding. However, this does not
mean that the specifications must be drawn to include every
possible bidder.
The courts have recognized that some items are not capable of
precise specifications. While the city will be allowed some latimde in
specifying features of a complicated piece of equipment, it must have a
clear reason for restrictive specifications. Where reasons for such
restrictions cannot be shown, they are considered to stifle competition and
will not be upheld.
.
.
With some contracts, cities may want to have a vendor assist in
drafting the specifications. However, in these situations, cities should
seek some sort of an agreement from these individuals not to bid on the
project for which they have drawn the specifications. Otherwise, the
consultant may have an unfair advantage when bidding on the contract
because of his or her work in creating the specifications.
The competitive bidding statute does not provide for an alternative
purchasing procedure such as a "request for proposal." However, in
situations where drawing specifications very tightly would have the effect
of unreasonably limiting competition, the city may draw the
specifications so as to include a variety of more or less comparable
equipment to give it a basis for later evaluating the resulting bids on the
basis of overall value.
Competitive Bidding Requirements in Cities
7
A.G.
Memorudum to
public ofDcia1s.
Feb. n, 1914
See sample
adYertisemat
Ryan v. C1J:y of
CooII Riq1U1.f. 461
N.W.1d 410 (MIDa.
App. 1990)
8
If this kind of procedure is used, it seems a good idea to include a
statement to that effect within the specifications. This will tell bidders
how the bids will be evaluated and what factors will be considered in
addition to price. In this type of situation, the specifications should spell
out the minimwn functions the equipment will have to perform in order to
be acceptable.
Finally, the Attorney General has suggested that cities should take
great care in specifying the contractual obligations of both parties in the
bid invitations. These factors may include things such as the city's right
to reject all bids, what the city views as the most important award factors,
the where and when of delivery, any necessary patent protection, and
liquidated damages provisions. Also included may be required
maintenance and services, the specifics of acceptance, whether the city is
purchasing on a unit or lot basis and the reasons why the plans and
specifications are restrictive (if they are). Additional elements may
include the period of time for which the vendor's bid is to be firm,
escalation clauses, and any special conditions relating specifically to the
items to be purchased. These factors should be dealt with clearly in the
bid invitation. Spelling out the terms and conditions will give both cities
and bidders a fuller understanding of their rights and responsibilities. It
can also help to minimize controversies and inefficiencies in the
performance of the contract. .
B. Advertising and publication requirements
1. The published notice should contain the following
information:
.--
.
.
A description of the project or purchase being sought;
. The availability of specifications in the office of the city clerk;
. Requirements for bids (such as sealed bids, security to accompany
bid);
. Where the bid must be submitted;
. The deadline for submitting the bid;
+ The time and place of the bid opening;
. The officers who will be present for the opening; and
+
A statement reserving the right of the city to reject all bids.
League of Minnesota Cities
.
.
Mbm. Stat. I
4u.311
Mbm. Stat. I
410.33
Miun. Stat.1
429.031. suM. 1
Miun. Stat. t
429.041. suM. 1
.
Mbm. Stat. I
429.041. subd.l
MimL Stat. I
429.041. subd. 1
.
2. Time
a. Contracts in general
In statutory cities, bids must be solicited by notice published
once in the official newspaper at least 10 days before the last day for
submission of bids.
Home rule charter cities should consult their charters for any
special advertisement requirements. If the charter is silent with regard
to this matter, a city may utilize the requirement for statutory cities of
advertising at least-IO days before the last day for submitting bids.
b. Contracts made under the local improvement
statutes
If a city is making a contract under the local improvement and
special assessment statutes, there are special public notice and hearing
requirements. Since these requirements must be met prior to awarding
the contract. they are not addressed in this document. However, there
are two possible advertisement requirements when seeking bids for this
type of contract. Regardless of which possibility is used, the
advertisement must specify the work to be done, and state the time
when the bids will be publicly opened for consideration by the council.
The advertisement must require that the bids be sealed and filed with the
clerk and must be accompanied by a cashier's check. bid bond, or
certified check made payable to the clerk.
The two possible advertisement requirements are:
.
Bids for a local imt)rovement contract that is estimated to
exceed 525.000. In this case, the city must advertise for bids in
the official newspaper and other papers for the length of time
that the council may deem advisable. The first publication must
be at least 10 days before the bids are publicly opened. If the
contract is less than $25,000, competitive bidding is not
required. However, if competitive bidding is used, the
advertisement procedure should follow the same standards.
Bids for imt)rovement contracts estimated to exceed
5100.000. In this case, the publication must be made at least
three weeks before the last day to submit bids. The
advertisement must be published at least once in the official
newspaper and at least once in either a trade paper or a
newspaper that is published in a first class city.
.
Competitive Bidding Requirements in Cities
9
These procedures are the minimum requirements and may be ..
added to in particular cases. A longer period of advertising can increase
the number of bidders and improve the chances of better contract terms.
Consequently, the council may wish to advertise in magazines,
newspapers and trade journals having a special group of readers who
could supply needed articl,es or construction work. For example, the
Construction Bulletin is widely used as ajournal for publishing
advertisements for city construction projects. In addition, the city may
want to mail an invitation or personally contact those contractors it thinks
might be interested in submitting a bid.
c. Opening and tabulation of bids
Bids must be kept unopened by the clerk until after the closing
time for receiving them. At the time set by the council in the
advertisement, the bids should be opened publicly in the presence of the
officials named in the bid notice. All bids should be opened and tabulated
at a public meeting whether this is done by the councilor in advance of
the council meeting by designated officials.
Generally, bids should be opened prior to the meeting at which the
council will consider them, preferably the same day. This enables the
engineer or clerk to tabulate each bid in advance, which will reduce the .
time spent on the matter during the council meeting.
D. Investigation of bids
After all bids have been opened, the council should investigate the
bids. Information should be obtained to help the council evaluate each of
the bidders. The investigation may be carried out by the city engineer,
purchasing agent, clerk, or other designated person. The following
elements are usually considered:
+ Compliance with specifications;
+ Reasonableness, including how the bids compare to the prior
estimate of cost, if any;
+ The responsibility of the bid and the probability of the bidder's
adequateperfonnance;and
+ Any other conditions that may be important.
10
League of Minnesota Cities
.
.
.
.
MInD.Stat.~
41:%.311; MinD.
Stat. ~ 429.041,
Collu v. c-uy of SL
PlUll. m Minn.
376, 2li N. W.2d 835
(1947) Foley Bras.
v. ManhaL. 266
Minn. 259, 123
N.W.2d 381 (1963)
StaU v. Snively, 115
MinD. 319, 221
N.W. 535 (1928);
IV!lJJng v. EdwtU'ds,
116 MinD. *, 134
N.W.221 (1912)
Nielson v. City of
SL Paul. 252 MinD.
12,88 N.W.2d 853
(1958)
Otter Tail Power
Co. v. Village of
Elbow Lake, 234
Minn. 419. 49
N.W.2d 197 (1951)
Otter Tail Power
Co. v. VWage of
WhealQn, 235
Minn. 123, 49
N.W.2d 804 (1951)
A.G. Ope 707-A-15,
Oct. 25. 1966
Otter Tail Power
Co. v. Vdlage of
Elbow 1..a/ce, 234
MinD. 419, 49
N.W.2d 191 (1951);
Laldnen v. P:u:eJj,
262 MinD. 461, 115
N.W.2d 346 (1962)
Contracts are usually awarded to the "lowest responsible bidder."
In determining who is the lowest responsible bidder, the courts have said
that the council has reasonable discretion. The phrase "lowest
responsible bidder" does not mean the lowest bidder, but the bidder who
is most likely to do faithful, conscientious work and promptly fulfill the
contract according to its letter and spirit:
The successful bidder must be considered "responsible" to
perform the proposed contact. "Responsibility" includes such things as
the bidder's financial responsibility, integrity, ability, skill and likelihood
of providing faithful and satisfactory performance.
In determining the lowest responsible bid, the council may take
into consideration not only the lowest price offered. but also the actual
capability of a given vendor to perform the proposed contract and
whether the bidder has adequately met the terms and conditions of the bid
invitation.
The council has somewhat more latitude in purchasing items of
equipment not capable of exact specifications. In making such a
purchase, a council may exercise reasonable discretion in determining the
lowest responsible bidder. In addition to the bid price, it may consider
the quality, suitability and adaptability of the article.
In some situations, the council may decide what weight is to be
given to various factors and accept what it deems to be the lowest
responsible bid. Such a situation occurred when plans and specifications
for the construction of a power plant demanded the consideration of
several factors and no single bid was the lowest in all the factors. The
court agreed that the city council could use its discretion to determine
which elements were the most important and said that such a contract will
not be set aside by the court unless there is an abuse of discretion.
In awarding a contract for the purchase of an item, such as a
police car, a council may consider the proximity of repair and service
facilities in addition to the price.
In extreme situations, time and certainty of delivery may be
grounds for not choosing the lowest monetary bidder. However, if
awarding a contract on a basis other than the lowest bid, the city must be
able to justify its decision.
Competitive Bidding Requirements in Cities
II
E. Disposition of bids .
A.G. Ope 707-a-l, After investigation, the council may either accept one of the bids
Mar. 28. 1955 or reject all of them. If there are no bids, the council must re-advertise.
Generally, a lack of response from bidders does not eliminate the
requirement to use the competitive bidding process. Cities that find
themselves in this type of situation may reach more potential bidders by
revising the bid specifications, or re-advertising in publications with a
larger circulation.
MInD. Stat. ~ On a project under the local improvement and special assessment
429.041. subd. 2 statutes, if there are no bidders or if the only bids exceed the engineer's
.. estimate, the council may choose to do the work by day labor.
IV. Award of bid
A. Conformity to plans and specifications
SlltIOn v. City of SL. The successful bid must conform to the bid specitications. Unless
Paw. 234 Minn. the bid responds to the specifications in all material respects, it is not a
263. ~ N.W.2d 436
(1951) bid but a new proposition and therefore should be rejected.
CollO' v. ClJy of SL. A bidder who has deviated from the specifications may still be
PtUIl, m MinD. awarded the contract if the deviation is not a material variance. The city
376,26 N.W.2d 835 .
(1947); A.G. Ope must determine if the deviation is a material variance from the bid
980-B. June 2. invitation. The general rule that determines if a variance is material is if
19S0; Duffy v.
Vl11age of it gives a bidder a substantial advantage or benefit not enjoyed by other
Princeton. 240 bidders. However, whether or not a material variance exists is a fact
Minn. 9. 60
N.W.2d 27 (1953) question that must be dealt with on a case-by-case basis. The following
were found to be examples of material variances:
Dl4mOnd v. C"lty of . A difference in the contract's payment date that was four months
Manklllo. 89 MinD. earlier than the date in the specifications.
48, 93 N.W. 911
(1903)
Olller v. ClJy of SL . A stipulation that the equipment sold to the city be installed
PtUIl, m MinD. according to the company's specifications instead of those of the
376,26 N.W.2d 835
(1947) city, and failure of the bidder to agree to pay for a city inspector
during the six-month trial period as called for in the specifications.
lATounleau v. . Modification to allow a bidder earlier payment and a change of
Hugo. 90 MinD. specifications to relieve the bidder from completion penalties if
420,97 N.W. 115
(1903) the delayed performance was due to circumstances beyond the
bidder's control.
A.G. Ope 701-8-7, . Bidder's deviation by adding a 10 percent escalation clause.
May 21, 1946
League of Minnesota Cities .
12
.
.
.
A.G. Op. 707-A-4,
Jue 4, 1947
....
Foley Bros. lnc. v.
ManhaJI.266
MiaD. 259, 123
N.W.2d 511 (1965)
A.G. Op. 707-A-3,
May 6,1953-'
Nielsen v. City of
SL Ptud. 2S2 Mian.
12, 88 N.W.2d 853
(1958)
Griswold v. Ramsey
County, 242 MinD.
519,65 N.W.2d 647
(1954); A.G. Op.
161-A-8. Jan. 5,
1965
Tunney v. CJJy of
Hasting1.111
MiaD. 212, 141
N.W. 168 (1913)
2 A.L.R.. 4th 991
51 A.L.R. 2d m
aDd 2 A.L.R.. 4th
991.
Submission of single bid for an entire contract when the
specifications asked for separate bids for the contract's four parts.
On the other hand, minor irregularities and deviations are
generally not viewed as material variations. This is especially true of
technical irregularities where requirements are intended for the benefit of
the city and do not injure other bidders. The following examples were
NOT material deviations:
+
+
Failure to submit a required non-collusion affidavit on a specified
form when a similar non-collusion certificate was submitted
instead.
.
Submission of a personal check instead of the required certified
check as bid security.
Failure to describe bidder status properly; failure to have a bid
bond notarized; neglect in sealing bid; a few minutes' delay in
submitting the bid.
.
B. Changes and mistakes in bids
Sometimes contractors will discover that their bids contain a
mistake after bids have been opened. Generally, a bidder should not be
allowed to substantially alter his or her bid after the bid opening since this
would give the bidder a substantial advantage over other bidders. If the
bidder is the low bidder because of the mistake and the bid has been
accepted before the mistake is discovered, the city may not award the
contract for the corrected amount. This is unfair to the other bidders if
the corrected bid is no longer the lowest bid. However, if the council
chooses to reject all bids and advertise again, a bidder may submit a new,
corrected bid (not knowing, of course, whether or not his or her new bid
will be low the second time.)
In general, a bidder will be relieved of the obligation to enter into
a contract because of a unilateral mistake if ALL of the following apply:
+ The mistake is so substantial that it is unreasonable to suppose the
contractor would have submitted the bid;
+ The mistake was not the product of the bidder's gross negligence;
. The contractor gives prompt notice of the error to the city;
+
The city has not changed its position in reliance on the bid and has
suffered no damage other than the loss resulting from the bid
mistake.
Competitive Bidding Requirements in Cities
13
59 A.L.R. 809
Sf. NlduJIa
C1uudt v. Kropp,
13! MUm. US, 160
N.W. 500 (1916)
TIIIIlIq v. CiJy of
HIISting$, 121
'" MinD. 212, 141
N.W. 168 (1913)
MilUl.Stat.!
574.21
14
The contractor must sufficiently identifY the error to permit the
city to determine that the contractor is entitled to relief. The contractor is
given relief when the error is obvious to the city when the bid is read.
Courts have granted relief whether the mistake was mutual or unilateral.
A contract may be rescinded for a unilateral mistake. The mistake
, may stem from a clerical error, such as transposing numerals; from
forgetting to include the amount for performing a segment of the work; or
from a math error. A court found that the omission of the structural steel
to be used in church construction was such a mistake.
.
The mistake may also stem from an error of judgment concerning
the nature of difficulties of the work, the quality of materials required, or
other judgmental factors. Such a situation occurred where a contractor
mistakenly figured on earth excavation when a large part of the
excavation was known to be through solid rock.
Lawsuits involving mistakes in bids may arise either in actions by
the city against the contractor or bid bond surety, or both. The city may
ask for the amount of the bond, or the difference betvleen the low bid and
the second low bid. A contractor may also sue for the return of the bid
bond. The city may relieve a mistaken bidder of the consequences of his
mistake. However, even if the corrected bid would still be low, it is
doubtful that the city may award the contract on the basis of the corrected .
bid.
When a mistaken bid is superseded or abandoned by the parties,
the bidder is entitled to a return of the deposit or cancellation of the .
security.
When a low bidder refuses to sign a contract because of a material
mistake in the bid, the city must decide whether to accept the second low
bid or to reject all bids and re-advertise. The city should also consider the
time and expenses involved in the second bidding, as well as the
possibility of higher bids on the second attempt. The delay may result in
higher costs and less competition. The delay can also result in less
favorable weather dllI"iTIg construction. Generally, it is expensive for
contractors to submit bids. Some contractors, having once bid ajob and
disclosed their price, may refuse to bid again.
League of Minnesota Cities
.
.
MbuLStat.~
514.rr
MinD. Stat. ~
429.041, subd. 1
Minn. Stat. ~
514.1.1
..
Minn. Stat. ~
514.1.6
MinD.Stat.~
514.1.9
.
v. Contract
A. Bonds
1. Bid bonds
Cities may require that bidders submit a bid bond with their bids.
Generally, a bid bond ensures that the city does not waste its time with a
frivolous bid. It guarantees that the bidder will enter into a contract with
the bid that was submitted, and provide the required bonds and insurance.
There is no statutory requirement that bidders must submit a bid
bond on contracts in general. Eowever, bidders on projects that are made
under the local improvement and special assessment statutes must submit
a cash deposit, cashier's check, bid bond, or certified check, payable to
the clerk for such percentage of the amount of the bid as the council
specifies. Some home rule charters may also contain provisions that
require bidders to submit bid bonds.
If a city requires bidders to submit bid bonds. it is responsible for
returning the bid bonds to the bidders whose bids were not accepted. The
city must also return the bid bond to the winning bidder after he or she
has entered into the contract and provides the acceptable security.
2. Performance and payment bonds
No contract for a public work is valid until the contractor gives
both a performance and a payment bond to the city. However, this
applies only if the contract is over $10,000. The bond amounts must each
be in at least the amount of the contract. The performance bond is to
guarantee that the contractor will complete the contract according to the
terms and conditions and to protect the city from all costs and charges
that may accrue on account of completing the work. The payment bond is
to ensure that all workers, subcontractors and persons furnishing
materials are paid.
If a city fails to get a payment bond from a contractor, it can be
held liable for losses to any workers, subcontractors and persons who
furnish materials if the contractor doesn't pay them. The city should
make sure that all subcontractors and material suppliers have been paid
by the contractor before making final payment to a contractor.
Although neither a payment bond nor a performance bond is
required for contracts that are less than SI0,000, cities may want to
require these bonds for all contracts. Some home rule charters may .
contain more extensive requirements for these types of bonds.
Competitive Bidding Requirements in Cities
IS
MiDD. Stat. ~
176.18%
MiDILStat.~
290.97
MiDILStat.~
16B.06.subd. 4
MlDILStat.~
471.425. subd. 4a
16
B. Miscellaneous considerations when contracting
This section is intended to give a brief listing of some of the more
important requirements to consider when making contracts. It is not
intended as an exhaustive list and a city should have its city attorney
review any contract prior to entering it.
1. Workers' compensation
A city may not enter a contract for any public work until it has
received from all other contracting parties proof of compliance with the
workers' compensation insurance requirements. This means that the
contractors must show that they are self-insured, carry workers'
compensation insurance for their employees, or are exempt from having
to provide such insurance.
2.. Income tax withholding
Cities may not make final payment to a contractor until the
contractor has sho\vTI proof of compliance with the state income ta'(
withholding requirements. The Department of Revenue requires all
contractors and subcontractors to file a Form IC-l34 to show compliance
with the withholding requirements. This certificate is the contractor's
proof of compliance. A city should request a copy of this document from
contractors before making the final payment on a contract.
.....
.
3. Audit clauses
.
A contract must include an audit clause that provides that the
books, records, documents and accounting procedures and practices of the
contractor (with regard to the contract) are subject to examination by the
city, and either the legislative auditor or the state auditor.
4. Prompt payment of subcontractors
A city contract must require the following of a prime contractor:
.
The prime contractor must pay subcontractors for undisputed
services within 10 days of the prime contractor's receipt of
payment from the municipality;
The prime contractor must pay interest of 1-1/2 percent to the
subcontractor if the payment is late;
The minimum monthly interest penalty payment for an unpaid
balance of$100 or more is $10.
.
.
league of Minnesora Cities
...
.
Coatact the League
of Miancsota Cities
Insuraace Tnut
for sample
language and other
IIIformadoa.
Mlaa. Stat. ~
337.02.
Milia. Stat. ~~
177Al -.44
.
NewMecJr Co. It.
Ind~p. School DisI.
No. 206, 540
N.W.2d 801 (MinD.
1995)
..
5. Language to hold harmless, defel:'d and indemnify
Cities should include language in their contracts so that the
contractor agrees to hold the city harmless, and also defend and
indemnify the city for all claims arising from the contract by a third party.
However, there are some statutory limits as to the use of such language.
For example, indemnification agreements are unenforceable in
construction contracts except for negligence. Again, cities should have
their city attorney review such contract language prior to entering the
contract.
In addition to the above language, a city should have the
contractor name the city as an 'additional insured under the contractor's
insurance policy. The city should require that the contractor provide a
copy of this endorsement as well as any appropriate certificates of
insurance.
6. Prevailing wages
a. Little Davis Bacon (Minnesota)
The wages of laborers, workers and mechanics on projects
financed in whole or in part by state funds should be comparable to wages
paid for similar work in the community as a whole.
There is no clear definition of what constitutes "state funds" for
the purpose of this requirement. Certainly the definition would include
any specific state grants that a city might get for a particular project. It
also may include such things as local government aid and other state aids.
Some have claimed that money that has been kept in the same fund with
any of these types of aids would qualify as state funds since it has
commingled with such funds.
However, the Minnesota Supreme Court found that Debt Service
Equalization Aid (DSEA) and Homestead and Agricultural Credit Aid
(HACA) did not trigger the prevailing wage requirements in a school
construction contract. The reasoning behind this decision was that these
aids lacked a direct relationship to the project. In short, use of these
government aids did NOT mean that the project had been financed by
state funds.
If a city has any doubts, it will probably want to be sure that at
least the prevailing wages are paid. Otherwise, a city may want to be
certain that only non-state funds, or money that has been kept separate
from anything that might be seen as state funds, are used to pay for the
project.
Competitive Bidding Requirements in Cities
17
40 U.5.C. ~ 276a
See Bailey,
MiUfagemenl of
Fadllty Design iUfd
COIfSt1'Ul:Ziorr.
ICMA MIS Rep.
Vol. 20. No. 6
(June 1988)
18
b. Davis Bacon Act (federal)
There is a similar federal prevailing wage requirement for all
public work contracts in which the United States or the District of
Columbia is a party. This requirement only applies when the contract
amount is above $2,000.
.o,
7. Equal employment~ human rights and Americans
with Disabilities Act (ADA) compliance
Some federal and state grants may contain requirements that
construction contracts include langu8.ge to ensure that contractors do not
discriminate with regard to age, race, sex. religion, nationality, and
disability. Regardless of whether such language is required, cities must
comply with nondiscrimination laws. A city may want to include
language in its contract to verity that it is contracting with a contractor
who is following appropriate non-discrimination practices.
C. Types of contracts
This section gives an overview of some of the different types of
contracts that have been considered by cities. It is not intended as an
exhaustive list. Cities should contact the League for additional
information on any of these types of contracts.
1. Design/bid/build contracts
The design/bidlbuild contract procedure is the most traditional
type that is used for building construction. With such a contract. the city"
contracts with an architect who designs the building. The architect's
drawings are then used as the specitications to advertise for bids on the
construction of the building. The winning bidder is contracted with to
build the building.
The strength of this type of contract is that it allows the city to
plan the entire building before the construction begins. It also allows for
some follow-up betwe~n the contractor and the architect.
The weakness of this type of contract is that disagreements can
arise between the city, the architect and the general contractor because of
competing interests. For example, the architect may not be aware of the
most current cost of materials and procedures, or the costs could change
significantly between the time that the building was designed and the time
the construction begins. This procedure is slow because the project must
be entirely planned out and bid before the construction costs can be fi.."{ed.
.
Lc:ague of Minnc:sota Cities
.
.
..
.
See Bailey,
Management of
Facility Design and
Constrru:tion.
ICMA MIS Rep.
VoL 20, No. 6
(JUDe 1988)
See J Olles.
DesignIBuiJd
Negotiaud Contract
CIdS RIsk of
Constnu:tion Cost
Overnurs for
MlUficjplll1tie:s.
Dllaois Mull. ReY.
(Apr. 1991)
See Bailey,
Manqement of
Facility Design and
Constnu:tion.
leMA MIS Rep.
VoL 20, No. 6
(Julie 1988)
2. Construction manager
In this type of contract, the city retains a construction manager
who is responsible for overseeing the contractor or advising the city if the
city is acting as the general contractor. Often, the city will take the
responsibility for purchasing the construction materials. This type of
contract once allowed Minnesota cities to save the cost of sales tax on
building materials. However, since cities are now subject to the sales tax,
this savings is no longer available.
The strengths of a construction manager contract are that the city
can avoid contractor mark-ups on the cost of materials and the city can
have additional supervision and feedback on the architectural design and
construction.
The weaknesses of a construction manager contract include the
possibility of higher administrative costs for the city and possible delays
because the responsibility for purchasing materials is not that of the
contractor. There also can be more opportunities for city, architect and
contractor disagreements.
3. Designfbuild
In a designlbuild contract, the city hires a firm whose architect
and contractor design and construct the building.
The strengths of the design/build contract are that the construction
and design costs are established early and the responsibility for the entire
project is with one firm, thus, the architect and the contractor work
together on the project. This type of procedure may also be faster
because the construction can begin while the final design is still being
finished.
The weaknesses of the designfbuild contract are that the project
may not be completely planned in advance, and the city may have less
access to and control over the architect. Additionally, there is often little
opportunity for outside checks and balances by other professionals
because the responsibility for the project rests with one organization.
Competitive Bidding Requirements in Cities
19
Mlaa. Stat. ~
465.71
.. MIDa. Stat. ~
.. 412.nl, subd. :%
MIDa.Stat.~
412.nl. subd.:%
Miaa. Stat. ~
410.33
2~
4. Lease-purchase agreements
Cities may lease real or personal property with an option to buy
under a lease-purchase agreement. For the purpose of the bid
requirements, the amount of the contract must include the total of all lease
payments for the entire term of the lease. The city must have the right to
terminate a lease-purchase agreement at the end of any fiscal year during
its term, and should be certain that any lease-purchase agreement contains
language that gives it this right.
5. Conditional sales contract
Statutory cities may purchase personal property under a
conditional sales contract. The purchase price must be paid within five
years. The seller is limited to the recovery of the property in the case of
nonpayment.
The city must publish a resolution stating its intent to enter into a
conditional sales contract for a purchase if the contract price exceeds
0.24177 percent of the market value of the city. The publication must
occur at least 10 days before the city makes the contract. If 10 percent of
the number of voters who voted in the last regular city election submit a
petition asking for an election, the city cannot enter into the contract until
the purchase is approved at an election.
Home rule charter cities may also use this statute to enter into a
conditional sales contract if their charters are silent on this matter.
e...
e--
6. Total-cost bidding
Traditional bidding on an item of equipment has focused
exclusively on the purchase price. This method has the advantage of
simplicity and in many cases is adequate to ensure the lowest overall cost.
In making some purchases of equipment, however, lowest
purchase price bidding may ignore other important elements of the cost.
To take account of these costs, some cities have used a method known as
total-cost bidding. Unaer this system, the city considers all of the costs of
purchasing, owning, operating and maintaining the equipment that it will
purchase. Specifications require vendors to bid not only the initial price
of the equipment, but also a number of minimum after-purchase costs for
a specific period, such as maintenance. The bid is generally backed by a
bond to insure performance by the vendor.
e
League of Minnesota Cities
.
.
.
Otter Tail Power
Co. v. VilJIlge of
Elbow lAke. Z34
MiDn. 419. 49
N.W.2d 197 (1951);
Otter Tail Power
Co. v. V'dlJJge of
WTrlltllon. 235
MiDa. 123. 49
N.W.2d 804 (1951)
A.G. Ope 707a-7,
Jan. 9, 1968.
A.G. Ope 707a-7,
Juae 12. 1967
see Totai-Cost
Bidding-A
RevolUlion in
Public ColllrtU:tS?,
S8 Iowa L. Rev, 1-
40, 1972
A.G. Ope 707-11-6.
Aug. 21, 1950
A.G. Ops. 707-8-7,
Aug. 9. 1946; Nov.
14, 1947; July 22.
1947; May 21,
1946; July 16, 1946
Total-cost bidding is not specifically authorized by statute in
Minnesota As such, arguments have been made thal: such bidding
violates competitive bidding requirements because it restricts
competition. The Minnesota Supreme Court has never passed upon the
validity of such bidding, although it has held that a council has reasonable
discretion in detenniniI).g who is the lowest responsible bidder.
The Attorney General has issued mixed opinions regarding total-
cost bidding. It was upheld in a situation where bidders were required to
include both a provision for a guaranteed minimum repurchase price and
for a guaranteed maximum repair cost. The reason behind this conclusion'
was that such specifications were reasonably designed to give all
contractors an equal opportunity to bid. In addition, the specifications
seemed to ensure that the taxpayers would get the best bargain for the
least money. In an earlier opinion, the Attorney General had disapproved
of a contract that used a form of total-cost bidding.
The view that total cost bidding can be valid under competitive
bidding statutes is spelled out in detail in an extensive law review article.
7. Cost-plus contracts
Cities may not make cost-plus contracts for construction work of
any kind. Cost-plus contracts are those in which the governing body
agrees to pay the contractor for all costs the contractor incurs on the
project plus some additional sum of money. In effect, there is no
competition on the cost oflabor or materials and no indication of how
much work is required or will be done. As a result, there is no basis for
comparing the bidders except on the percentage for overhead and profit.
The Attorney General has held that a bid on a cost-plus basis does not
meet the statutory provisions for competitive bidding.
An alternative to the cost-plus system in times of labor and
material shortages and possible rising prices is to use a so-called escalator
clause in advertising for bids. Under such a clause, contract prices go up
automatically with inflation according to a fixed formula prescribed in the
contract. The Attorney General has issued mixed opinions on the use of
escalator clauses.
Competitive Bidding Requirements in Cities
21
A.G. op. 107-A-15,
Oct. 8, 1945
MinD. Stat. ~
419.041,3ubd. 1
Also 3ee section
d1sclWing SpliJting
of contraas
Minn. Stat. ~
429.041, 3ubd. 7
V"tl1Qg~ of E:a:elsior
v. F. W. Pearce
Corp., 303 Minn.
118, 226 N.W.2d
316 (1975)
Car.sonv.Ci.tyof
lJ4wson. 119 MinD.
453,152 N.W. 842
(1915)
22
D. Changes in contracts after award
1. Adding on to contracts
When one constrUction job is the subject of competitive bidding
and a contract is let, another job may not be added to the contract at a
later time. This would give the contractor an unfair advantage since other
prospective contractors would have had no opportunity to bid on the
second job. However, cities may combine two or more improvements in
one advertisement and in one contract, if the contract is made under the
local improvement and special assessment statutes.
A change to add new work to a contract may not need to be
competitvely bid if the total added cost is less than $25,000. Because
contracts below $25,000 are not required to be competitively bid, it is
arguable that a contract for additional work would not be required to be
competitively bid if the amount is less than 525,000. However, cities
should exercise caution in this area.
...
A city council may authorize changes in a unit-price contract that
is made under the local improvement and special assessment statutes.
After the work on a unit-price contract has begun, the council may
authorize additional units of work at the same unit price, as long as the
total contract price does not increase by more than 25 percent. The city
may do this without re-advertising for bids.
In applying this provision, a court approved the addition to the
contract of one political subdivision of units of work to be done by
another political subdivision, as long as the 25 percent restriction was not
exceeded. The court found that the variable in the contract was the total
estimated number of units, and the constant was the unit price. Therefore,
no harm resulted from amending a factor that may change under many
different circumstances. The harm to protect against was an unreasonable
unit price, and that factor was not a proper subject of the contract
modification.
.
2. Changes in work
A city may have occasion to make alterations or require extra
work because of errors in plans, unforeseen conditions, or other valid
reasons. Construction contracts often contain language that authorizes
making these type of necessary changes. Such provisions may permit a
city to make some minor changes in the work, if the changes are ordered
in writing. However, cities should use caution when ordering changes in
work since this type of requirement has given rise to a considerable
amount of litigation.
League of Minnesora Cities
.
.
.
.
Budutum
PtlUllbing Co. v.
Regmtf oftM
Univ. ofMlnn.,11J8
MiDD. 328, 215
N.W.2d 479 (1974)
LJuuIstrom Constr.
Co. v. Dygm, 2!4
MinD. 224. 94
N.W.2d 5r! (19!9)
Sh4w v. F1nt
&zpdst C1uur:h, 44
MinD. 2Z, 46 N.W.
146 (1890)
'"
CarsOIl v. C"liy of
Dawson. 119 J~flnn.
453, 152 N.W. 842
(1915)
McCree and Co. v.
St.tzte. :zs3 Mlnn.
19!, 91 N.W.2d 713
(1958).
SUmtOIl v. Morris
Corutnu:tioll Co.,
159 MinD. 3lro, 199
N.W. 104 (1924)
-'=
Sometimes these provisions include a requirement that estimates
must accompany or precede the order. These are also valid. A provision
requiring written notice to the city of claims for extra cost is similar in
effect.
Such provisions are intended as a check upon the contractor and.,
being for the benefit of the city, may be insisted upon or waived as suits
the city's convenience.
When the contract with the principal contractor contains such a
notice provision, it binds both the principal contractor and any
subcontractors.
What constitutes "extras" has also been the subject of many cases.
For example, a city contract provided that the city had the right to make
alterations in extent, dimensions, form of plans or location of the work,
and also provided that no claims for extra labor or material were allowed
unless ordered in writing by the city. In this situation, the court found
these provisions to be independent. As a result, when changes were made
that increased the expense, the contractors could recover the value of the
necessary labor and material even though no written order had been
given. If the "extras" are needed because of errors in the specifications or
. unforeseen conditions, the contractor may have a right to recover because
of misrepresentation. In this type of situation, a \Vntten order would not
be necessary.
3. Different or changed conditions
Often a contractor finds that the conditions (such as underlying
soil, rock or water) are different from those in the specifications.
Sometimes the conditions have changed since the contract was let. These
are among the most common causes of disputes between a contractor and
a city.
If the specifications assume conditions different from the actual
conditions and as a result it costs more to perform the contract, the
contractor may recover damages sustained as a result of having relied on
the specifications.
If the discrepancy is discovered before performance begins, the
court may void the contract. A court found that a bidder on a highway
contract could recover losses from having relied on inaccurate
specifications, even though the specifications included a warning that
they could differ from the true conditions.
Competitive Bidding Requirements in Cities
23
SUa v. u""arrJ. 10
MilIa. 494, 10 GiL
448 (1874);
Fmdridc v. County
o/Redwood., 153
MilIa. 450, 190
N.W.SOl (1922)
MIDD. StaL ~
471.345, subd. 14
Kotchevar v. North
Fork TowlUirip,
Sieanu County,
U9 MinD. 234, 39
N.W.ld 107 (1949);
Buffalo
BlJumi"ollS, l"e. v.
Maple HiO EstaJes.
311 MinD. 468.150
N.W.ld 182 (1977)
Fargo FolUfdry Co.
Y. Jl'dlIIge 0/
C4i1owtzy. 148
MinD. 173, 181
N.W. S84 (1911)
24
On the other hand, where a contractor makes an absolute and
unqualified contract to perfonn a given undertaking, he or she assumes
the risks of performance. As a result, the contractor is liable for any
failure to perform the contract even though the cost may be much more
than contemplated. An extreme case occurred where a contractor had
mice built part of a building that fell down because of alleged quicksand.
The court said that no difficulty short of absolute impossibility would
excuse the contractor from doing what he expressly agreed to do.
Specifications and contracts that include a provision for making
adjustments for unknown difficulties may result in lower bids when there
is a possibility of such difficulties. Without such a provision, cities may
find that the bids will be higher because bidders have to anticipate the
possibility of bad site conditions.
E. Contracts let in violation of bid requirements
An unsuccessful bidder may challenge the validity of a contract in
court. lfthe contract was made without following the competitive
bidding requirements, the contract is void and the unsuccessful bidder
may be awarded the costs of preparing the unsuccessful bid.
When a contract is found to be void, it is no longer a legally
enforceable agreement. However, this does not mean that the supplier of
the goods or services has no remedy. Minnesota courts have held that
cities are liable to the seHer or contractor for the benefit received by the
city. The reasoning behind this conclusion is that it would be unfair for
the city to make use of the supplier's goods or services and not pay for
what it has received because of its violation of the competitive bidding
law. However, this is generally only the case if the contract was entered
into in good faith and was a contract that the city had the power to make.
Thus, a foundry company was permitted to recover the value of
the benefits received by the village under a contract to rebuild and repair
a water tower and steam heating system. The contract itself was
unenforceable because of the failure to a4vertise for bids. Recovery was
not permitted for the vaJue of the material and cost of labor. However,
the contractor did recover payment for the amount of benefit actually
received by the village.
This rule for recovery based on benefits received applies only
when the contract has been perfonned or partly performed. Before its
performance, the contract may be set aside or found void through a court
action. Once a contract is void, the city may not compel its performance.
.-
.
League of Minnesota Cities
.
.e
e
e.,
Ekdroffics
UnJbniJed. 1m:.. v.
JIllbIpol
BunrsvU14. 289
MluD.U8. 182
N.W.2d 679 (1971)
Siurbom v. Netd. 4
MhlII. 126. 4 GiL
183 (1860)
15 U.s.c. H 1-7
When an item to be purchased is capable of exact specifications,
the court may prevent the award where there is evidence that a low bidder
met the advertised specifications in all material respects. However,
because the council has reasonable discretion, a court will not require the
city to award a contract to a particular bidder.
Generally, a councilmember who makes a contract on behalf of
the city without advertising for bids would not be personally liable for
damages resulting from the illegal contract, if acting in good faith. Of
course, if the action is a deliberate evasion of the bid requirement, the
councilmember may be criminally liable since the cases that have
exempted councilmembers fro~ civil liability have been limited to
instances in which the official acted in good faith.
VI. City contracts in relation to federal anti-
trust legislation
A. GeneralIv
oJ
The federal anti-trust laws were passed to protect our economic
sys~em from the monopolization of businesses and the restraint of trade.
These laws have been found to apply to the practices of cities as well as
businesses. It is important that cities keep these laws in mind when
selling, purchasing or making contracts. The laws do not specify what
damages may be awarded in a successful lawsuit against a city. However,
a contract could be voided and a successful challenger could be awarded
attorney's fees.
B. The three most important anti-trust acts
The three most important anti-trust laws are the Sherman Act, the
Clayton Act and the Robinson-Patman Act. These three acts work in
conjunction with one another. A brief description of each act is given
separately.
1. The Sherman Act
The Sherman Act prohibits monopolies and attempts or
conspiracies to monopolize. Agreements between buyers not to buy from
a particular seller may be a violation of the Shennan Act. An agreement
among competing buyers to prevent competition in their purchasing or to
control prices may also violate this act.
Competitive Bidding Requirements in Cities
25
15 U.s.e. H 12. 13,
14-19,21.-27
15 U.s.e. H 13..
13b, aad 21a
C1ty of ColsunJJia v.
OIMi Outdoor
Advertising, Inc..
III S. Ct. 1344
(1991)
See dlscussioa
aader sectioa
hqfmztioll of
sp<<ijlctltiolU
26
2. The Clayton Act
The Clayton Act generally prohibits price discrimination and
certain mergers and acquisitions. It also prohibits the sale or lease of
goods conditioned upon a buyer's agreement not to use the goods of a
competitor. Such practices could result in substantially less competition
or tend to create a monopoly.
3. The Robinson-Patman Act
The Robinson-Patman Act was adopted to amend the price
discrimination part of the Clayton Act. It prohibits sellers from setting
unreasonably low prices for the purpose of driving out competitors. It
also prohibits sellers from charging different prices for the same item
based upon geographic location for the purpose of driving out
competitors. In addition, the law makes it a crime for buyers to
knowingly induce or receive an illegal discriminatory price.
e-
C. The application of these laws to cities
Decisions made by the United States Supreme Court have made it
clear that federal anti-trust laws can also apply to cities. As such, it is
important for cities to keep these laws in mind when contracting and
purchasing.
The state's immunity from the federal anti-trust laws does not
apply directly to local governments. However, a city may have immunity
if acting under a clearly expressed state policy.
e.
At a minimum city officials should add an anti-trust mindset, like
their current anti-discrimination mindset, to their mental checklist of
considerations before acting and even before speaking on city purchases
and contracts. They should resolve to only act openly through formal
meetings, and keep a well-documented record through minutes, formal
findings and resolutions setting out exactly what was done and why.
The following suggestions should be kept in mind when making a
contract to keep purchases and contracts free of anti-trust problems:
+ Use competitive bids or quotations even when the law does not
require it.
+
Avoid using vendor-furnished specifications that might
unnecessarily limit competitive bidding. When consultants
prepare bid specifications, they generally should not bid on the
requirements they have helped to create.
.
League ofMiMesota Cities
. Also see MlDo. .
Stat. ~ 471.87 aDd !
471.88
.
Also see MIDo. .
Stat. f 471.895
.
.
.
~. .'
Avoid purchasing from a vendor in which a councilmember or
other decision maker in the purchasing process ,has an interest.
(This is also prohibited under the state's conflict ofinterest laws.)
Avoid informal, unrecorded communica~ons with suppliers.
Do not accept gifts from suppliers. (This is prohibited by state
law.)
Be sure that when performance or bid bonds are required they are
either legally necessary or for the purpose of ensuring responsible
bidders. Such bond requirements can serve as a restriction on
bidders and may not be necessary to make purchases of standard
materials.
.
, Be wary of giving local vendors preference in public purchasing
when it limits competition. This does not mean cities must avoid
contracting with a local vendor when all other things are equal.
Likewise, if the bidder's location has an impact on the contract's
cost (such as for delivery charges or repairs), it may be an
important factor to consider when determining who is the lowest
responsible bidder.
Emphasize non-restrictive specifications that facilitate competitive
bidding.
.
Competitive Bidding Requirements in Cities
27
Sampl~ advertisement for bids
NOTICE TO BIDDERS
REPAIR OF WELL NO.4 PROJECT NO. 290
.
Sealed bids will be received and publicly opened by the City of Fridley, Anoka County,
Minnesota, at the office of the Public Works Director, 6431 University Ave. NE, Fridley
Minnesota 55432 (Tel. 612-572-3553) on Tuesday, the 16th of January 1996 at 11:00 A.M.
for the furnishing of work and materials for the Repair of Well No.4.
Plans and specifications may be examined at the office of the Public Works Director and
...90pies may be obtained for the contractor's individual use by applying to the Public Works
Director.
.. '
Bids must be made on the basis of cash payment for work and accompanied by a cash
deposit, certified check (on a responsible bank in the State ofl\tlinnesota) or a bidder's bond
made payable without conditions to the City of Fridley, MN, in an amount of not less than 5% of
the total amount of the bid.
The City Council reserves the right to reject any and all bids and to waive any bids received
without explanation. No bid may be withdrawn for a period of thirty (30) days.
By the order of the City Council of the City of Fridley, Minnesota
.
SAI\1PLE FORJ."\1 FOR ADVERTISING FOR PURCHASES
To Whom it May Concern:
The Council of the City of
0' clock _ M., on
materials, equipment, etc.):
The specifications are on file in the City Clerk's office. A copy of the specifications will be
furnished to any prospective bidder upon a deposit of _ dollars to guarantee their safe return.
Bids must be made on the basis of cash payment for the property. All bids must be accompanied
by a cash deposit, bid bond, certified bank letter of credit, or certified check made payable to the
city for at least _ percent of the bid amount. Bids must be directed to the City Clerk and
must be securely sealed with a.statement on the outside wrapper describing the item for which
the bid is being submitted. Bids will be opened and considered by the City Council at_
o'clock M. in the council chambers on , 19 . The City Council reserves the
- -
right to reject all bids.
will receive bids at the office of the City Clerk until
19 _ for the purchase of the fo llowing (merchandise,
,19_.
Published in
on
Clerk
28
League of Minnesota Cities
.
:.
.
.
Outline of a Request for Proposal (RFP)
I.
Introduction
The city of
in providing
is seeking proposals from qualified firms interested
services to'the city.
u.
Scope of services
(This section can contain a detailed description of the
service that is being sought.)
" UL
Instructions to proposers
-.
Proposals must be in writing and must be received by _ _.M. on ~ 19_. All
proposals, questions and correspondence should be directed to: (paIne of city staff and address of
office.) In order to ensure a fair review and selection process, firms submitting proposals are
prohibited from contacting any other city staff or councilmembers regarding these proposals.
IV. Statement of content ofRFP
A. Title page (name, address, phone, contact person, date)
B. Table of contents
C. Statement of the proposal (work, timetable, availability)
D. Consultant' sJfirm.' s profilelhistory/experience (client references)
E. Fees and method of payment
V. Proposal evaluations
(This section can outline the criteria that the council
will use to evaluate the proposals.)
VI. Agreement terms
(This section can outline the negotiation procedures, any
ethics policies and other terms that the proposals must meet.)
VU. City's timetable
(This section can address such things as the day that the
proposals will be opened, when interviews will be scheduled,
and when the selection will be made.)
vm. Other information
(This section can cover background information on the
city, claims record information for insurance, or other
information that might be important for firms to know
when submitting their proposals.)
Competitive Bidding Rcquirements in Cities
29
CITY OF PRIOR LAKE
~4kJr ~""""\jm~~fij ~~."'-~Offij Ii ~
~IL~~ \WO\L~~ .~~Wr' ~V:lVJ
February 10, 2000 (5pm - 10pm)
III.
."',",,F',.
HISTORY
In 1982, the Metropolitan Transit Service Demonstration Program legislation was adopted.
Later, to become known as "opt out", the legislation allowed some 23 metropolitan area
communities to opt out of the Metropolitan bus system and start a bus system themselves or
in cooperation with similarly situated suburbs.
Opt out was thought to be a means through which growing cities who were not receiving the
quantity or quality of transit services commensurate with the taxes paid could contract with
others for services. It was intended to be a means through which new transit concepts could
be tried. In some cases new concepts were tested.
The City of Plymouth opted out first, followed closely by Southwest Metropolitan Transit and
later by Minnesota Valley Transit Authority (MVTA), both of which are joint power entities
consisting of numerous communities. Minnesota Valley consists of 9 contiguous communities
who work together by joint powers agreement.
CURRENT CIRCUMSTANCES
Mayor Mader became the City's representative to the MVT A last year. He is concerned that
the City may be able to do a better job providing transit services to its residents using the
$379,500 annual tax support earmarked for this purpose.
Accordingly, on Monday I met with Metropolitan Council staff members to discuss our options
and refine the attached outline of the steps we would take and the time required to improve
our service. If there are changes to the outline as a result of this meeting, I will apprise the
Council accordingly at the Workshop. Also attached is the legislation which guides transit
programs such as this.
One of two outcomes are likely if the City proceeds to investigate the transit services we
receive:
(1) We may learn that the services provided by MVTA can be changed to better meet the
needs of Prior Lake, and that the best administrator of that transit service is MVT A.
Under this option, we remain in the joint powers organization.
(2) We may learn that the that services we receive should be changed and that the City is
the best party to subcontract the service and assume day-to-day oversight and
accountability. Under this option we become our own opt-out transit system.
CONCLUSION
The City Council should discuss and provide direction to the staff regarding whether we should
further investigate transit improvements. If the City were to operate the program, the joint
powers agreement and tax requirements are such that the service could not be initiated in less
than 12 months.
I :\COUNCI L\ WKSHOPOO\SUM#3,DOC
revised February 4, 2000
']'" fll,t" 'I.. t'
I, ~' ;.':::~ ~. "1: t~' ..~ I .:' r,F, : "'''', ill' t"" _ :'-_, ,,~-'~,~>: .\. ", .,~ '~ ~"'\ ~ ""~j "J {
I rranSI' ! mprovemen, s
APPROXIMATE TIMELINE AND PROCESS
(assumes City investigates other providers)
1
February 7, 2000
2
February 10, 2000
3
February 15, 2000
4
February 29,2000
5
June 5, 2000
6
July 1, 2000
7
August 15,2000
8
August 30, 2000
9
September 15, 2000
10
September 30,2000
I :\COUNCIL \WKSHOPOO\SUM#3.DOC
Meet with Met. Council staff to receive information about
appropriate process for planning and implementing
transit revisions as well as generally accepted industry
formats for service productivity and cost data.
Receive City Council direction regarding whether the
staff should pursue investigation of how and in what
format transit should be provided to Prior Lake.
Provide MVT A with one year notice of possible
withdrawal from Joint Powers Agreement.
Transit Planner to assemble the following in writing:
. Configuration and cost of Transit presently provided
to City.
. Report regarding alternate transit modes based
upon knowledge of community needs.
. Information regarding available transit funding
sources and potential service providers.
. Suggestions for transit enhancements including
estimated costs.
Provide City Council with above report seeking direction
on next step. Negotiate with MVT A for transit
enhancements or direct preparation of RFP.
Retain individual to prepare RFP.
Conduct vendors meeting to discuss RFP.
Proposals due.
Firms present proposals to Council subcommittee.
Council subcommittee recommends provider(s) to
provide services.
11 October 30, 2000 Materials submitted to Met. Council including program
and budget for approval including reimbursement of
costs to date.
12 Dec. 2000 ~ Feb. 2001 Provider prepares for initiation of service (equipment &
personnel)
13 Dec. 2000 - Feb. 2001 City publicizes new service using various media.
14 February 15, 2001 New service in place.
15 May 31, Sept. 15, Dec. 31 City Council receives quarterly reports on costs &
ridership.
I :\COU NCI L \ WKSHOPOO\SUM#3.DOC
54
s for elderly
rice. At least
lIed or elder-
)ointments to
il on disabili-
)f penalty for
the eligibility
led in section
n service, the
nonprofit pro-
istance from a
t have demon-
::>f service most
ceive equitable
individuals as a
this service and
rates that reflect
for special trans-
l a timely manner
;:s, including, but
,mder subdivision
policies and stan-
:nsure compliance
mcial assistance to
transportation ser-
e council's special
:il is not required to
;ite and home again
:icipation in human
tion to and from the
,ncil shall distribute
an equitable alloca-
mber of elderly, dis-
:ation needs who ac-
r assisting the opera-
a passenger who ,does
Clall provide the help
ld leaving the vehicle
ther departure or des-
: in good repair. If an
55
METROPOLITAN GOVERNMENT 473.388
-\
ope tor or assistant refuses help because of the condition of the steps or the wheelchair, the
opera r of the service shall send letters to the service administrator designated by the coun-
cil, who hall notify the person denied service describing the corrective measures necessary
to qualif or service.
Subd. . [Repealed, 1987 c 88 s 13]
Histor 1984 c 654 art 3 s 122; lSp1985 c 10 s 100; 1986 c 444; 1987 c 88 s
8-12; 1987 c 4 s 8; 1989 c 269 s 48; 1992 c 390 s 1,2; 1993 c 326 art 4 s 12; 19
628 art 3 s 77 ,211; 1995 c 236 s 10-12
473.387 SPECIA TRANSPORTATION MARKETS.
Subdivision 1. rposes. The legislature finds and declares that the lim' d public re-
sources available to s sidize transit require increased efforts to concentr e service and
funding on special secto of the marketplace, so as to ensure a basic level mobility for all
persons in the metropolit area. The purposes of the programs establishe y this section are
to better target transit serves and expenditures on transit dependent ctors of the market
and to increase the efficien and effectiveness and control the cost f transit services for
persons who lack private me s of transportation.
Subd. 2. Administration. he council shall design and ad . ister the programs under
this section. The council may r uest proposals for projects 0 demonstrate methods of
achieving the purposes of program administered under this s tion. The council shall design
or ensure the design of programs at will provide bette access for the targeted service
groups to places of employment and tivity throughout t e metropolitan area, using regular
route transit, paratransit, taxis, car or n pools, or othe means of conveyance. The council
may organize the services by providing t individuals irectly or indirectly, reduced fares or
passes on public transit or vouchers to b used to rchase transportation; by contracting
with public and private providers; by arra geme ts with government agencies, civic and
community organizations or nonprofit grou s oviding assistance to the targeted service
groups; by arrangements with prospective e loyers, with employment, education, retail,
medical, or other activity centers, or with 10 a overnments; or by any other methods de-
signed to improve service and reduce cos to tli targeted service groups.
Subd. 3. Jobseekers. The council s 11 establ h a program and policies to increase the
availability and utility of public transi ervices an educe transportation costs for persons
who are seeking employment and w 0 lack private eans of transportation.
Subd, 4. Transit disadvanta d. The council sha establish a program and policies to
reduce transportation costs for p sons who are, because f limited incomes, age, disability,
or other reasons, especially de endent on public transit common mobility.
History: lSp1985 c 10 101; 1994 c 628 art 3 s 84-
473.3875 TRANSIT F LIVABLE COMMUNITIES.
The council shall stablish a transit for livable communitl s demonstration program
fund. The council sha adopt guidelines for selecting and evaluati demonstration projects
for funding. The se ction guidelines must include provisions eval ting projects:
(1) interrela' g development or redevelopment and transit;
(2) interrel mg affordable housing and employment growth area .
(3) helpin intensify land use that leads to more compact develop
ment;
(4) co dinating school transportation and public transit service;
(5) i plementing recommendations of the transit redesign plan; or
(6) therwise promoting the goals of the metropolitan livable communiti
IstOry: 1996 c 464 art 2 s 3
473.388 REPLACEMENT SERVICE PROGRAM. <:::
,Subdivision 1. Program established. A replacement service program is established to
~ontJ.nue the metropolitan transit service demonstration program established in Minnesota
tatutes 1982, section 174.265, as provided in this section.
473.388 METROPOLITAN GOVERNMENT
56
57
Subd. 2. Replacement service; eligibility. The council may provide assistance under
the program to a statutory or home rule charter city or town or combination thereof, that:
(a) is located in the metropolitan transit taxing district;
(b) is not served by the council bus service or is served only with council bus routes
which begin or end within the applying city or town or combination thereof; and
(c) has fewer than four scheduled runs of council bus service during off-peak hours de-
fined in section 473.408, subdivision 1.
Eligible cities or towns or combinations thereof may apply on behalf of a transit opera-
tor with whom they propose to contract for service.
The council may not provide assistance under this section to a statutory or home rule
charter city or town unless the city or town,
(i) was receiving assistance under Minnesota Statutes 1982, secti'on 174.265 by July 1,
1984, .
(ii) had submitted an application for assistance under that section by July I, 1984, or
(iii) had submitted a letter of intent to apply for assistance under that section by July 1,
1984, and submits an application for assistance under this section by July 1, 1988. A statutory
or home rule charter city or town has an additional 12-month extension if it notified the for-
mer regional transit board before July 1, 1988, that the city or town is in the process of com-
pleting a transportation evaluation study that includes an assessment of the local transit needs
of the city or town.
Subd. 3. Application for assistance. An application for assistance under this section
must:
(a) describe the existing service provided to the applicant by the council, including the
estimated number of passengers carried and the routes, schedules, and fares;
(b) describe the transit service proposed for funding under the demonstration program,
including the anticipated number of passengers and the routes, schedules, and fares; and
(c) indicate the total amount of available local transit funds, the portion of the available
local transit funds proposed to be used to subsidize replacement services, and the amount of
assistance requested for the replacement services.
Subd. 4. Financial assistance. The council may grant the requested financial assistance
if it determines that the proposed service is intended to replace the service to the applying city
or town or combination thereof by the council and that the proposed service will meet the
needs of the applicant at least as efficiently and effectively as the existing service.
The amount of assistance which the council may provide under this section may not ex-
ceed the sum of:
(a) the portion of the available local transit funds which the applicant proposes to use to
. subsidize the proposed service; and
(b) an amount of financial assistance be!lring an identical proportional relationship to
the amount under clause (a) as the total amount of funds used by the council to fund its transit
operations bears to the total amount of taxes collected by the council under section 473.446.
The council shall pay the amount to be provided to the recipient from the funds the council
would otherwise use to fund its transit operations.
For purposes of this section, "available local transit funds" means 90 percent of the tax
revenues which would accrue to the council from the tax it levies under section 473.446 in the
applicant city or town or combination thereof.
For purposes of this section, "tax revenues" in the city or town means the sum of the
following:
(1) the nondebt spread levy, which is the total of the taxes extended by application of the
local tax rate for nondebt purposes on the taxable net tax capacity;
(2) the portion of the fiscal disparity distribution levy under section 473F.08, subdivi-
sion 3, attributable to nondebt purposes; and
(3) the portion of the homestead credit and agricultural credit aid and disparity reduc-
tion aid amounts under section 273.1398, subdivisions 2 and 3, attributable to nondebt pur-
poses.
Tax revenues do not
Subd. 5, Other assis
under this section may alE
plying for assistance unde
local transit funds or loca
transit service and which
applicant which has .exha
any other local subsldy f
Subd. 6. [Repealed,
Subd. 7, Local levy
ble for assistance under'
payment of the operating
to provide for payment Oi
that the tax must be suffi.
pality in the previous ye
(b) The transit tax r
(1) for the first tran
lowing a year in which t
local transit funds for th
473.446, calculated as if
percent instead of 90 pe'
ratio; and
(2) for taxes levied
ty elects to levy under y
have levied in the prevlc
ket value adjustment ra
The commissioner
subdivision to the muni
kept in a separate fund
(c) To enable the rr
definition of "tax reven
ty's transit tax levy was
tion 473.446:
(1) in the first tran:
ing a year in which the
nondebt spread levy for
ipality, and not the com
determining its local t~
(2) 88 percent of t
in subdivision 4, payal
levy year following a y
nently transferred frorr
this subdivision in one
der this clause shall be
(d) Any transit tc
wards, any limit hereai
any municipality unle:
(e) This subdivisi
opting to levy the trans
mance standards estat
(f) Within the des
the obligation of the s
(g) For purposes'
pality elects to levy UJ
(h) A municipali
fies the council and th
56
Jvide assistance under
,ination thereof, that:
lith council bus routes
thereof; and
ing off-peak hours de-
:half of a transit opera-
statutory or home rule
ion 174.265 by July 1,
)n by July I, 1984, or
that section by July 1,
lly 1, 1988. A statutory
m if it notified the for-
in the process of com-
E the local transit needs
nce under this section
council, including the
ld fares;
:monstration program,
lules, and fares; and
lortion of the available
:es, and the amount of
ed financial assistance
Ice to the applying city
: service will meet the
isting service.
1is section may not ex-
::ant proposes to use to
,rtional relationship to
uncil to fund its transit
mder section 473.446.
I the funds the council
s 90 percent of the tax
. section 473.446 in the
means the sum of the
:d by application of the
tion 473F.08, subdivi-
d and disparity reduc-
utable to nondebt pur-
i
I
I
I
(
,
57
METROPOLITAN GOVERNMENT 473.388
Tax revenues do not include the state feathering reimbursement under section 473.446.
Subd. 5. Other assistance. A city or town receiving assistance or levying a transit tax
under this section may also receive assistance from the council under section 473.384. In ap-
plying for assistance under that section an applicant must describe the portion of its available
local transit funds or local transit taxes which are not obligated to subsidize its replacement
transit service and which the applicant proposes to use to subsidize additional service. An
applicant which has exhausted its available local transit funds or local transit taxes may use
any other local subsidy funds to complete the required local share.
Subd. 6. [Repealed, 1994 c 628 art 3 s 209]
Subd. 7. Local levy option. (a) A statutory or home rule charter city or town that is eligi-
ble for assistance under this section, in lieu of receiving the assistance, may levy a tax for
payment of the operating and capital expenditures for transit and other related activities and
to provide for payment of obligations issued by the municipality for such purposes, provided
that the tax must be sufficient to maintain the level of transit service provided in the munici-
pality in the previous year.
(b) The transit tax revenues derived by the municipality may not exceed:
(1) for the first transit levy year and any subsequent transit levy year immediately fol-
lowing a year in which the municipality declines to make the levy, the maximum available
local transit funds for the municipality for taxes payable in the current year under section
473.446, calculated as if the percentage of transit tax revenues for the municipality were 88
percent instead of 90 percent, and multiplied by the municipality's market value adjustment
ratio; and
(2) for taxes levied in any year that immediately follows a year in which the municipali-
ty elects to levy under this subdivision, the maximum transit tax that the municipality may
have levied in the previous year under this subdivision, multiplied by the municipality's mar-
ket value adjustment ratio.
The commissioner of revenue shall certify the municipality's levy limitation under this
subdivision to the municipality by June 1 of the levy year. The tax must be accumulated and
kept in a separate fund to be known as the "replacement transit fund."
(c) To enable the municipality to receive revenues described in clauses (2) and (3) of the
definition of "tax revenues" in subdivision 4, that would otherwise be lost if the municipali-
ty's transit tax levy was not treated as a successor levy to that made by the council under sec-
tion 473.446:
(1) in the first transit levy year and any subsequent transit levy year immediately follow-
ing a year in which the municipality declined to make the levy, 88 percent of the council's
nondebt spread levy for the current taxes payable year shall be treated as levied by the munic-
ipality, and not the council, for purposes of section 473F.08, subdivision 3, for the purpose of
determining its local tax rate for the preceding year; and
(2) 88 percent of the revenues described in clause (3) of the definition of "tax revenues"
in subdivision 4, payable in the first transit levy year, or payable in any subsequent transit
levy year following a year in which a municipality declined to make the levy, shall be perma-
nently transferred from the council to the municipality. If a municipality levies a tax under
this subdivision in one year, but declines to levy in a subsequent year, the aid transferred un-
der this clause shall be transferred back to the council.
(d) Any transit taxes levied under this subdivision are not subject to, or counted to-
wards, any limit hereafter imposed by law on the levy of taxes upon taxable property within
any municipality unless the law specifically includes the transit tax.
(e) This subdivision is consistent with the transit redesign plan. Eligible municipalities
opting to levy the transit tax under this subdivision shall continue to meet the regional perfor-
mance standards established by the council.
(1) Within the designated Americans with Disabilities Act area, metro mobility remains
the obligation of the state.
(g) For purposes of this subdivision, "transit levy year" is any year in which the munici-
pality elects to levy under this subdivision.
(h) A municipality may not levy taxes under this subdivision in any year unless it noti-
fies the council and the commissioner of revenue of its intent to levy before July 1 of the levy
473.388 METROPOLITAN GOVERNMENT
58
year. The notification must include the amount of the municipality's proposed transit tax for
the current levy year.
Subd. 8. Service incentive. A replacement transit service shall receive an additional
two percent of available local transit funds, as defined in subdivision 4, if the service in-
creased its ridership for trips that originate outside of the replacement transit service's mem-
ber communities and serve the employment centers in those communities by at least five per-
cent from the previous year, provided the service operates within regional performance stan-
dards. A replacement transit service that is receiving the maximum amount of available local
transit funds may receive up to two percent over the maximum amount set in subdivision 4 if
it increases its ridership as provided in this subdivision. The additional funding received un-
der this subdivision may be reserved by the replacement transit service for future use.
History: 1984 c 654 art 3 s 123; 1986 c 444; 1987 c 278 s 16; 1992 c 511 art 2 s
36; 1994 c 628 art 3 s 87-90; 1995 c 236 s 13; 1996 c 455 art 5 s 3,4; 1996 c 464 art 2 s
~
473.39 BORROWING MONEY.
Subdivision 1. General authority. The council may issue general obligation bonds
s 'ect to the volume limitations in this section to provide funds to implement the council's
tran ' capital improvement program and may issue general obligation bonds not subject t, "
the lim tions for the refunding of outstanding bonds or certificates of indebtedness of e
council, former regional transit board or the former metropolitan transit commissio, {and
judgments a 'nst the former regional transit board or the former metropolitan tran, 't com-
mission or the c ncil. The council may not issue obligations pursuant to this suaivision,
other t~an refu~din, ond~, in excess of the amount specifica~ly authoriz~d by ~t ~xcept as
otherWIse provIded m ctlOns 473.371 to 473.449, the councll shall provIde f,(ft the Issuance,
sale, and security of the 13 ds in the manner provided in chapter 475, and lyis the same pow-
ers and duties as a municipa' issuing bonds under that law, except t~(no election is re-
quired and the net debt limitati in chapter 475 do not apply to the b,0hds. The obligations
are not a debt of the state or any m icipality or political subdivisiqrfwithin the meaning of
any debt limitation or requirement pe 'ning to those entities. Nejtl1er the state, nor any mu-
nicipality or political subdivision except council, nor any mt}n1ber or officer or employee
of the council, is liable on the obligations.' e obligations ryriiy be secured by taxes levied
without limitation of rate or amount upon all t Ie propett!y in the transit taxing district and
transit area as provided in section 473.446, subdivI ' n l,iclause (c). As part of its levy made
under section 473.446, subdivision I, clause (c), the c J cil shall levy the amounts necessary
to provide full and timely payment of the obligati9ris a transfer the proceeds to the ap-
propriate council account for payment of the obli~(ions. T taxes must be levied, certified,
and collected in accordance with the terms angrtonditions of indebtedness.
Subd. la. Obligations. (a) After Auguspi, 1989, the counci ay issue certificates of
'indebtedness, bonds, or other obligations rlnder this section in an ount not exceeding
$30,700,000 for transit financial assistaI1&, as prescribed in the council capital improve-
f
ment program. /
(b) As a condition of the use of tf~sit financial assistance under this sectio the council
must make the transit facilities it lfdhstructs, acquires, or improves for 1-394 with ds pro-
vided ~nder this section availabll to all transit providers on a nondiscriminatory basiS;" s the
councll defines these,terms. ,/ ,"
(c) The limitation co!)tfuned in this subdivision does not apply to refunding bonds i
sued by the council. /
Subd. lb. Obl~'g, ons. The council may also issue certificates of indebtedness, bonds,
or other obligation nder this section in an amount not exceeding $62,000,000, of which
$44,000,000 ma):: e used for council transit and paratransit fleet replacement, transit and
paratransit faci . les, and transit and paratransit capital equipment, and $18,000,000 may be
used for tran . hubs, park-and-ride lots, community-based transit vehicles and replace-
ment servic., program vehicles, intelligent vehicle highway systems projects, and other capi-
tal e=pend' ures as prescribed in the council's transit capital improvement program, and re-
lated cost including the cost of issuance and sale of the obligations. For the purposes of this
sub . 's. n, uniforms are not capital expenditures.
'" ~-
~-........
59
Subd. 1c. Obligation
1 b, the council may issue (
section in an amount not e:
as prescribed in the ~ounc
cluding the costs of lssuar
Subd. 2. Legal inves
issued by the council to w'
proper for investment, of
union, trust company, ms'
pledged by any bank, .sa~
security for the deposIt 0,
Subd. 3. [Repealed,
Subd. 4. Transit ca]
tions pursuant to this sec
ment program. The progl
capital investment strateg
ponent must specify, to f
For each improvement SI
and relative priority; (2)
tures; (3) ownership and
vironmental, social, and
sources, including federa
cal effects, including an (
costs.
History: 1984 c 65
1987 c 278 s 17,18; 198
1; 1994 c 628 art 3 s 91
20,21
473.391 ROUTE PLA
Subdivision 1. Cor
ernments for route plam
guration of existing tran
essary for the test mark,
way described generall)
thorne interchange in tt
Subd. 2, Route eliJ
termination to eliminat,
(1) the level of sul
(2) the availabilit)
(3) the percentage
and disabled riders cur
History: 1987 c ~
art 2 s 5
473.3915 TRANSIT,
Subdivision 1. De
visions 2 and 3 have tt
Subd. 2. Regular
as defined in section 4'
per hour between 7:00
vice on Saturday, Sun'
Subd. 3. Transit
route along which regl
urban service area, as (
route for which funds
revised February 4, 2000
']"'""., .., t8A tl.. . . ...... ....... .... . . !It..
.1. ~.: n!~.II~ 'mt. '"~.' '" 1fl6 mi !.-~ ani M '; ,S.~~'
, q Gilll~j It \ t. il \ ~ ,i Q, '.
APPROXIMATE TIMELINE AND PROCESS
(assumes City investigates other providers)
Step,
1
2
February 10, 2000
3
February 15, 2000
4
February 29,2000
.
5
June 5, 2000
6
July 1, 2000
7
August 15, 2000
8
August 30, 2000
9
September 15, 2000
10
September 30, 2000
.
I :\COUNCIL\WKSHOPOO\SUM#3.DOC
o
Meet with Met. Council staff to receive information about
appropriate process for planning and implementing
transit revisions as well as generally accepted industry
formats for service productivity and cost data.
Receive City Council direction regarding whether the
staff should pursue investigation of how and in what
format transit should be provided to Prior Lake.
Provide MVT A with one year notice of possible
withdrawal from Joint Powers Agreement.
Transit Planner to assemble the following in writing:
. Configuration and cost of Transit presently provided
to City.
. Report regarding alternate transit modes based
upon knowledge of community needs.
. Information regarding available transit funding
sources and potential service providers.
. Suggestions for transit enhancements including
estimated costs.
Provide City Council with above report seeking direction
on next step. Negotiate with MVT A for transit
enhancements or direct preparation of RFP.
Retain individual to prepare RFP.
Conduct vendors meeting to discuss RFP.
Proposals due.
Firms present proposals to Council subcommittee.
Council subcommittee recommends provider(s) to
provide services.
.
.
.
11 October 30,2000 Materials submitted to Met. Council including program
and budget for approval including reimbursement of
costs to date.
12 Dec. 2000:. Feb. 2001 Provider prepares for initiation of service (equipment &
personnel)
13 Dec. 2000 - Feb. 2001 City puplicizes new service using various media.
14 February 15, 2001 New service in place.
15 May 31, Sept. 15, Dec. 31 City Council receives quarterly reports on costs &
ridership.
I :\COU NCIL \ WKSHOPOo\SUM#3.DOC
54
. s for elderly
rice. At least
lIed or elder-
Jointments to
il on disabili-
)f penalty for
the eligibility
led in section
n service, the
nonprofit pro-
istance from a
t have demon-
:>f service most
,ceive equitable
individuals as a
, this service and
rates that reflect
.for special trans-
l a timely manner
<:s, including, but
Jnder subdivision
policies and stan-
:nsure compliance
mcial assistance to
transportation ser-
e council's special
:il is not required to
;ite and home again
icipation in human
tion to and from the
,ncil shall distribute
an equitable alloca-
mber of elderly, dis-
:ation needs who ac-
r assisting the opera-
a passenger who does
Gall provide the help
ld leaving the vehicle
ther departure or des-
.;0 good reparr. If an
55
METROPOLITAN GOVERNMENT 473.388
"'
ope tor or assistant refuses help because of the condition of the steps or the wheelchair, the
opera r of the service shall send letters to the service administrator designated by the coun-
cil, who hall notify the person denied service describing the corrective measures necessary
to qualif or service.
Subd. . [Repealed, 1987 c,88 s 13]
Histor 1984 c 654 art 3 s 122; lSp1985 c 10 s 100; 1986 c 444; 1987 c 88 s
8-12; 1987 c 4 s 8; 1989 c 269 s 48; 1992 c 390 s 1,2; 1993 c 326 art 4 s 12; 19
628 art 3 s 77 ,211; 1995'c 236 s 10-12
473.387 SPECIA TRANSPORTATION MARKETS.
Subdivision 1. rposes. The legislature finds and declares that the lim' d public re-
sources available to s sidize trl\nsit require increased efforts to concentr e service and
funding on special secto of the marketplace, so as to ensure a basic level mobility for all
persons in the metropolit area. The purposes of the programs establishe y this section are
to better target transit serVI es and expenditures on transit dependent ctors of the market
and to increase the efficien and effectiveness and control the cos f transit services for
persons who lack private me s of transportation.
Subd. 2. Administration. he council shall design and ad . ister the programs under
this section, The council may r uest proposals for projects 0 demonstrate methods of
achieving the purposes of program administered under this s tion. The council shall design
or ensure the design of programs at will provide bette access for the targeted service
groups to places of employment and tivity throughout t e metropolitan area, using regular
route transit, paratransit, taxis, car or n pools, or othe means of conveyance. The council
may organize the services by providing individuals irectly or indirectly, reduced fares or
passes on public transit or vouchers to b used to rchase transportation; by contracting
with public and private providers; by arra geme ts with government agencies, civic and
community organizations or nonprofit grou s oviding assistance to the targeted service
groups; by arrangements with prospective e loyers, with employment, education, retail,
medical, or other activity centers, or with 1 a overnments; or by any other methods de-
signed to improve service and reduce cos to tn targeted service groups.
Subd. 3. Jobseekers. The council s 11 establ h a program and policies to increase the
availability and utility of public transi ervices an educe transportation costs for persons
who are seeking employment and w 0 lack private eans of transportation.
Subd, 4. Transit disadvanta d. The council sha establish a program and policies to
reduce transportation costs for p sons who are, because f limited incomes, age, disability,
or other reasons, especially de endent on public transit common mobility.
History: lSp1985 c 10 101; 1994 c 628 art 3 s 84
473.3875 TRANSIT F LIVABLE COMMUNITIES.
The council shall stablish a transit for livable communitl s demonstration program
fund, The council sha adopt guidelines for selecting and evaluati demonstration projects
for funding. The sel ction guidelines must include provisions eval ting projects:
(1) interrela' g development or redevelopment and transit;
(2) interrel mg affordable housing and employment growth area .
(3) helpin intensify land use that leads to more compact develop
ment;
(4) co dinating school transportation and public transit service;
(5) i plementing recommendations of the transit redesign plan; or
(6) therwise promoting the goals of the metropolitan livable communiti
IStOry: 1996 c 464 art 2 s 3
473.388 REPLACEMENT SERVICE PROGRAM. <::
.Subdivision 1. Program established. A replacement service program is established to
~ontJ.nue the metropolitan transit servic~ de~ons?,ation program established in Minnesota
tatutes 1982, sectIOn 174.265, as provided In thIS section. '
~\
'..,~
'-:.l}i
'Kt,
;,'~.
?~
.
.
.
473.388 METROPOLITAN GOVERNMENT
56
57
Subd. 2. Replacement service; eligibility. The council may provide assistance under
the program to a statutory or home rule charter city or town or combination thereof, that:
(a) is located in the metropolitan transit taxing district;
(b) is not served by the council bus service or is served only with council bus routes
which begin or end within the applying city or town or combination thereof; and
(c) has fewer than four scheduled runs of council bus service during off-peak hours de-
fined in section 473.408, subdivision 1.
Eligible cities or towns or combinations thereof may apply on behalf of a transit opera-
tor with whom they propose to contract for service.
The council may not provide assistance under this section to a statutory or home rule
charter city or tQwn unless the city or town,
(i) was receiving assistance under Minnesota Statutes 1982, sectfon 174,265 by July 1,
1984, .
(ii) had submitted an application for assistance under that section by July 1, 1984, or
(iii) had submitted a letter of intent to apply for assistance under that section by July 1,
1984, and submits an application for assistance under this section by July I, 1988. A statutory
or home rule charter city or town has an additional 12-month extension if it notified the for-
mer regional transit board before July 1, 1988. that the city or town is in the process of com-
pleting a transportation evaluation study that includes an assessment of the local transit needs
of the city or town.
Subd. 3. Application for assistance. An application for assistance under this section
must:
(a) describe the existing service provided to the applicant by the council; including the
estimated number of passengers carried and the routes, schedules, and fares;
(b) describe the transit service proposed for funding under the demonstration program,
including the anticipated number of passengers and the routes, schedules, and fares; and
(c) indicate the total amount of available local transit funds, the portion of the available
local transit funds proposed to be used to subsidize replacement services, and the amount of
assistance requested for the replacement services.
Subd. 4. Financial assistance. The council may grant the requested financial assistance
if it determines that the proposed service is intended to replace the service to the applying city
or town or combination thereof by the council and that the proposed service will meet the
needs of the applicant at least as efficiently and effectively as the existing service.
The amount of assistance which the council may provide under this section may not ex-
ceed the sum of:
(a) the portion of the available local transit funds which the applicant proposes to use to
, subsidize the proposed service; and
(b) an amount of financial assistance be!lfing an identical proportional relationship to
the amount under clause (a) as the total amount of funds used by the council to fund its transit
operations bears to the total amount of taxes collected by the council under section 473.446.
The council shall pay the amount to be provided to the recipient from the funds the council
would otherwise use to fund its transit operations.
For purposes of this section, "available local transit funds" means 90 percent of the tax
revenues which would accrue to the council from the tax it levies under section 473.446 in the
applicant city or town or combination thereof.
For purposes of this section, "tax revenues" in the city or town means the sum of the
following:
(1) the nondebt spread levy, which is the total of the taxes extended by application of the
local tax rate for nondebt purposes on the taxable net tax capacity;
(2) the portion of the fiscal disparity distribution levy under section 473F.08, subdivi-
sion 3, attributable to nondebt purposes; and '
(3) the portion of the homestead credit and agricultural credit aid and disparity reduc-
tion aid amounts under section 273.1398, subdivisions 2 and 3, attributable to nondebt pur-
poses.
Tax revenues do not
Subd. 5. Other assis
under this section may als
plying for assistance unde
local transit funds or loca
transit service and which
applicant which has .exha
any other local SUbSIdy f
Subd. 6. [Repealed,
Subd. 7. Local levy ,
ble for assistance under'
payment of the operating
to provide for payment 01
that the tax must be suffi,
pality in the previous ye
(b) The transit tax r
(1) for the first tran
lowing a year in which t
local transit funds for tt
473.446, calculated as if
percent instead of 90 pe'
ratio; and
(2) for taxes levied
ty elects to levy under y
have levied in the prevIc
ket value adjustment ra
The commissioner
subdivision to the muni
kept in a separate fund
(c) To enable the IT
definition of "tax reven
ty's transit tax levy was
tion 473.446:
(1) in the first tran:
ing a year in which the
nondebt spread levy for
ipality, and not the COul
determining its local tz
, (2) 88 percent of t
in subdivision 4, payal
levy year following a y
nently transferred fron
this subdivision in one
der this clause shall be
(d) Any transit tz
wards, any limit herea
any municipality unle
(e) This subdivisi
opting to levy the tranf
mance standards estat
(f) Within the de~
the obligation of the 5
(g) For purposes
pality elects to levy u
(h) A municipali
fies the council and tt
'$
56
57
METROPOLITAN GOVERNMENT 473.388
)ll by July 1, 1984, or
that section by July 1,
lly 1, 1988. A statutory
m if it notified the for-
in the process of com-
e the local transit needs
- ;~
Tax revenues do not include the state feathering reimbursement tinder section 473.446.
Subd. 5. Other assistance. A city or town receiving assistance or levying a transit tax
under this section may also receive assistance from the council under section 473.384. In ap-
plying for assistance under that section an applicant must describe the portion of its available
local transit funds or local transit taxes which are not obligated to subsidize its replacement
transit service and which the applicant proposes to use to subsidize additional service. An
applicant which has exhausted its available local transit funds or local transit taxes may use
any other local subsidy funds to complete the required local share. '
Subd. 6. [Repealed, 1994 c 628 art 3 s 209]
Subd. 7. Local levy option. (a) A statutory or home rule charter city or town that is eligi-
ble for assistance under this section, in lieu of receiving the assistance, may levy a tax for
payment of the operating and capital expenditures for transit and other related activities and
to provide for payment of obligations issued by the municipality for such purposes, provided
that the tax must be sufficient to maintain the level of transit service provided in the munici-
pality in the previous year.
(b) The transit tax revenues derived by the municipality may not exceed:
(1) for the first transit levy year and any subsequent transit levy year immediately fol-
lowing a year in which the municipality declines to make the levy, the maximum available
local transit funds for the municipality for taxes payable in the current year under section
473.446, calculated as if the percentage of transit tax revenues for the municipality were 88
percent instead of 90 percent, and multiplied by the municipality's market value adjustment
ratio; and , ,
(2) for taxes levied in any year that immediately follows a year in which the municipali-
ty elects to levy under this subdivision, the maximum transit tax that the municipality may
have levied in the previous year under this subdivision, multiplied by the municipality's mar-
ket value adjustment ratio,
The commissioner of revenue shall certify the municipality's levy limitation under this
subdivision to the municipality by June 1 of the levy year. The tax must be accumulated and
kept in a separate fund to be known as the "replacement transit fund."
(c) To enable the municipality to receive revenues described in clauses (2) and (3) of the
definition of "tax revenues" in subdivision 4, that would otherwise be lost if the municipali-
ty's transit tax levy was not treated as a successor levy to that made by the council under sec-
tion 473.446:
(1) in the first transit levy year and any subsequent transit levy year immediately follow-
ing a year in which the municipality declined to make the levy, 88 percent of the council's
nondebt spread levy for the current taxes payable year shall be treated as levied by the munic-
ipality, and not the council, for purposes of section 473F.08, subdivision 3, for the purpose of
determining its local tax rate for the preceding year; and
(2) 88 percent of the revenues described in clause (3) of the definition of "tax revenues"
in subdivision 4, payable in the first transit levy year, or payable in any subsequent transit
levy year following a year in which a municipality declined to make the levy, shall be perma-
nently transferred from the council to the municipality. If a municipality levies a tax under
this subdivision in one year, but declines to levy in a subsequent year, the aid transferred un-
der this clause shall be transferred back to the council.
(d) Any transit taxes levied under this subdivision are not subject to, or counted to-
wards, any limit hereafter imposed by law on the levy of taxes upon taxable property within
any municipality unless the law specifically includes the transit tax.
(e) This subdivision is consistent with the transit redesign plan. Eligible municipalities
opting to levy the transit tax under this subdivision shall continue to meet the regional perfor-
mance standards established by the council.
(t) Within the designated Americans with Disabilities Act area, metro mobility remains
the obligation of the state.
(g) For purposes of this subdivision, "transit levy year" is any year in which the munici-
pality elects to levy under this subdivision.
(h) A municipality may not levy taxes under this subdivision in any year unless it noti-
fies the council and the commissioner of revenue of its intent to levy before July 1 of the levy
JI' e assistance under
)' n thereof, that:
lith council bus routes
thereof; and
ing off-peak hours de-
;half of a transit opera-
statutory or home rule
ion 174.265 by July 1,
nce under this section
council, including the
ld fares;
:monstration program,
lules, and fares; and
,ortion of the available
~es, and the amount of
&cial assistance
ice to the applying city
: service will meet the
[sting service.
1is section may not ex-
;;ant proposes to use to
,rtional relationship to
uncil to fund its transit
mder section 473.446,
1 the funds the council
s 90 percent of the tax
. section 473.446 in the
means the sum of the
:d by application of the
tion 473F.08, subdivi-
d and disparity reduc-
utable to nondebt pur-
~J;..
.
473.388 METROPOLITAN GOVERNMENT
58
59
year. The notification must include the amount of the municipality's proposed transit tax for
the current levy year., ,
Subd. 8. Service incentive. A replacement transit service shall receive an additional
two percent of available local transit funds, as defined in subdivision 4, if the service in-
creased its ridership for trips that originate outside of the replacement transit service's mem-
ber communities and serve the employment centers in those communities by at least five per-
cent from the previous year, provided the service operates within regional performance stan-
dards. A replacement transit service that is receiving the maximum amount of available local
transit funds may receive up to two percent over the maximum amount set in subdivision 4 if
it increases its ridership as provided in this subdivision. The additional funding received un-
der this subdivision may be reserved by the replacement transit service for future use.
History: 1984 c 654 art 3 s 123; 1986 c 444; 1987 c 278 s 16; 1992 c 511 art 2 s ,
36,' 1994 c 628 art 3 s 87-90; 1995 c 236 s 13; 1996 c 455 art 5 s 3,4,' 1996 c 464 art 2 s
473.39 BORROWING MONEY.
Subdivision 1. General authority. The council may issue general obligation bonds
s 'ect to the volume limitations in this section to provide funds to implement the council's
tran ' capital improvement program and may issue general obligation bonds not subject t '
the lim tions for the refunding of outstanding bonds or certificates of indebtedness of ' e
council, ormer regional transit board or the former metropolitan transit commissio , /!md
judgments a 'nst the former regional transit board or the former metropolitan tranit com-
mission or the c ncil. The council may not issue obligations pursuant to this sulfdivision,
other than refundin onds, in excess of the amount specifically authorized by ~., Except as
otherwise provided in ctions 473.371 to 473.449, the council shall provide fqt'the issuance,
sale, and security of the jj ds in the manner provided in chapter 475, and Iyl{ the same pow-
ers and duties as a municipa' issuing bonds under that law, excep~th (no election is re-
quired and the net debt limitati ' in chapter 475 do not apply to the b nds. The obligations
are not a debt of the state or any m icipality or political subdivisio within the meaning of
any debt limitation or requirement pe 'ning to those entities. Ne~er the state, nor any mu-
nicipality or political subdivision except council, nor any m~ber or officer or employee
of the council, is liable on the obligations. e obligations ~(iy be secured by taxes levied
without limitation of rate or amount upon all t Ie propeI15' in the transit taxing district and
transit area as provided in section 473.446, subdivl . n I "lause (c). As part of its levy made
under section 473.446, subdivision 1, clause (c), the ceil shall levy the amounts necessary
to provide full and timely payment of the obligati9F1s a transfer the proceeds to the ap-
propriate council account for payment of the obli9alions, T"ti taxes must be levied, certified,
and collected in accordance with the tenns an~onditions 0 indebtedness.
Subd. la. Obligations. (a) After Augus ,if, 1989, the counci ay issue certificates of
'indebtedness, bonds, or other obligations nder this section in an) ,ount not ,exceeding
$30,700,000 for transit financial assista e, as prescribed in the council capital improve-
ment program.
(b) As a condition of the use of ansit financial assistance under this sectio the council
must make the transit facilities it nstructs, acquires, or improves for 1-394 with ds pro-
vided under this section availab to all transit providers on a nondiscriminatory basis; '" s the
council defines these. terms.
(c) The limitation co ained in this subdivision does not apply to refunding bonds i
sued by the ~ouncil.
Subd. lb. Oblig 'ons~ The council may also issue certificates of indebtedness, bonds,
or other obligation nder this section in an amount not exceeding $62,000,000, of which
$44,000,000 ma):: e used for council transit and paratransit fleet replacement, transit and
paratransit faci . leS, and transit and paratransit capital equipment, and $18,000,000 may be
used for tran . hubs, park-and-ride lots, community-based transit vehicles and replace-
ment servic program vehicles, intelligent vehicle highway systems projects, and other capi-
tal expend' ures as prescribed in the council's transit capital improvement program, and re-
lated cost including the cost of issuance and sale of the obligations. For the purposes of this
sub, . 's' n, unifonns are not capital expenditures.
Subd. Ic. Obligation
1 b, the council may issue (
section in an amount not e:
as prescribed in the counc
eluding the costs of issuar
Subd. 2. Legal inves
issued by the council to w
proper for investment, of
union, trust company, InS'
pledged by any bank, sav
security for the deposit oj
Subd. 3. [Repealed,
Subd. 4. Transit ca;
tions pursuant to this sec
ment program. The progJ
capital investment strateg
ponent must specify, to f
For each improvement SI
and relative priority; (2)
tures; (3) ownership and
vironmental, social, and
sources, including federa
cal effects, including an (
costs.
,History: 1984 c 6:-
1987 c 278 s 17,18; 198
1; 1994 c 628 art 3 s 91
20,21
473.391 ROUTE PLA
Subdivision 1. Cor
ernments for route plam
guration of existing tran
essary for the test mark,
way described generall~
thorne interchange in t1
Subd. 2. Route elb
tennination to eliminat
(1) the level of sul
(2) the availabilit:
(3) the percentagf
and disabled riders cur
History: 1987 c ;
art 2 s 5
473.3915 TRANSIT
Subdivision 1. DE
visions 2 and 3 have tl
Subd. 2. Regular
as defined in section 4
per hour between 7:0C
vice on Saturday, Sun
Subd. 3. Transit
route along which regl
urban service area, as ,
route for which funds
.
.
CITY OF PRIOR LAKE
CilJ Co d .^ Db' 12000....... ........
.'rt "~a : ,.' hT Oil. " '^Dp~\/,! ',;
February 10,2000 (5pm - 10pm)
IVi
ronto I Tower I Panama
,-;;,!!.'"
HISTORY
Over time there has been a great deal of discussion about a number of development related
issues in this area. A considerable amount of planning has been completed addressing
individual development issues in this area but little has been accomplished to address the
area as a whole.
The development related issues in this area include:
. Priordale Mall
. Ring Road
. CSAH 23 I TH13 intersection
. Post Office
. EZ Stop Access I Frontage Road
. Toronto Avenue
. T J Towing
CURRENT CIRCUMSTANCES
The City does not have the resources to remedy all these issues. But, perhaps this area can
be improved if the City selects key issues to address which will set the stage for development
of the area.
The Council has already committed itself to the CSAH 23 I TH 13 intersection as a priority by
programming its improvement in the 2004 Capital Improvement Program. The Council has
also directed that an alignment for the entire ring road be proposed promptly in light of the
development of the post office, concerns expressed by the NAPA property owner and safety
and access issues associated with the frontage road by EZ Stop. (This item is scheduled for
the March 6th work session).
I believe that the City Council priorities expressed above have been well placed. In fact, the
development of the ring road should be programmed in the 2001 - 2005 Capital Improvement
Program. Doing so will allow the City to address the EZ Stop frontage road and Toronto
Avenue while dramatically improving access to this area which has always been a high priority
to area businesses.
It would be ideal if a development project could be supported by the City which addresses
numerous issues at once. Such a project should address all of the following issues at once: (1)
the T.J. Towing parcel; (2) the ring road from Franklin Trail to Toronto; (3) the Park Nicollet
property; and (4 ) Toronto access to TH 13 and frontage road.
CONCLUSION
The Mayor and I would like to take this opportunity to discuss with the Council some thoughts
on this topic and its related issues.
I :\COUNCI L \ WKSHOPOo\SU M#4.DOC
Park Nicolletl T J Towing Sites
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200
400
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CITY OF PRIOR LAKE
'r.....~,!lh.. ~'VI\mJ~'Rrf')11 -O.~W,~pi~! 'ii1 ~
~4~~Y ~~~HAt\~ .~~V}J a ~v
February 10, 2000 (5pm - 10pm)
v.
anager Evaluation
HISTORY
Annually, the City Council has reviewed the performance of the City Manager. Under my
present contract, the review is to take place in November each year. The evaluation document
used was originally provided by the consultant retained to fill the City Manager position. The
last few years, the Council has used a document it created through the City Manager's
evaluation subcommittee.
CURRENT CIRCUMSTANCES
The City Council, at its January 3rd annual meeting, appointed Mayor Mader and
Councilmember Ericson as the City Manager's Evaluation Subcommittee. The subcommittee
typically is responsible for proposing an evaluation tool for Council members to use,
coordinating the five Councilmembers' evaluations, and preparing compensation
recommendations for City Council consideration.
CONCLUSION
The Mayor and Councilmember Ericson will be meeting prior to the February 10th Workshop.
They will provide an oral report for the meeting.
NOTES FROM FEBRUARY 10, 2000 CITY COUNCIL WORKSHOP:
Park Property Acquisition:
City Manager Boyles provided background on the $7.8 million park and library referendum
advising that part of the proceeds from the referendum are to be used for new athletic fields.
Boyles gave a status report on Lakefront Park and Busse Park noting that the restrooms and
concession area still need to be constructed at Busse Park. Boyles requested Council direction on
whether or not to move forward on purchasing a 25.5 acre parcel from Scott County for future
athletic fields.
Mayor Mader expressed concerns about going over the $7.8 million referendum amount
approved by the voters. There was a general consensus from the Council that referendum funds
be spent for permanent restrooms at Busse Park and that it would be feasible to purchase the 25.5
acres from Scott County for a park now or for future park development.
The Council requested that this item be on the next workshop agenda and they be provided with
the following information:
1. Find out how much it will cost to finish Lakefront Park and the restrooms and concession
building at Busse Park.
2. Find out how much it will cost to buy park land from Scott County and not grade or develop.
3. 'Find out how much it will cost to purchase park land from Scott County, grade, and complete
the park including restrooms and concession stand.
Council wants to know the balance of park referendum funds after each of the scenarios are
completed. Council also wants to know what exactly the city can use the proceeds from the bond
sale for. Can it only be used for park acquisitions and development? Can it be used for the
downtown?
Competitive Procurement:
Council reviewed the Purchase Policy and proposed changes. Mayor Mader and Council did not
provide any changes to the policy. Mayor Mader thought the policy was difficult to follow (too
much information) and perhaps should be simplified. He did ask that staff develop a one page
summary showing who is responsible and has authority at each level of purchase (matrix).
The Mayor's concerns and suggestions are as follows:
1. Recommendations for accepting bids be presented to Council in a timely manner and not at
the last minute to eliminate their being forced to take action.
2. There be a minimum of three good (real) bids.
3. The City continue purchasing through cooperative purchasing organizations such as the State
and Hennepin County but that staff periodically test these bids to make sure the bids are
accurate and the lowest. The City might do better going with local vendors.
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With regards to purchasing playground equipment, the following recommendations were
provided:
1. Advise vendors of maximum amount to bid but advise the City expects a lesser bid.
2. Staff provide specs that include basic requirements.
3. Specs should require quality equipment or materials.
4. Specs should include demographics of the neighborhood or vendor should seek out
demographic information.
5. Time of year for delivery of equipment should be taken into account--don't have equipment
delivered and installed in fall--it sits all year and warranty would be in effect and no one is
using equipment.
Prior Lake Transit Options:
Council reviewed the proposed timelines and process for evaluating transit provided by MVT A
versus the City providing public transit for residents.
Mayor Mader updated the Council on the history behind the MVT A and the purpose of the
Suburban Transit Authority (STA).
Council agreed that the City Manager should contact the MVT A and request cost and ridership
information as presently provided to the City of Prior Lake by the MVTA (Step 3). Council also
agreed that once the information is received from the MVT A that Step 4 should be implemented
and that the city manager hire a transit planner to review the MVT A report and assess the
services provided by the MVTA to the residents of Prior Lake.
Council also recommended that Prior Lake transit riders be surveyed for the following
information:
. Are they residents of Prior Lake?
. Where are they going?
. How long does it take to commute from point A to Point B?
. Is the bus on time? Ifnot, how long do you have to wait?
It was suggested this survey be handed out at the park and ride lot and sent to van pool riders,
etc. The Council also agreed that at some point a transit citizens advisory group would be
formed.
Franklin/TH13/Toronto/Tower Development Issues:
With regards to TJ Towing, Council agreed to the following:
· City manager should begin quietly negotiating purchase of property or give indication
that City is willing to look at buying the property. City needs to determine clean-up
costs.
· Find out liability/financial implications if City acquired land through condemnation.
. Find out if any funds are available for environmental cleanup.
· Review zoning ordinance--can we allow senior housing as conditional use in
commercial zone? Location might be good for senior housing--close to clinics. City
is in need of additional senior housing.
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. Look at vacating cut-through road--get legal opinion from Suesan.
. Work with Mrs. Borcha--should not take away her livelihoodlhelp her with retirement
planning.
. Council agreed a master plan should be developed which shows ultimate alignment
but must begin now looking at temporary solutions such as aT-intersection.
City Manager Evaluation Criteria for 2000:
Mayor Mader reviewed proposed evaluation criteria for the city manager. He and
Councilmember Ericson would develop a final performance evaluation form based on Council
input and comments. The 2000 evaluation form as presented consisted of the following:
Purpose: To establish priorities that city manager is responding to the needs ofthe citizens:
. small town ambiance or values
. taxes too high for what citizens receive
. city government works against citizens rather than for them
. city government spends money and energy on new projects and doesn't solve current
problems.
Measurable Criteria:
. overall property tax reduction with no decrease in city services. If Council agreed 7%
was not appropriate, this would not have an adverse affect on city manager's
performance evaluation.
. Effective competitive procurement of equipment and services. Specifications would
address minimum requirements--what is needed vs. wanted--or what are the musts vs.
wants. A minimum of three bids would be presented for Council consideration in a
timely manner that allows Council to delay action (don't bring bid approvals at the
last minute).
. Effect improvements in ordinances that make them more citizen friendly. Get input
from Council, staff and citizens and prioritize and proposed not less than 10 ordinance
amendments. An example would be the "tree counting requirement."
· Action to clean up old problem sites--E-Z Stop, private parking pads on city right-of-
way.
Subjective Criteria:
. Information to City Council must be accurate and quality information. Staff should
not intentionally mislead Council with faulty or omitted information.
. Staff reports are accurate-quality--not quantity.
· Utilization of cost/benefits analysis, return on investment analysis or other financial
analysis when making spending decisions.
Implementation:
. Mid-year evaluation by Council in July.
· Year-end evaluation held first week in December. Council prepare and give brief
overall evaluation to public.
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