ORDINANCE NO. __________



The city of Duluth does ordain:

     Section 1. That Section 31 of the 1912 Charter of the city of Duluth, as amended, be amended to read as follows:

     Section 31. Within one of the departments authorized in Section 20 of this Charter the council shall by ordinance, establish a division of procurement and purchases and a board of standardization to be managed by the purchasing agent, or the city may contract with the state or any local governmental subdivision for the services of any existing purchasing and procurement agency, or to establish a joint purchasing and procurement agency.

     The council shall regulate the making of bids and the letting of contracts by ordinance subject to the following conditions: limitations as outlined in Minnesota Statute 471.345 (Uniform Municipal Contracting Law).

     (a)  In all cases of work to be done by contract or the purchase of property of any kind, or the rendering of any service to the city other than professional services, competitive bids shall be secured before any purchase is made or any contract awarded;

     (b)  The awarding of contracts which are subject to competitive bidding under this Section, and which involve twenty-five thousand dollars ($25,000) or less may, by ordinance, be delegated to administrative officers. Such contracts involving more than such limit shall be awarded only after authorization by the council;

     (c)  The council may reject, or by ordinance authorize administrative officers to reject, any and all bids;

     (d)  Contracts shall be let to the lowest responsible bidder and purchases shall be made from the responsible bidder who offers to furnish the article desired for the lowest sum; that contracts may be awarded to rehabilitation facilities described in Minnesota Statutes 1992, Section 268A.06 within the guidelines set forth in Minnesota Statutes 1992, Section 471.345, Subd. 12;

     (e)  In determining the lowest responsible bidder, in addition to price, the following may be considered:

           (1)  The ability, capacity and skill of the bidder to perform the contract or provide the service required;

           (2)  Whether the bidder can perform the contract or provide the service promptly, or within the time specified, without delay or interference;

           (3)  The character, integrity, reputation, judgment, experience and efficiency of the bidder;

           (4)  The quality of performance of previous contracts or services;

           (5)  The previous and existing compliance by the bidder with laws and ordinances relating to the contract or services;

           (6)  The sufficiency of the financial resources and ability of the bidder to perform the contract or provide the service;

           (7)  The quality, availability and adaptability of the supplies, or contractual services to the particular use required;

           (8)  The ability of the bidder to provide future maintenance and service for the use of the subject of the contract;

           (9)  The number and scope of conditions attached to the bid;

     (f)  Specifications shall not be so prepared as to exclude all but one type or kind but shall include competitive supplies and equipment, and competitive bids shall be secured before purchase by contract or otherwise is made, provided, however, that unique or noncompetitive articles which are determined by the standardization board, subject to the approval of the council, to be sufficiently superior for the service intended by the city, may be purchased without regard to other bids;

     (g)  The council shall by ordinance establish proper procedure whereby the head of any using agency may purchase directly any supplies immediate procurement of which is essential to prevent delays in the work of the using agency which may vitally affect the life, health or convenience of citizens. A full report of the circumstances of every emergency purchase shall be made to the council at the meeting of the council next held after such emergency purchase, and the report regarding such purchase shall be entered in the minutes of the council and be open to public inspection.

     Section 2. That Section 33 of the 1912 Charter of the city of Duluth, as amended, be amended to read as follows:

     Section 33. The council shall annually provide, by resolution, for the publication of all matters required by this Charter to be published, and to that end shall annually designate the official paper in which all such publications shall be made. The city may choose to publish any such notices or items on the city’s internet website so long as this is allowed by Minnesota statutes or is not expressly forbidden by state statutes.

     Section 3. That Section 34 of the 1912 Charter of the city of Duluth, as amended, be amended to read as follows:

     Section 34. The fiscal year shall be the calendar year. At the end of each year the council shall cause a complete examination and audit of all books and accounts of the city to be made by competent accountant, who shall not otherwise be an officer or employee of the city, unless such examination is to be made by the state public examiner. In either event a summary of the audit in a form approved by the council shall be published in the official paper of the city. The mayor shall cause such summary to be published annually within 60 days after the completion of such audit required by Minnesota Statute 471.697, or its successor, shall be published by such means as allowed or required by state law.

     Section 4. That Section 54(A) of the 1912 Charter of the city of Duluth, as amended, be amended to read as follows:

     Section 54(A).   The city's accounting system shall present fairly and fully disclose the financial position and results of financial operations of the funds and account groups of the city in conformity with generally accepted accounting principles, as established by the Governmental Accounting Standards Board and the American Institute of Certified Public Accountants.

     The requirements of the federal general accounting office, and the Single Audit Act of 1984 OMB Circular A-133, or its successor, shall be followed in reporting all federal revenues and expenditures, as required, which will demonstrate compliance with finance-related legal and contractual provisions.

     The accounting system of the city shall be organized and operated on a fund basis, which is a self-balancing accounting entity, recording cash and other financial resources together with related liabilities and residual equities or balances, which are segregated for the purpose of specific activities or objectives.

     The city shall maintain a fund structure that includes:

           (1)  A general fund to account for all financial resources, except those to be accounted for in another fund;

           (2)  Special revenue funds, including a permanent improvement fund, to account for the proceeds of specific revenue sources, other than special assessments, expendable trusts, and major capital projects, which are legally restricted to expenditure for specified purposes;

           (3)  Capital project funds to account for financial resources to as used for the acquisition or construction of major capital facilities, other than those financed by proprietary funds, special assessment funds and trust funds;

           (4)  Debt service funds to account for the accumulation of resources for, and the payment of, general long-term debt principle and interest;

           (5)  Enterprise funds to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the city is that the costs, including depreciation, of providing goods or services to the general public, be financed through user fees, or where the city has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for public policy, management control, capital maintenance, accountability or other purposes.

           An enterprise fund shall be maintained for the acquisition, construction, support, maintenance and operation of each public utility owned and operated by the city, including the payment on any bonds or other indebtedness which may be a lien on such utility. There shall be paid into these funds all monies derived from the sale of bonds issued on account of any such utilities, and from the operation of such utility, and from the sale of any property acquired for or used in connection with any such utility. There shall be paid out of these funds the cost of the purchase, construction, extension, operation, maintenance and repair of any such utility, including the interest upon all bonds or other indebtedness which may be a lien upon such utility. Any surplus in such funds may be used for the purchase of any bonds or certificates of indebtedness issued upon said utilities, and for the payment of such bonds or other indebtedness upon their maturity;

           (6)  Internal service funds to account for the financing of goods or services provided by one department or agency to other departments or agencies within the city on a cost reimbursement basis;

           (7)  Trust and a Agency funds to account for assets held by the city in a trustee capacity or as an agent for individuals, private organizations or other governmental units.

           The city shall establish and maintain those funds required by law and sound financial administration consistent with legal and operating requirements, which should be established to avoid unnecessary funds which would result in inflexibility, complexity and inefficient financial administration.

           An annual budget shall be adopted by the city of Duluth which allows the accounting system to provide the basis for appropriate budgetary control. Budgetary comparisons should be included in the appropriate financial statements and schedules, for which an annual budget has been adopted

     Section 5. That Section 55 of the 1912 Charter of the city of Duluth, as amended, be amended to read as follows:

     Section 55. The city of Duluth may issue bonds or certificates of indebtedness by ordinance as follows for the following purposes:

           (1)  To pay, fund or refund any debts of the city;

           (2)  To purchase, construct, extend, improve and maintain public utility plants. Such bonds or certificates of indebtedness so issued shall be a specific lien upon such plants named in such ordinance authorizing the issuance of said bonds or certificates of indebtedness;

           (3)  In an amount not exceeding $300,000 for the benefit of the permanent improvement revolving fund Any purpose authorized by state law.

           The subsections 4 through 13, inclusive, are hereby repealed.

           (14) Bonds in amount of not more than $250,000 for the benefit of a permanent revolving equipment depreciation fund, which is hereby created, the proceeds of which shall be used solely for the purchase of equipment needed by the city. Such bonds, as and when authorized by ordinance, duly adopted by the city council shall be issued and sold in accordance with pertinent provisions of general laws as now or hereafter are in force relating to public indebtedness.

     For the support of the permanent revolving equipment depreciation fund the council shall establish rates which shall be paid by each division or department out of their annual appropriations for current expenditures, for the use of equipment belonging to the fund. Such rates shall be sufficient to repair and replace equipment so acquired and shall be used only for such purpose.

     Section 6. That this ordinance shall take effect 90 days after its passage and publication.

STATEMENT OF PURPOSE:  This ordinance amends the Charter to modernize and streamline the city’s purchasing function and update accounting language.

Section 31 specifies that the purchasing agent is responsible for procurement and purchasing duties of this section, eliminates the board of standardization (it has not functioned for most of the past 30 years); ties the Charter to the generic language of the state’s purchasing statutes and sets the state’s limits as our maximums. Duluth would use Chapter 41 of the City Code to set specific limits (at or below the state’s limits). Moves all other purchasing language to the City Code, much of which is already there. We would prefer the Charter to be more broad (policy level) and the Code to be more specific, or detailed.

Section 33 adds the city’s website as an alternative to the newspaper, as allowed by state statute.

Section 34 eliminates council/mayor requirements, and substitutes the state statute that governs our reporting requirements.

Section 54(A) updates from Single Audit Act of 1984 to the current OMB Circular A-133; eliminates trust fund language. GASB did away with trusts as a fund type several years ago in GASB Statement No. 34.

Section 55 eliminates language pertaining to the permanent improvement revolving fund and permanent revolving equipment depreciation fund, neither of which have been used in the past 25 years.