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5.12. SR 12-19-1994 rei ~\) ( II !fil ITEM 5.12. MEMORANDUM River TO: Mayor & City Council SUBJECT: Pat Klaers, City AdNI.li~st~ator December 19, 1994 ..~ Consider Revised City Conflict of Interest Ordinance FROM: DATE: Attached for your review is some information from the City Attorney on the changes in our City Conflict of Interest Ordinance. Also attached is the proposed ordinance for your consideration. . In September, two different proposals were reviewed by the Council. One proposal closely mirrored state law while the other proposal, the one being recommended for approval, went slightly beyond the state law minimums. When this topic was discussed in September, the City Council requested input from our Planning Commission, Park and Recreation Commission, Library Board and Utilities Commission on the proposed changes in the City Conflict of Interest Ordinance. Most of the feedback that I received from Commissions, or individual members of Commissions, was in support of Option #1. Recommendation Staff recommends approval of the proposed ordinance revising our City Conflict of Interest policy. council:confoint . 13065 Orono Parkway. P.O. Box 490. Elk River, MN 55330. (612) 441-7420. Fax: (612) 441-7425 . . . .... DEe 1 5 199~ MEMORANDUM LARKIN, HOFFMAN, DALY & LINDGREN, LTD. Attorneys at Law 1500 Norwest Financial Center 7900 Xerxes Avenue South Bloomington, Minnesota 55431 Telephone: (612) 835-3800 FAX: (612) 896-3333 TO: Mayor Henry A. Duitsman and Members of the City Council Peter Beck, City Attorney December 14, 1994 Conflict of Interest Ordinance Open Meeting Law Excess Liability Insurance FROM: DATE: RE: Conflict of Interest Ordinance Earlier this year I prepared, at Council direction, two alternative amendments to the City's Conflict of Interest Ordinance. The Council had directed me to prepare an ordinance which would bring the City's policy generally into closer conformance with state conflict of interest laws applicable to municipalities. Council indicated a preference for the more comprehensive of the two alternatives I had prepared. It is my understanding that the other City Commissions which have reviewed the proposed ordinance have concurred. Therefore, the attached ordinance is ready for Council adoption at its meeting of December 19, 1994, if the Council so desires. I also prepared, earlier this year, a draft memorandum to members of the City Council, members of City Commissions and City department heads outlining the City's conflict of interest policy. If the Conflict of Interest Ordinance is adopted by the Council on December 19, 1994, I will update and circulate this memorandum to all Commissioners and department heads. Open Meeting Law I recommend that the memorandum on the City's Conflict of Interest policy be expanded to include a few paragraphs on the state's open meeting law. I have met with most of the City Commissions over the past year to discuss the requirements of the open meeting law, and have found a certain amount of misunderstanding regarding these requirements. I think it would be helpful for people to have a written document to refer to in the future. . . . .. I am also recommending that the City purchase so-called "open meeting law insurance" from the League of Minnesota Cities Insurance Trust. The Minnesota Supreme Court has recently confirmed that a suit against city officials alleging a violation of the open meeting law is not a claim covered under the Trust's general policy. The Trust offers open meeting law coverage at a fairly nominal amount. This coverage protects City officials against the possibility of incurring attorneys' fees defending an open meeting law suit. If the Council elects to purchase this coverage, I will mention that fact in my memorandum. Excess Liability Insurance Lori has asked me to discuss with the Council whether the City should purchase "excess liability insurance" from the Trust. Minnesota law puts a limit on the tort liability of municipalities (currently $200,000 per claim and $600,000 for all claims arising out of the same occurrence). Excess liability insurance provides coverage in excess of these tort liability limits. The League offers two types of excess liability insurance. The first type does not waive the statutory tort liability limits for claims which are covered by the statutory limits, but provides excess liability coverage for claims which may not be covered by the tort liability limits. For instance, dram shop claims, civil rights claims, and certain federal employment law claims may not be covered by the state tort liability limits. The second type of excess liability insurance offered by the League waives the tort liability limits of Minnesota law. The purpose of this policy is to provide the opportunity for plaintiffs to obtain more than the statutory maximum in damages. It is my understanding Lori has some information for the Council on the cost of this excess liability insurance. I will leave to the Council the decision of whether the benefit received is sufficient to off-set the cost. However, in my discussions with people at the League of Cities, they indicate that they have very seldom had claims that have gone into excess liability coverage. I will be at the Council meeting on December 19, 1994, and will be happy to answer questions from the Council on any of the three topics discussed in this memo. 2 . PKB:JM9s . . . .. ORDINANCE NO. 94 - CITY OF ELK RIVER AN ORDINANCE AMENDING SECTION 218.08(9) OF THE ELK RIVER CITY CODE OF ORDINANCES REGARDING THE CITY'S CONFLICT OF INTEREST POLICY The City Council of the City of Elk River does hereby ordain as follows: Section 1. Section 218.08(9) of the Elk River Code of Ordinances is amended to read as follows: 218.08(9) Conflict of Interest. a. Introduction. The credibility of local government rests heavily upon the confidence which citizens have in public officials and employees to render fair and impartial services to all citizens without regard to personal interest and/or political influence. Thus, City officials and employees must scrupulously avoid any activity which suggests a conflict of interest between their private interests and City responsibilities. Officials and employees of the City, or their family members, shall not engage or have financial interest in any business or other activity which could reasonably lead to a conflict of interest with the official's or employee's primary City responsibilities. "Family members" of an official or employee shall be deemed to be the official or employee's spouse, parents, children, siblings, brothers-in- law, and sisters-in-law and the lineal descendants of any of them. Examples of activities which are not in accordance with this policy include, but are not limited to the following: (1) Entering into any sale, lease or contract in violation of Minnesota Statutes, Section 471.87- 471. 89; (2) Acceptance by a local official of any gift from an interested person in violation of Minnesota Statutes Section 471.895; (3) Activities which require the official or employee to interpret City codes, ordinances, or regulations when such activity involves matters with which the official or employee has business and/or family ties; (4) Consulting activities carried out within the City if such consulting involves talents or skills primarily related to the official's or employee's City work responsibilities; . (5) Using an official's or employee's authority, influence or City position for the purpose of private or personal financial gain; (6) The use of city time, facilities, equipment, or supplies for the purpose of private or personal financial gain; (7) Entering into a business transaction when it involves using confidential information gained in the course of employment; (8) Accepting other employment or public office where it will affect the official's or employee's independence of judgment or require use of confidential information gained as a result of City duties; (9) Conducting personal business while working regularly scheduled hours; and (10) Accepting rebates or procuring any financial gain through the bidding process or employment of outside personnel. . Any official or employee engaging in any activity involving either an actual or potential conflict of interest or having knowledge of such activity by another official or employee shall promptly report the activity to the City Administrator or, if such activity be by the City Administrator, to the Mayor. The City Administrator or Mayor shall investigate the matter and make a determination as to whether or not an actual or potential conflict exists. If the City Administrator or Mayor determines a conflict exists, it shall be presumed that the continuation of the practice would be injurious to the effectiveness of the official or employee in carrying out his/her duties and responsibilities. In such cases the official or employee shall immediately terminate the conflicting activity or be subject to termination of employment or removal from office. b. Officials. For the purposes of this Section 218.08(9), the term "official" shall include all elected and appointed officials of the City including, but not limited to, the City Council, the Economic Development Authority, and the members of the Boards and Commissions established by Chapter II of the City Code of Ordinances. "Employee" shall include any individual employed by the City on a full or part-time basis. c. Elections. No elected official shall require, either directly or indirectly, any employees of the City to campaign on his/her behalf as a condition to employment. No employee shall use City time or resources in promoting or advocating the election of any individual. . . . . d. ApPlicability. Nothing in this policy is intended to violate, supersede, or conflict with any applicable state or federal law regarding conflicts of interest in public employment or disclosure requirements. Section 2. This ordinance shall be effective upon adoption and publication, according to law. Passed and adopted by the City Council of the City of Elk River, this ____ day of , 1994. Henry A. Duitsman, Mayor Attest: Sandra Thackeray, City Clerk PKB:JH6s . . . MEMORANDUM LARKIN, HOFFMAN, DALY & LINDGREN, LTD. Attorneys at Law 1500 Norwest Financial Center 7900 Xerxes Avenue South Bloomington, Minnesota 55431 Telephone: (612) 835-3800 FAX: (612) 896-3333 TO: Mayor Henry A. Duitsman and Members of the City Council Peter Beck, City Attorney September 12, 1994 Conflict of Interest Ordinance FROM: DATE: RE: Earlier this year the City Council directed me to amend the City's Conflict of Interest Ordinance to eliminate certain sections which were too broad and to generally bring the ordinance into closer conformance with the state conflict of interest laws applicable to municipalities. In response to this direction I have prepared, and attach for Council review and consideration, two possible revisions of the Conflict of Interest Ordinance. In Option 1 (attached Exhibit A) I have tried to address the City Council's concerns with the existing ordinance, while still maintaining a conflict of interest policy that applies to all City officials and employees. Option 2 (attached Exhibit C) simply incorporates the applicable state laws, which apply only to "public officials" and "local officials" as those terms are defined in state statutes. Option 2 would not apply to all employees. I am recommending the Council adopt Option 1, with further revisions if deemed necessary after Council review and discussion. I believe that this option addresses the concerns which the City Council had earlier this year, while still maintaining a comprehensive conflict of interest policy applicable to all City employees, consistent with the Council's action in early 1993 when the existing ordinance was adopted. Attached to this memo please find the following exhibits: Exhibit ;I B Exhibit t A Option 1 Option 1 in "redlined" format, showing changes from the existing ordinance . . . # Exhibit C Option 2 Exhibit D Draft memo for distribution to all City commissions and departments outlining the City's Conflict of Interest Ordinance (Option 1) and applicable state laws. This memo could be distributed following Council action on an Ordinance amendment. I will revise this memo as necessary if the Council selects Option 2. I will be at the Council meeting on September 26, 1994, to answer any questions you may have about the proposed Conflict of Interest Ordinance amendments. In the meantime, please feel free to call me with any questions. PKB:JH4s . . . , EXHIBIT A ORDINANCE NO. 94~ - Option 1 CITY OF ELK RIVER AN ORDINANCE AMENDING SECTION 218.08(9) OF THE ELK RIVER CITY CODE OF ORDINANCES REGARDING THE CITY'S CONFLICT OF INTEREST POLICY The City Council of the City of Elk River does hereby ordain as follows: Section 1. Section 218.08(9) of the Elk River Code of Ordinances is amended to read as follows: 218.08(9) Conflict of Interest. a. Introduction. The credibility of local government rests heavily upon the confidence which citizens have in public officials and employees to render fair and impartial services to all citizens without regard to personal interest and/or political influence. Thus, City officials and employees must scrupulously avoid any activity which suggests a conflict of interest between their private interests and City responsibilities. Officials and employees of the City, or their family members, shall not engage or have financial interest in any business or other activity which could reasonably lead to a conflict of interest with the official's or employee's primary City responsibilities. "Family members" of an official or employee shall be deemed to be the official or employee's spouse, parents, children, siblings, brothers-in- law, and sisters-in-law and the lineal descendants of any of them. Examples of activities which are not in accordance with this policy include, but are not limited to the following: (1) Entering into any sale, lease or contract in violation of Minnesota Statutes, Section 471.87- 471.89; (2) Acceptance by a local official of any gift from an interested person in violation of Minnesota Statutes Section 471.895; +xt IIa-ving an interest in any business which has contacts or other direct dealing ~ith the City, (~3) Activities which require the official or employee to interpret City codes, ordinances, or regulations when such activity involves matters with which the official or employee has business and/or family ties; (~4) Consulting activities carried out within the City if such consulting involves talents or skills primarily related to the official's or employee's City work responsibilities; . (45) Using an official's or employee's authority, influence or City position for the purpose of private or personal financial gain; (56) The use of city time, facilities, equipment, or supplies for the purpose of private or personal financial gain; +trt Receipt or acceptance of any compensation or other considerations from anyone other than the City for the performance of an act which the official or employee would be required or expected to perform in the regular course of his/her City employment, or as a part of his/her duties as an official or employee. Compensation does not include awards, plaques or momentos recognizing the official's or employee's contribution in their area or to a charitable organization, honoraria or other expenses in conjunction ~ith a presentation or demonstration in the employee's field of expertise or scholarships/financial grants for schools, (7) Entering into a business transaction when it involves using confidential information gained in the course of employment; or is with an individual or entity that has contacts or other direct dealings with the City, . (8) Accepting other employment or public office where it will affect the official's or employee's independence of judgment or require use of confidential information gained as a result of City duties; ~ Acting as an agent or representative for another in any matter pending before the City or Council, except in the proper discharge of duties. For example, an official or employee should not appear before City Council on behalf of a third party and seek to use their position or influence to sway the Council, (9T&) Conducting personal business while working regularly scheduled hours; and (lOT) Accepting rebates or procuring any financial gain through the bidding process or employment of outside personnel., and +Trt Acceptance of any gift (other than a campaign contribution) with a value of ~100 or more from any individual, corporation or other entity that is or may become a supplier of goods or services to the City. . . . . Any official or employee engaging in any activity involving either an actual or potential conflict of interest or having knowledge of such activity by another official or employee shall promptly report the activity to the City Administrator or, if such activity be by the City Administrator, to the Mayor. The City Administrator or Mayor shall investigate the matter and make a determination as to whether or not an actual or potential conflict exists. If the City Administrator or Mayor determines a conflict exists, it shall be presumed that the continuation of the practice would be injurious to the effectiveness of the official or employee in carrying out his/her duties and responsibilities. In such cases the official or employee shall immediately terminate the conflicting activity or be subject to termination of employment or removal from office. b. Officials. For the purposes of this Section 218.08(9), the term "official" shall include all elected and appointed officials of the City including, but not limited to, the City Council, the Economic Development Authority, and the members of the Boards and Commissions established by Chapter II of the City Code of Ordinances. "Employee" shall include any individual employed by the City on a full or part-time basis. c. Elections. No elected official shall require, either directly or indirectly, any employees of the City to campaign on his/her behalf as a condition to employment. No employee shall use City time or resources in promoting or advocating the election of any individual. d. Applicability. Nothing in this policy is intended to violate, supersede, or conflict with any applicable state or federal law regarding conflicts of interest in public employment or disclosure requirements. such as those set forth in Minn. Stat. Chapter lOA. Section 2. This ordinance shall be effective upon adoption and publication, according to law. Passed and adopted by the City Council of the City of Elk River, this ____ day of , 1994~. Henry A. Duitsman, Mayor Attest: Sandra Thackeray, City Clerk PKB:HZ1s . . . ORDINANCE NO. 94 - EXHIBIT B REDLn~iNG CLEARED CITY OF ELK RIVER AN ORDINANCE AMENDING SECTION 218.08(9) OF THE ELK RIVER CITY CODE OF ORDINANCES REGARDING THE CITY'S CONFLICT OF INTEREST POLICY The City Council of the City of Elk River does hereby ordain as follows: Section 1. Section 218.08(9) of the Elk River Code of Ordinances is amended to read as follows: 218.08(9) Conflict of Interest. a. Introduction. The credibility of local government rests heavily upon the confidence which citizens have in public officials and employees to render fair and impartial services to all citizens without regard to personal interest and/or political influence. Thus, City officials and employees must scrupulously avoid any activity which suggests a conflict of interest between their private interests and City responsibilities. Officials and employees of the City, or their family members, shall not engage or have financial interest in any business or other activity which could reasonably lead to a conflict of interest with the official's or employee's primary City responsibilities. "Family members" of an official or employee shall be deemed to be the official or employee's spouse, parents, children, siblings, brothers-in- law, and sisters-in-law and the lineal descendants of any of them. Examples of activities which are not in accordance with this policy include, but are not limited to the following: (1) Entering into any sale, lease or contract in violation of Minnesota Statutes, Section 471.87- 471. 89; (2) Acceptance by a local official of any gift from an interested person in violation of Minnesota Statutes Section 471.895; (3) Activities which require the official or employee to interpret City codes, ordinances, or regulations when such activity involves matters with which the official or employee has business and/or family ties; (4) Consulting activities carried out within the City if such consulting involves talents or skills primarily related to the official's or employee's City work responsibilities; . (5) Using an official's or employee's authority, influence or City position for the purpose of private or personal financial gain; (6) The use of city time, facilities, equipment, or supplies for the purpose of private or personal financial gain; (7) Entering into a business transaction when it involves using confidential information gained in the course of employment; (8) Accepting other employment or public office where it will affect the official's or employee's independence of judgment or require use of confidential information gained as a result of City duties; (9) Conducting personal business while working regularly scheduled hours; and (10) Accepting rebates or procuring any financial gain through the bidding process or employment of outside personnel. . Any official or employee engaging in any activity involving either an actual or potential conflict of interest or having knowledge of such activity by another official or employee shall promptly report the activity to the City Administrator or, if such activity be by the City Administrator, to the Mayor. The City Administrator or Mayor shall investigate the matter and make a determination as to whether or not an actual or potential conflict exists. If the City Administrator or Mayor determines a conflict exists, it shall be presumed that the continuation of the practice would be injurious to the effectiveness of the official or employee in carrying out his/her duties and responsibilities. In such cases the official or employee shall immediately terminate the conflicting activity or be subject to termination of employment or removal from office. b. Officials. For the purposes of this Section 218.08(9), the term "official" shall include all elected and appointed officials of the City including, but not limited to, the City Council, the Economic Development Authority, and the members of the Boards and Commissions established by Chapter II of the City Code of Ordinances. "Employee" shall include any individual employed by the City on a full or part-time basis. c. Elections. No elected official shall require, either directly or indirectly, any employees of the City to campaign on his/her behalf as a condition to employment. No employee shall use City time or resources in promoting or advocating the election of any individual. . . . . d. Applicability. Nothing in this policy is intended to violate, supersede, or conflict with any applicable state or federal law regarding conflicts of interest in public employment or disclosure requirements. Section 2. This ordinance shall be effective upon adoption and publication, according to law. Passed and adopted by the City Council of the City of Elk River, this ____ day of , 1994. Henry A. Duitsman, Mayor Attest: Sandra Thackeray, City Clerk PKB:JH6s . . . EXH1BIT C ORDINANCE NO. 94 - Option 2 CITY OF ELK RIVER AN ORDINANCE AMENDING SECTION 218.08(9) OF THE ELK RIVER CITY CODE OF ORDINANCES REGARDING THE CITY'S CONFLICT OF INTEREST POLICY The City Council of the City of Elk River does hereby ordain as follows: Section 1. Section 218.08(9) of the Elk River Code of Ordinances is amended to read as follows: 218.08(9) Conflict of Interest. a. Prohibition. Officials of the City shall not engage in any activity which is in violation of state conflict of interest laws, including: (1) Entering into any sale, lease or contract in violation of Minnesota Statutes, Section 471.87- 471.89; or (2) Acceptance by a local official of any gift from an interested person in violation of Minnesota Statutes Section 471.895. Any official engaging in any activity involving either an actual or potential violation of state conflict of interest law, or having knowledge of such activity by another official, shall promptly report the activity to the City Administrator or, if such activity be by the City Administrator, to the Mayor. The City Administrator or Mayor shall investigate the matter and make a determination as to whether or not violation of state law has occurred. If the City Administrator or Mayor determines that a violation of state law has occurred, the City Administrator or Mayor shall notify the appropriate law enforcement officials. b. Elections. No elected official shall require, either directly or indirectly, any employees of the City to campaign on his/her behalf as a condition to employment. No employee shall use City time or resources in promoting or advocating the election of any individual. c. Applicability. Nothing in this policy is intended to violate, supersede, or conflict with any applicable state or federal law regarding conflicts of interest in public employment or disclosure requirements. . . . Section 2. This ordinance shall be effective upon adoption and publication, according to law. Passed and adopted by the City Council of the City of Elk River, this ____ day of , 1994. Attest: Sandra Thackeray, City Clerk PKB:JH7s Henry A. Duitsman, Mayor . . . EXHIBIT D MEMORANDUM LARKIN, HOFFMAN, DALY & LINDGREN, LTD. Attorneys at Law 1500 Norwest Financial Center 7900 Xerxes Avenue South Bloomington, Minnesota 55431 Telephone: (612) 835-3800 FAX: (612) 896-3333 TO: Mayor Henry A. Duitsman Members of the City Council Members of the Economic Development Authority Members of the Housing and Redevelopment Authority Members of the Planning Commission Members of the Park and Recreation Commission Elk River Municipal Utility Commissioners City of Elk River Department Heads Peter Beck, City Attorney , 1994 City of Elk River Conflict of Interest Policy FROM: DATE: RE: Attached for your review are copies of Section 218.08(9) of the Elk River Code of Ordinances and Minnesota Statutes Sections 471.87-471.895. These ordinance and statutory provisions set forth the conflict of interest standards applicable in the City of Elk River. The City of Elk River's policy is to enforce the state conflict of interest laws applicable to municipal officials, and to apply a similar standard to all City of Elk River officials and employees. Following is a summary of the applicable state laws and the City's ordinance. Contracts Minnesota Statutes Section 471.87 prohibits any public official who is authorized to take part in the making of a sale, lease, or contract to voluntarily have a personal financial interest in the transaction or to personally benefit financially from it. Violation of this prohibition is a gross misdemeanor. This statute applies to all kinds of contracts, formal or informal, for goods, real estate or services, whether the City is the buyer or seller. This statute applies only to persons authorized to take part in the making of contracts. In Elk River, this would include members of the City Council, the EDA, the HRA and Elk River Municipal Utilities, because each of these . . bodies is authorized to enter into contracts. The statute prohibits these persons from being paid employees of the City, entering into any contract with the City, holding stock in a corporation which enters into a contract with the City, or being a subcontractor under a contract with the City. In addition to Minnesota Statutes Section 471.87, the City Council Members are also subject to Minnesota Statutes Section 412.311, which provides that, "no member of a City Council shall be directly or indirectly interested in any contract made by the Council. II This provision is somewhat broader than that in Section 471.87, and requires that City Council Members be particularly circumspect about conflict of interest situations regarding contracts. Minnesota Statutes Section 471.88 sets forth some exceptions to Section 471.87, and authorizes the City Council, by unanimous vote, to contract for goods or services with one of its interested officials under certain circumstances, including: 1. The designation of a bank or savings association as an authorized depository for public funds and as a source of borrowing. However, the official who has an interest in the bank or savings association must disclose that interest when the bank or savings association is first designated, or when the official is elected, and that disclosure must be entered in the minutes of the City Council. 2. The designation of an official newspaper or the publication of official matters in the newspaper, when the newspaper is the only one complying with statutory requirements for designating the official newspaper. 3. A contract with a cooperative association of which the official is a shareholder or stockholder but not an officer or director. 4. A contract for which competitive bids are not required. The League of Cities has interpreted this provision as meaning a contract under the competitive bidding threshold of Minnesota Statutes Section 471.345 ($25,000) . 5. A contract with a Volunteer Fire Department for the payment of compensation to its members or for the payment of retirement benefits to members. 6. When an EDA Commissioner is employed by a bank engaged in making loans or performing trust services involving real or personal property affected by any plan of the EDA if the Commissioner discloses the nature of the loans or trust services of which the Commissioner has personal knowledge, which disclosure shall be entered into the minutes of the EDA. 2. . 7. A public officer may rent space in a public facility at a rate commensurate with that paid by other members of the public. 8. Local officials may apply for a County HRA loan or grant. Minnesota Statutes Section 471.881 provides that the exceptions set forth above apply not withstanding the provisions of any other statute and Section 471.89 sets forth the procedures to follow when a contract is void. Gifts Minnesota Statutes Section 471.895 addresses gifts to public officials. This is the statute adopted by the 1994 legislature which has triggered so much discussion. The prohibition in this statute reads as follows: An interested person may not give a gift or request another to give a gift to a local official. A local official may not accept a gift from an interested person. . "Gift" is defined to mean money, real or personal property, a service, a loan, a forbearance or forgiveness of indebtedness, or a promise of future employment, that is given and received without the giver receiving consideration of equal or greater value in return. "Interested person" is defined to mean a person or a representative of a person or association that has a direct financial interest in a decision that a local official is authorized to make. "Local official" is defined to mean an elected or appointed official of a county or city or of an agency, authority or instrumentality of a county or city. Following are some thoughts on some of the key terms in this statute: Who is an "interested person"? An interested person is one that has "a direct financial interest" in a decision that a local official is authorized to make. Commentators have suggested that a direct financial interest is not the general interest that every taxpayer has in the decisions of a local official, but is the more immediate and personal interest that one has in a decision that affects one differently from others, such as a tax abatement or assessment on a particular parcel. 3. . . Who is a "local official"? Members of the Elk River City Council and all members of appointed Council Commissions (including the EDA, HRA, Planning Commission, Park and Recreation Commission, Elk River Municipal Utilities, etc.) are local officials. The commentators have suggested that appointed staff members are also "local officials," if they have significant responsibility for making decisions. However, not every person who works for the City is an "official." Officials are those who have significant responsibility for making decisions, not those who simply carry out the orders of others. What is a "gift"? Virtually anything of any value is going to be considered a "gift" under this statute, including: (a) money, including honoraria; (b) real or personal property, including food and beverages, entertainment tickets, etc.; (c) services, including free travel and lodging; (d) a loan, forbearance or forgiveness of indebtedness; and (e) a promise of future employment. To be a gift, the item of value must be given and received without the giver receiving consideration of equal or greater value in return. The commentators are suggesting that this language will allow local officials and interested persons to, for instance, take turns picking up the check for meals or other items of equal value. The statute makes exceptions for the following: (a) campaign contributions; (b) services to assist in the performance of official duties including, but not limited to, providing advice, consultation, information and communication in connection with legislation and services to constituents; (c) services of insignificant monetary value. However, the value is measured by its value to the recipient (local official) rather than to the giver. Commentators have indicated that this exception should be narrowly construed. 4. (d) plaques or mementos recognizing service; . (e) trinkets or mementos of insignificant value, such as pins, pens, cups and calendars, etc.; (f) informational material of unexceptional value, such as newspapers, pamphlets, brochures, etc.; (g) food or beverages given in connection with a speech; (h) the law does also not apply to gifts given by a family member, nor to gifts given to groups that are not related to the recipient's position as a public official, but given for some other reason. Violation of Minnesota Statutes Section 471.895 is a misdemeanor. Therefore, all City officials and employees should be very careful about complying with its requirements. City Policy The City Conflict of Interest Ordinance incorporates the state laws outlined above, and also: . 1. Sets forth a city conflict of interest policy. This policy provides that officials and employees of the City, or their family members, shall not engage or have financial interest in a business or other activity which could reasonably lead to a conflict of interest with the officials or employees' primary city responsibilities. 2. Sets forth eight examples of activities which are not in accordance with this policy. This list is not intended to be comprehensive, but only illustrative of the types of activities which are not in accordance with the policy. 3. Applies this policy to City officials and all employees of the City. This is broader than the state laws, which cover only public officials and "local officials." Violation of the City's Conflict of Interest Policy is not made a criminal violation by the Ordinance but is, pursuant to the terms of the ordinance, grounds for termination of employment or removal from office. Conclusion . The city and state requirements and policies regarding conflicts of interest can be complex and difficult to apply to specific situations. This memorandum and attachments are intended to provide each of you with the laws themselves and some general guidance. I encourage each of you to consult me if you have questions about the application of these statutes and this ordinance to a specific situation. 5. ~,e.'~..~~ r~rk~~t ~" ,,~- !.3 ~..l ~~ ~ [ PKB:JH5s . ..... . . 471.86 MUNICIPAL RIGHTS, POWERS, DUTIES 1184 it. If judgment is rendered against the firefighter, such governmental appropriate money from any funds available to pay such jud for the payment thereof pursuant to law. Subd. 3. Application. The obligation 0 Ion shall not apply in any case where such firefighter is fully indem . nst claims for such damages and for such expenses by contract with an this section shall not be construed to waive any existing immunity acc law to municipalities or governmental subdivisions from claims for sustained as the result of the negligence of its officers, agents or servant exercise or performance of governmental or public functions. ry: 1951 c 183 s 1-3; 1957 c 199 s 1; 1973 c 123 art 5 s 7; 1977 c 429 s 63; 1986 471.87 PUBLIC OFFICERS, INTEREST IN CONTRACT; PENALTY. Exceptas authorized in section 471.88, a public officer who is authorized to take part in any manner in making any sale, lease, or contract in official capacity shall not voluntarily have a personal financial interest in that sale, lease, or contract or personally benefit financially therefrom. Every public officer who violates this provision is guilty of a gross misdemeanor. History: 1951 c 379 s 1; 1955 c 41 s 1; 1986 c 444 471.88 MS -1957 [Repealed, 1961 c 651 s 2] 471.88 EXCEPTIONS. Subdivision I. The governing body of any port authority, seaway port authority, economic development authority, town, school district, hospital district, county, or city, by unanimous vote, may contract for goods or services with an interested officer of the governmental unit in any of the following cases. Subd. 2. In the designation of a bank or savings association in which the officer is interested as an authorized depository for public funds and as a source of borrowing, no restriction shall apply to the deposit or borrowing of any funds or the designation of a depository by such authority or governmental unit in any bank or savings associa- tion in which a member of an authority or officer of a governmental unit shall have an interest if such deposited funds are protected in accordance with chapter 118; provided, however, that any member or officer having such an interest shall disclose that the member is a director or employee of the bank or savings association, which disclosure shall be entered upon the minutes of the authority or governmental unit, such disclo- sure shall be made when such bank or savings association is first designated as a deposi- tory or as a Source of borrowing, or when such member or officer is elected whichever is later, and such disclosure shall serve as notice of such interest and need not be made with each successive transaction; Subd. 3. The designation of an official newspaper, or publication of official matters therein, in which the officer is interested when it is the only newspaper complying with statutory or charter requirements relating to the designation or publication; Subd. 4. A contract with a cooperative association of which the officer is a share- holder or stockholder but not an officer or manager; Subd. 5. A contract for which competitive bids are not required by law. Subd. 6. A contract with a volunteer fire department for the payment of compensa- tion to its members or for the payment of retirement benefits to these members; Subd. 7. A contract with a municipal band for the payment of compensation to its members; Subd. 8. [Repealed, 1992 c 380 s 8] Subd. 9. When a port authority commissioner or economic development autho~ty commissioner is engaged in or employed by a firm engaged in the business of import 109 or exporting or general trade, it shall be lawful for the authority to do business with the 1185 MUNICIPAL RIGHTS, POWERS, DUTIES 471.89 . commissioner or the commissioner's employer provided that in the fixing of any rates affecting shippers or users of the terminal facility, said commissioner shall not vote thereon. Subd. 10. When a seaway port authority commissioner is engaged in or employed by a firm engaged in the business of importing or exporting or general trade, it shall be lawful for the authority to do business with the commissioner or the commissioner's employer provided that in the fixing of any rates affecting shippers or users of the termi- nal facility, said commissioner shall not take part in the determination of, except to tes- tify, nor vote thereon. Subd. II. When a commissioner of any public housing, port authority, or eco- nomic development authority is employed by a bank engaged in making loans or per- forming trust services involving real or personal property affected by any plan or such housing or port authority, no restriction shall apply to any such loans made or trust ser- vices performed by said bank if the commissioner shall disclose the nature of such loans or trust services of which the commissioner has personal knowledge, which disclosure shall be entered upon the minutes of such authority.- Subd. 12. An officer of a government unit may contract with the unit to provide construction materials or services, or both, by sealed bid process iftl1e unit has a popu- lation of 1,000 or les.s according to the last federal census. The officer may not vote on the question of the contract when it comes before the governing body for consideration. Subd. 13. A public officer may rent space in a public facility at a rate commensu- rate with that paid by other members of the public. Subd. 14. Housing and redevelopment authority. When a county or multicounty housing and redevelopment authority administers a loan or grant program for individ- ual residential property owners within the geographical boundaries of a government unit by an agreement entered into by the government unit and the housing and redevel- opment authority, an officer of the government unit may apply for a loan or grant from the housing and redevelopment authority. If an officer applies for a loan or grant, the officer must disclose as part of the official minutes of a public meeting of the govern- mental unit that the officer has applied for a loan or grant. Subd. 15. Franchise agreement. When a home rule charter or statutory city and a utility enter into a franchise agreement or a contract for the provision of utility services to the city, a city council member who is an employee of the utility is not precluded from continuing to serve as a city council member during the term of the franchise agreement or contract if the council member abstains from voting on any official action relating to the franchise agreement or contract and discloses the member's reason for the abstention in the official minutes of the council meeting. History: 1961 c 651 s 1; 1965 c 806 s 1-4; 1969 c 26 s 1; 1973 c 123 art 5 s 7; 1977 c 55 s 1-3; 1978 c 651 s 1; i979 c 20 s 1; 1986 c 399 art 2 s 38-40; 1986 c 400 s 38-40; 1986 c 444; ISp1986 c 3 art 2 s 41; 1991 c 65 s 1,2; 1992 c 380 s 7; 1992 c 522 s 42,43 471.881 EXCEPTIONS; APPLICATION. The exceptions provided in section 471.88 shall apply notwithstanding the provi- sions of any other statute or city charter. . History: 1967 c 18 s 1 471.89 CONTRACT, WHEN VOID. Subdivision 1. Procedure followed. A contract made pursuant to section 471.88, Subdivision 5, is void unless the procedure prescribed by subdivisions 2 and 3 is fol- lowed. S.ubd. 2. Resolution by governing body. Except in an emergency making such proce- dure Impracticable, the governing body of the governmental unit shall authorize the ~ontract in advance of its performance by adopting a resolution setting out the essential acts and determining that the contract price is as low as or lower than the price at which the commodity or services could be obtained elsewhere. In case of an emergency when . .... . . 471.89 MUNICIPAL RIGHTS, POWERS, DUTIES 1186 the contract cannot be authorized in advance, payment of the claims shall be autho- rized by a like resolution in which the facts of the emergency are also stated. Subd. 3. Claims, affidavits filed. Before such a claim is paid, the interested officer shall file with the clerk of the governing body an affidavit stating: (a) The name of the officer and the office held by the officer; (b) ~n itemization of the commodity or services furnished; (c) The contract price; (d) The reasonable value; (e) The interest of the officer in the contract; and (f) That to the best of the officer's knowledge and belief the contract price is as low as, or lower than, the price at which the commodity or services could be obtained from other sources. History: 1951 c 379 s 3; 1965 c 45 s 64-66; 1967 c 125 s 1,2; 1978 c 651 s 2,3; 1986 c 444 . may, in the re Subd. its governing Subd. 3. St assume and shall city in the joint ente . tion of said hospital. History: 1951 c 49 90 STATUTORY CITIES, HOSPITAL; TRANSFER TO COUNTY. bdivision 1. Authorization. When duly authorized by unanimous vote of its gov- ody any statutory city owning real estate and a hospital building situated equipment jointly with the county in which said statutory city is located, inal consideration or without consideration, transfer its title and interest e, hospital building, and equipment to said county. ty may accept. Said county, when authorized by a majority vote of may, accept such grant and conveyance. city obligations not assumed by county. Such county does not liable for any part of the obligations incurred by said statutory of the statutory city and county in the construction or opera- 471.91 AIR TRAVEL AC The governing body of any the first class is authorized to ent . engaged in carrying passengers on s lishment of an air travel account for a . " conditions as may be necessary and pr ' employees of the city or county, and to exceeding $500 to the credit of such accoun .', History: 1951 c 630 s 1 the first class or any county containing a city of a contract with any airline company regularly flights in interstate commerce for the estab- city or county, subject to such terms and facilitate air travel by the officers and with the airline company a sum not 471.92 DANGEROUS EXCAVATIONS; MAINT Subdivision 1. The governing body of any county:' maintenance or abandonment of open wells, cesspools, catch basins and may provide penalties for the violation the .. or abandonment of any such installation so as to endanger tn able number of persons, may be defined as a public nuisance a the laws relating to public nuisances. Subd. 2. The abatement of any such nuisance may include suit installation or surrounding the same with a suitable protective fence. History: 1955 c 601 s 1,2; 1973 c 123 art 5 s 7 CE, ABANDONMENT. r town may regulate the s, recharging basins, he use, maintenance y of any consider- ted pursuant to . 471.924 COUNTY REGULATION OF PAWNBROKERS, SECOND JUNK DEALERS. Subdivision 1. Authority. For the purpose of promoting the health, safety, as been assigned the use of a local government vehicle for ent business on an extended basis, and the employee's pri- ot the local government work station to which the employee is ; or yee has been assigned the use of a local government vehicle for overnment business away from the work station to which the anently assigned, and the number of miles traveled, or the time ct the business, will be minimized if the employee uses a local govern- o travel to the employee's residence before or after traveling to the place rnment business. 4. Exceptions. This section does not apply to public safety vehicles that are leased by a political subdivision. tory: 1993 c 315 s 16 ... 471.88 EXCEPTIONS. 471.666 PERSONAL USE OF PUBLICLY OW ITED. Subdivision I. Definitions. For purposes 0 shall apply: (a) "Local government vehicle" means division of the state of Minnesota or loan (b) "Political subdivision" means a town, school district, metropolitan or re of this state. (c) "Local government employ appointed or employed by apolitica cal subdivisions. Subd. 2. Restricted uses. A I rized local government busines use of the vehicle for local go\!' be used for transportation t except as provided in subd" Subd. 3. Permitted us ment employee to travel (1) in connection not wor:king; (2) if the empl authorized local g mary place of wo permanently as . (3) if the authorized I employee i needed to ment ve ofloca S 471.631 REWARDS FOR INFORMATION ABOUT FELONS. A home rule charter or statutory city may offer and pay a reward or fu ment ofa reward offered by a nonprofit organization in an amount it deem for information leading to the apprehension and charging or convicti alleged to have committed a felony within the city's limits. History: 1993 c 63 s 1 . 83 471.635 ZONING ORDINANCES. Notwithstanding section' 471.633, a governmental subd' reasonable, nondiscriminatory, and nonarbitrary zoning or businesses where firearms are sold by a firearms dealer. For a firearms dealer is a person who is federally licensed to s tal subdivision is an entity described in sections 471.6 History: 1993 c 326 art 1 s 3; 1993 c 366 s 8 may regulate by ces, the location of rposes of this section, rms and a governmen- 471.634. AUTOMOBILES PROHIB- section, the following definitions Ie owned or leflsed by a political sub- political subdivision. ory or home rule charter city, county, agency, or other special purpose district . "employee" means an individual who is ivision, including all elected officials of politi- overnment vehicle may be used only for autho- ding personal use that is clearly incidental to the ent business. A local government vehicle may not om the residence of a local government employee, 3. ocal government vehicle may be used by a local govern- from the employee's residence: ork-related activities during hours when the employee is . [For text ofsubds 1 to 15. see M.S.1992} Subd. 16. School district. Notwithstanding subdivision 5, a school board member 471.88 MUNICIPAL RIGHTS, POWERS, DUTIES 84 . may be newly employed or may continue to be employed by a school district as an employee only if there is a reasonable expectation at the beginning of the fiscal year or at the time the contract is entered into or extended that the amount to be earned by that officer under that contract or employment relationship will not exceed $5,000 in that fiscal year. Notwithstanding section 1 25. 1 2 or 125.17 or other law, if the officer does not receive unanimous approval to continue in employment at a meeting at which all board members are present, that employment is immediately terminated and that officer has no further rights to employment while serving as a school board member in the district. History: 1993 c 224 art 9 s 43 -INSURANCE COVERAGE BY POLITICAL SUBDIVISION. Subd. 5a. A home ru fund or pool to discharge the bon employees of the city. ' tory city may use a self-insurance revolving rovided by state law for officers and History: 1993 c 218 s I . . . . - . Ch.377,. ~ 4 E or to a Oft . deletions by itIikIout . 1994 "imGUL.AR SESSION 'Ch. 379, ~ 1 . . (4) a plaque or similar memento recognizing indiVidual services in i field of specialty or to a charitable cause; .. . . . (5) a trinket or memento of insignificant value; _ (6) informational material .of unexceptional value;. or (7) food or a beverag.e given at a reception, meal, or meeting away from. the recipient's place of work by an organization. before whom the recipient appears to make a speech or answer questions as part of a program. . (b) The prohibitions in this section do not apply if the gift is given: (1) because of the recipient's membership in a group, a majority of whose members are not local officials, and an equivalent gift is given to the. other members of the. group; or . (2) by an interested person who is. a member of the family of the recipient, unless the gift is given on behalf of someone who is not a member of that family.. . Presented to the governor March 18, 1994. . Approved March 22, 1994. . OKA COUNTY-'-LIBRARY SERVICE-CITY OF ANOKA CHAPTER 378 H.F. No. 1956 1 government; authorizing the public library systems of the county of Anoka to merge and the county to provide li~rary services for the, city. Approved March 28, 1994. WRIGHT COUNTY-SHELTE FACILITY-TRANSFER TO CHAPTER 379 H.F. No. 1955 AN ACT relating to Wright county; permitting the transfer of a sheltere operator without bids or consideration. . BE IT ENACTED BY THE LEGISLATURE OF THE STATE - 0 Section 1. TRANSFER OF SHELTERED WORKSHOP FACILITY TO Addlllons are Indicated by underline; deletions by ~ 5