City Council - Regular Meeting

[clears throat] We are

add one coming in the getting pizza. Yeah. Go ahead and call this workshop to order. Uh, welcome to our purchasing policy workshop for this evening and we'll have Mr. Ford here to start us off.

Good evening. [clears throat] Bob Ford, uh, chief financial officer. Hello, Darren. How you doing? Um, there we go. Okay. Um, I don't think this is going to take a lot of time this evening. Feel free to jump in, ask questions as we move along. Um, but our current purchasing policy was updated in 2022, so September of 2022. And in that update, there were sort of four or actually six major themes. one, we changed the requisition process back in the in the old days. We had paper, we went to an ERP solution, an electronic solution. Um, we added some language uh in 22 uh specifically around leases and so that our purchasing policy would be in compliance with Gazsby 87, which effectively took operating leases, which were offbalance sheet leases, and put them on the balance sheet. Um there was a discussion there was a new section added about emergency expenditures. There was a definition of what an emergency was and it empowered the city administrator and the mayor uh to take appropriate action in response to an emergency which really gave the city administrator um in the event of an emergency up to $100,000 of spending power and with the mayor's authorization up to $200,000 of spending power. It went on to um provide some language and definition around grant funding and some additional language around petty cash and our purchasing card program. As as you can see, it's kind of a smattering of things that got included in this purchasing policy update in 22, but nothing of substance related to the process, the ranges, the tiers, etc.

Oh, there we go. Flipping on to the next page. Uh that this purchasing policy proposal, the 26 update, um really has five major themes. So the first theme is we will be relying on the approved budget as the source of truth that that drives the purchasing policy incremental required approvals and basically eliminates redundancy in the process. The second principle is expanding purchasing ranges for each tier drives operating efficiency. So we'll spend a little time talking about that. Consolidating the tiers from five to four drives approval simplicity and a better understanding of the process. Um, expanding purchasing authority for the city administrator and the mayor drives timely resolution of catastrophic event or an emergency. And then lastly, um, [clears throat] what the theme here is changing the purchasing agent from the city administrator, which is how it's currently fi defined in our existing purchasing pol policy to the chief financial officer aligns more with the organizational definition that we have embedded in the purchasing policy. So we don't have a purchasing department, but the finance department carries out the purchasing department's functions. So it seems odd that the city administrator would be the purchasing agent and not the chief financial officer since the financial department or the finance department actually executes the purchasing policy. So I want to spend a little time on this concept and this concept is where the budget becomes the source of truth if you will. So you'll remember in our budgeting process, we defined two

separate budgets, an operating budget and a capital budget. And what I've done here is I've just highlighted what we approved in the capital budget this last year for 26. So the first thing is that on the bottom part of this page, you'll notice that we talk about uses. Remember uses are the expenditures. So we've got capital projects identified by fund and we've got vehicle and equipment or other capital expenditures that were approved by fund. So specifically as we're talking about the purchasing policy th this council through the budgeting process has already approved a significant portion of the capital expenditures that we're going to make in a specific fiscal year. And we've done that through the budget. So specifically, and I put underneath, just to remind you, underneath your package, this sort of horrendous um ledger sheet that shows by fund each and every project that we currently have budgeted within the context of the 26 budget and then also it extrapolates it out for nine more years to complete our CIP. So once again, the the premise here is that the approved budget is the is the underlying document that defines approvals and that when it's time to move forward on a specific project that's already been approved in the budget, it doesn't make sense to come back to the city council again for additional approvals since you've already approved it. And so if you'll turn we go on here to the next. Here we go.

So on the following page, I've identified the the tiers that we currently have in place and the proposed expanded ranges and consolidated tiers. So on the left hand side I've identified here's our current ranges and on the right hand side I've identified where we're proposing we go with this. Um so fundamentally and we'll spend a little time digging a little deeper into each one of these items but we're proposing raising what I'll call tier one the base tier which is a tier that does not require three bids. We're proposing raising that from $5,000 to $15,000. And I'll spend a little time walking you through why that is why that expenditure, that higher level of expenditure, that ceiling if you will, makes sense in the context of the work that we do today. Um, tier two and tier three in our current policy is really um it's so tightly um they're so tightly next to each other in terms of approvals, etc. We're proposing expanding that um and consolidating consolidating basically tier two and tier three and part of tier four into the new tier 2. Um but you can see on the approval required section on the right hand side. So if you look at let's just take let's just take tier two for instance on the right hand side tier 2 the floor would be $15,000 up to 50. Once again the budget is the driver. So the budget has create is the the source source of truth. We've already identified these projects in the budget. We've already discussed them during the approval process. So the budget drives the any incremental requirement. There's

also a section um in our current municipal code section 135.050 050 that says that we can't make an an additional expenditure if it would in fact um create an environment where that fund would exceed the amount that you've already approved. So the safeguard here is that we have a a statute on the books that says you can't spend more than it's already been approved. And so if it's in the budget and we can't spend more than it's already been approved, then the proposal here is that the approval for 15,000 to 50,000 would be the department director, the finance manager, and in the case of something that's out of budget or non-budgeted, I would need to come in as the chief financial officer and give approval there. Once again, the only way that we would approve something that was non-budgeted is that if we had a way, let's just make up a number. a project comes in for $35,000, we would need to either reduce another project to fund that specific project or we would have at at that point in time, we would have an unbudgeted item that we would bring back to council as part of the budget amendment process. Um, once again, looking at tier three, we're we're taking tier three, which is currently part of our upper tier. We're taking part of that 50,000 to 100. Once again, the budget drives the author the incremental approvals. Once again, the safeguard is the code 135.050. Departmental director, CFO, and city administrator approval in the event of a non-budgeted item. And then anything over $100,000, if it's budgeted,

we would we would not bring that item back to council because we've already approved that as part of the budget process. But if it's over $100,000 and it's not budgeted, then we're back to council for approval. So that's the fundamental premise of the update to the old purchasing policy to the new policy. It's really to drive to eliminate the redundancy of bringing things back to council continually when you've already approved it as part of the budget process. And when I say that, it's not only the approval that we go through in the fall of the year, but with every budget amendment, we would update that budget to the current budget. That'd be the the operating budget at that time, operating or capital budget at that time. So why expand the tier ranges? Um since 2022, cumulative inflation has been 25 to 30% depending on what inflation metric you look at, whether it's CPI, PPI, or some other definition of some combination of inflation and what components are included. But more specifically for us as a city and specifically on the public works projects, we've seen construction costs that have increased 40 to 65% over that same time frame. So we've got a situation where we've got ranges that were established many years ago and we've had inflation and construction cost increases year after year after year after year. And so we we we we've squeezed ourself into the upper part of the range. And in fact, there are times when there is no solution um given the current inflationary impacts. There's no solution in our current purchasing policy that will accommodate our needs. So therefore, the tier ranges need to be adjusted to account for cost increases

to date and to provide additional headroom for the coming years. We don't want to have to update our purchasing policy every year. We need to give ourselves some headroom, some flexibility, and some operating room. So, here's some examples of why expand the tier ranges. So, I'll use Eric Brown and his team as an example. They're out on a job and they're putting a water line or a sewer line in the ground and they suddenly hit a bunch of rock and they need to rent a rock breaker. Well, just to rent a rock breaker on a short-term contract is about $10,500. Under our current our current purchasing policy, that would require them they couldn't just go out and rent a rock breaker, come back to the job, and keep going. they'd have to go out and seek three bids in order to get the bids, take the bids back, analyze them. So, it it's going to effectively slow down the progress in the field with regards to a lot of our p a lot of our um public works projects. Um we've given you other examples uh to rent a dozer. if they f get into a project and find out we don't have the equipment. We need to bring a dozer in because of X Y or Z. Um $10,200. A roller is a little over 5,000 bucks. Um on the vehicle and equipment repair and maintenance side, heavy truck tires anywhere from 6,000 to $7,000 a tire. Um I don't even know what this is. A D deaf particulate filter. 10,000 bucks for one of those things. um

on the low end.

Yeah. And so once again, we're in the field. We're trying to we're we're we're going about our our job and suddenly we we need one of those things. I don't know what they are, but we need it. And as a result, we'd have to go out in the current policy would require us to go out for three beds. Um so once again, expanding the tier ranges specifically at the bottom end. This is where everyday life happens on the bottom end of our tiers. And this gives our operating teams, specifically public works, more operating headroom to be able to get their jobs done. And I think Colton, you told me that Springfield just raised their local lower tier to $25,000.

Yeah, their expanded purchasing policy tiers are pretty similar to ours. Yeah, that's right. Yeah. And I and I read through their purchasing policy and they've also identified that where the budget where where an item is is included in the budget, the budget is the the controlling document and that specific project if it's budgeted for when you come up to that project and prepared to sign the contract, they don't need to take it back to council either. So it's it's a similar concept. So once again I'm I'm being a little redundant here but the consolidating the tiers and expanding the ranges once again the budget is going to drive the approval requirements and then once again the safeguard as per Republic municipal code section 135.050 no expenditure will be made which would result in the total expenditures of that fund to exceed the amount authorized by city council in the approved budget. So, that's the safeguard. We're never going to spend more than you've approved. And if it's in the budget, it just gives us flexibility and the ability to push forward and get things done. Um, what it effectively does is one, it raises the requirements for three bids from an expenditure greater than $5,000 to an expenditure greater than 15. Anything over $15,000 will get three bids. And it also raises the requirements for formal bidding methods such as RFPs and RFQS from $50,000 or $70,000 for infrastructure projects to $100,000 or 125 for in infrastructure projects. So saying all of this, those are really the two takeaways that this this modified policy or this updated policy will do. It gives us more headroom in every tier, but specifically it gives us more

flexibility at the low end and at the high end the operating budget is carries the day. On the emergency front, [clears throat] the current policy that was put in place in 22 gave the city administrator the authority if he declares an emergency that he could spend up to $100,000 without city council approval. We're proposing raising that to 250. And also, um, in 22, the city administrator plus the mayor could spend up to $200,000. We're proposing raising that to $350,000. And why? So, here's some examples. A single well pump um can cost about $160,000 for repair or replacement. So, one well pump goes down, we're going to spend 160. Our current policy in that environment would require both the city administrator and the mayor to approve that. When in fact, I think we'd all agree if a well pump goes down, we want you to get it fixed. Um, a single pump failure at Schuler Creek can cost $175,000. There are five pumps at that at that site. And I think we had a situation two years ago where two pumps went down at the same time. So, our current emergency statute as part of our our purchasing policy would not have accommodate that accommodated that and we would had to come back to city council for approval. We're just looking for headroom to be able to deal with those emergencies given the cost of these components that have significantly increased over time. Um so in summary,

[clears throat] this policy update would eliminate redundant approvals by identifying the approved budget as the governing document or the driver of the purchasing policy approvals required. It simplifies the structure by consolidating the tiers. It recognizes the impacts of increased cost to the city's to the city's purchasing power and provides additional operating headroom by expanding the tier ranges. It cleans up the organizational structure by naming the CFO as purchasing agent. And it provides additional purchasing authority to the city administrator and the mayor in the event of a catastrophic failure or emergency. [snorts] And then last but not least, yes, there's more to come. So today, there are a number of financial related policies on the books for the city of Republic. Um but the technology improvements and automation opportunities associated with Questica, Stampley, Sage Intact, ADP, Koozie, many of our policies and underlying procedures are either outdated, redundant or even unnecessary. So over the next year or so, we will be coming back to council in another workshop um to either update, eliminate or consolidate into one financial policy document all of the financial related policies to clean up the municipal code. Um that'll include this specific policy. At some point we want to integrate it into the overall financial policy so that we're only dealing with one document in terms of maintaining and updating because there are a number of related and similar paragraphs across multiple documents. Let's get them all in one place. So this is this is coming down the pike. Tonight we're talking about the purchasing policy and getting

it updated so that we can be more effective and less redundant in our processes. So 22 minutes. Great job. So So questions. Does this make sense to y'all? Um, it it's really about operating efficiency and and coming to council when we need to come to council, but not coming to council when we don't. Absolutely. Have any questions from city council? Yeah. Excuse me, Mr. Shaw.

Uh, could I get some clarification on what what a non-budgeted item would be when we're looking at the approvals required here? So, a non-budgeted item. Let's let's take um let's say that we had budget. I'll use the building next door. So, when we we budgeted a specific amount for the budget in the budget for the building, um let's say that we forgot to budget for IT infrastructure. Um and that IT infrastructure was $565,000 and it wasn't part of the budget. We needed we need the IT infrastructure to make that building work. That would require us to come to council. However, if that 565 had been in the budget and you had approved that budget and that line item was identified, we would have not come back to council for that 565.

Good. Thank you, Mr. Mayor. Mr. Campbell, Mr. Ford, you you spoke of Schuler Creek down there, the lift station. So, it's more than just like the pump cost. It's getting trucks there to to haul that to a to the treatment plant or to a treatment plant. So, would all that cost I mean as it's occurring would fall into this as well, right?

Um, if I understand your question correctly, Darren, yes, it would fall into this bucket. Once again, in a scenario where an emergency is declared, we would um be able to move forward on up to $350,000 with Mr. Mayor's approval. U up to $350,000 worth of expenditures. If we saw that exceeding, we're going to be required to come back to council for that. Thank you.

Thank you, Mr. Campbell. Do we have any additional questions from city council? Okay, seeing that there is none, I'm glad you mentioned the Schuler Creek lift station. It seems like that's every couple years there is an emergency there. So, having this in place, I think will make a a great deal of effort in making that move forward faster than having to have an emergency meeting for us to all come back together to approve that. So, any additional questions, statements from city council? Mr. order. I I would assume that on an emergency situation, the process has gone through. Council will be notified then afterwards of all this gone on

or simultaneously, we would alert you to what we were doing, but we would we would immediately start into the repair process without having to wait for approvals from from council. Okay. So, yeah, I I don't know. I I I got to wrap my head around this a little bit more. Uh the the the lift station, the pump itself, um that we haven't done the systems, correct, on a lot of things, but there are some things that we've never done systems on that we need to move on quick. Correct.

So there So we just take this price, Bob, you know, Bob's Pumps has this, so we're going to buy it from Bob's Pumps. So we don't try to Well, we'll do do our due diligence. We'll do our due diligence. Our goal is to find the best deal that's out there given, sorry, given the time frame that we're talking about. Um, we won't go out for a formal RFP process obviously, but Eric and his team would, you know, call three suppliers and say, "Okay, I need pump XYZ. What's it going to cost?" And they're going to they're going to find the best deal. Okay. Um, but they're not going to let that let's find the best deal keep that lift station down for two weeks. Exactly. Yeah,

exactly. Okay, thank you very much. I know that's always an issue on availability as well when we do have to go into those situations of who has it, who can get it to us faster than three years from now. Laura, I just want to point out anytime we do an emergency expenditure, it is reported in the admin report as well. Okay. So, there is documentation for that as well. In the admin report, is there a requirement for the mayor to notify council in that emergency situation like at 24 hours? Not that I'm aware of. Okay. I'm not aware of it either. I would, as long as I'm mayor, I would do my due diligence to let council know anytime that an emergency situation arose. And I know it sounds like staff will as well. So, absolutely.

Do we have any other questions from city council, questions, statements, discussion? Okay. Anything else for Mr. Ford? That's it. Okay. Uh, moving on to our next portion. We're going to ensure an amendment. Okay. So, our next portion will be a tour of our city hall. So, hope council is ready and this workshop is adjourned.