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RESOLUTION 2012 —12 <br />RESOLUTION ESTABLISHING REQUIREMENTS FOR LETTERS OF CREDIT <br />WHEREAS, the City Council deems it advisable and in the best interest of the City of <br />Hugo to adopt a policy relating to letters of credit; and <br />WHEREAS, in enacting this policy, the City Council acknowledges that variations <br />may be required depending on current fiscal conditions. <br />NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of <br />Hugo, Washington County, Minnesota, as follows: <br />SECTION 1: SCOPE <br />This policy applies whenever a letter of credit is required by the City of Hugo. <br />SECTION 2: REQUIREMENTS <br />A letter of credit submitted to the City of Hugo must: <br />1. Be issued by a financial institution that is -insured by the Federal Deposit <br />Insurance Corporation; <br />2. Be in a form approved by the city; <br />3. Specify that the letter of credit is irrevocable; <br />4. Be for the amount required by ordinance or executed agreement; <br />5. Provide for disbursement of funds from an office in the Minneapolis -St. Paul <br />seven -county metropolitan area; <br />6. Include an automatic renewal clause requiring the financial institution to provide <br />30 days advance written notice to the City Clerk, by registered mail, if it intends <br />not to renew; <br />SECTION 3: ACCEPTABLE ALTERNATIVES <br />Acceptable alternatives to a letter of credit are cash, valid certified check, bank draft or <br />money order. If any of these are provided in lieu of a letter of credit, the funds must be <br />forwarded to the Finance Department for deposit to the city's accounts. Releases or <br />draws on the funds will be processed in the same manner as a letter of credit; however, no <br />interest will be paid. <br />