HomeMy WebLinkAbout2012.06.04 RESO 2012-12RESOLUTION 2012 —12
RESOLUTION ESTABLISHING REQUIREMENTS FOR LETTERS OF CREDIT
WHEREAS, the City Council deems it advisable and in the best interest of the City of
Hugo to adopt a policy relating to letters of credit; and
WHEREAS, in enacting this policy, the City Council acknowledges that variations
may be required depending on current fiscal conditions.
NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of the City of
Hugo, Washington County, Minnesota, as follows:
SECTION 1: SCOPE
This policy applies whenever a letter of credit is required by the City of Hugo.
SECTION 2: REQUIREMENTS
A letter of credit submitted to the City of Hugo must:
1. Be issued by a financial institution that is -insured by the Federal Deposit
Insurance Corporation;
2. Be in a form approved by the city;
3. Specify that the letter of credit is irrevocable;
4. Be for the amount required by ordinance or executed agreement;
5. Provide for disbursement of funds from an office in the Minneapolis -St. Paul
seven -county metropolitan area;
6. Include an automatic renewal clause requiring the financial institution to provide
30 days advance written notice to the City Clerk, by registered mail, if it intends
not to renew;
SECTION 3: ACCEPTABLE ALTERNATIVES
Acceptable alternatives to a letter of credit are cash, valid certified check, bank draft or
money order. If any of these are provided in lieu of a letter of credit, the funds must be
forwarded to the Finance Department for deposit to the city's accounts. Releases or
draws on the funds will be processed in the same manner as a letter of credit; however, no
interest will be paid.
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SECTION 4: ADMINISTRATION
The Finance Department is responsible for the safekeeping of all letters of credits (or
acceptable alternatives) received by the City, and for processing all draws, reductions or
releases of letters of credit.
Upon roll call, the following Members voting AYE: Haas, Klein, Petryk, Weidt, Miron
Upon roll call, the following Members voting NAY: None
Whereupon said resolution was declared passed and adopted this 4t' day of June, 2012.
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Fran Miron, Mayor
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Michele Lindau, City Clerk