CITY COUNCIL WORKSHOP MEETING MARCH 21, 2018 … › administration › Council... · (1) in index mutual funds based in the United States and indexed to a broad market United States

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CITY OF WOODBURY, MINNESOTA

CITY COUNCIL WORKSHOP MEETING

COUNCIL CHAMBERS, WOODBURY CITY HALL

MARCH 21, 2018

6:00 p.m. Dinner – City Hall Lunch Room

WORKSHOP AGENDA 6:30 p.m. 1. Proposed Investment Policy Revisions 18-76 7:00 p.m. 2. Public Works and Parks Building Design Development

Plans 18-77

8:15 p.m. 3. Bailey Road (CSAH 18) Corridor Management and Safety

Improvement Projects 18-78

8:35 p.m. 4. County Highway 19 (Woodbury Drive) and Local Road

Capacity and Safety Improvement Project 18-79

8:55 p.m. 5. 2018 Legislative Initiatives 18-80 9:10 p.m. 6. Administrator Comments and Updates1 8:15 p.m. 7. Mayor and City Council Comments and Commission

Liaison Updates1

9:20 p.m. 8. Adjournment

1. Items under comments and updates are intended to be informational or of brief inquiry. More substantial discussion of matters under comments and updates should be scheduled for a future agenda.

1 CITY OF WOODBURY, MINNESOTA

Office of City Administrator Council Letter No. 18-76 March 21, 2018 TO: The Honorable Mayor and Members of the City Council FROM: Clinton P. Gridley, City Administrator SUBJECT: Proposed Investment Policy Revisions

SUMMARY During its last session, the Minnesota Legislature added two types of investments to the list of approved options available to the City - index equity mutual funds and investing though the Minnesota State Board of Investment (SBI). These options are significantly different than the investments the City has historically been limited to. After several meetings of discussion, the Audit and Investment Commission (Commission) is recommending a revision to the investment policy to allow for the option to invest in equities through the SBI. The new state law providing for the additional long-term equity investment authority is attached. In addition to the option discussed above, the Commission also discussed the current bond maturity limitation of ten years and evaluated the benefits/risks of extending the maturity limitation beyond ten years. After several meetings of discussion, the Commission is recommending a revision to the investment policy to allow for the option to invest in bonds with a maturity greater than ten years but less than fifteen years. This yield curve maturity extension will allow for greater returns on the long-term portion of the investment portfolio. The investment policy was last reviewed by the Commission in 2015 with no changes recommended and last updated with changes in 2012. Along with the two revisions discussed above, various technical revisions/updates are also proposed. The revisions were the result of a review done by Wells Fargo Securities and city staff. The Commission reviewed these revisions and is recommending the approval. The proposed investment policy is attached for your review. RECOMMENDATION Staff recommends Council discuss the proposed policy revisions.

Council Workshop Letter No. 18-76 March 21, 2018 Page 2 BUDGET IMPACT SBI Equity Option For discussion purposes, the annualized SBI Non-Retirement Fund return for the five year period starting July 1, 2012 to June 30, 2017 was 14.6%. This rate of return is significantly higher than the return on bonds. For the same period, the City’s bond portfolio earned 5.6% including unrealized gains and losses. If unrealized gains and losses are factored out, the City’s bond portfolio earned 4.5% over the same period. As outlined in the attached SBI Non-Retirement Fund prospectus, this option is attractive if you believe that, over time, stocks will provide higher returns than other investments. The returns will rise and fall directly with the movement of the stock market. As with all options that use common stocks, the City Council must be willing to accept returns that vary widely in the short-term. In the long-term, the fund should average higher returns that you could obtain by investing in the fixed income market. Because of the potential movement in the stock market in the short-term and the limitations of the MN Statue governing long-term equity investments, the Commission and staff recommend equity investments be limited funds held for long-term capital plan reserves and the compensated absences obligation. The initial investment in the SBI Non-Retirement Fund is proposed at $3,000,000 and represents 1.6% of the total portfolio as of December 31, 2017. Additional equity investments will be evaluated upon completion of the 2019-2023 Capital Improvement Plan and the availability of long-term capital plan reserves. Bond Maturity Extension For discussion purposes, there is approximately a five basis point spread between ten-year agency bullets compared to fifteen-year agency bullets in February 2018. If the 5 basis point spread was applied to 10% of the portfolio, interest income would increase approximately $9,000 per year. The current yield spreads are very low given the current flat yield curve. Over the last 15 years, the average yield spread was 41 basis points between ten-year treasuries compared to fifteen-year treasuries. If the 41 basis point spread was applied to 10% of the portfolio, interest income would increase approximately $74,000 per year. PUBLIC PROCESS The public review process for the proposed revisions to the investment policy revision were as follows:

Audit and Investment Commission Meeting Discussion on October 25, 2017 Audit and Investment Commission Meeting Discussion on November 13, 2017 Audit and Investment Commission Meeting Discussion on February 28, 2018

Written By: Tim Johnson, Finance Director Approved Through: Clinton P. Gridley, City Administrator Attachments: 1. New Investment Authority State Law

2. Investment Policy with Proposed Revisions 3. MN State Board of Investment Minnesota Non- Retirement Fund

Prospectus

Minnesota Session Laws 2017 1st Special Session; Chapter 4 Article 2 Sec. 27. [118A.09] ADDITIONAL LONG-TERM EQUITY INVESTMENT AUTHORITY. Subdivision 1.

Definition; qualifying government.

"Qualifying government" means:

(1) a county or statutory or home rule charter city with a population of more than 100,000;

(2) a county or statutory or home rule charter city which had its most recently issued general obligation bonds rated in the highest category by a national bond rating agency; or

(3) a self-insurance pool listed in section 471.982, subdivision 3.

A county or statutory or home rule charter city with a population of 100,000 or less that is a qualifying government, but is subsequently rated less than the highest category by a national bond rating agency on a general obligation bond issue, may not invest additional funds under this section but may continue to manage funds previously invested under subdivision 2. Subd. 2.

Additional investment authority.

Qualifying governments may invest the amount described in subdivision 3:

(1) in index mutual funds based in the United States and indexed to a broad market United States equity index; or

(2) with the Minnesota State Board of Investment subject to such terms and minimum amounts as may be adopted by the board. Index mutual fund investments must be made directly with the main sales office of the fund. Subd. 3.

Funds.

(a) Qualifying governments may only invest under subdivision 2 according to the limitations in this subdivision. A qualifying government under subdivision 1, clause (1) or (2), may only invest its funds that are held for long-term capital plans authorized by the city council or county board, or long-term obligations of the qualifying government. Long-term obligations of the qualifying government include long-term capital plan reserves, funds held

to offset long-term environmental exposure, other postemployment benefit liabilities, compensated absences, and other long-term obligations established by applicable accounting standards.

(b) Qualifying governments under subdivision 1, clause (1) or (2), may invest up to 15 percent of the sum of:

(1) unassigned cash;

(2) cash equivalents;

(3) deposits; and

(4) investments.

This calculation must be based on the qualifying government's most recent audited statement of net position, which must be compliant and audited pursuant to governmental accounting and auditing standards. Once the amount invested reaches 15 percent of the sum of unassigned cash, cash equivalents, deposits, and investments, no further funds may be invested under this section; however, a qualifying government may continue to manage the funds previously invested under this section even if the total amount subsequently exceeds 15 percent of the sum of unassigned cash, cash equivalents, deposits, and investments.

(c) A qualified government under subdivision 1, clause (3), may invest up to the lesser of:

(1) 15 percent of the sum of its cash, cash equivalents, deposits, and investments; or

(2) 25 percent of its net assets as reported on the pool's most recent audited statement of net position, which must be compliant and audited pursuant to governmental accounting and auditing standards. Subd. 4.

Approval.

Before investing pursuant to this section, the governing body of the qualifying government must adopt a resolution that includes the following statements:

(1) the governing body understands that investments under subdivision 2 have a risk of loss;

(2) the governing body understands the type of funds that are being invested and the specific investment itself; and

(3) the governing body certifies that all funds designated for investment through the State Board of Investment meet the requirements of this section and the policies and procedures established by the State Board of Investment. Subd. 5.

Public Employees Retirement Association to act as account administrator.

A qualifying government exercising authority under this section to invest amounts with the State Board of Investment shall establish an account with the Public Employees Retirement Association (PERA), which shall act as the account administrator. Subd. 6.

Purpose of account.

The account established under subdivision 5 may only be used for the purposes provided under subdivision 3. PERA may rely on representations made by the qualifying government in exercising its duties as account administrator and has no duty to further verify qualifications, use, or intended use of the funds that are invested or withdrawn. Subd. 7.

Account maintenance.

(a) A qualifying government may establish an account to be held under the supervision of PERA for the purposes of investing funds with the State Board of Investment under subdivision 2. PERA shall establish a separate account for each qualifying government. PERA may charge participating qualifying governments a fee for reasonable administrative costs. The amount of any fee charged by PERA is annually appropriated to the association from the account. PERA may establish other reasonable terms and conditions for creation and maintenance of these accounts.

(b) PERA must report to the qualifying government on the investment returns of invested funds and on all investment fees or costs incurred by the account. Subd. 8.

Investment.

(a) The assets of an account shall be invested and held as required by this subdivision.

(b) PERA must certify all money in the accounts for which it is account administrator to the State Board of Investment for investment under section 11A.14, subject to the policies and procedures established by the State Board of Investment. Investment earnings must be credited to the account of the individual qualifying government.

(c) For accounts invested by the State Board of Investment, the investment restrictions shall be the same as those generally applicable to the State Board of Investment.

(d) A qualifying government may provide investment direction to PERA, subject to the policies and procedures established by the State Board of Investment. Subd. 9.

Withdrawal of funds and termination of account.

(a) A government may withdraw some or all of its money or terminate the account.

(b) A government requesting withdrawal of money from an account created under this section must do so at a time and in the manner required by the executive director of PERA, subject to the policies and procedures established by the State Board of Investment.

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Adopted: 11-13-85 Revised: 9-26-12, 7-18-07, 3-31-04, 5-22-02, 2-11-96, 11-13-85

Number: CD-FIN-5.3

Mayor:

City Administrator:

For: Finance Subject: Investment Policy

PURPOSE The purpose of this policy is to establish the guidelines for the investment of all public funds of the City of Woodbury. This policy is designed to ensure the prudent management of public funds, the availability of operating and capital funds when needed, and an investment return commensurate with the City's investment risk constraints and cash flow characteristics of the portfolio. POLICY Scope

This policy applies to all financial assets of the City of Woodbury. While separate investment funds are created to accommodate reporting on certain bonded indebtedness the municipal advisor rules and the investments with the State Board of Investment, individual investments are purchased using a pooled approach for efficiency and maximum investment opportunity. The City's funds are defined in the City's Comprehensive Annual Financial Report and include the General fund, Special Revenue funds, Debt Service funds, Capital Project funds, Enterprise funds, Internal Service, Trust and Agency funds and any new funds created by the City.

Objective

The City has determined that its funds shall be invested based on the following three four objectives, listed in priority order:

Safety of principal. Safety of principal is the foremost objective of the City. Investments shall be undertaken in a manner that seeks to ensure preservation of capital in the overall portfolio. Liquidity. The portfolio will remain sufficiently liquid to enable the City to meet all operating and capital requirements that might reasonably be anticipated. Yield Return. The investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary cycles, taking into account investment risk and liquidity needs.

Council Directive CD-FIN-5.3 Investment Policy Page 2 of 12

Purchasing Power. Recognizing that the bond investment options for public entities only allow investment growth around the rate of inflation, the intent of this objective is not only to preserve capital but also to seek enhancement of the portfolio’s purchasing power over the long-run. To this end, the portfolio will include equity investments that track the returns of the Standards & Poor’s 500 Index.

Standards of Care

The prudent person standard shall be applied to the management of the portfolio. This standard states: "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the expected income to be derived." Investment officers acting in accordance with the written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility or an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and the liquidity and the sale of securities are carried out in accordance with the terms of this policy.

Delegation of Investment Authority

The Finance Director/Treasurer is designated as the Investment Officer of the City and is responsible for investment management decisions and activities. The Finance Director shall develop and maintain written administrative procedures for the operation of the investment program, consistent with this policy. The written procedures shall include a bidding process, monitoring diversification and risk as well as a system of controls to regulate the activities of subordinate officials. Investment transactions are limited to active phone conversation only. No transactions shall be conducted through voice mail, fax or e-mail. The Finance Director is authorized, as allowed under State Statute, to designate depositories, broker - dealers and safekeeping agents for City Funds. The investment transactions with the State Board of Investment will be conducted in accordance with the contribution and withdrawal procedures outlined in the fund prospectus. All transactions with State Board of Investment must be approved by the city administrator or designee prior to execution.

Authorized Financial Dealers and Institutions

The Finance Director will maintain a list of financial institutions authorized to provide investment services to the City. Prior to any investment transactions with the City, all broker/dealers who desire to become qualified bidders for investment transactions must supply the treasurer with audited financial statements, proof of National Association of Security Dealers certification, proof of Minnesota registration, a certificate of insurance for excess SIPC coverage,


and completion of the broker notification and certification form required by Minnesota Statutes 118A. The Minnesota State Board of Investment and the League of MN Cities Minnesota Municipal Money Market Fund (4M Fund) are authorized financial institutions.

Authorized Investments The City is authorized, under State Law Chapter 118A, to invest in the following securities:

1. U.S. Treasury Obligations (bills, notes, bonds) 2. U.S. Government Agency and Federally Sponsored Agency Securities, excluding mortgage

backed securities that fail the "FFEIC" test. Callable agency securities, excluding new issues with call dates of less than three months, are authorized. Step-up agency securities are authorized investments.

3. In any security which is a) General obligations of the State of Minnesota or any of its municipalities, or b) a general obligation of any other state or any of its municipalities, or c) a general obligation of the Minnesota housing finance agency, or d) a general obligation of a housing finance agency of any other state that is a moral obligation of the state, or e) a revenue or general obligation of any agency or authority of the State of Minnesota other than the Minnesota housing finance agency. Investments under b), c), or d) must be rated A or better by a national rating agency. Investments under e) must be rated AA or better by a national rating agency.

4. Bankers Acceptances - eligible for purchase by the Federal Reserve. 5. Commercial Paper - issued by U.S. corporations or their Canadian subsidiaries that is of the

highest quality Tier 1 (with highest credit rating of must be rated by 2 of 3 national rating agencies) and matures in 270 days or less.

6. Certificates of Deposit - provided it is guaranteed by the FDIC, or is backed by collateral as required M.S. 118A.

7. Repurchase agreements or Reverse Repurchase agreements - provided they are fully collateralized at 102 percent of market value by securities described in 1 or 2 above.

8. Mutual Funds - provided they only invest in 1 or 2 above and whose investments have final maturities of 132 120 months or less.

9. Guaranteed Investment Contracts - provided they meet the requirements of M.S. 118A. 10. Local Government Investment Pools - the City currently uses the 4M Fund, sponsored by the

League of Minnesota cities as a source for short term, liquid investments at a competitive rate of return. This fund, or any other local government pool specifically authorized by the City Council, is authorized investment for City funds.

11. Minnesota State Board of Investment – Minnesota Non-Retirement Equity Fund. Bond Securities Safekeeping

The City will minimize deposit custodial credit risk, which is the risk of loss due to the failure of the depository bank, by holding all securities in segregated account for the City’s benefits at a


third party trustee as safekeeping agent. The investment dealer or bank in which the security is purchased shall deliver all securities on the delivery versus payment method to the designated third party. Delivery versus payment is a way of controlling risk to which securities market participants are exposed. Delivery of securities (i.e. the change in their ownership) is done simultaneously with payment. This means that neither the buyer nor the seller is exposes to the risk that the other will default.

Bond Securities Investment Parameters

The City's investments shall be diversified as to specific maturity and issuer and institution in order to minimize risk to the portfolio. Investments should be purchased to match expected cash flow needs, minimizing the market risk associated with the early sale of investments. Investments beyond two years should be related to debt payments, or other known expenditures. Up to twenty percent (20 percent) thirty percent (30 percent) of the portfolio exclusive of the funds with the State Board of Investment may be invested beyond five years, but not more than 10 years in maturity and up to an additional ten percent (10 percent) invested in mortgage backed securities. with twenty percent (20 percent) of the portfolio limited to ten years in maturity and an additional ten percent (10 percent) of the portfolio limited to fifteen years in maturity. Securities with a maturity of more than five years shall be fixed term securities and not securities whose term can be extended by changes in market conditions, i.e., mortgage backed securities. No more than 50 percent of the portfolio should be invested in any one security issuer, with the exception of U.S. Treasury obligations, which could represent one hundred percent (100 percent) of the portfolio. Commercial paper is limited to twenty percent (20 percent) of the portfolio and no more than two and on-half percent (2.5 percent) of the portfolio should be invested in any one commercial paper issuer. Once the amounts invested reach the investment parameter limitations, no other funds may be invested beyond the investment parameter limitation; however the finance director is authorized to manage the funds previously invested under this section even if the total exceeds the investment parameter limitation.

Equity Investment Parameters

The amount invested in the Minnesota State Board of Investment – Minnesota Non-Retirement Equity Fund is limited to fifteen percent (15 percent) of the total portfolio. Equity investments are targeted for long-term capital plans, compensated absence reserves/liabilities or other long-term obligations established by applicable accounting standards. Long-term capital costs for purposes of this policy are defined as expenses to be incurred more than fifteen years into the future from the date of purchase. Once the amounts invested reach the investment parameter limitations, no other funds may be invested beyond the investment parameter limitation; however the finance director/city administrator are authorized to manage the funds previously invested under this section even if the total exceeds the investment parameter limitation.


Reporting and Review

The City's investment policy shall be adopted by resolution by the City Council. The City's investments and investment practices shall be reported to the City Council and reviewed at least annually with the Audit and Investment Commission. The annual information reported to the Audit and Investment Commission shall include summaries of investments by security type and investment maturity. The report shall also include a detailed list of investments as of the reporting date and the rate of return earned for the year. The Audit and Investment Commission shall report on its review, and make any recommendations they feel appropriate, to the City Council.

Statutory Authority

Specific investment parameters for the investment of public funds by the City are found in Minnesota Statutes Chapters 118A.


Glossary

Accrued interest - the accumulated interest due on a bond as of the last interest payment made by the issuer.

Agency - a debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. government. Federally sponsored agencies (FSAs) are backed by each particular agency with a market perception that there is an implicit government guarantee. An example of a federal agency is the Government National Mortgage Association (GNMA). An example of an FSA is the Federal National Mortgage Association (FNMA).

Amortization - the systematic reduction of the amount owed on a debt issue through periodic payments of principal.

Average Life - the average length of time that an issue of serial bonds and/or term bonds with a mandatory sinking fund feature is expected to be outstanding.

Basis Point - a unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield, e.g., 1/4" of 1 percent is equal to 25 basis points.

Bid - the indicated price at which a buyer is willing to purchase a security or commodity.

Book Value - the value at which a security is carried on the inventory lists or other financial records of an investor. The book value may differ significantly from the security's current value in the market.

Callable Bond - a bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions. Call Price - the price at which an issuer may redeem a bond prior to maturity. The price is usually at a slight premium to the bond's original issue price to compensate the holder for loss of income and ownership.

Call Risk - the risk to a bondholder that a bond may be redeemed prior to maturity.

Cash Sale/Purchase - a transaction that calls for delivery and payment of securities on the same day that the transaction is initiated.

Collateralization - process by which a borrower pledges securities, property or other deposits for the purpose of securing the repayment of a loan and/or security.

Commercial Paper - an unsecured short-term promissory note issued by corporations, with maturities ranging from 2 to 270 days.


Coupon Rate - the annual rate of interest received by an investor from the issuer of certain types of fixed-income securities. Also known as the "interest rate".

Credit Quality - the measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer's ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies.

Credit Risk - the risk to an investor that an issuer will default in the payment of interest and/or principal on a security.

Current Yield (Current Return) - a yield calculation determined by dividing the annual interest received on a security by the current market price of that security.

Delivery Verses Payment (DVP) - a type of securities transaction in which the purchaser pays for the securities when they are delivered either to the purchaser or his/her custodian.

Derivative Security - financial instrument created from or whose value depends upon, one or more underlying assets or indexes of asset values.

Discount - the amount by which the par value of a security exceeds the price paid for the security.

Diversification - a process of investing assets among a range of security types by sector, maturity, and quality rating.

Duration - a measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a given fixed-income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is a useful indicator of its price volatility for given changes in interest rates.

Equity Investment - generally refers to the buying and holding of shares of stock on a stock exchange in anticipation of income from dividends and capital gains.

Equity Fund - An equity fund is a mutual fund that invests principally in stocks. It can be

actively or passively (index fund) managed. Equity funds are also known as stock funds.

FDIC - Federal Deposit Insurance Corporation - Federal insurance program guaranteeing funds up to $100,000 $250,000 per individual/corporation investing at a bank.

Federal Funds (Fed Funds) - funds placed in Federal Reserve Banks by depository institutions that are in excess of current reserve requirements. These depository institutions may lend Fed funds to each other overnight or on a longer basis. They may also transfer funds among each other on a same-


day basis through the Federal Reserve banking system. Fed funds are considered to be immediately available funds.

Federal Funds Rate - interest rate charged by one institution lending funds to the other.

Government Bonds - an obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market.

Interest Rate - see "Coupon rate".

Interest Rate Risk - the risk associated with declines or rises in interest rates that cause an investment in a fixed-income security to increase or decrease in value.

Inverted Yield Curve - a chart formation that illustrates long-term securities having lower yields than short-term securities. This configuration usually occurs during periods of high inflation coupled with low levels of confidence in the economy and a restrictive monetary policy.

Investment Company Act of 1940 - federal legislation that sets the standards by which

investment companies, such as mutual funds, are regulated in the areas of advertising, promotion, performance reporting requirements, and securities valuations, for example.

Investment Policy - a concise and clear statement of the objectives and parameters formulated by an investor or investment manager for a portfolio of investment securities.

Local Government Investment Pool (LGIP) - an investment by local governments in which their money is pooled as a method for managing local funds. LGIPs offer an option for managing cash reserves and minimizing principal risk.

Liquidity - an asset that can be converted easily and quickly into cash.

Mark-to-Market - the process whereby the book value or collateral value of a security is adjusted to reflect its current market value.

Market Risk - the risk that the value of a security will rise or decline as a result of changes in market conditions.

Market Value - current market price of a security.

Money Market Mutual Fund - mutual funds that invest in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, banker's acceptances, repos, and Fed funds).


Mutual fund - an investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by the following SEC disclosure guidelines:

report standardized performance calculations; disseminate timely and accurate information regarding the fund's holdings,

performance, management, and general investment policy; have the funds investment policies and activities supervised by a board of

trustees, which are independent of the advisor, administrator, or other vendor of the fund;

maintain the daily liquidity of the funds shares; value their portfolios on a daily basis; have all individuals who sell SEC-registered products licensed with a self-

regulating organization (SRO) such as the National Association of Securities Dealers (NASD); and

have an investment policy governed by a prospectus that is updated and filed by the SEC

annually.

Mutual Fund Statistical services - companies that track and rate mutual funds.

National Association of Securities Dealers (NASD) - a self-regulatory organization (SRO) of brokers and dealers in the over-the-counter securities business. Its regulatory mandate includes authority over firms that distribute mutual fund shares as well as other securities.

Net Asset Value - the market value of one share of an investment company, such as a mutual fund. This figure is calculated by totaling a fund's assets, which includes securities, cash, and any accrued earnings, subtracting this from the fund's liabilities and dividing this total by the number of shares outstanding. This is calculated once a day based on the closing price for each security in the fund's portfolio. [Total assets] - [Liabilities] ÷ [Number of shares outstanding]

No-Load Fund - a mutual fund that does not levy a sales charge on the purchase of its shares.

Nominal yield - the stated rate of interest that a bond pays its current owner, based on par value of the security. It is also known as the "coupon", "coupon rate", or "interest rate".

Offer - an indicated price at which market participants are willing to sell a security or commodity. Also referred to as the "ask price".

Par - face value or principal value of a bond typically $1,000 per bond

Positive Yield Curve - a chart formation that illustrates short-term securities having lower yields than long-term securities. Also known as a normal yield curve.


Premium - the amount by which the price paid for a security exceeds the security's par value

Prime Rate - a preferred interest rate charged by commercial banks to their most creditworthy customers. Many interest rates are keyed to this rate.

Principal - the face value or par value of a debt instrument. Also may refer to the amount of capital invested in a given security.

Prospectus - a legal document that must be provided to any prospective purchaser of a new securities offering registered with the Securities and Exchange Commission. This can include information on the issuer, the issuer's business, the proposed use of proceeds, the experience of the issuer's management, and certain certified financial statements.

Prudent Person Rule - an investment standard outlining the fiduciary responsibilities of public funds investors relating to investment practices. Purchasing Power - is the value of a currency expressed in terms of the amount of goods and services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods and services you would be able to purchase. Rate of Return – is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost. Gains on investments are defined as income plus any capital gains realized on the sale of the investment.

Regular-Way Delivery - securities settlement that calls for delivery and payment on the third business day following the trade date (T + 3); T + 1 payment basis is being considered. Mutual funds are settled on a same-day basis; government securities are settled on the next business day.

Reinvestment Risk - the risk that a fixed-income investor will be unable to reinvest income proceeds from a security holding at the same rate of return currently generated by that holding.

Repurchase Agreement (Repo or RP) - an agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price to the second party on demand or at a specified later date.

Reverse Repurchase Agreement (Reverse Repo) - an agreement of one party to purchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified later date.

Rule 2a-7 of the Investment Company Act - applies to all money market mutual funds and mandates such funds to maintain certain standards, including a 13-month maturity limit and a 90 60 -day average maturity on investments, so as to help maintain a constant net asset value of one dollar ($1.00).


Serial bond - a bond issue, usually of a municipality, with various maturity dates scheduled at regular intervals until the entire issue is retired.

Sinking Fund - money accumulated on a regular basis in a separate custodial account that is used to redeem debt securities or preferred stock issues.

Standard and Poor’s 500 Index -The Standard & Poor's 500 Index (S&P 500) is an index of

stocks issued by 500 large companies with specific market capitalization thresholds. It is seen as a leading indicator of U.S. equities and a reflection of the performance of the large-cap universe.

Term Bond - bonds comprising a large part or all of a particular issue, which come due in a single maturity. The issuer usually agrees to make periodic payments into a sinking fund for mandatory redemption of term bonds before maturity.

Total Return - the sum of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation plus any realized dividends or capital gains. This is calculated by taking the following components during a certain time period. [Price Appreciation] + [Dividends Paid] + [Capital Gains] = Total Return

Treasury Bills - short-term U.S. government non interest-bearing debt securities with maturities of no longer than one year and issued in minimum denominations of $10,000. Auctions of three and six-month bills are weekly, while auctions of one-year bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends.

Treasury Notes - intermediate U.S. government debt securities with maturities of one to 10 years and issued in denominations ranging from $1000 to $1 million or more.

Treasury Bonds - long-term U.S. government debt securities with maturities of 10 years or longer and issued in minimum denominations of $1000. Currently, the longest outstanding maturity for such securities is 30 years.

Volatility - a degree of fluctuation in the price and valuation of securities.

"Volatility Risk" rating - a rating system to clearly indicate the level of volatility and other noncredit risks associated with securities and certain bond funds. The ratings for bond funds range from those that have extremely low sensitivity to changing market conditions and offer the greatest stability of the returns ("aaa" by Standard & Poor's; "V-1" by Fitch) to those that are highly sensitive with currently identifiable market volatility risk ("ccc" by Standard & Poor's, "V-10" by Fitch).

Weighted Average Maturity (WAM) - the average maturity of all the securities that comprise a portfolio. According to SEC rule 2a-7, the WAM for rated money market mutual funds may not exceed 60 days and no one security may have a maturity that exceeds 397 days.


When Issued (WI) - a conditional transaction in which an authorized new security has not been issued. All "when issued" transactions are settled when the actual security is issued.

Yield - the current rate of return on an investment security generally expressed as a percentage of the security's current price.

Yield-to-Call (YTC) - the rate of return yielded by a debt security held to maturity when both interest payments and the investor's potential capital gain or loss are included in the calculation of return.

Yield Curve - a graphic representation that depicts the relationship at a given point in time between yields and maturity for bonds that are identical in every way except maturity. A normal yield curve may be alternatively referred to as a positive yield curve.

Yield-to-Maturity - the rate of return yielded by a debt security held to maturity when both interest payments and the investor's potential capital gain or loss are included in the calculation of return.

Zero-Coupon Securities - security that is issued at a discount and makes no periodic interest payments. The rate of return consists of a gradual accretion of the principal of the security and is payable at par upon maturity. Adopted by the Woodbury City Council: November 13, 1985, February 11, 1996 May 22, 2002 – Resolution No. 02-122; March 31, 2004 – Resolution No. 04-76; July 18, 2007 – Resolution No. 07-155; September 26, 2012 – Resolution No. 12-144.

Minnesota State Board of Investment l 60 Empire Drive l Suite 355 l St. Paul, Minnesota 55103

Phone: 651.296.3328 Fax: 651.296.9572 website: http://mn.gov/sbi e-mail: [email protected]

Minnesota Non-Retirement FundQualifying Governmental Entities

Fiscal Year 2018 Investment Prospectus

Managed by the Minnesota State Board of Investment

MiMinnesota State Board of Investment

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U.S. Stocks Short-Term Inflation

The Minnesota Non-Retirement Fund is managed by the Minnesota State Board of Investment

Board Members:

Governor Mark DaytonState Auditor Rebecca OttoSecretary of State Steve SimonAttorney General Lori Swanson

Executive Director and Chief Investment Officer:

Mansco Perry III

This document was produced using recycled paper with a minimum of 30% postconsumer waste.


Office of City Administrator

Council Workshop Letter No. 18-77 March 21, 2018 TO: The Honorable Mayor and Members of the City Council FROM: Clinton P. Gridley, City Administrator SUBJECT: Public Works and Parks Building Design Development Plans

SUMMARY At the May 17, 2017 Council workshop meeting, staff along with Hagen, Christensen & McIlwain Architects (HCM) presented the outcome of the needs study for the project which identified numerous deficiencies for the Public Works and Parks operations. Council directed staff to proceed with schematic design and site planning for the 10-year plan which were presented at the September 27, 2017 Council workshop. This 10-year plan addresses current deficiencies while laying out an orderly expansion plan for ultimate needs. Completing a project less than what is proposed would not meet the needs of the operations. Following the September 27th Council workshop, staff and consultants moved forward with design development plans which allowed the project to be refined to meet the needs of the project along with the available funding. With the design development completed for the project, the next step in the process is to complete a final check in with Council prior to completing the construction documents and bidding the project. Upon completion of the construction documents, staff will bring the project to an upcoming Council meeting to request authorization to solicit bids for the project. This project will be a major disruption to Public Works and Parks operations during construction. Staging and relocation plans are being developed for staff, material, equipment and storage containers. Currently it is anticipated that staff will be relocated to existing City facilities including City Hall, HealthEast Sports Center, and La Lake Retreat Center along with utilizing on-site temporary trailers. Materials, equipment and storage containers will also need to be moved off site to a number of locations including Tamarack Nature Preserve parking lot, the Afton Road open space (former church site), La Lake Retreat Center, and 11063 Bailey Road site (new Public Safety vehicle storage facility). It is also important to mention that facilities such as the La Lake Retreat Center and Tamarack Nature Preserve parking lot would be unavailable for use or rental by the public during the duration of the project.

Council Workshop Letter No. 18-77 March 21, 2018 Page 2 RECOMMENDATION Staff recommends Council review the design development plans and provide concurrence on the project scope so that staff can move toward bid documents and construction plans.

BUDGET IMPACT More current project cost estimates are still being updated; however, per the January 17, 2018 workshop presentation by our Financial Advisor, the city portion of the project is estimated as follows: COSTS:

Estimated project cost 1 $19,840,000 Estimated bond issuance costs $ 345,000 Total estimated City cost $20,185,000 SWWD build-out & County lease $ 250,000 Total estimated project costs $20,435,000 FUNDING: Debt Issuance 2 $13,000,000 PW/Parks Building Fund $ 2,150,000 Water & Sanitary Sewer Fund 3 $ 1,796,250 Capital Improvement Fund 4 $ 3,238,750 Total estimated City funding $20,185,000 SWWD & County lease funding $ 250,000 Total estimated project funding $20,435,000

Staff is currently negotiating contributions from the South Washington Watershed District (SWWD) and Washington County (County). The SWWD currently leases office space at the current Parks and Public Works facility to be demolished, and requested space be provided for them within the renovated space. Their current lease is being re-negotiated based on the services and space that will be offered to them. In addition, a capital contribution is also being negotiated for leasehold improvement within their designated area. In addition, to best utilize the future growth space within the warm storage expansion, staff has been negotiating with the County to lease 5 parking stalls for their snow removal operations for a 5-year period. This allows the County time while they work toward expanding their South Shop facility in the near future while allowing the City to make the best use of the future expansion space until needed for City operations.

1 From September 27, 2017, $19.9 million was preliminary amount, exclusive of debt issuance costs 2 No property tax impact as this debt replaces existing debt levies 3 From January 17, 2018 workshop, $1,806,250 was preliminary amount. 4 From January 17, 2018 workshop, $3,228,750 was preliminary amount

Council Workshop Letter No. 18-77 March 21, 2018 Page 3 It is estimated that between the SWWD and the County there will be an additional up front contribution of approximately $250,000 to the project. In addition, the SWWD would continue to pay a monthly lease for their office space and services provided by the City. SCHEDULE Below is an anticipated schedule for the remainder of the project.

Item Date

Complete Construction Documents March 2018 Council authorization to bid Precast, Fuel Island, Steel & Misc. Metals

March 14, 2018

Council Workshop review of final plans March 21, 2018 Planning Commission review of project April 2, 2018 Council approves plans and specifications, authorization for bid April 4, 2018 Bid opening for Precast, Fuel Island, Steel & Misc. Metals April 17, 2018 Council approve project budget April 25, 2018 Council awards bid for precast, fuel island, steel & misc. metals April 25, 2018 Bid opening for remainder of project May 3, 2018 Council approves bids and transfers to RJM May 23, 2018 Begin Construction June 18, 2018 Substantial Completion Late Summer 2019

PUBLIC PROCESS Following the acceptance of the schematic design by Council, staff began the public involvement process. This process began with a neighborhood meeting for the properties located within 500 feet of the proposed project held on October 23, 2017. Approximately 12 property owners attended this meeting. The primary concerns heard were regarding landscaping and screening that would help with shielding the adjacent properties from lights and noise of the Public Works and Parks operations. A second neighborhood meeting for this same area was held on February 15, 2018. Approximately 8 property owners attended this meeting. The site design was presented at this meeting which mitigated the resident’s concerns voiced at the initial meeting. Lastly, a City-wide open house was held on February 20, 2018 to allow for community wide input for the project, 1 resident attended this open house. Information on the project and open house was provided to all residents in the January 2018 Woodbury City Update. Written By: Paul Kauppi, Assistant City Engineer Approved Through: Klayton Eckles, Engineering and Public Works Director/City Engineer Attachments: Project Location Map



Council Workshop Letter No. 18-78 March 21, 2018 TO: The Honorable Mayor and Members of the City Council FROM: Clinton P. Gridley, City Administrator SUBJECT: Bailey Road (CSAH 18) Corridor Management and Safety Improvement

Projects SUMMARY Washington County staff will be in attendance to discuss the proposed project details and answer the Council’s questions. Location/Background In March of 2017, Washington County and the cities of Woodbury and Newport began a cooperative study to identify the corridor needs and improve safety along Bailey Road from I-494 to Woodbury Drive. The study identified the “ultimate vision” for the corridor as a 4-lane divided highway similar to the existing Woodbury Drive (CSAH 19) north of Bailey Road. In addition to developing a vision, the project identified 3 areas along the corridor that would provide the most benefit to safety and capacity issues due to existing and proposed growth. Proposed Improvements The Bailey Road Access Management Project (from Pioneer Road to Wellington Lane) is proposed to widen the existing roadway to a 3-lane section to add a two-way left turn lane. Adding a left turn lane through this area will increase safety and capacity of the road. In cooperation with the Bailey Road Access Management Project, the City is proposing a relocation of the existing Bailey Frontage Road intersections to Salem Drive and Dorchester Drive to increase safety at the intersections. The Bailey Road Management and Safety Project (from Woodlane Drive to Radio Drive) has seen significant new development, and more development is proposed alongside elementary school. In anticipation of the continued development activity, it is proposed to construct the “ultimate vision” in this area by widening the existing roadway to a 4-lane divided section, with trails on both sides of the roadway, and intersection improvements.

Council Workshop Letter No.18-78 March 21, 2018 Page 2 The Bailey Road Intersection Improvement Project (at the intersection of Bailey Road and Military Road in Newport) will reconstruct the existing stop controlled intersection as a signalized intersection with turn lane improvements. This project will increase capacity for Bailey Road as it connects to the I-494/US 61/ US 10 Interchange. RECOMMENDATION Washington County is requesting a resolution of municipal support for the project. City staff is requesting direction related to the Council’s support for the project. If the Council indicates support for the project, a resolution of support would be included as a consent item on an upcoming Council meeting agenda. BUDGET IMPACT These projects are a partnership between the City of Woodbury and Washington County which will require a Cooperative Agreement if the projects move forward to construction. Preliminary cost estimates have been prepared for budgeting purposes. Based on Washington County’s project cost sharing policy, preliminary cost estimates are shown in the table below. Project Area Estimated

Washington County Cost Share

Estimated City of Woodbury Cost Share

Estimated Total Project Cost

Bailey Road Access Management Project (Pioneer Dr. to Wellington Lane)

$2,760,000 $450,000 $3,210,000

Bailey Road Management and Safety Project (Woodlane Dr. to Radio Dr.)

$8,650,000 $1,500,000 $10,150,000

These costs will be further refined and updated if the project moves to design and construction. The City’s Capital Improvement Plan includes funding for these projects from the Major Roadway Special Assessment Fund and the Municipal State Aid Roadway Construction Fund. Schedule The Bailey Road Access Management Project is anticipated to be constructed in 2019. The Bailey Road Management and Safety Project and the Bailey Road Intersection Improvement Project are anticipated to be constructed in 2020. A needs study, data collection, preliminary design, and public engagement process have been completed to date. The proposed project schedule is:

Council Workshop Letter No.18-78 March 21, 2018 Page 3 March 21, 2018 Municipal support Council Workshop April – Dec. 2018 Final Design 2019 Construction – Bailey Road Access Management Project 2020 Construction – Bailey Road Management and Safety Project Written By: Tony Kutzke, Principle Engineer Approved By: Klayton Eckles, Engineering and Public Works Director Attachment: Project Location Map

Council Workshop Letter No.18-78 March 21, 2018 Page 4



Council Workshop Letter No.18-79 March 21, 2018 TO: The Honorable Mayor and Members of the City Council FROM: Clinton P. Gridley, City Administrator SUBJECT: County Highway 19 (Woodbury Drive) and Local Road Capacity and Safety

Improvement Project SUMMARY Washington County staff will be in attendance to discuss the proposed project details and answer the Council’s questions. Location/Background In March of 2017, Washington County and the City of Woodbury began a cooperative study to improve the safety, capacity and operation of County State Aid Highway (CSAH) 19 (Woodbury Drive) and local roads including Hudson Road, Rivertown Drive, Commerce Drive, and Tamarack Road. This commercial area in Woodbury has seen substantial increase in traffic, and growth is expected to continue into the future. The number of vehicles traveling the Woodbury Drive Corridor and adjacent local roads has reached the capacity of the existing roadways and intersections. In addition to capacity and safety improvements that are needed in the area there is a need for improving the existing pavement and eliminating gaps in the existing trail system. Proposed Improvements Woodbury Drive will receive improvements including additional driving lanes, turn lanes, and a new trail along the west side. These improvements will also include a new pavement surface, signals, water quality improvements, and an opportunity to provide a landscaped gateway to the City of Woodbury. Tamarack Road will be reconstructed as a 4-lane divided roadway with added left turn lanes, a new signal at Hudson Place, and replacement of existing trails.

Council Workshop Letter No.18-79 March 21, 2018 Page 2 Commerce Drive will expand at Woodbury Drive to accompany the growth in traffic with additional turn lanes, and will receive pavement rehabilitation further to the west. Additional trail connections will be added to increase walkability and interconnectivity in the area. Hudson Road will have turn lane improvements on either side of the Woodbury Drive intersection, and pavement rehabilitation extending to the west from Norma Lane. There will be an additional trail connection added to the north side of the roadway from Woodbury Drive to Rivertown Drive to increase pedestrian connections between businesses and along the corridor. Rivertown Drive will be reconstructed from a 4-lane undivided roadway to a 3-lane section with a center double left turn lane to better accommodate vehicle turning movements. A trail is proposed on the east side from Commerce Drive to Hudson Road. Schedule The County Highway 19 (Woodbury Drive) and Local Road Capacity and Safety Improvement Project is anticipated to be constructed in 2020. A needs study, data collection, preliminary design, and public engagement process have been completed to date. The proposed project schedule is: March 21, 2018 Municipal support Council Workshop April – Dec. 2018 Final Design April – Dec. 2019 Right of Way acquisition 2020 Construction RECOMMENDATION Washington County is requesting a resolution of municipal support for the project. City staff is requesting direction related to the Council’s support for the project. If the Council indicates support for the project, a resolution of support would be included as a consent item on an upcoming Council meeting agenda. BUDGET IMPACT This project is a partnership between the City of Woodbury and Washington County which will require a Cooperative Agreement if the project moves forward to construction. Preliminary cost estimates have been prepared for budgeting purposes. Based on Washington County’s project cost sharing policy, preliminary estimates indicate a City cost share of approximately $1.3 million for Woodbury Drive improvements. Preliminary estimates for the local roadways indicate City costs at approximately $11.7 million, leaving a total preliminary estimated City cost of approximately $13 million. The total estimated project cost, including Washington County’s estimated cost share is approximately $21.8 million.

Council Workshop Letter No.18-79 March 21, 2018 Page 3 These costs will be further refined and updated if the project moves to design and construction. The City’s Capital Improvement Plan includes funding for this project from the Major Roadway Special Assessment Fund, Municipal State Aid Roadway Construction Fund and special assessments. Special assessments to benefitting commercial properties are also anticipated as a funding source based on City policy. Further analysis will be conducted on the assessment potential for benefitting properties during the design phase of the project. Written By: Tony Kutzke, Principle Engineer Approved By: Klayton Eckles, Engineering and Public Works Director Attachment: Project Location Map

Council Workshop Letter No.18-79 March 21, 2018 Page 4



Council Workshop Letter No. 18-80 March 21, 2018 TO: The Honorable Mayor and Members of the City Council FROM: Clinton P. Gridley, City Administrator SUBJECT: 2018 Legislative Initiatives SUMMARY The City Council annually adopts a unique Woodbury Legislative Program items for communication benefit to our legislative delegation. This item was reviewed at the City Council workshop of January 17 and adopted at the January 24, 2018 council meeting. At the Council workshop meeting of March 14, 2018, the City Council directed that this program be re-reviewed RECOMMENDATION Staff recommends Council provide any direction desired on the Woodbury Legislative Program. Written By: Clinton P. Gridley, City Administrator Attachments: 1. Woodbury Legislative Program

2018 Legislative Agenda

1. PRIORITY

a. 2018 bonding request – 50% state and local cost share for development of an East Metro public safety

training facility Health and Emergency Response Occupations (HERO) Center at 12600 Ravine Parkway in Cottage Grove for the cities of Woodbury and Cottage Grove.

2. LOCAL CONTROL

Local governmental entities are closest to their constituents, are most knowledgeable about its jurisdiction, and are most invested in the welfare and success of its community. Therefore, elected local governmental officials are best suited to making important decisions about its operations, regulations and activities. The following are specific areas of home-rule authority pre-emptions that need to be resisted or relaxed.

a. The City of Woodbury supports the principle of representative democracy that allows city councils to

formulate local budgets and therefore opposing state-imposed levy limits.

b. State imposition of artificial limitations such as the “taxpayer’s bill of rights”, valuation freezes, reverse referenda, fund balance restrictions, limits on use of G.O. bonding authority, super majority requirements or other limitations to the local government budgeting and taxing process are not supported by the City of Woodbury.

c. The City of Woodbury supports exempting cities from local government compensation limits per Minnesota State Statute 43A.17 which limits the salary and the value of other forms of compensation of a person employed by a political subdivision of this state, excluding school districts and university personnel. The local government compensation limit was originally established in 1983 and as enacted, permanently set the limit at 95 percent of the governor’s salary. In 2005, the law was modified to annually adjust the compensation cap based on CPI-U increase over the prior year. This cap is an impingement on city home rule authority and their ability to recruit and retain the best talent it needs to operate cities. Moreover, Woodbury is not an LGA recipient, which should allow for exemption under this act.

d. The City of Woodbury supports amending State Statutes 469.190 Local Lodging Tax that would allow cities more flexibility to utilize the lodging tax proceeds to finance economic development, marketing and tourism-related expenses without requirement to form a convention and visitors bureau / destination marketing organization.

e. The City of Woodbury opposes legislation that reduces or eliminates the City’s authority in the areas of local land use controls - local zoning, land use, comprehensive planning, utility and transportation planning, etc. These types of regulations have significant impacts to local neighborhoods. Cities are best positioned to govern these matters and have effective processes for hearing and addressing concerns of affected citizens. The City has an adopted Comprehensive Plan based on broad community input that articulates the community’s goals. Interference with these effective local processes impedes the City’s ability to effectively implement the Comprehensive Plan.

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3. FINANCIAL

a. The City of Woodbury supports expanding the state sales tax exemption to include general vehicle purchases (marked squad cars and emergency vehicles are exempt), fuel purchases, lodging and prepared foods, and municipal golf course purchases. (MS297a.70 see subd 2 subparagraph b regarding exemptions).

b. The City of Woodbury opposes the use of fiscal disparities to fund housing, social or physical metropolitan programs (e.g. Bloomington Mall of America). Fiscal disparities should be solely used for tax base redistribution.

c. The City of Woodbury supports property tax relief via the Circuit Breaker (Regular Homeowner's Homestead Credit Refund) as opposed to Local Government Aid (LGA).

4. TRANSPORTATION

a. Support for a comprehensive transportation funding package

b. Support for I-94, I-494, I-694 interchange improvements

c. Support for the Gateway Corridor Gold Line project

5. ADMINISTRATIVE

a. The City of Woodbury does not support expanding the current Data Practice statutes, and encourage

reforming the open records law to address some of the abuses that are occurring as follows:

i. Inspection, copies and copy costs - Currently the MGDPA states that when a person requests access to documents for the purpose of inspection, the responsible authority may not impose a charge or otherwise require the payment of a fee to inspect data. This requirement is a hindrance, as the same amount of work is done to research documents for inspection is done as when the individual wishes copies of the documents.

ii. Responding to data requests - Currently the MGDPA states the responsible authority or designee generally may not require requestors to identify themselves, state a reason for a request, or otherwise justify a request for public data. (Statute does allow the responsible authority to request information to confirm that an individual requesting private data is in fact the subject of the data (or the authorized representative). These requirements are a hindrance as there are many times when a requester seeks voluminous, wide-ranging information and the responsible authority should have the ability to be able to ask questions about the information request. This will, in essence, provide a more positive avenue of communication and improve ability to more efficiently provide the requested information.

b. The City of Woodbury supports statewide professional licensure and regulation for practice of massage

therapy so long as new state statutes meets or exceeds current city ordinance standards.

c. The City of Woodbury opposes the January 23, 2016 new Minnesota State Plumbing Code that went to effect requiring annual backflow prevention testing per section 603.4.2 of the plumbing code. Homeowners with new lawn irrigation systems as of January 23, 2016 must have the backflow valve tested every year; homeowners with existing pressure vacuum breakers are exempt from the requirement

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until the valve is replaced. The reason for requirement is to prevent water from the household irrigation system from backing up into the drinking water system if there is a significant loss of pressure in the city’s water supply system. This level of pressure loss is an exceedingly rare event. The cost for annual testing for residential property is estimated at $100-$150.

6. WATER RESOURCE MANAGEMENT:

a. The City of Woodbury supports legislative action resulting in more flexible approaches to water reuse

regulations that meet economic and environmental goals including addressing overlapping, duplicative, and conflicting requirements from the MDH, MDNR, and other state agencies in the current system.

b. The City of Woodbury opposes funding of any implementation cost involved with the DNR North &

East Metro study (e.g. connection of northeastern metro cities to surface water) if it does not directly result in supplying water to Woodbury residents.

7. METROPOLITAN COUNCIL:

a. The City of Woodbury favors a modification to the present governance model for the Metropolitan

Council that is more responsive to the needs and challenges of local government as follows:

i. Appointment of Metropolitan Council members by the Governor with four-year, staggered terms. The appointment of the Metropolitan Council Chair should coincide with the term of the Governor.

ii. The City of Woodbury favors a modification to the present governance model for the Metropolitan Council in the form of a “council of governments” type model utilizing elected city and county officials to serve as the metropolitan governing board with appointments being made by the local governments themselves.

iii. Nominating committee process that maximizes participation and input by local officials.

iv. Bipartisan Legislative Commission on Metropolitan Government, or another entity, to monitor

and review the Metropolitan Council’s activities and to provide transparency and accountability of the Metropolitan Council operations and functions.

b. The City of Woodbury opposes:

i. Any expansion of Metropolitan Council powers such as the conversion of either housing or

potable waters to a “metropolitan systems” classification as defined in the Metropolitan Land Use Planning Act.

ii. Mandatory targets for affordable housing or mandatory inclusionary housing provisions in the regional comprehensive planning process or through other regulatory processes.