10.04 Friends of the Pequot Lakes Library Request

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Page 1 of 3 5-22-17 E-Mail from City Attorney Chris Hood, Flaherty&Hood, P.A. Regarding FOPLCL Request This email follows the below email relating to the one outstanding issue I had related to the possible application of the gift statute,section 465.03, noted in my opinion below, to the present question. After reviewing the resolutions adopted by the City Council you have provided to me as well as the fact that the CD's are in the name of the City library with the City's tax id number, I do not see anything that would change my opinion as stated below even though the attachment to the most recent resolution makes reference to an "Endowment Donation." There is no indication what is meant by this reference and the fact that the CD's are in the name of the City Library with the City tax id number,seems to weigh heavily to the conclusion that when these dollars were provided to the City they became government dollars to be expended for library purposes, but subject to the limitations imposed upon the City by law on the expenditure of those dollars. An endowment as that term is defined is a transfer of gift of money to an institution for a particular purpose. In this case, the record resolution states that FOL gifted/transferred dollars to the City to be used for the library. That is what has been done and continues to be done as I understand the facts. There is nothing contained in the adopting City resolutions that would indicate that this money would be returned to FOL under certain conditions. Thus,my only conclusion under these facts can be as I have stated below. This confirms the opinion you have already received from the City's auditors. 5-17-17 E-Mail from City Attorney Chris Hood, Flaherty& Hood, P.A. Regarding FOPLCL Request The State Auditor's documentation is generally correct. The City's auditors are acting consistent with that and are certainly familiar with how the dollars flowed to the City from the Friends of the Library (FOL)on this in their review of the City's finances and records,so I would have to defer to them on their review and findings related to the City's finances. Based on this, I have concerns that the City's auditors would issue the City a qualified financial report, which could have other financial consequences for the City, if the City makes the proposed expenditure to FOL contrary to the auditors findings. I have no reason to disagree with the auditor's review,findings and conclusion on this matter as I would share the same view of the law based upon the facts as have been presented to me and based upon the following analysis. As I understand the facts, FOL is a private,nonprofit corporation dedicated to fundraising and other donor driven activities for the City library, which of course is a very good thing and something the City certainly wants to continue. The library, by contrast,is a department of a public entity, the City, like other City departments, and is served by public employees,funded by public dollars, and subject to a body of public laws. The City is a political subdivision of the State, which means that all of its powers to act, including making expenditures, come from the State and must serve a public purpose and be based on express or implied legal authority in state statute for the City to so act. (See Minn. Const.Art.X,§2 and Art.XI, §1). Thus, every expenditure of City dollars is subject to this two prong public purpose expenditure analysis. In this case, FOL provided money to the City at some point in the past(2015), which the City used to purchase certain investments to support the yearly operating expenses of the library. FOL has now requested that the City turn over or return those dollars to FOL as FOL has determined that it can invest in other investments that will provide a higher rate of return. FOL's goal and objective is certainly a good one as presumably FOL would use the additional money from its investments to support the library. The Minnesota Supreme Court has followed a liberal approach, and has generally concluded that "public purpose"means an activity that meets all of the following standards:1) The activity will benefit the