10.04 Friends of the Pequot Lakes Library Request

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1 June 19, 2017 To: Pequot Lakes City Council From: Friends of the Pequot Lakes Library- Melissa Birch and Thomas Adams Subject: Return to FoPL Endowment monies currently held in a fiduciary capacity by the City Report: Let me start by thanking each of you for taking your personal time to meet with us regarding this situation. The Friends of the Pequot Library (FoPL) very much appreciates it. Subsequent to our individual visits, you have had a chance to read our memorandum and also that of the City's outside counsel. I am not here tonight to go over either memorandum in detail. You have had time to read and digest the comments which, I believe, have been included in your packet. I would, however, like to make several additional comments. Attorney memorandum - I have read the document in its entirety and have no quarrel with their legal argument. They clearly point to Minnesota state law. In brief summary, if a party donates money to a governmental agency, those monies cannot be returned to the donating party. However, we do not believe the attorneys understood that the monies were not donated nor did they acknowledge or consider errors that were made by the City in how they recorded or allocated the funds to City accounts. In our view, the issue to be decided by the Council revolves around whether the monies in question were actually "donated" to the City of Pequot Lakes or were sent to the City to act as a fiduciary on behalf of the FoPL. In the view of FoPL, the funds that were specifically identified as Endowment Funds (the four Certificates of Deposit and the$40,000 sent in Septmeber, 2015)fell into the latter category. Unfortunately, the City, for some reason, inappropriately labeled those funds as Donations. I believe this was done for simplicity's sake. Never before had the City been requested to hold funds in this manner. So, instead of setting up a new and proper account to correctly identify these funds, they simply utilized an existing account. Sadly, that account is called Donations. In summary, we would say the following: • The FoPL states that, over time, funds were sent to the City for two purposes. The first was to provide funds for the current ongoing expenses of running the Library. These were funds donated to the City. The second was to hold funds for the FoPL as a fiduciary. The latter was done since initially the FoPL was incorrectly advised it could not invest funds directly. These were not donated funds. And these are the funds FoPL is requesting to be returned. • The FoPL believes it clearly advised the City of these dual purposes. • The funds were incorrectly assigned to a donations category. • These were privately raised endowment monies not City raised funds.