City of Cotati
C.) Expenditure Planning and Purchasing Policies
Adopted June 10, 2025
prevent or mitigate the loss or impairment of life, health, property, or essential public services.
3. Provisions / Procedures
A. Budget Requirements
Expenditures are to be budgeted and controlled to not exceed estimated revenues and the approved and planned use of fund balances accumulated in prior years.
B. Minor Non-Recurring Purchases
1) Petty Cash: Only to be utilized for minor purchases up to $100.00 per person Deleted: S50 per transaction. All claims must be approved by the appropriate department head and accompanied by supporting documentation.
2) Credit Card: The Administrative Services Department may issue City credit cards as directed by the City Manager only. Issued cards shall be used in accordance with the procedures for use of City credit cards as included within the Administrative Purchasing Manual. City of Cotati credit cards should never be used to circumvent established competitive purchasing procedures.
4. Purchasing Limits
A. City Employees: $1,000 limit per purchase with prior approval from Department Deleted: S500 Head or City Manager.
B. Department Head: $5,000 limit per purchase unless previously authorized by City Manager with a supporting purchase order/contract.
C. City Manager: $25,000 limit per purchase (CMC 2.12.122) D. City Council: Any purchase above $25,000 requires City Council approval, except in limited circumstances, including:
1) The City Manager may authorize purchases ifall of the city funds to be spent for the special and professional services (architects, engineers, attorneys, planning consultants, environmental consultants and other specialized consultants) will be fully reimbursed by another party (CMC 2.12.122); or
2) If there is an emergency, in accordance with Section G of this policy.
5. Purchases Generally
A. Budget Requirements: All purchases must have a City Council approved budget and requisite funds available.
B. Insufficient Funding: If the needed funds are not available for a purchase, then the purchase shall require separate City Council appropriation.
C. Due Diligence: Any official of the City authorized to make purchases shall, before making the purchase, secure accurate and comparative cost information concerning the
City of Cotati
C.) Expenditure Planning and Purchasing Policies
Adopted June 10, 2025
9. Purchase of Professional Services
Agreements for Professional Services will be awarded pursuant to the following guidelines:
A) Agreements for Professional Services estimated to cost up to twenty-five thousand dollars (up to $25,000.00) may be awarded, based on up to three proposals whenever practical.
B) For professional services estimated to be twenty-five thousand ($25,000.01) dollars or greater, Requests for Quotation (RFQ) or Requests for Proposal (RFP) should be Deleted: for professional services estimated to be highly considered. Awarding of the agreement may be issued by the City twenty-five thousand ($25,000.01) dollars or greater Manager provided a budget appropriation for the service has been approved by the City Council. If no RFP or RFQ is issued, three proposals shall be solicited.
Contracts for Professional Services estimated to cost more than twenty-five thousand ($25,000.01) dollars will generally be awarded pursuant to the following guidelines; however, it is recognized that the City's need for consultant services will vary from situation to situation, and accordingly, flexibility will be provided in determining the appropriate evaluation and selection process to be used in each specific circumstance. As such, cost shall not be the sole criterion in selecting the successful bidder. Consultant proposals will be evaluated based on a combination of factors that result in the best value to the City, including but not limited to:
• Understanding of the work required by the City
• Quality and responsiveness of the proposal
• Demonstrated competence and professional qualifications necessary for satisfactory performance of the work required by the City
• Recent experience in successfully performing similar services • Proposed methodology for completing the work
• References
• Background and related experience of the specific individuals to be assigned to the project.
• Proposed compensation
10. Contracts, Agreements, Mou's with Other Public Agencies or Non-Profits Must go to City Council for approval, regardless of dollar amount, unless under $25,000 and normal process is waived by the City Manager and City Attorney.
11. Annual and Multi-Year Agreements
A. Annual Agreements: For annual agreements with a single vendor for repeated or "as-needed" purchases throughout a year, the procurement procedures used shall be consistent with the estimated cumulative expenditures during that fiscal year.
City of Cotati
C.) Expenditure Planning and Purchasing Policies
Adopted June 10, 2025
B. Multi Year Agreements: A contract may be entered into for any period deemed to be in the best interest of the City (typically not longer than 5 years), provided that the initial term of the contract and renewal provisions are included in the original solicitation process. Multi-year contracts are subject to the purchasing procedures required for each fiscal year under contract,_Adequate_funds must be available Deleted: by the estimated cumulative multi-year to fulfill the first fiscal year's obligation at the time of contract contract amount execution, except for "standby" agreements that are for emergency services only and not used during the normal course of business.
Subsequent year's appropriations are subject to authorization by the City Council, with the exception for "standby" emergency agreements.
Standard termination of a contract language must be included within all multi-year agreements.
12. Exemptions for Bid Requirements
A. Sole Source Purchases Exemption: Commodities and services, which can only be obtained from one vendor, are exempt from competitive bidding Sole source purchases may include proprietary items sold directly from the manufacturer, items that have only one distributor authorized to sell in this area, or a certain product that has been proven to be the only product that is acceptable. sole source purchases shall be supported by written documentation signed by the purchasing Department Head and City Manager. An example of a sole source is where equipment, supplies or materials are required in order to be compatible with existing equipment or to perform a complex or unique function. The final determination that an item is a valid sole purchase will be made by the City Manager and shall not be emergency under the PCC
§1102. In some cases, such as sudden loss of critical infrastructure, it may only be an emergency under the public contract code. However, in either case, the following emergency contracting provisions apply.
In accordance with PCC §22050, as may be amended from time to time, the City Manager or designee, as the Director of Emergency Operations (CMC 2.24.060), shall have the authority to repair or replace a public facility, take any directly related and immediate action required by that emergency, and procure the necessary equipment, services, and supplies for those purposes, without giving notice for bids to let contracts. This includes "public works", as authorized under PCC§22035.
City of Cotati
C.) Expenditure Planning and Purchasing Policies
Adopted June 10, 2025
16. Public Project Contracts
In accordance with Cotati Municipal Code Chapter 3.4, the City follows the procedures in the Uniform Public Construction Cost Accounting Act (PCC §22000 et seq.), as may be amended from time to time. For convenience, the following thresholds exist as of the date of this policy for Public Projects in accordance with PCC §22032:
A. Public projects of seventy_five thousand dollars_($75,000) or less may_be Deleted: sixty performed by the employees of a public agency by force account, by negotiated Deleted: thousand contract, or by purchase order. Deleted: $60,000
Public projects of two hundred and twenty thousand dollars ($220,000) or less may be Formatted: Right: 0.08' let to contract by informal procedures, as defined by PCC §22034.
Deleted: two hundred
C. Public projects
Deleted: $200,000
twenty thousand dollars ($220,000) shall be letto_contract by Formatted: Right: 0.01"
formal bidding procedures.
Deleted: two hundred
Deleted: $200,000
City of Cotati
C.3) Capital Asset Policy
Adopted June 10, 2025
regular basis.
In addition, an annual year-end inventory is required to be completed by July 10 for each fiscal year ending June 30. To facilitate the fulfillment of the requirements of this section and in order to prepare accurate financial reports, Departments are also responsible for safeguarding assets that are not defined as capital assets by the Policy Guidelines.
2. Overview
Capital assets are broadly defined as financial resources that are tangible or intangible in nature and have a useful life greater than two (2) years. Examples of capital asset categories are Land, Land Improvements, Buildings, Building Improvements, Infrastructure, and Equipment. The Capital Asset Policy defines capital assets under each classification, addresses useful life ranges, sets minimum capitalization thresholds, and gives examples of costs to include in the value of the capital asset.
Additionally, the policy discusses the treatment of unique items such as Computer Software, Capital Leases, Self-Constructed Assets, Works of Art, Donated Assets, Construction in Progress, Costs incurred Subsequent to Acquisition, and Transfers of Assets between Funds.
Capital assets are to be accounted for at historical cost, or if cost is not determinable, at estimated fair market value at the time acquired or placed into service. Generally, cost includes all expenses associated with the acquisition, construction, and installation of a capital asset. If appropriate, salvage/residual values should be determined prior to recording an asset.
If the funding source of an asset is a grant, or the asset is acquired by gift or donation, the source or donor should be identified. If multiple funding sources apply, all sources should be identified.
For historical assets, if the funding source cannot be determined, the asset shall be recorded under the general fund.
A. Summary of Capitalization Thresholds
Although the service life of certain buildings, improvements, and equipment, may extend beyond two 2) years, the City has established minimum capitalization thresholds for administrative purposes. All purchases below the applicable class threshold are to be made in the current period.
Class Capitalization Threshold
Land $0.00
Land Improvements $100,000
Buildings $100,000
Building Improvements $25,000 Deleted: 5,000
Infrastructure $25,000
Equipment Furniture & Vehicles $25,000 Deleted: 5,000
Intangible Assets $25.000 Deleted: 5,000
Capital Leases $35,000
Deleted: 25,000
Leasehold Improvements $25,000
Works of Art/Historical Treasures $5,000
Construction in Progress for Year End Reporting Projects expected to exceed $100,000 at completion__ Deleted:
City of Cotati
D) Investment Management Policies
Adopted June 10, 2025
Maximum
Authorized Investment Type Government Maximum Minimum Maximum in Portfolio Investment in Code Maturity Credit Quality One Issuer
Treasury Obligations
(bills, notes, & bonds) 53601(b) 5 Years N/A 100% N/A
US Government
53601(f) 5 Years N/A 100% N/A
Agency and Federal Agency
Securities
Local Agency Investment As permitted by LAIF
Fund (LAIF) 16429.1 Upon N/A (currently S65 N/A
Demand million per account)
Sonoma County Investment As permitted by
Pool (SCIP) 53684 Upon N/A County Treasurer N/A
Demand (currently no limit)
Joint Powers Authority Pool See § 8.3
53601(p) N/A (above) None N/A
Negotiable Certificates of
Deposit 53601(i) 5 Years N/A 30% N/A
Placement Service Deposits 53601.8 and
- Deposits or 53635.8 N/A
*An investment term or remaining maturity is to be measured from the settlement forward date to final maturity. A security purchased pursuant to 53601 is prohibited from having a settlement date exceeding 45 days from the time of investment.
8. Review of Investment Portfolio
The securities held by the City of Cotati must be compliant with Section 8.0 "Authorized and Suitable Investments" at the time of purchase. The Administrative Services Director should review the portfolio of assets held in investments (at least annually) to identify non-compliant securities.
The Administrative Services Director should establish procedures to report any materially adverse impact on the performance of the portfolio or to the agency.
9. Investment Pools / Money Market Funds
A thorough investigation of the investment pool/money market fund is required prior to investing, and on a continual basis. Best efforts will be made to acquire the following information:
a) A description of eligible investment securities, and a written statement of investment policy and objectives.
b) A description of interest calculations and how it is distributed, and how gains and losses are treated.
A description of how the securities is safeguarded (including the settlement processes), and how often the securities are priced and the program audited. d) A description of who may invest in the program, how often, and what size deposit and withdrawal are allowed.
A schedule for receiving statements and portfolio listings.
Are reserves, retained earnings, etc. utilized by the pool/fund? g) A fee schedule, and when and how it is assessed.
h) Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds?
10. Collateralization
City of Cotati
E) Debt Management Policies
Adopted June 10, 2025
and rehabilitation of capital improvements and facilities, equipment, and land to be owned and operated by the City.
A.I) Long-term debt financings are appropriate when the following conditions exist:
• When the project to be financed it is necessary to provide basic services._ Deleted: financed When the project to be financed to provide benefit to constituents over multiple years. Deleted: will provide • When total debt does not constitute an unreasonable burden to the Covered Entities and the City's taxpayers and/or ratepayers, as applicable.
• When the debt is used to refinance outstanding debt to produce debt service savings or to realize the benefits of a debt restructuring.
A.2) The Covered Entities may use long-term debt financings subject to the following conditions:
• The project to be financed must be approved by the governing board of the Covered Entity. • The weighted average maturity of the debt (or the portion of the debt allocated to the project) will not exceed the average useful life of the project to be financed by more than 20%. • The Covered Entity estimates that sufficient revenues will be available to service the debt • The Covered Entity determines that the issuance of the debt will comply with the applicable • The City will not issue long-term debt to finance current operations. • The City will not incur general obligation indebtedness for public improvements, which exceed in aggregate 15% of the assessed value of all real and personal property of the City as specified in the California Government Code Section 43605.
B) Short-term debt. Short-term debt may be issued to provide financing for the Covered Entities' operational cash flows to maintain a steady and even cash flow balance. Short- term debt may also be used to finance short-lived capital projects; for example, the Covered Entities may undertake lease-purchase financing for equipment.
C) Financing on Behalf of Other Entities. The Covered Entities may also find it beneficial to issue debt on behalf of other governmental agencies or private third parties to further the public purposes of Covered Entities. In such cases, the Covered Entities shall take reasonable steps to confirm the financial feasibility of the project to be financed, and the financial solvency of any_borrower and that_- - the issuance of such debt is consistent with the policies set forth herein.
3. Types of Debt
The following types of debt are allowable under this Debt Policy:
City of Cotati
E.1) Unfunded Pension Liability Policies
Adopted June 10, 2025
Funding Level Objective
It is the City's policy to strive to achieve and maintain a UAL "Funded Ratio" (being the ratio by+ - - Formatted: Right: 0", Tab stops: Not at 5.35" which the Market Value of Assets-as set forth in the most recently published Valuation Report- exceeds the Present Value of Projected Benefits or "PVB"- as set forth in the most recently published Valuation Report) for each Pension Plan of 90%, but never dropping below 80% (the "Funding Level Objective").
Funding Level Objective = 90%
Achieving and maintaining the Funding Level Objective ensures that the ongoing contributions of-- - - Formatted: Right: 0* the City and its employees, and therefore the taxpayer funds, are properly and adequately funding the retirement benefits of retirees and today's workers. This concept is commonly referred to as the intergenerational equity. Falling short of this funded level forces future City Councils to pay the costs of the poor planning and execution of today's Pension Plans. The reason for a Funding Level Objective less than 100% is to allow some cushion for the possibility that good investment returns in a given year might push the Funded Ratio of a Pension Plan above 100% (commonly referred to as "superfunded status"), which means that the City and its employees had contributed into the Pension Plan more than was necessary. Thus, while the City remains committed to maintaining a 100% funded level, it shall manage the 10% differential (i.e., the difference between 90% and 100%) through its own investment process, which may include creating the "Pension Rate_ Deleted: by creating the "Pension Rate Stabilization Fund" Stabilization Fund" discussed herein.. discussed herein
City of Cotati
E. 1) Unfunded Pension Liability
Policies Adopted June 10, 2025
D. Utilize Savings Achieved from Refunding Outstanding Non-Pension Related Debt to Pre-Pay UAL. During each budget cycle, staff should review all outstanding long-term non-pension related debt of the City to determine whether a refunding of such debt might result in net present value savings of greater than 3%, and if so, consider a structure and strategy that frontloads the savings, which can then be used to pay down the UAL. This strategy should only be used if the interest rates on the currently outstanding debt is sufficiently below the then-current Discount Rate to ensure that overall savings are achieved by the City.
E. Sources of Revenue. All fees, rates and charges should incorporate full allocation of pension costs for employees providing associated services. While some funds cannot contribute more than their fair share (i.e., enterprise funds), not contribute less than their fair share. Staff shall review allocation of labor costs to proprietary and other funds to ensure full reimbursement of the pension cost burden.
Staff shall provide, or cause to be provided, consistent and well-documented methodology for pension cost allocation to all funds.
F. Pension Obligation Financing. The City shall consider issuing taxable municipal debt obligations (generically hereafter referred to as "Pension Obligations") to refinance the UAL, in part or in whole, if such bond obligations are expected to produce minimum cash flow savings of at least 5%, taking into account all debt service and costs of issuance associated with such bond obligations, in comparison to CalPERS' respective UAL amortization schedule and the then-current Discount Rate. Pension Obligations shall not utilize swaps or derivatives of any kind and should be structured with reasonable and flexible call provisions (with a maximum of 10-year call provision). Pension Obligations shall be used only to prepay the UAL liabilities and shall not be used to finance normal cost payments. The issuance of Pension Obligations must be voted upon and approved by the City Council.
G. Annual Review of the CaPERS Actuarial Valuation Reports and Associated Tasks.
The City staff shall review or cause to be reviewed the annual CaPERS actuarial valuation reports within 90 days of their release_by_CalPERS, which usually takes Deleted: 30 place during the month of August. The review should focus on identifying the annual changes to each of the Pension Plans UAL and quantifying the associated cost implications and the corresponding impact on the Funded Ratio. Staff should annually reach out to the City's CaPERS actuary to request a calculation of flat payments (rather than ramp-up payments) for all outstanding and new UAL amortization bases. In making ADPs, the City staff shall determine or cause to be determined the optimal application of the ADPs to the outstanding UAL amortization bases to achieve the Funding Level Objective as well as desired budgetary outcomes.