1h Vending Machine Lease Agmt
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax 952.227.1190
Engineering
Phone: 952.227.1160
Fax 952.227.1170
Finance
Phone 952.227.1140
Fax 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax 952.227.1110
Public Works
1591 Park Road
Phone 952.227.1300
Fax 952.227.1310
Senior Center
Phone: 952.227.1125
Fax 952.227.1110
Web Site
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MEMORANDUM
TO:
Todd Gerhardt, City Manager
FROM:
Justin Miller, Assistant City Manager'SJ'^
:-~-
DATE:
January 12, 2005
RE:
Lease Agreement with the Employee Group Fund for the
Operation of Vending Machines in City Hall
BACKGROUND
One of the items that is routinely questioned by our auditors is the operation of
the City Hall vending machines by the Employee Group Fund. The money
generated from these machines is collected by the Employee Group Fund to help
pay for things such as flowers for hospitalized employees, the summer employee
picnic, memorial flowers for funerals, and re-stocking the machine. No public
money (general fund or enterprise fund) is used to operate these machines, with
the exception of the electricity needed to operate them.
Staff and our auditors are recommending that to clear up this issue a lease
arrangement be made between the City and the Employee Group Fund. This lease
calls for an annual payment of $10 per machine to be made by the Employee
Group Fund to the City of Chanhassen for the purposes of renting the space and
paying the estimated cost of the electricity needed to operate the machine. This
approach is also recommended by the State Auditor (see attached memo).
RECOMMEND A TION (simple majority required)
Staff recommends that the Chanhassen City Council approve the attached lease
agreement between the City and the Employee Group Fund for the purpose of
operating vending machines in City Hall.
The City 01 Chanhassen . A growing community with clean lakes, quality schools, a channing downtown, thriving businesses, winding trails, and beautiful parks. A great place to live, work, and play.
CITY OF CHANHASSEN
CARVER AND HENNEPIN COUNTIES, MINNESOTA
Date
Resolution
Motion By
Seconded By
RESOLUTION LEASING SPACE
FOR VENDING MACHINES
WHEREAS, the Chanhassen Employee Group Fund has requested the City to allow them
to lease space to install two vending machines in City Hall; and
WHEREAS, the Fund intends to use the net proceeds from vending machines for
benevolent purposes.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Chanhassen, Minnesota:
1. The City hereby leases space to the Chanhassen Employee Group Fund for two
vending machines in the City Hall at locations to be approved by the City Manager.
2. As rent for the leased space, the Fund shall reimburse the City the estimated cost of
electricity to operate the vending machines and pay the City $10.00 per machine per
year.
3. The City reserves the right to rescind this resolution without notice.
ADOPTED this
Chanhassen, Minnesota.
day of
,2005, by the City Council of the City of
ATTEST:
Todd Gerhardt, Clerk/Manager
Thomas A. Furlong, Mayor
116193
RNK:Ol/14/05
Office of the State Auditor
City Expenditures and the Public Purpose Doctrine
Page 6
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necessary. See Op. Att'y Gen. 285a (Aug. 7, 1969)(Attomey General
deferred to library board's determination that meal was necessary so
invited guests could attend).
4. The OSA maintains that the purchase of alcohol at public expense does not serve
a public purpose. In addition, the expenditure of public funds for the expenses of
a spouse of a public employee or officer does not serve a public purpose.
E. Employee Social Events
Unless specific authority provides otherwise, employee social functions should not be paid
for with public funds. See Ops. Att'y Gen. 59A-22 (Jan. 8, 1957) (municipal corporation
may not imply authority to appropriate public revenue for celebrations, entertainments,
etc., quoting 15 McQuillin, Municipal Corporations, 3rd ed., Sec. 39.22), and 59a-22
(Nov. 23, 1966) (city Christmas party).
Comment: Many public entities fund employee social events through employee clubs.
Such clubs collect money from the employees, and have no involvement with the public
entity regarding the funds collected from the employees. Sometimes vending machine
proceeds are used by the employee clubs. A public entity appears to have at least three
options for the operation of vending machines in public spaces:
1.
The public entity could be responsible for the vending machine. All disbursements
of vending machine proceeds would then need to comply with the public purpose
doctrine.
The public entity could contract with a private entity, which results in the public
entity receiving a commission from the vending machine sales. All commissions
collected by the public entity would need to comply with the public purpose
doctrine.
An employee club could operate the vending machines. In such cases, the OSA
would expectto see a written arm's-length contract between the public entity and
the employee club that would compensate the public entity for the licensed space
used by the vending machines, and set forth the liabilities of the parties with regard
to the machines and insurance. Proceeds of the vending machines would not be
considered public funds in such cases. Note: Vending machines operated by
employees in non-public places, such as in employee lunch rooms, would not
necessarily be public funds in the OSA's opinion.
2.
* 3.