I-1 - Preliminary Official Statement - UR Loan Agreement

City of Tiffin Schedule of Findings Year ended June 30, 2019 The 28E agreement between the City and the Fire Association does not relieve the City Council of its responsibilities or obligation to ensure the public funds provided to the Association continue to be used for the purposes set out in the agreement and are not used in violation of the Iowa Constitution. The 28E agreement does not include provisions for continued oversight by the City Council of the public funds provided to the Fire Association. (c) Organizations established as 504 domestic non-profit corporations are typically created to further charitable pursuits, not to provide a service or act as a vendor providing a service such as fire protection. Legally separate non-profit fire associations typically exist to support a City government in carrying out its responsibility to provide fire protection. These non-profit associations provide this support by holding various fund raisers and collecting donations to help provide funds to purchase equipment and other items needed by the City to carry out its duties. Funds in these situations flow from the non-profit organization to the City thereby leaving the donations (collected from taxpayers) from the Association and other public funds under the control and oversight of the governmental body and subject to public accountability. The arrangement the City has with the Non-profit Fire Association to provide fire protections services, and not just to support the City in providing that service is unusual. It is unclear whether a non-profit organization can be established for the noted purpose or whether the non-profit organization is afforded the same legal immunities in providing the service as a government is. Recommendation – The City should consult legal counsel to determine the validity of the City’s arrangement with the non-profit Fire Association, a 504 domestic non-profit organization, to provide fire protection services, including whether the organization has the proper legal immunities for providing service, i.e., those same immunities afforded a government providing fire services. Chapter 28E does not directly state whether immunity for fire protection services passes to a non-municipality contracting to provide those services. However, at 28E.17(2) it does state that immunity is passed on for transportation services. Under standard statutory construction rules, this suggests that immunity is not passed for non-transportation services. In addition, consideration should be given to whether the current arrangement is in the best interest of taxpayers given the arrangement transfers all control over the public funds used to support the service to an organization which is not subject to oversight or public accountability. If the arrangement is determined to be appropriate, the 28E agreement should be modified to include provisions/requirements for the City Council to provide oversight over the Association’s financial activities, including ensuring the funds are spent for the purposes set out in the agreement and not in violation of the Iowa Constitution. The agreement can include a requirement the Fire Association be independently audited by a CPA annually. In addition, the City should not simply turn all taxpayer dollars over to the Association to spend as the Association sees fit. Again, if the arrangement is determined to be appropriate, the City should reimburse the Association based on invoices that detail the specific expenditures being invoiced. The City should retain the ability to review all Association expenditures and determine their appropriateness prior to payment of the invoices. 62