Home » Legals » City of Aberdeen – Notice for Resolution No. 25-02-03R Promotional Fund Policy

City of Aberdeen – Notice for Resolution No. 25-02-03R Promotional Fund Policy

By Aberdeen Insider  -    February 27, 2025 in Legals   Reading Time: 5 minutes

CITY OF ABERDEEN

RESOLUTION NO. 25-02-03R

A RESOLUTION TO ESTABLISH

PROMOTION FUND FINANCIAL ADMINISTRATION POLICY

WHEREAS, the City of Aberdeen, pursuant to SDCL § 10-52A-2, imposed at Aberdeen City Code, Sec. 50-77 an additional municipal non-ad valorem tax at the rate of one percent upon the gross receipts of all leases or rentals of hotel, motel, campsites, or other lodging accommodations within the municipality for periods of less than twenty-eight consecutive days, or sales of alcoholic beverages or establishments where the public is invited to eat, dine, or purchase and carry out prepared food for immediate consumption, or ticket sales or admissions to places of amusement, athletic, and cultural events, or any combination thereof; and

WHEREAS, this additional non-ad valorem tax may be levied by the City of Aberdeen only for the purpose of land acquisition, architectural fees, construction costs, payments for civic center, auditorium, or athletic facility buildings, including the maintenance, staffing, and operations of such facilities and the promotion and advertising of the city, its facilities, attractions, and activities; and

WHEREAS, the City of Aberdeen refers to the additional non-ad valorem tax as “Promotion Funds” and administers this activity within a special revenue fund identified as the “Promotion Fund”; and

WHEREAS, the City of Aberdeen recognizes the importance of effective financial management and accountability in the administration of the Promotion Fund; and

WHEREAS, it is essential to establish clear guidelines for the appropriation and allocation of Promotion Fund awards to ensure transparency and fiscal responsibility.

            NOW, THEREFORE, BE IT RESOLVED by the Aberdeen City Council as follows:

Section 1.  The following financial administration policy for the Promotion Fund is adopted:

I. Purpose: The purpose of this policy is:

  • To establish a process for appropriating budgetary authority and allocating Promotion Fund awards to recipients.
  • To establish a target reserve balance for the Promotion Fund.
  • To establish a process and criteria for the continued evaluation of the Promotion Fund reserve balance.
  • To establish a policy for the distribution of Promotion Fund awards outside of the annual appropriations process.

 

II. Background:

 

  1. The Promotion Fund is represented within the City of Aberdeen’s General Ledger as a Special Revenue fund identified as fund number 202.

 

  1. The Promotion Fund, as provided for within SDCL § 10-52A-2, includes receipts derived from the municipal sales tax on lodging, alcoholic beverages, eating establishments, and admission sales.

 

  1. The City Council has broad authority to determine what qualifies as promoting the municipality. By way of example, the South Dakota Attorney General determined that use of  Promotion Funds to promote an archaeological site in Wyoming was inappropriate (AG Opinion 92-06) but that the following uses of Promotion Funds were appropriate:
  • To provide grants and loans, and give or lend without consideration constructed facilities, to industries willing to locate in the municipality (AG Opinion 84-46).
  • For construction, operation, and maintenance of a museum and heritage center in the city (AG Opinion 86-16).
  • For construction and maintenance of municipal parking lots (AG Opinion 88-7).

III.       Budgeting Process:  The City of Aberdeen annual appropriations ordinance will provide budgetary authority for the Promotion Fund. The recommended annual appropriation amount will be determined by the Finance Officer.

IV. Allocation Guidelines:

 

  1. When authorized and provided for by the Council, a portion of the annual allocation of Promotion Funds may be designated for use by the City for the purpose of land acquisition, architectural fees, construction costs, payments for civic center, auditorium, or athletic facility buildings, including the maintenance, staffing, and operations of such facilities and the promotion and advertising of the city, its facilities, attractions, and activities.
  2. The recommended allocation of Promotion Funds shall be as follows:

90%    Portion of annual revenue available for distribution to organizations in support of the promotion and advertising of the City, its facilities, attractions, and activities.

10%    Portion of annual revenue available for the purpose of land acquisition, architectural fees, construction costs, payments for civic center, auditorium, or athletic facility buildings, including the maintenance, staffing, and operations of such facilities and the promotion and advertising of the city, its facilities, attractions, and activities.

V. Application and Allocation Process:

  1. Application.  Entities may apply for Promotion Funds annually following these    steps:

Step 1.       Availability of Applications:  The City Manager will make applications available no later than the first regular City Council meeting in July.

Step 2.       Submission Deadline:  Completed applications must be submitted to the City Manager by the first regular City Council meeting in August.

  1. City Council Review. The City Manager will provide completed applications to the City Council for review.
  2. City Council Recommendations. Council members will review applications and submit their recommended funding allocations to the City Manager by the last regular City Council meeting in August.
  3. Compilation. The City Manager will compile the Council’s recommended allocations into a resolution based on the median allocation to those entities receiving an allocation from a majority of Council Members.

 

  1. Allocation. The City Council will adopt the annual Promotion Fund allocation by resolution no later than the last regular City Council meeting in September.  Any uncommitted funds will be placed into a reserve balance which may be used in subsequent allocation processes. The City Council may amend the proposed allocation before final approval.

VI. Audit and Financial Review Requirements:

  1. The City of Aberdeen values financial transparency, accountability, and strong internal controls. Promotion Funds are public funds derived from a sales tax. To ensure responsible use of these funds, the City requires certain recipients to undergo either a Financial Review or Audit by a certified independent accountant.
  2. An organization’s allocation of Promotion Funds may be withheld until the required financial data is submitted.
  3. The threshold for Audit and Financial Review requirements are described within the table below:

2025 – 2026 and later

Financial Review  Required (Annual) – N/A – $125,000 to $249,999.99 in annual Promotion Fund Allocations

Audit Required (Annual or Biennial) – $100,000 or more in annual Promotion Fund Allocations – $250,000 or more in annual Promotion Fund Allocations

VII.     Reserve Balance:

  1. To maintain the solvency of the Promotion Fund, it shall be the policy of the City Council to maintain a fund balance of 10% to 15% of annual appropriations from the appropriations ordinance within the current operating year, not to exceed $200,000.
  2. If the reserve balance is less than 10% of current year appropriations, the Finance Officer will inform the Council of the financial condition of the Fund and make recommendations to restore the fund balance to a desired level.
  3. If the reserve balance is in excess of 15% of current year appropriations, the Finance Officer will inform the Council of the availability of excess Promotion Funds available for disbursement by way of subsequent allocation.

VIII.    Disbursement of Funds:  The Finance Officer will prepare a projected calendar to disburse Promotion Funds to recipients in an equitable manner. Disbursements may be made monthly, quarterly, biannually, or annually and are dependent upon funding availability. Any allocation or disbursement to departments or divisions of the City shall be made only after all commitments to outside organizations are fulfilled.

  1. Subsequent Allocation:
  2. When a year-end Promotion Fund reserve balance exceeds 15% of current year appropriations or $200,000, Promotion Funds may be made available to organizations in a process described as Subsequent Allocation.
  3. An application for Subsequent Allocation of Promotion Funds may be made available by the City Manager. Applications should be reviewed by the City Council at which time council members shall provide allocation recommendations to the City Manager. The City Manager will compile City Council allocation recommendations into the form of a resolution for consideration by the City Council based on the median allocation.
  4. The Finance Officer will draft a supplementing ordinance to provide additional budgetary authority for any Subsequent Allocation.
  5. Disbursements made via subsequent allocation are subject to the audit and financial review requirements made within the fiscal period of disbursement. Disbursements amounts are cumulative per organization per year.

X. Promotion Fund Timeline

January          The Finance Officer determines the Promotion Fund reserve balance. If the reserve balance exceeds 15% of annual appropriations or $200,000, subsequent allocation applications may be available.  The City Manager will notify the Council of available funds and initiate the allocation process.

July                 Promotion Fund applications available from the City Manager.

August            Promotion Fund applications due to City Manager; City Council reviews and provides recommended funding allocations.

September      Consideration of Promotion Fund Allocation Resolution

Section 2.   Revisions and Amendments.

Any revisions or amendments to the Promotion Fund Financial Administration Policy shall be by resolution.

Section 3.   Effective Date

This resolution shall take effect immediately upon passage and approval.

The foregoing Resolution No. 25-02-03R was adopted at a regular meeting of the Aberdeen City Council on the 24th day of February, 2025. Number of AYES: 9, Number of NAYS: 0, Members abstaining: None, /s/Travis Schaunaman, Mayor, ATTEST: /s/ Jordan McQuillen, Finance Officer

Published once on February 27, 2025, at the total approximate cost of $102.48 and may be viewed free of charge at www.sdpublicnotices.com and www.aberdeeninsider.com