4.2. SR 10-27-1997~.,y of
MEMORANDUM
Item #4.2.
TO:
FROM:
DATE:
SUBJECT:
Mayor & City Council
Lori Johnson, Asst. City Administrator/
Finance Director
October 27, 1997
Consider Contribution to Coalition of
Utility Counties and Coalition of Utility
Cities
At last week's City Council meeting, Assistant County Attorney Kathleen
Heaney updated the Council on the Coalition of Utility Counties and its work
regarding the electric utility personal property tax issue. Sherburne County
has been a very active participant in the Coalition of Utility Counties. We
have be able to rely on the county for information and leadership in dealing
with this issue. The Coalition of Utility Cities has also been working on this
issue and also hired a lobbyist to protect the cities' interests. Both of these
groups are working toward the same goals and the work of both will be
beneficial to Elk River.
Earlier this year the city contributed $500 to Sherburne County to help offset
its lobbying costs. The lobbing costs are split proportionately among the
participating counties so our contribution directly helped to reduce
Sherburne County's cost. The Coalition of Utility Cities has now made a
formal request for city participation through a joint powers agreement and
proposed dues of $1,735. Attached is the list of cities affected by this issue,
the proposed dues for each city, and also a copy of the joint powers
agreement.
Elk River has not been very active in the City Coalition probably because the
County Coalition organized earlier and included the city as part of the
organization through meetings, fax updates and numerous conference calls.
The County Coalition has strong leadership and has done a good job of
representing our interests.
Although Sherburne County has not made a request for an additional city
contribution, it may be appropriate for the city to consider helping the
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
County fund its share of the costs for the lobbyist who has already started
preparing for the upcoming legislative session. The Council should also
decide whether it wants to become a member of the Coalition of Utility Cities
through its joint powers agreement and pay the proposed dues, or whether
the Council would prefer to simply make a contribution without becoming an
official member of the group.
Action Requested
The Council is asked to consider the request from the Coalition of Utility
Cities to approve the Joint Powers Agreement and pay the associated dues.
The Council is also asked to consider a contribution to Sherburne County to
offset its costs related to this issue.
\\elkriver\sys\shrdoc\council\elecutil.doc
Coalition of Utility Cities
~ ..,posed dues are equal to $1,250 + 0.005% of each
city's 1996 market value in generating machinery.
Machinery Proposed
,Ci~ Mkt Value Dues
Becker 478,845,200 25,192
Burnsville 81,738,100 5,337
Cohasset 197,370,900 11,119
Duluth 1,127,000 1,306
Elk River 9,700,200 1,735
Fergus Falls 21,154,600 2,308
Granite Falls 7,507,200 1,625
Hoyt Lakes 18,267,600 2,163
Inver Grove Heights 21,324,900 2,316
Mankato 22,385,800 2,369
Monticello 197,297,000 11,115
Oak Park Heights 58,847,800 4,192
Red VVing 373,507,800 19,925
Shakopee 11,930,100 1,847
~' Cloud 5,265,000 1,513
To~ 92,550
JOINT POWERS AGREEMENT
The parties to this Agreement are all governmental units existing pursuant to the laws of
the State of Minnesota. This Agreement is made and entered into pursuant to Minnesota
Statutes, Section 471.59.
WITNESSETH:
WHEREAS, pursuant to Minnesota Statutes, Section 471.59 (Joint Exercise of Powers),
local government units may enter into an agreement through the action of their respective
governing bodies to jointly or cooperatively exercise any power common to the contracting
parties or any similar powers, including those which are the same except for the territorial limits
within which they may be exercised; and
WHEREAS, the parties hereto derive significant revenues in the form of personal
property taxes levied on electric generation or distribution facilities located in their respective
jurisdictions; and
WHEREAS, the Minnesota Department of Revenue, in conjunction with the Public
Utilities Commission (PUC) and the Department of Public Service, has issued a study dated
January 15, 1997 entitled "Analysis of Utilities Taxation in Minnesota" and has presented such
information before the Senate Subcommittee for Property Tax and Local Government Budget
Division, Senator Sandra L. Pappas, Chair, on February 5, 1997; and
WHEREAS, the above-referenced study by the Department of Revenue has in fact
recommended the decreased use or elimination of personal property tax as a source of revenue
for local government units; and
WHEREAS, Investor Owned Utilities (IOU's) have proposed legislation which would
remove personal property tax from the available tax capacities of the affected local government
units; and
WHEREAS, local government units who lose tax capacity as a result of the elimination
or decreased use of personal property tax as a source of revenue could see significant increases in
property taxes at the local level as a result of such legislation without the replacement of such
revenues; and
WHEREAS, proposed replacement revenues such as a "meter" tax would not provide the
same assurance of cash flow since such revenues would be collected and administered outside of
local control thereby decreasing the reliability and security of the revenues; and
WHEREAS, with the loss of the personal property tax as a revenue source, the affected
local government units will experience an adverse impact in their ability to bond, bond ratings,
long-term debt, and problems with outstanding debt including issues concerning on-going bond
disclosure requirements.
NOW, THEREFORE, BE IT RESOLVED, that in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
Purpose. The purpose of this Agreement is to establish a coalition of local government
units to carry out the following purposes:
a. Monitor electric utility tax and regulatory issues for cities;
Conduct research and analysis on electric utility tax and regulatory issues on
behalf of cities containing electric generation or distribution facilities;
Co
Develop options to protect or replace lost revenues which will result from the
deregulation of the electric utility industry or tax changes;
d. Coordinate activities with other interest groups and governmental entities;
Communicate directly through lobbying or through preparation of advocacy
materials with the legislature, state agencies, and the media;
Retain consultants to develop and provide member cities with technical advice
and support to implement programs to meet the purposes stated in this
Agreement; and
ge
Take such other actions as are deemed necessary and appropriate consistent with
the foregoing general purposes stated in this Agreement.
o
Coalition ofUtili _ty Cities (CUC). The parties hereto agree to identify this Agreement and
the resulting governing joint powers board, as established in paragraph 3 of this
Agreement, as the Coalition of Utility Cities (CUC).
3. Joint Powers BQard.
ao
The development, management, and control of the CUC shall be vested in a joint
powers board. The joint powers board shall be composed of representatives
appointed by each member local government unit. Each member local
government unit shall appoint one (1) director representative and one (1) alternate
representative to serve on the joint powers board. The alternate representative
appointed by each member government unit shall be entitled to attend meetings of
the joint powers board and may vote in the absence of the member's director
representative.
2
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Each designated director representative and alternate representative of a member
local government unit on the joint powers board shall serve a term of one (1) year
or until successors are duly appointed by the governing body of the member local
govemment unit.
A vacancy on the joint powers board shall be filled by appointment by the
respective governing body of the member lo,al government unit left
unrepresented by the vacancy.
Except as otherwise provided, the transaction of business by the joint powers
board shall be by majority vote of those board members present at a meeting at
which a quorum is present. At all meetings of the joint powers board, one-half
(1/2) of the board members currently serving on the board shall constitute a
quorum for the transaction of business.
Meetings of the joint powers board shall be held at least one (1) time per fiscal
year, as called by the president. Except as otherwise provided by law, a meeting
of the joint powers board may be conducted by telephone conference call.
The joint powers board shall at its first meeting, and at an annual meeting held
prior to July 1 of each year after 1997, elect officers who shall consist of a
president, vice-president, secretary, and treasurer. The president and
vice-president shall be elected by the joint powers board from those director
representatives then serving on the joint powers board. The president and vice-
president shall not be the same person and shall not be the secretary or treasurer.
The secretary and treasurer may be the same person but need not be a director
representative of a member local government unit serving on the joint powers
board.
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The joint powers board may adopt appropriate bylaws governing the conduct of
the board.
~zb_ed.~. Any municipal corporation located within the state of Minnesota that has
an interest in electric utility regulatory or tax issues may become a member of the CUC.
The initial members of the CUC shall be those local governmental units who have
executed an identical copy of this Agreement on or before December 31, 1997 and
submitted the same along with payment of its assessment, as provided in paragraph 5 of
this Agreement, to the secretary of the organization. Local govemmental units seeking to
join the CUC after December 31, 1997, shall be admitted only upon executing and
submitting an identical copy of this Agreement to the secretary of the CUC and upon
approval of their membership by the CUC joint powers board.
3
Dues Assessments. Funding for the CUC shall be provided by participating member
local government units. Each participating member's dues assessment during the first
year of existence of the CUC shall be equal to $1,250 plus 0.005% of each member local
government unit's 1996 generating machinery market value. For.the first year of
existence, each member local government unit shall remit its respective dues to the
treasurer of the CUC within 60 days of executing this Agreement or within 60 days after
the election of officers as provided in paragraph 3 (f) of this Agreement, whichever is
later. For purposes of this Agreement, the first year of existence of the CUC shall end
June 30, 1998 and a fiscal.year for the CUC shall thereafter commence July 1 and end
June 30 of the following year.
After the first year of existence, at the annual meeting as provided in paragraph 3 (f), the
joint powers board shall establish dues assessments for member local government units.
The treasurer shall thereafter certify to each participating member local government unit
its dues assessment by no later than August 1 of each fiscal year. After dues assessments
are certified, each member local government unit shall remit its respective dues to the
treasurer of the CUC within sixty (60) days of receipt of its dues assessment.
Termination. This Agreement shall remain in effect until terminated by action of the
CUC joint powers board at a duly qualified meeting. If the joint powers board is
terminated, all assets acquired as a result of the joint exercise of powers pursuant to this
Agreement remaining after the date of termination and after payment of any outstanding
debts or expenses, shall be returned to those member local government units in good
standing on the date of termination in proportion to the respective contributions made by
the member local government unit.
Any individual member local government unit participating in this Agreement may elect
to withdraw from participation in the CUC at any time upon adoption of a resolution to
that effect submitted to the secretary of the CUC joint powers board. A withdrawing
individual local government unit shall not be entitled to the remm of any dues previously
paid.
v.C. tO. xfilxfiBg~y.. This Agreement is made pursuant to and shall be construed in
accordance with the laws of the state of Minnesota.
o
Severability. In the event that any provision of this Agreement is determined to be
invalid, illegal, or unenforceable by any court of competent jurisdiction, or by reason of
any existing or subsequently enacted legislation, the other provisions of this Agreement
shall remain in full force and effect, and the parties hereto shall negotiate in good faith
and agree to such amendments or modifications of or to this Agreement or other
appropriate actions as shall, to the maximum extent practicable, in light of such
determination, implement and give effect to the intentions of the parties hereto.
4
~. This Agreement may be amended by the CUC joint powers board from
time to time by a 2/3 vote of those board members present at a duly qualified meeting at
which the vote is taken. Prior to a meeting at which amendment of this Agreement is
proposed, each member lo,al government unit shall be given ten (10) days prior written
notice of the meeting and the amendment which is proposed.
10.
Captions and Headings. Captions and headings in this Agreement are for ease of
reference only and are not intended to alter the terms of'this Agreement.
IN WITNESS WHEREOF, the undersigned local government unit, pursuant to an
authorizing resolution of its respective governing body, has caused this Agreement consisting of
five pages this page included to be signed and delivered on its behalf this day of
,1997.
CITY OF
BY.
Its
BY
Its.
5
OCT. ~3. 1997
,....,istant Couflt~
Attorneys;
Thomas N.
Nancy J. Log~'incJ
Thomas ¢.
Kalhieen A. Haaney
Christopher J. Johnson
Dean ~. Emanuel
Roslta ~errano
Investlgatot:
Ga~ E, Poslus~y
Victim So.ices
Ceerdinato~;
Chns Me[and
3:~OPM SHER~URNE COUNTY RTTORNEY
Sherburne County
Government Center 13850 Highway 70 · Elk River, MN 55330-4601
N0.629 P. 1/3 Z./'~ Z,
Walter M. Kaminsky
County Attorney
(6 ! 2) 241-~565
FaX (612) 247-£$75
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City Council for the City of Elk River
Resolution
Date: Resolution No.:
= -= =~ I~1 II
Whereas, Tt~e City of Elk River is host to the United Power plant and this
facility contributes both real and personal property taxes to the community, school
and county;
Whereas, legislation has been introduced which would eliminate the personal
property tax on generation facilities and transmission and distribution lines in the
state. Elimination of the personal property tax would result in a host of difficulties,
namely:
a. a detrimental effect on the city's ability to finance essential services
not only to the citizens at large but also the power plant itself (i.e.,
police and fire services), and,
b. a detrimental effect on the city's ability to issue bonds due
bonding capacity and the adverse effect on the interest rates and bond
ratings; and,
Whereas, even if an alternative revenue stream would be provided, the effect
on the bonds would not be resolved;
Now, therefore the City Council for the City of Elk River hereby makes the following:
Resolution
A. The City Council for the City of Eik River hereby opposes the elimination of
personal property taxes on attached machinery and transmission and distribution
lines;
B. Further that the substitution of an alternative form of revenue in lieu of
personal property taxes is an unacceptable alternative given the negative
consequences on the bonds.
This resolution passed/failed on the~
day of . . ,1997
Attested to:
Patrick Klaers
City Administrator