05-10-2016 ERMU MIN ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
May 10,2016
Members Present: John Dietz,Chair;Al Nadeau,Vice Chair;and Daryl Thompson,Trustee
ERMU Staff Present: Troy Adams,General Manager;
Theresa Slominski,Finance and Office Manager;
Mark Fuchs,Electric Superintendent;
Eric Volk,Water Superintendent;
Mike O'Neill,Technical Services Superintendent;
Tom Sagstetter,Conservation&Key Accounts Manager;
Michelle Canterbury,Executive Administrative Assistant;
Jennie Nelson,Customer Service Manager
Others Present: Peter Beck,Attorney;Lori Ziemer,City Interim Finance Director;
Terri Heaton, Springsted Senior Vice President/Client Representative
1.0 CALL MEETING TO ORDER
John Dietz called the May 10,2016 meeting to order at 3:30 p.m.
1.1 Pledge of Allegiance
The Pledge of Allegiance was recited.
1.2 Consider Utilities Agenda
Troy Adams requested to move up agenda item 5.5,Bond Sale Resolution to immediately
follow the 2.0,Consent Agenda.
Daryl Thompson moved to approve the revised May 10,2016 Utilities agenda. Al Nadeau
seconded the motion.Motion carried 3-0.
1.3 Recognition of the ERMU Tom Bovitz Memorial Scholarship Recipient
Michelle Canterbury introduced Kyle Ziemer who was the recipient of the ERMU"Tom Bovitz
Memorial Scholarship." Kyle shared what his future plans for college were.The Commission
congratulated him on the essay he wrote.
Page 1
Regular Meeting of the Elk River Municipal Utilities Commission
May 10,2016
1.4 Recognition of Employee Achievement
Tom Sagstetter introduced Jolene Fenn-Jansen and announced that she recently graduated from
the Chamber of Commerce Leadership Elk River Program. Jolene shared some of the
highlights of the program and what a memorable experience it had been.The Commission
congratulated Jolene on her achievement.
2.0 CONSENT AGENDA(Approved By One Motion)
John Dietz had a few questions on the financials,staff responded.
Al Nadeau moved to approve the Consent Agenda as follows:
2.1 April Check Register
2.2 April 12,2016 Previous Meeting Minutes
2.3 Financial Statements
2.4 Resolution Electing Not to Waive Statutory Tort Limits for Liability Insurance
2.5 2016 First Quarter Performance Metrics and Incentive Compensation Update
2.6 Revised Energy Management Rates Tariff
Daryl Thompson seconded the motion. Motion carried 3-0.
5.5 Bond Sale Resolution
Theresa Slominski shared that staff has been moving forward with our$10 million dollar
bonding for an early payment buy-in to Minnesota Municipal Power Agency(MMPA)this
year. In addition to any payment made this year, in 2018 there would need to be a"true-up"
of the buy-in amount that would need to be made with cash or additional bonding. In
conjunction with the bonding, staff is proposing to refund debt issue 2007A bonds for an
early payoff in 2018. There was discussion.
Terri Heaton from Springsted presented the recommendations relating to the 2016A
bonding for$10 million, and an analysis of the 2007A bond refunding of$1.46 million.
Information was also provided for the justification of the refunding with the adjusted
timeline and projected savings of$56,000. Terri went over the schedule and timing of some
of the key events that will occur relative to the bond issuance. As the City of Elk River is
the qualified entity to issue the bonds,the resolutions must be approved by the City
Council to be effective. John Dietz asked for further clarification on the rating. Terri
Heaton responded.
Al Nadeau made a motion to authorize and request the City Council to sell the 2016A
Electric Bonds and refund the 2007A Electric Bonds in June 2016. Daryl Thompson
seconded the motion. Motioned carried 3-0.
Page 2
Regular Meeting of the Elk River Municipal Utilities Commission
May 10,2016
3.0 OPEN FORUM
No one appeared for open forum.
4.0 OLD BUSINESS
4.1 Security Department Cost Analysis
At the previous commission meeting,Commission directed staff to bring back three years of
historical financial data for the security department; specifically a comparison between the
security system monitoring margin and the security system total margin.
For the security monitoring margins,Mike O'Neill presented the trends for the past three years
plus 2016 projections.Next,Mike presented the total margins for the security department for the
past three years plus 2016 projections. Mike pointed out that there were two significant
adjustments that affected the numbers presented.The first occurred in 2014 when an error was
discovered in the billing for the city of Elk River's wastewater lift station accounts.The error
was corrected and an approximate$40,000 credit was made to the Wastewater Department,
which resulted in the security department realizing a negative net margin for 2014.The second
as previously discussed,was the change in billing software in 2015.This change resulted in the
recognition of revenue relating to annually billed customers amortized over the entire year as
opposed to the past method of recognizing that revenue in the month it was received;this has
resulted in a$45,000 swing.John Dietz commented that a vast majority of our revenue from the
security system is being generated from the monitoring. After discussion the Commission
directed staff to come back next month with an evaluation of the security department.
4.2 Expansion of the Board of Commissioners
Troy Adams provided an update on the expansion of the Board of Commissioners from 3 to 5.
Troy shared that on March 16,the ERMU Commission expansion legislation passed through
committee to the floor in both the House and the Senate. On April 26,the House bill passed on
the floor with a vote of 124-1,and the Senate companion bill passed on the floor on May 4 with
a vote of 61-0.The legislation is now on to the Governor.Troy shared that after the session is
done, Senator Kiffmeyer and Representative Zerwas would both be willing to come to a city
council meeting to recap and speak on the success of the two bills.
Troy shared that in preparation for the expanded Board of Commissioners,staff will be working
on completion of the governance manual,a meeting procedures guide,and updating the by-
laws.There was further discussion.Peter Beck provided an update on participation in a meeting
via Skype and the conditions that must be met to do so.He recommended including the specifics
of interactive television meetings in the updated by-laws or the meeting procedure guide.
Page 3
Regular Meeting of the Elk River Municipal Utilities Commission
May 10,2016
5.0 NEW BUSINESS
5.1 2016 First Quarter Delinquent Items
Theresa Slominski presented the delinquent items for the first quarter which included a
delinquent amounts listing report totaling$8,206.44 for all services. Theresa also presented
a color-coded recap comparison with last year, identifying the running totals. Theresa noted
that we collected approximately$22,000 from Revenue Recapture in 2016; of that, $10,500
was from a large commercial write-off in 2015. The amount for the first quarter write-offs
is ($927.42), a credit due to collections on amounts previously written off, which is typical
in the first quarter. John Dietz had some questions on the first quarter delinquent items.
Staff responded. There was further discussion.
Daryl Thompson made a motion to approve the First Quarter Delinquent Amounts
Listing. Al Nadeau seconded the motion. Motion carried 3-0.
5.2 2016 MMUA Legislative Rally Update-Verbal
Tom Sagstetter and Troy Adams attended the Minnesota Municipal Utilities Association
(MMUA) Legislative Rally held in St. Paul on April 19. Tom provided an update on the
key issues and talking points which included: CIP Challenges, Railroad Right-of-Way
Crossing Fees, Refundable Sales Tax for Construction Materials, Labeling of Non-
Flushable Wipes,Regulatory Certainty for Effluent Limits, and Small Wireless Pole
Attachments. Discussion followed.
5.3 Lunch and Break Policy for Field Staff
At the previous commission meeting, Commission requested that staff provide a copy of
the lunch and break policy for field staff. Mark Fuchs shared that ERMU does not have a
written lunch and break policy and that we currently follow the Minnesota Statutes in
regards to lunch and break times. Staff consulted legal counsel and the current practice
meets all the requirements of the law. John Dietz inquired on whether the breaks where
typically taken in the field or back at the plant. Staff responded that coffee breaks are
typically taken out in the field, and that employees would not pack everything up to go
back to the plant to take a break or lunch. Eric Volk and Mark Fuchs explained that our
employees are very mindful of the task at hand and will wait to take a break until they get
to a good stopping point. This is one of the reasons why we try not to be too rigid with the
specific times the breaks and lunches need to be taken. There was further discussion. Troy
Adams stated that after speaking with legal counsel, it was recommended that a section
outlining the rules related to lunches and breaks be added to the annual employee handbook
update. The updated handbook will be brought to the Commission for consideration in fall
of 2016. John thanked staff for explaining and elaborating on the process we've been
following regarding breaks. He shared that it helps the Commission to be informed so that
Page 4
Regular Meeting of the Elk River Municipal Utilities Commission
May 10,2016
they are better able to handle any questions or comments they receive from community
members.
5.4 Well#3 Recondition Presentation
Eric Volk presented a power point presentation of the Well #3 reconditioning project. The
project began February 1, and was completed by April 15, 2016. The project involved
pulling and replacing the well,replacing old pipes, sandblasting and painting the filter,
installing new glass block windows, painting the floor, and replacement of all chemical
lines and conduits. The reconditioning will help to extend the life of the well and filter for
many years to come.
5.6 Landfill Gas Plant Engine Repair and Plant Operational Cost Update
Tom Sagstetter gave an update on the Landfill Gas Plant engine repair. ERMU has
experienced two catastrophic failures in the last 3 years; one in 2013, and the second in
March 2016. The landfill gas plant received the repaired engine#4 on April 25th and was
up and running at full production on April 26th. We have yet to receive the final invoice for
the repair and are still waiting to find out if it will be covered under any type of warranty.
As previously reported to the Commission,the cost is estimated to be around $112,000 for
the repair. ERMU staff has also been in contact with the League of Minnesota Cities
regarding the insurance policy for third party coverage for equipment breakdowns at the
landfill gas plant to determine if that will be an option.
Tom explained that the operational expenses of the plant have been an area of concern in
recent years due to drastic increases in maintenance costs above and beyond those covered
under the maintenance contract with Waste Management(WM). Tom informed the
commission that WM is in the process of implementing new standard maintenance
schedules that will involve installing new pistons rings and main bearings on a regular
scheduled basis. The drastic changes with the new maintenance schedule will result in
significant increases in parts and labor costs, and under the current operating structure of
the plant and the contracts associated with it ERMU would be solely responsible for the
incremental charges. There was discussion.
Currently ERMU staff is evaluating historical and future projections of costs and revenue
to determine the next steps. Tom shared that there has been communication with WM and
Sherburne County about the drastically increasing costs, relatively flat revenue, and the
viability of the facility. In an effort to increase the viability of the landfill gas to electric
plant, ERMU staff has been exploring several options. Tom went over the different options
in detail. There was further discussion. Moving forward, staff will continue to provide
updates as information is gathered and options are considered.
Page 5
Regular Meeting of the Elk River Municipal Utilities Commission
May 10,2016
6.0 OTHER BUSINESS
6.1 Staff Updates
Troy Adams informed the Commission that based on a recent customer experience,there has
been discussion on our process for disconnects/reconnects and the fee associated with it.Jennie
Nelson was present and explained the disconnection process.Jennie shared that we recently had
an incident where a residential customer who had been scheduled for disconnection came into
the office and paid the past due amount before the actual disconnection had taken place. As the
schedule for disconnects had already been compiled,and staff had been dispatched to do so,the
$50.00 fee was charged to the customer in question;the customer disagreed with this decision.
The Commission had a few questions. Staff responded.After discussion it was determined that
staff was correct in charging the$50.00 fee.The Commission suggested strengthening the
language of the policy to further clarify the timeframe in the disconnect/reconnect process that
the fee will be incurred and recommended identifying the fee as an administrative fee. Staff will
bring back the proposed revised policy to the next commission meeting.
Theresa Slominski had one item to add.At the February 9,2016 commission meeting,the
package cable bid was awarded to Border States for their escalated price of$332,903. As
escalated pricing fluctuates,the commission requested that once all the wire was purchased that
staff report back on what the total cost was. As all the cable has now been purchased,Theresa
shared that we ended up spending more with the escalated pricing,which resulted in a$17,000
deficit. Mark Fuchs pointed out that the amount of the deficient doesn't take into account the
value we receive from Border States picking up and disposing of the reels.
Eric Volk shared that ERMU was approached by Verizon to add six more antenna attachments
onto the Gary Street Water Tower; increasing the total attachments to twelve.As Verizon
currently occupies 50%of the tower capacity with their six antenna attachments,staff
determined it would not be in ERMU's best interest to max out the tower capacity without
considering other contract options with potentially interested parties.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on June 14,2016.
The Commission recessed the regular meeting at 5:19 p.m.
6.3 Closing of Meeting: "Meeting to be Closed pursuant to MN Statute 13D.05, Subd.
3(c)to develop or consider offers or counteroffers for the purchase or sale of real
or personal property."
a. Call Closed Session to Order
b. Discussion
Page 6
Regular Meeting of the Elk River Municipal Utilities Commission
May 10,2016
c. Adjourn Closed Session
6.4 Closing of Meeting: "Meeting to be Closed pursuant to MN Statute 13D.05, Subd.
3(a) for Employee Performance Evaluation."
Based on time constraints,the Commission consensus was to postpone agenda item 6.4,
Closed Meeting for Employee Performance Evaluation,to June 14, 2016 at 2:30 p.m.
6.5 Adjourn Regular Meeting
Al Nadeau moved to adjourn the regular meeting of the Elk River Municipal Utilities
Commission at 5:45 p.m. John Dietz seconded the motion. Motion carried 3-0.
Minutes prepared by Michelle Canterbury.
�drAgittlft
J� J.D-,tz �
k air, i CAP -.ion
111
Tina Allard
City Clerk
Page 7
Regular Meeting of the Elk River Municipal Utilities Commission
May 10,2016