2.3 ERMUSR 07-12-2016 ELK RIVER MUNICIPAL UTILITIES
SPECIAL MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
June 14,2016
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;
Tom Geiser,Assistant Electric Superintendent
Jennie Nelson,Customer Service Manager
Others Present: Cal Portner,City Administrator;Peter Beck,Attorney;
Terri Heaton, Springsted Senior Vice President/Client Representative
1.0 CALL MEETING TO ORDER
John Dietz called the June 14,2016 meeting to order at 2:30 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 5.1,Award of Bonds 2016A and Refunding of
Electric Bonds 2016B,to immediately follow the 2.0, Consent Agenda.
Daryl Thompson moved to approve the revised June 14,2016 Utilities agenda. Al Nadeau
seconded the motion.Motion carried 3-0.
1.3 Recognition of Employee Achievements
Mike O'Neill introduced Tony Hubbard and Jeff Murray and announced that they both
completed the Metering Apprenticeship Program and are now working on their Substation
Apprenticeship. Tony and Jeff shared some details about the two year program and the benefits
of the training they received. The Commission congratulated Tony and Jeff on their
achievement.
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2.0 CONSENT AGENDA(Approved By One Motion)
John Dietz had a few questions on the Electric Cost-of-Service and Rate Design Study, staff
responded.
Al Nadeau moved to approve the Consent Agenda as follows:
2.1 May Check Register
2.2 May 10,2016 Previous Meeting Minutes
2.3 Financial Statements
2.4 2015 Consumer Confidence Report
2.5 Wellhead Protection Plan Implementation Evaluation and Work Plan
2.6 Consulting Services for Electric Cost-of-Service and Rate Design Study
Daryl Thompson seconded the motion. Motion carried 3-0.
5.1 Award of Bonds 2016A and Refunding of Electric Bonds 2016B
At the May 10th meeting, the Commission passed a resolution to proceed with the issuance
of$10,000,000 2016A bonds, and the refunding of the bond 2007A issue of$1,460,000
2016B bonds, and the City Council passed it at the May 16th meeting. At that time it was
identified that the award of the bonds by the Utility Commission would come back and be
on the June 14th agenda. Proposals for the sale of the bonds were received this morning,
June 14, until 10:00 a.m.
Terri Heaton from Springsted presented the market sale information results. For the 2016A
Electric Revenue Bonds, subsequent to bid opening,the issue size decreased from
$10,000,000 to $9,755,000 due to a premium with the offer. Terri presented the bids and
announced that the Wells Fargo Bank, National Association came in as the low bidder with
a true interest rate of 2.31%. For the 2016B Electric Revenue Refunding Bonds,
subsequent to bid opening,the issue size decreased from$1,460,000 to $1,370,000. The
Robert W. Baird& Company, Incorporated was the low bidder with a true interest rate of
1.32%. Terri shared that based on the lower interest rate and reduced underwriter fees, the
final results of the bond refunding reflected a total savings of$94,737.
The rating call for both bonds was conducted on May 31St. It was decided to stay to with
Moody's for rating purposes; we currently have an Aa3 rating. Terri shared that ERMU
staff did a fabulous job on the rating call and really represented the utilities well. Teri
pointed out the highlights in Moody's review, which included ERMU's credit strengths and
credit challenges. Based on the information reviewed, Moody's has assigned an Aa3 rating
to ERMU's $11.5 million Electric Revenue Bonds, Series 2016A and Electric Revenue
Refunding Bonds, Series 2016B. There was discussion on the rating. Troy Adams pointed
out that Theresa Slominski and her staff put a great deal of effort into putting together the
packet used for the rating call, and that along with years of good utility decision making is
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reflected in our high rating. There was further discussion. John Dietz asked a few
questions. Terri Heaton and staff responded.
Al Nadeau made a motion to approve and award the sale of Electric Revenue Bonds,
Series 2016A,to the low bidder.Daryl Thompson seconded the motion. Motion
carried 3-0.
Daryl Thompson made a motion to approve and award the sale of the Electric
Revenue Refunding Bonds, Series 2016B,to the low bidder.Al Nadeau seconded the
motion. Motion carried 3-0.
3.0 OPEN FORUM
No one appeared for open forum.
4.0 OLD BUSINESS
4.1 Landfill Gas Plant Engine Repair and Operational Cost Update
As part of the ongoing evaluation of the Elk River Landfill Gas Plant(LFGP),ERMU met with
Waste Management(WM)and Sherburne County representatives on May 23rd to discuss current
and future operations of the facility.ERMU staff completed a detailed analysis of all of the costs
and revenue for the facility since it became operational in October 2002 through the end of the
contracts in September 2022.Tom Sagstetter explained that although recent operational cost
trends have been concerning,the key findings of the analysis were that the LFGP has not been a
burden to the customers of ERMU,nor will it be in the future based on forecasted costs and
revenues.Tom shared that all of the partners(Sherburne County,Waste Management,and
ERMU)agreed that the future operation and ownership of the LFGP needs to continue to be
evaluated with final changes to be implemented in 2017 for operations,maintenance and
ownership. John Dietz stated that he gave a utilities update to the City Council which included
our concerns about the profitability of the LFGP and some of the steps we're taking to try to
mitigate the risk.
Tom touched on the areas that were discussed at the May 23rd meeting,and noted that Waste
Management has agreed to waive the cost for the gas used to power the plant for the remainder
of 2016 which will help significantly with the overall return. The Commission had a few
questions. Staff responded. Tom stated that the partners have scheduled a meeting for July 21st
to follow-up on action items identified at the previous meeting. ERMU staff will continue to
provide updates as information is gathered and different options are considered.
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4.2 Governance Manual
At the August 2014 Utilities Commission meeting, staff presented a draft of an ERMU
Governance Handbook. The intent for this handbook was to be incorporated into an ERMU
Governance Manual that would be given to new Commissioners. During discussions about the
proposed Governance Handbook and Manual, it was determined that our by-laws were outdated
and needed to be revised. And with the expansion of the commission from three to five
members,a by-laws update is now required.
Troy Adams shared that staff has been researching other utility's by-laws and collecting samples
to draw from and during this process Minnesota Municipal Utilities(MMUA)was able to
connect staff with experts on the subject manner. One of those experts was John Miner,former
General Manager of Rochester Public Utilities. Through a conference call with John Miner,
staff discussed the current by-laws and governance polices and discovered that there is far more
depth to this project than originally thought.Troy added that the amount of work and the need
for subject matter expertise has led way to ERMU potentially contracting with a governance
consultant. Troy presented a scope of work to assist in the redevelopment of the ERMU by-
laws and governance policies that John Miner had provided;the base proposal reflected an
approximate cost of$25,000.As this was not a budgeted expense,Troy explained where the
cost could be funded from. As John Miner will be passing though Minnesota on Wednesday,
June 15,Troy suggested that he and the Utilities Chair sit down with him to discuss the scope
and importance of this work. Staff requested discussion,direction,and conditional approval to
contract with John Miner of Collaborative Learning,Inc.
Daryl Thompson commented that$25,000 sounded like a lot of money.Peter Beck shared that
if he were to do the work on this project it would fall out of the scope of the retainer and would
be charged at an hourly rate.As this is a unique area of work,Peter was not uncomfortable with
that kind of a dollar amount to get the job done.There was discussion.
Daryl Thompson made a motion to authorize the Commission Chair and General
Manager to conditionally contract,with a price to not exceed$25,000,with John Miner of
Collaborative Learning,Inc.for the revision of ERMU's by-laws and governance policies.
Al Neadeau seconded the motion. Motion carried 3-0.
5.0 NEW BUSINESS
5.2 Deposits and Related Services Policies
At the May Commission meeting, the Commission directed staff to revise the Deposits and
Related Services Policies; in particular the section about the disconnect/trip charge. It was
suggested that the language be strengthened to clarify the timeframe in the
disconnect/reconnect process that the $50.00 fee be incurred. Jennie Nelson shared that
staff worked with legal counsel to revise section 7.0 pertaining to the disconnect/trip charge
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to further clarify that the $50.00 fee will be charged at the time the disconnect list is
prepared. John Dietz recommended removing the second sentence in section 7.0 A, which
stated"Management can remove the charge at their discretion."After discussion, it was
agreed upon to strike the sentence and amend the policy to reflect the change. Jennie noted
that other minor edits were made to the policy.
Daryl Thompson made a motion to approve the proposed Deposits and Related
Services Policies with the recommended amendment to section 7.0 A. Al Nadeau
seconded the motion. Motion carried 3-0.
5.3 Metropolitan Council Notice of Termination of Contract
Eric Volk shared that in March of 2009, ERMU entered into an agreement with the
Metropolitan Council allowing them to install antennas for the Northstar Commuter Rail on
the Gary Street Water Tower. Per the terms of the agreement, the Metropolitan Council
paid ERMU $9,000 for a lease scheduled to terminate on December 31, 2028. As the use of
the premises is no longer needed, ERMU recently received notice from the Metropolitan
Council terminating the agreement, effective August 15, 2016. In the termination letter,
dated May 16, 2016,the Metropolitan Council requested a prorated refund for the unused
years of the lease. Peter Beck stated that there is nothing in the contract that prorates the
amount, and that the $9,000 payment was for the term of the contract regardless of length.
The Commission was in consensus to deny the Metropolitan Councils' request for a refund,
and directed Peter Beck to provide some language to be included in ERMU's response to
the Metropolitan Council on why their request was denied.
Al Nadeau made a motion to deny the Metropolitan Councils' request for a refund.
Daryl Thompson seconded the motion. Motion carried 3-0.
5.4 2016 Vehicle Purchases and Retirements
Approved in the 2016 budget were three F250 pickup trucks. For 2016, Midway Ford was
the vendor awarded the State Bid for Ford. Mike O'Neill presented quotes from Midway
Ford and Cornerstone Automotive. The quote from Cornerstone Automotive came in at
$31,933.38 per vehicle, and the state contract bid from Midway Ford came in at
$31,563.90, for a difference of$369.48 per vehicle. Based on the small difference in
pricing, staff recommended keeping the purchase of the vehicles local with Cornerstone
Automotive. Staff also presented the city vehicle evaluation forms for the trucks that have
been deemed ready for retirement/auction. Mike pointed out that the trucks we'll be
purchasing will be four doors versus the extended cabs we have previously gone with. By
going with the four doors, it will allow for greater ease of use and for better resale down the
road. Discussion followed.
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Daryl Thompson made a motion to approve the purchase of the three F250 pickup trucks
from Cornerstone Automotive. Al Nadeau seconded the motion. Motion carried 3-0.
6.0 OTHER BUSINESS
6.1 Staff Updates
Troy Adams announced that the Minnesota Municipal Utilities Association(MMUA) Summer
Conference is scheduled August 15-17 and will be held at Cragun's Resort in Brainerd,MN.He
reached out to the Commission to see who was interested in attending. The Commissioners
expressed an interest in attending and said they will get back to staff with a definite answer once
they have an opportunity to check their calendars.
Theresa Slominski informed the Commission that Lome Franz gave her resignation yesterday;
her last day will be June 27. As there are projects on the horizon and additional things we could
be doing,Theresa expressed an interest in replacing the position with a full time accountant.
There was discussion.Daryl Thompson inquired as to what the difference in cost would be to
employee someone full time versus part time. Staff provided a rough estimate.After further
discussion,Daryl Thompson recommended giving Theresa the authority to move forward in
fmding a full time replacement for the accounting position. The Commission requested that
staff bring back justification and an outline of the wages to the next Commission meeting.
Daryl Thompson made a motion to giveTheresa Slominski the authority to move forward
with finding a full time accountant. Al Nadeau seconded the motion. Motion carried 3-0.
Mark Fuchs made note that he included pictures of the new Bore Rig truck and Vac-Tron with
his staff report. John Dietz inquired as to how things were going working with the city
mechanics. Tom Geiser,who is the person responsible for scheduling all of the maintenance of
our vehicles,explained the process and shared that everything is going very well.
Eric Volk shared that there was a water main break at the Elk River High School last Friday
morning,which was the day of the graduation ceremony for the Class of 2016. The call came in
around 10:15 a.m. and the repair was completed by 2:15 p.m.thanks to the teamwork by all
involved. There was discussion.Eric gave praise to the fire department, streets department,
water department and electric department for all their efforts and the specialty equipment they
provided to get the job done quickly and safely. The ruptured line was capped and will be fully
repaired later. Eric mentioned that Jim Boyle with the Star News will be writing an article on
this topic to be included in the Saturday edition of the newspaper.The Commission commented
that everyone involved did a great job.
Cal Portner shared that the city was awarded a grant to pay for participation in a three year
program called Climate-Smart Municipalities. Elk River is one of five Minnesota cities that
have been chosen to partner with five-award winning German cities to collaboratively explore
and advance economically beneficial, green initiative strategies for both. Representatives from
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Minnesota,including Cal and Kristin Mroz,will travel to the state of North Rhine-Westphalia in
July,where they will visit climate-smart energy facilities and work with their partner
communities to develop strategies for reducing their energy footprint while boosting the local
economy.The City of Elk River will also have the benefit of working with their twin
community when they visit Minnesota in the fall. Cal will provide a full report when they return
from their trip in July.
6.2 Set Date for Next Meeting
The next regularly scheduled Commission meeting will be held on July 12,2016.
The Commission recessed the regular meeting at 3:55 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."—PID#75-411-0220 and#75-411-0250, also known as
1437 Main Street NW
a. Call Closed Session to Order at 3:55 p.m.
b. Discussion
c. Adjourn Closed Session at 4:10 p.m.
6.4 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."-Valuation of business line.
a. Call Closed Session to Order at 4:11 p.m.
b. Discussion
c. Adjourn Closed Session at 4:29 p.m.
6.5 Adjourn Regular Meeting
Al Nadeau moved to adjourn the special meeting of the Elk River Municipal Utilities
Commission at 4:30 p.m. Daryl Thompson seconded the motion. Motion carried 3-0.
Minutes prepared by Michelle Canterbury.
John J.Dietz
Chair,ERMU Commission
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Tina Allard
City Clerk
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