4.3. ERMUSR 12-13-2016 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
December 13, 2016 4.3
SUBJECT:
Governance Manual Update
DISCUSSION:
Based on Commissioner and Staff input through surveys and discussion, our consultant John
Miner has developed drafts for the first four Governance Manual policies. These are attached for
review. And at a minimum the next four policies will be ready for review in January. These
policies are:
• G-1.4 Agenda Planning (annual agenda& meeting agendas)
• G-1.7 Commission Officer Roles, Responsibilities & Succession
• G-1.8 Commission Committees (principles, structure, roles and responsibilities)
• G-1.9 Independent Advisors to the Commission(general counsel, bond counsel, human
resources counsel, etc.)
The intention is to have the core Governance Manual ready for adoption in early 2017.
ACTION REQUESTED:
No action required at this time.
ATTACHMENTS:
• Draft ERMU Governance Policy G-1 —Commission Purpose, 12/5/2016
• Draft ERMU Governance Policy G-1.1 —Commission-City Council Relationship and
1 Roles, 12/5/2016
• Draft ERMU Governance Policy G-1.2—Commission Authorities and Responsibilities,
12/5/2016
• Draft ERMU Governance Policy G-1.3 —Governance Style, 12/5/2016
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ELK RIVER MUNICIPAL UTILITIES - COMMISSION POLICY
Category: GOVERNANCE Title: COMMISSION PURPOSE
G
Date of Adoption: Policy Reference: G-1
Purpose:
With this policy, the Commission commits that it will govern as a body that understands its
corporate obligations to the owners and other stakeholders of the ERMU electric and water
utility enterprises.
Policy:
The Commission's principal purpose is to ensure that ERMU achieves appropriate results
(See Policy Series R — Results Policies) for its owners, customers, employees, and other
stakeholders at an appropriate cost, while avoiding unacceptable actions and situations.
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ELK RIVER MUNICIPAL UTILITIES - COMMISSION POLICY
Category: GOVERNANCE Title: COMMISSION-CITY COUNCIL
G RELATIONSHIP AND ROLES
Page 1 of 2
Date of Adoption: Policy Reference: G-1.1
Purpose:
With this policy, the Commission describes its role in relation to the Elk River City Council and
the way in which it desires to interact with the City Council.
Legal Authority:
As established by Minnesota Statutes Chapter 412, the Commission has complete and sole
control, authority and jurisdiction over ERMU, except that the City Council appoints each
member of the Commission and has its own designated representation on the Commission.
Policy:
The Commission and the City Council share the responsibility for ensuring effective governance
of ERMU for the benefit of the City, its citizens, and ERMU's utility customers. The Commission
desires to maintain a working relationship with the City Council that will enable both bodies to
coordinate and carry out their separate responsibilities so that ERMU is governed with
excellence.
Although governed autonomously by the Commission, ERMU is part of the City of Elk River's
City government. The intent and purpose of separate governance, as authorized by state statute,
is to enable the operation of the City's utility enterprises in a business environment rather than in
the environment of general city government. This creates opportunities for bringing greater value
to the stakeholders of both the City and ERMU through a hybrid of private and public
governance and management practices. It is the intent of both the Commission and the City
Council to align their respective governance structures and processes in ways that will realize
these opportunities for greater value.
Consistent with the preceding, the Commission will not fail to:
1. Routinely monitor, evaluate, and strive to improve its performance, keeping the City Council
informed in a thorough and timely manner about the effectiveness of the Commission's
governance with respect to the following:
a. Compliance with legal and fiduciary responsibilities;
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POLICY G-1.1 COMMISSION-CITY COUNCIL RELATIONSHIP AND ROLES
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b. Compliance with Commission-established Governance policies that are periodically
reviewed and updated, and that set expectations for ERMU's strategic and business
results, governance, and management; and
c. The employment, working relationship with, and performance of a qualified and
competent General Manager who is expected to manage ERMU in compliance with
applicable Commission policies.
2. Appoint one of its Members to serve as a Member of the City's Economic Development
Authority (EDA) to represent ERMU's interests in economic development.
3. Provide an opportunity for the City Council to meet jointly with the Commission no more often
than annually but at least once every three (3) years. The meeting will be held in the second
quarter of the year following completion of the annual independent financial audit. The focus
of this joint meeting will be a report by the Commission to the Council of ERMU's financial
and operating results for the preceding fiscal year, along with an opportunity for the Council
to provide input to the Commission on matters related to planning and budgeting for the next
fiscal year. The Commission may request or recommend additional joint meetings for other
specific purposes.
4. Develop, update as necessary, and provide to the Mayor and City Council documentation
that is intended to ensure the appointment of qualified and committed ERMU
Commissioners. Such documentation will include relevant knowledge and experience, core
competencies, and character traits that are consistent with the Commission's requirements
and commitments to effective governance. The Commission's expectation is that the City
Council will use this information to appoint persons who are appropriately qualified and well-
informed about the expectations for service as a Commissioner.
5. At least annually at the time of budgeting for the next fiscal year, consider ERMU's financial
condition with respect to voluntary payments in lieu of taxes (PILOT) and other donations of
services from the ERMU utility enterprises to the City that are likely to have material financial
consequences for both entities. The Commission will inform the City Council promptly of any
material changes in the PILOT and other donations. Further, the Commission will use a
process for determining PILOT and other financial donations to the City that is transparent,
consistent with state and national benchmarking comparisons, forecasted and budgeted, and
with a mutually understood methodology. In approving or allowing other donations such as
labor, street lighting, and water for fire suppression, the Commission will subscribe to the
philosophy that it is providing value to the community and not just shifting costs from one
entity to the other.
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ELK RIVER MUNICIPAL UTILITIES - COMMISSION POLICY
Category: GOVERNANCE Title: _ COMMISSION AUTHORITIES AND
G REPSONSIBILITIES
Date of Adoption: Policy Reference: G-1.2
Purpose:
With this policy, the Commission acknowledges that its authorities and responsibilities derive
from State of Minnesota Statutes Chapter 412 with respect to incorporation, Commission
structure and composition, and exercise of corporate powers by the Commission in the operation
of ERMU's electric and water utilities.
Policy:
The Commission will govern ERMU for the purposes enumerated in its enabling legislation and
policies, exercising its authorities within the limits established by law. The Commission will
review from time to time and, if necessary, revise its governance policies and By-laws to be
consistent with each other, with any applicable changes in the law, and with current accepted
municipal utility enterprise and business practices.
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Category: GOVERNANCE Title: GOVERNING STYLE
G
Date of Adoption: Policy Reference: G-1.3
Purpose:
With this policy, the Commission intends to establish and articulate an institutional philosophy
and approach that will enable it to govern with excellence.
Policy:
Commission Members, individually and collectively, will act in ways that visibly demonstrate the
ERMU style of governance. Commission members will lead proactively and the Commission will
enforce upon itself the discipline needed to govern effectively and consistently.
Consistent with the preceding general statements:
1. The Commission will guide and inspire Management and staff employees toward a
strategic vision through the thoughtful and proactive development of written policies that
express clear expectations and shared accountability for results.
2. The Commission's policies will reflect its role as trustee, effectively meeting its fiduciary
responsibilities while representing and balancing the sometimes competing interests of
customers, the ERMU utility business enterprises, the City of Elk River, ERMU employees,
and others who may be affected, either directly or indirectly, by ERMU's decisions and
actions.
3. The Commission will govern ERMU as the significant business enterprise that it is,
enabling ERMU to provide quality services to its customers and prudent financial
contributions to the City, while responsibly managing and sustaining its physical assets
and financial resources.
4. The Commission, with support from the General Manager, will set its own agenda for
governance and, to the greatest extent practical, will initiate its own policies. The
Commission will consider and adopt policies in accordance with its stated "Principles for
Policy Development." The Commission will routinely review, evaluate and update its
policies, as necessary.
5. By adopting and enacting its policies, the Commission will create and sustain a
governance structure and processes in which the respective roles and accountabilities of
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the Commission and Management are clearly delineated, understood, and mutually
supported.
6. The Commission will promote a sense of partnership, trust, and mutual respect among its
individual members, with ERMU Management and staff employees, and with customers,
City, and community interests to provide value to all stakeholders.
7. The Commission will establish and use a variety of methods to promote two-way
communications and dialogue about ERMU's future direction, accomplishments, and major
challenges among its stakeholders.
8. The Commission will support the development of a values-based organization with high
standards of professional conduct, interpersonal behaviors, and self-accountability for
results.
9. The Commission will encourage mutual respect, open dialogue and expression of diverse
viewpoints among Commission members and Management; the Commission will
acknowledge and effectively handle disagreements, working toward consensus in its
deliberations and decisions.
10.The Commission will support the hiring and retention of a capable General Manager, who
will be responsible to the Commission for the management and operation of ERMU's utility
businesses. The Commission will also support the General Manager in creating an
organization which attracts and retains capable management and staff employees, and
develops leaders.
11.Commission members will devote appropriate attention, time and energy to govern
effectively. They will understand their responsibilities and take advantage of opportunities
for continuing education and development that improve their governance capabilities.
12.The Commission will seek to create a reputation that attracts qualified and dedicated
persons to become Commission members. It will do this by building public understanding
of its governance role, as well as the commitments and contributions of its individual
members.
13.The Commission will periodically evaluate and discuss its policies and the performance of
the ERMU organization in relation to those policies, with particular attention to the needs
and expectations of its various stakeholders.
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