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4.1 ERMUSR 06-13-2017 Elk River Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Troy Adams, P.E. - General Manager MEETING DATE: AGENDA ITEM NUMBER: June 13, 2017 4.1 SUBJECT: Bylaws and Delegation to Management Policies ACTION REQUESTED: Adopt the proposed Bylaws and Policies. BACKGROUND: In 2016 the Commission approved contracting with Collaboration Unlimited to update and develop core governance policy. The decision to implement and the schedule for completion were largely based on two factors. First,the existing policy book and bylaws had not been reviewed or updated on a routine basis. Second, with the March 2017 expansion for the ERMU Commission from three to five members it was determined to be beneficial to develop and update core governance policy to serve as a guide for the expanded Commission. The work was divided into two phases,the first being the core governance policies and the second addressing the development of delegation to management policies. On May 9, 2017, the Commission adopted the Phase 1 core governance polices. DISCUSSION: This initiative to update ERMU's polices included updating the existing by-laws. Staff worked with ERMU's legal counsel to draft updated bylaws. The bylaws were revised with the intent to simplify and yet be specific about the source and limit of the ERMU Commission's authority. The proposed revised bylaws are attached. Also presented for consideration are the first four delegation to management policies that our consultant John Miner has developed. Staff worked with ERMU's legal counsel to review the policies, and the results of that review are reflected in the following proposed policies: • G.4 Corporate Limitations • G.4a Succession of Leadership • G.4b Information and Support to the Commission • G.4c Strategic and Business Planning With only the first four policies of Phase 2 developed, there are gaps and overlap in policy. These gaps and overlaps are intended to be resolved as the Commission reviews and considers policy updates and revisions throughout this project. It is the intention to bring policy back for consideration at every Commission meeting. The remaining policies to be developed in the Page 1 of 2 49 delegation to management are reflected in the tentative table of contents which is attached for reference. FINANCIAL IMPACT: None ATTACHMENTS: • Proposed ERMU Policy—G.1 a—By-Laws • Proposed ERMU Policy—G.4—Corporate Limitations • Proposed ERMU Policy—G.4a— Succession of Leadership • Proposed ERMU Policy—G.4b—Information and Support to the Commission • Proposed ERMU Policy—G.4c— Strategic and Business Planning • ERMU Governance Policy Manual Table of Contents—For Reference Only Page 2 of 2 50 Elk River .; Municipal Utilities COMMISSION POLICY Section: Category: Governance Authorities and Purpose Policies Policy Reference: Policy Title: G.1 a Bylaws ARTICLE I—AUTHORITY Section 1. The Village of Elk River Water, Light, Power and Building Commission was created on July 11, 1947, by resolution adopted by the Village of Elk River Trustees. Section 2. Pursuant to Minnesota Statutes, Section 412.331, adopted in 1949, any water, light, power and building commission then in existence was required to thereafter operate as a public utilities commission under Minnesota Statutes, Sections 412.321 to 412.391. The Village of Elk River Water, Light, Power and Building Commission became Elk River Municipal Utilities. Section 3. Elk River Municipal Utilities is a public utilities commission operating pursuant to and subject to Minnesota Statutes, Sections 412.321 to 412.391 and Elk River City Code Sections 2-271 to 2-276. ARTICLE II—JURISDICTION Section 1. Elk River Municipal Utilities has jurisdiction over: A. The City of Elk River Municipal electric utility; and B. The City of Elk River water utility. ARTICLE III—COMMISSION MEMBERSHIP Section 1. Pursuant to Laws of Minnesota 2016, Chapter 97 — House File No. 2718, and Elk River City Code Section 2-271, the Elk River Municipal Utilities Commission shall consist of five members. No more than two members may also serve as City Council members. Section 2. Commissioners shall be appointed by the City Council to staggered terms. Page 1 of 4 51 ERMU Commission Policy—G.la Bylaws Section 3. Each Commissioner shall serve for a term of three years and until a successor is appointed and qualified. Section 4. Commissioners shall comply with the City's conflict of interest ordinance, Elk River City Code Sections 2-131 to 2-135. Section 5. No member of the Commission shall receive a salary except as fixed by the City Council. ARTICLE IV—OFFICERS Section 1. The Commission shall annually choose a president from among its members. The president shall be designated the Chair of the Commission and shall perform such duties as shall be delegated to the Chair in the Commission's adopted policies Section 2. The Commission may also annually appoint a Vice-Chair of the Commission who shall perform such duties as shall be delegated to the Vice-Chair in the Commission's adopted policies. The Vice-Chair shall preside at meetings of the Commission if the Chair is absent. Section 3. The Commission shall also appoint a Secretary for an indefinite term. The Secretary need not be a member of the Commission and shall perform such duties as shall be delegated to the Secretary in the Commission's adopted policies. Section 4. The Commission shall have the power to revoke a Commission member's appointment as Chair or Vice-Chair, and appoint a replacement Chair or Vice Chair, if the Commission determines, by a vote of a majority of its members, to do so. The Commission shall also have the power to replace the Secretary at any time by a vote of the majority of its members. ARTICLE V—MEETINGS Section 1. The Commission shall hold at least one regular meeting each month, on the day and at the time designated by the Commission from time to time. Regular meetings shall be noticed as required by Minnesota Statutes. Section 2. The Commission may hold special meetings from time to time at the request of the Chair or the request of two other Commissioners. Special meetings shall be noticed as required by Minnesota Statutes. Section 3. A majority of the Commissioners shall constitute a quorum for the transaction of business, and the votes of a majority of the Commissioners present shall be sufficient to adopt any motion or resolution. The votes of members on any action shall be taken by ayes and nays recorded in the minutes. Section 4. Commission meetings are open to the public unless closed as authorized by Minnesota Statutes, and shall be governed by Roberts Rules of Order, latest revised edition, for Page 2 of 4 52 ERMU Commission Policy—G.la Bylaws all situations to which they apply and in which they are not inconsistent with these Bylaws, the Commission's adopted Policies, and any special rules of order that the Commission may adopt.. ARTICLE VI—POWERS Section 1. The Commission shall have all of the powers enumerated in Minnesota Statutes, Section 412.361 and, except as provided in the Bylaws and the Commission's adopted Policies, shall exercise those powers on its own behalf ARTICLE VII— GENERAL MANAGER Section 1. The Commission shall have the power to appoint a General Manager, whose responsibilities, duties, limits of authority and accountability to the Commission shall be set forth in these Bylaws and as designated by the Commission from time to time in its adopted Policies. Section 2. The General Manager shall have the authority to implement the Commission's powers under Minnesota Statutes, Section 412.361, Subds. 1 and 2 to enter into contracts for the operation of the utility and to employ all necessary help for the management and operation of the public utility, by entering into contracts and employing personnel consistent with the Commission's adopted budget and pay plan. However, all contracts requiring public bidding, all contracts falling under Minnesota Statutes, Section 412.361, Subds. 3, 4 and 5, and all contracts required by the Commission's adopted Policies to be approved by the Commission, shall be approved by the Commission. Section 3. If the position of the General Manager is vacant, the Commission may designate another to perform all or some of the General Manager's duties. ARTICLE VIII—FINANCES, FUNDS AND REPORTS Section 1. The Commission shall maintain the funds, conduct the audits and make the reports required by Minnesota Statutes, Sections 412.371 and 412.381. ARTICLE IX—APPLICATION AND AMENDMENT Section 1. In the event that any provision of these Bylaws is or may be in conflict with the laws of any governmental body or power having jurisdiction over the Elk River Municipal Utilities Commission, or over the subject matter to which such provision of these Bylaws applies or may apply, such provision of these Bylaws shall be inoperative to the extent only that the operation thereof unavoidably conflicts with such law and shall in all other respects be in full force and effect. Section 2. These Bylaws may be amended by the Commission at any regular meeting by a majority vote of the entire Commission, provided the proposed amendment is on the agenda and made public no later than three days before the meeting. Section 3. In addition to these Bylaws, the Commission may adopt, from time to time, Governance Policies (adopted Policies)that are not inconsistent with these Bylaws. Page 3 of 4 53 ERMU Commission Policy—G.1 a Bylaws BYLAW HISTORY: Adopted Month, Day, Year Page 4 of 4 54 Elk River Municipal Utilities COMMISSION POLICY Section: Category: Governance Delegation to Management Policies Policy Reference: Policy Title: G.4 Corporate Limitations PURPOSE: With this policy,the Commission describes, at a high level,the limits that it places on the General Manager to determine the methods by which management and staff conform to Commission policies in the management and operation of ERMU. Other policies in this series place more specific limits on the prerogatives of the General Manager with respect to specific functions of management POLICY: The General Manager shall not cause or intentionally allow any practice, decision, action or circumstance within the ERMU organization that is unlawful, imprudent, or in violation of commonly accepted business and professional ethics. POLICY HISTORY: Adopted Month, Day, Year Page 1 of 1 55 Elk River Municipal Utilities COMMISSION POLICY Section: Category: Governance Delegation to Management Policies Policy Reference: Policy Title: G.4a Succession of Leadership PURPOSE: With this policy,the Commission intends to ensure ERMU's continuity of leadership, both long- term and short-term. More specifically,the Commission intends to protect ERMU from the sudden loss of services by the General Manager, other executive managers, and any employee who performs functions that are critical to the organization. The Commission also intends to prepare employees at all levels of the organization for increasing leadership responsibilities. POLICY: The General Manager shall establish, and at all times maintain current, a short-term plan for executive leadership and critical function succession under which two or more of his/her direct reports are designated and prepared to temporarily assume the responsibilities of Acting General Manager on short notice. Consistent with this general statement, the General Manager shall: 1. Keep the Commission informed about the content of his/her short-term plan for executive leadership and critical function succession. The General Manager's plan for executive leadership succession shall include the designation of a primary and secondary successor, both of whom are acceptable to the Commission, and a written position description for Acting General Manager 2. Keep the Commission informed about his/her availability to perform the duties of the General Manager. 3. Not be absent from ERMU's offices and/or otherwise unavailable for communication with the Commission and other management employees for more than three (3) consecutive business days without first having designated a temporary successor and informing both the Commission and management employees of that designation. Page 1 of 2 56 ERMU Commission Policy—G.4a Succession of Leadership 4. Not allow the General Manager and both his/her primary and secondary designated successors to travel together in the same vehicle or other public or commercial form of conveyance. The primary successor shall immediately assume the responsibilities of Acting General Manager upon receiving information that the General Manager is unable to fulfill his/her responsibilities or has been absent from corporate headquarters and/or otherwise unavailable for more than three (3) consecutive business days without having designated his or her temporary successor. In such event,the Acting General Manager shall formally notify the Commission of his/her assumption of responsibilities, after which the Commission President shall convene a special meeting to confirm the appointment of the Acting General Manager and to either confirm or modify the position description for Acting General Manager. Additionally, the General Manager shall establish, and at all times maintain current, and effectively implement a long-term plan for leadership succession that is intended to: 1. Prepare all employees to grow in their leadership capabilities and responsibilities. 2. Ensure that the loss of services from any one employee does not impair the performance of the organization's critical functions. 3. Identify capable and willing people for future critical leadership positions and intentionally develop them in their leadership competencies and responsibilities. 4. Identify and communicate to the Commission any critical human resource needs of the organization that are not adequately met with available resources, along with steps that he/she is taking to meet those needs. POLICY HISTORY: Adopted Month, Day, Year Page 2 of 2 57 Elk River Municipal Utilities COMMISSION POLICY Section: Category: Governance Delegation to Management Policies Policy Reference: Policy Title: G.4b Information and Support to the Commission PURPOSE: With this policy, the Commission communicates its expectations for information and support from the General Manager. POLICY: The General Manager shall not permit the Commission to be uninformed or unsupported in its work. Consistent with this general statement,the General Manager shall: 1. Inform the Commission in a timely manner about ERMU's significant successes or shortcomings with respect to Commission policies, goals and other directives. 2. Submit timely, accurate, and understandable financial, operating and other monitoring data required by the Commission in a form that directly relates to the provisions of the Commission policies being monitored. (See Monitoring Performance of the General Manager Policy) 3. Report in a timely manner any actual or anticipated instance of management noncompliance with Commission policies. 4. Inform the Commission about significant events and situations that are directly relevant to the Commission's policies, especially any changes which may materially alter assumptions that the Commission has used previously to establish policy and make other significant decisions. 5. Advise the Commission if, in the General Manager's opinion,the Commission is not in compliance with its own Governance Policies and Commission-Management Connection Page 1 of 2 58 ERMU Commission Policy—G.4b Information and Support to the Commission Policies, especially where Commission actions or behavior(individual or collective) are detrimental to the working relationship between the Commission and the General Manager. 6. Advise the Commission if, in the General Manager's opinion, the Commission is unfocused in its work or out of step with ERMU's strategic framework(vision, core purpose, core values, mission and strategic objectives) as stated in the Authority and Purpose Policies. 7. Bringbefore the Commission in a timelymanner as manyinternal and external points of view, issues and alternatives as the Commission may need to deliberate effectively and make fully informed decisions. 8. Bring to the Commission, in support of the Commission's deliberations and decision-making, the recommendation(s)of management,the rationale for those recommendations, and the process(es) by which those recommendations were developed. 9. Present information that is clear, concise, and in a form that differentiates among the purposes for which it is intended(i.e. monitoring, decision-making, business context, education, etc.). (See Agenda Planning Policy). 10. Provide appropriate methods and resources for official communications and other functions of the Commission, its officers, committees and independent advisors. 11. Communicate and work with the Commission as a whole, either directly or, as appropriate, through its officers and committees. 12. Supply for the agenda of any Commission meeting all matters that are required by law or contract to be approved by action of the Commission. POLICY HISTORY: Adopted Month, Day, Year Page 2 of 2 59 Elk River Municipal Utilities COMMISSION POLICY Section: Category: Governance Delegation to Management Policies Policy Reference: Policy Title: G.4c Strategic and Business Planning PURPOSE: With this policy,the Commission affirms the importance of strategic and business planning and sets forth its expectations for the General Manager in terms of the effective development, implementation, monitoring, and updating of the Commission's approved Strategic Plan, Financial Plan and Business Plan/Budget. POLICY: The General Manager shall not allow ERMU to operate without the following Commission approved plans: 1. A Strategic Plan that provides strategic direction for a period of not less than five (5) future fiscal years in terms of high-level elements such as vision, core purpose, core values, mission,key result areas and broadly stated strategic objectives that are intended to achieve the organizational outcomes contained in the Commission's Authority and Purpose Policies. 2. A Financial Plan covering not less than five (5) future fiscal years (see Financial Planning and Budgeting Policy). 3. A Business Plan/Budget that supports accomplishment of the Strategic Plan and sets forth specific operating and financial results in terms of elements such as actions and outcomes, budgeted financial and other resource requirements, and projected financial statements. Consistent with this general statement, the General Manager shall: 1. Provide the overall direction, leadership, education, and resources needed to engage the Commission,management employees, key staff employees, and other key stakeholders in an effective strategic planning process. Page 1 of 2 60 ERMU Commission Policy—G.4c Strategic and Business Planning 2. Present to the Commission for approval a recommended Strategic Plan, a recommended Financial Plan, and a recommended Business Plan/Budget, as well as any subsequent changes to the approved plans that are needed to keep them relevant and effective. The Strategic Plan, as approved by the Commission,will include the high-level elements identified above. Consistent with the strategic direction approved by the Commission, management will implement, monitor, and periodically report to the Commission the status of the Strategic Plan through the use of goals, action plans, and performance measures. The Strategic Plan, Financial Plan, and Business Plan shall not materially deviate from the Commission's Authority and Purpose Policies. 3. Implement, if the Commission does not approve in a timely manner,the recommended Strategic Plan, Financial Plan, and Business Plan/Budget, as required to effectively manage the ERMU organization and utility enterprises. 4. Use the Strategic Plan as a guide and point of reference for preparing and updating the Financial Plan, Business Plan/Budget and other business management tools. 5. Communicate key elements of the Strategic Plan, Financial Plan, and Business Plan/Budget to ERMU's Commission, customers, employees, and other stakeholders at appropriate intervals to keep them well-informed about ERMU's operating environment, strategic direction and desired business and operational performance. 6. Report key business results and other operational outcomes to ERMU's Commission, customers, employees, and other stakeholders at appropriate intervals, using the Strategic Plan and Business Plan/Budget as a point of reference. Note: The ERMU Commission has established strategic and business planning as an important part of its own Governance Agenda(see Agenda Planning Policy). During the first quarter of each fiscal year(January - March), the Commission will review the most current adopted version of ERMU's Strategic Plan and Financial Plan, along with the results of the Business Plan/Budget for the preceding fiscal year. The Commission and Management will prepare, and the Commission will adopt an updated Strategic Plan and Business Plan/Budget before the end of each calendar year. During the second and third quarters of every third year,the Commission and Management will work together to re-develop, and the Commission will adopt a Strategic Plan for at least five (5) future fiscal years. Management will prepare, and the Commission will adopt during the fourth quarter(October—December) of each year a Business Plan/Budget that includes management's revenue/expense budget and projections, including relevant assumptions for two (2) future fiscal years. POLICY HISTORY: Adopted Month, Day, Year Page 2 of 2 61