3.0. SR 09-07-1999
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ITEM #3.
MEMORANDUM
River
TO: Mayor & City Council
FROM:
Pat K1aers, City ~}rator
September 7,1999
DATE:
SUBJECT: Joint Sewer and Water Superintendent
At the August 9, 1999, City Council meeting, the WWTS Superintendent's
resignation was accepted. On 8/9/99, the possibility of a joint sewer and water
superintendent position was also discussed plus the Mayor indicated an interest in
looking at the entire operation of both the sewer and water departments. (See
attached minutes.)
As requested on 8/9/99, attached for your review is a third party legal opinion
regarding the City and Utilities sharing an employee. This opinion indicates that
with a clear understanding of duties and responsibilities that a shared
superintendent position is legal.
I have had the luxury of reviewing the memo from Bryan Adams on this employee
issue and on the issue of combining the sewer and water departments. Regarding
combining the sewer and water departments, I believe there is a mistake in the
second paragraph of Bryan's memo whereby it should read...that a City Council vote
or a petition signed by 15 percent...leads to a public referendum vote. Bryan's
report includes a number of his professional opinions and recommendations.
Overall, I agree with what Bryan says at the end of his memo in terms of the
current systems working well, and we have not experienced any significant
problems to speak of in the last number of years. However, I don't necessarily agree
with all of the comments in the report, including that a superintendent of sewer and
water underneath the City Council's jurisdiction could not have responsibility for
the financial management of the departments. I think that an annual audit would
review any irregularities, and that this would be an appropriate checks and balance
system. Additionally, I was surprised to learn that the Water Superintendent
spends 55 percent of his time in the water department, as I was under the
assumption that this percentage was lower.
It is anybody's guess as to whether or not a combined position would be a
manageable situation or cost effective, but I think that there is little doubt that the
departments being combined under one jurisdiction would be more cost effective
than how they currently operate. The major savings appear to be in the sharing of
personnel and equipment.
13065 Orono Parkway. P.O. Box 490. Elk River, MN 55330. TDD & Phone: (612) 441-7420. Fax: (612) 441-7425
. The concept of Bryan managing the sewer department somewhat gets us to the
Mayor's point of looking at the entire water department and sewer department
situation, and considering if the Utilities should manage the sewer department or
the City should manage the water department regardless of the status of a shared
superintendent position.
The City should be very reluctant to give up management of the sewer department
as municipal sewer is the number one factor in growth management and urban
development. I think that these municipal sewer decisions related to the extension
of pipes should be made by elected officials and not appointed officials.
Additionally, the city sewer and water system are under the city streets and in the
city right-of-way. The City bonds for the capital improvement projects, and assesses
out the benefits for these projects. The Utilities cannot assess out public
improvement projects. If the water department came to the City, the City would
hire one joint sewer and water superintendent (and a maintenance employee) and
share the water and sewer employees throughout both departments. The Utilities
have to do electric bills and it is assumed they would continue with the billing for
sewer and water.
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7.4.
Accept Resianation from Darrell Mack and Discuss Wastewater Treatment Plant
Superintendent Position
Lon Johnson requested the council to consider Darrell Mack's resignation. She
noted that Gary Leirmore will take charge in the interim until a replacement for
Darrell is hired.
COUNCILMEMBER FARBER MOVED TO ACCEPT DARRELL MACK'S RESIGNATION AS
WASTEWATER TREATMENT SUPERINTENDENT WITH REGRET AND INDICATING THAT THE
29 YEARS OF SERVICE THAT HE PROVIDED THE CITY HAVE BEEN COMMENDABLE. .
COUNCILMEMBER THOMPSON SECONDED THE MOTION. THE MOTION CARRIED 5-0.
The council discussed the issue of combining the position of water and sewer
superintendent. It was the consensus of the council that this was an opportune
time to discuss this issue as both superintendents are retiring. Councilmember
Dietz indicated that it is not the city's intention to take over the water department
but to structure the position so as to have one employee. He further stated that
he will be asking the Utilities Commission to look at this again due to Darrell's
retirement.
Bryan Adams felt that there are issues that have to be resolved regarding statute
412.321 dealing with the authority in operating a utilities commission.
City Attorney Peter Beck suggested that the city hire a lawyer to review this issue.
He stated that a third party opinion would be non biased and could be obtoined
for a reasonable fee.
The Council directed the City Attorney to request a legal opinion from Jim
Strommen, Holmes & Gravin, on the issue of a shared sewer and water
superintendent position. The council directed staff to schedule a joint meeting
with the Utilities Commission to discuss the water and sewer positions and
structure. Councilmember Thompson recommended that the Utilities delay the
hiring process for the water superintendent until this issue is resolved. The council
concurred.
City Council Minutes
August 9, 1999
Page 6
Mayor Klinzing indicated that during the joint discussion by the Council and!
Utilities Commission regarding this issue, the discussion should be all ' !
encompassing which includes the possibility of a referendum to allow either the
utilities to take over the sewer department or the sewer department to take over
the water department. She noted that this is the time to look at all options.
Kennedy
470 Pillsbury Center
200 South Sixth Street
Minneapolis MN 55402
(612) 337-9300 telephone
(612) 337-9310 fax
http://www.kennedy-graven.com
JAMES M. STROMMEN
Attorney at Law
Direct Dial (612) 337-9233
ernai1: jstrommen@kennedy-graven.com
August 17, 1999
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Mayor Stephanie Klinzing and City Council
City of Elk River . ,
13065 Orono Parkway
P.O. Box 490
Elk River, MN 55330
Re: City-Public Utilities Commission Personnel Sharing
Dear Mayor Klinzing and Council:
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Qur.f1!111has been retained to review the following issue: whether the City of Elk River ("City")
and,the. City'.Municipa!UtilitiesCommissio,n ("Commi~sjon'~)may enter.into an agreement by
which asingleymployee performs "superintendent" dutiesfallingunder>the separate jurisdiction
of-the City (sanitary sewer system) and the, Commission (water system), respectively.
Alternatively stated, the issue is whether there is any legal prohibition against the City and
Commission agreeing to share the employee filling the described superintendent positions. In
my opinion, there is no legal prohibition if the City-Commission sharing agreement ensures a
separation of duties and jurisdiction.
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To answer this question, the following information has been provided. The City operates the
sanitary sewer system and the personnel hired to cany out its operation report to the City
administrator imd to .~he City council. The' Commission operates the City water,'system. The'
Commission is governed by Minnesota Statutes, Sections 412.321 to 412.391 and Sections
210.00-210.14 of the City Code. Personnel hired by the Commission report to the general
manager, who answers to the Commission. The shared position contemplated is created by the
retirement of both the City wastewater treatment system superintendent and the Commission's
water superintendent. The "essential functions" of the wastewater treatment system
superintendent include responsibility for "operation and management" of the facilities, collection
system, lift stations, building and grounds and the application of bio-solids. The water
~uperintendent position includes metering, water testing, water production and distribution and
environmental. compliance to ope:rate the City water system. It is assumed that these positions
draw on the same type of operational expertise and can be carned out adequately by one full-time
employee: ' , '.. ;~,.,
]MS-167431
EL185-4
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Mayor Stephanie Klinzing and City Council
August 17, 1999
Page 2 .
Among the powers expressly granted to the Commission under Minnesota Statutes and the City
Code is the "power to enter into agreements with the council for . . . compensation for the use by
either the commission or the city of . . . personnel under the control of the other. . . ." Minn.
Stat. ~ 412.361 subd. 5; City Code, ~ 210.08.5. This augments the expressly granted right of the
Commission to "employ all necessary help for the management and operation of the public
utility.". Minn. Stat. ~ 412.361, subd. 2~ City Code ~ 210.08.2
Thus, sharing personnel with. the City for the' "'management and operation" of the utility is an
expressly granted power to the Commission. The sharing of personnel must be by agreement and
not by the unilateral action of either the City or the Commission. See, ()p.Atty. ~en:,,?24-A-6,
, Aug;16; T~55- (opinil1giliadbe vilhtge cQuld.not .compel 'the transferoffunds',froxl;l"Hid:.:.oubl!ci,
utilities commission); Op. Atty: . Gen., 469-E-6, Feb.18, 1957 (opIning that the village council
had no unilateral authority to discontinue payments to the public utilities commission for street
lighting).
The agreement between the City and the Commission should delineate the reporting duties of the
employee to make clear that the employee is under the jurisdiction of the appropriate body,
depending on the work performed. A properly-drafted job description can result in the
contemplated savings in taxpayer money without creating any infringement on the Commission's
authority to "do anything it deems necessary for (the water system's) proper and efficient
operation" and "to employ all necessary help for the management and operation of the public
utility. . ." Minn. Stat. ~ 412.361 subd. 2; City Code ~ 210.08.1. Through such an agreement
the City would gain no power to manage or unilaterally dictate matters within the jurisdiction of
the Commission. In my opinion, the law not only allows this type of agreement for this position,
it contemplates it in Section 412.361 as an efficient use oftaxpayer funds.
If you have any questions, please call.
Very truly yours,
~R'WEN'CI:IARUlRED
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James M. Strommen
JMS:sms
cc: Peter Beck
JMS-167431
EL185-4
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ELK RIVER MUNICIPAL UTILITIES
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322 King Avenue
Elk River, Minnesota 55330
Phone (612) 441-2020
Fax (612) 441-8099
September 1, 1999
To: Elk River City Council: and
Stephanie Klinzing, Mayor
John Dietz
Daryl Thompson
Larry Farber
Paul Motin
Elk River Municipal Utilities Commission:
Jim Tralle
John Dietz
George Zabee
From: Bryan C. Adams
Subject: Waterl Waste Water Departments
This issue is studying the combining of positions of Water and Sewer Superintendent. Others are
suggesting combining the entire water and sewer departments. The reason for this consideration is to
first- benefit the customer, second- save money for both the Utilities and the City. and third- become
more efficient which mayor may not translate into saving money.
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The Elk River Municipal Water system was established in 1920. The electric utility was established
in 1945 with the purchase of the electrical generation and distribution system. In 1947, the Village of
Elk River formed a utility commission under chapter 412, Laws of Minnesota, being responsible for
the electric and municipal water utilities. A utility is defined as a waterworks, district heating system,
gas, light, power or heating plant. Waste water system under the statute is not classified as a utility.
The reason a utility commission exists is to operate and manage the local utility as a business yet be
an arms length from the politics and political pressure of the City Council. The abolition of the Utility
Commission or a utility under the Utility Commission, such as the Water Department, can only be
accomplished by first, a petition signed by 15% of the voters in the last election, then a majority vote
in a public election answering the question "Shall jurisdiction over the Water Department be
transferred from the Public Utilities Commission to the City Council?" On the other hand, the City
Council can transfer jurisdiction of the Waste Water Department to the Utilities Commission by motion
or resolution.
The positions of Superintendent of Sewer and Water can be combined under the jurisdiction of the
Utilities Commission with no restrictions. These positions can be combined under the jurisdiction of
the City Council with a very carefully drafted job description, excluding all duties relating to
purchasing, expenditures and fees. This is a leadperson position and not a true manager or
superintendent as currently being utilized in these positions.
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The current organizational structure of the Water and Waste Water departments allow for efficient
.operation. We experience few customer complaints and the water rates are competitive. I can not
speak for the Waste Water department rates. Currently the Utilities bills and collects Waste Water
funds for the City and transfers these funds monthly to the City. The Utilities also bills and collects
monthly garbage fees and transfers these funds to the City.
In regard to benefits to the customer, the customer being a developer or homebuilder, deals with
the electric, water, waste water and planning/zoning departments. Regardless how the waste water
and water departments are organized, the customer must still deal with the electric and
planning/zoning departments. This requires the customer to go to both locations.
The Pro's and Con's of combining the Water/ Waste Water Lead position are as follows:
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Pro's
1) Reduce new construction inspection time. Currently waste water and water employees are
sent to a new facility to do waste water and water inspections. Water employees go to a
site on two more occasions for meter delivery and remote installation. Possibly water
employees could inspect waste water construction. There has been a cooperating effort on
this in the past.
2) 80th Waste Water and Water departments have four employees available to respond to
after hours complaints. A larger pool of employees would be beneficial. Not presently a
problem.
3) Some Waste water employees carry ~ow level water licenses, some water employees
carry low level Waste Water licenses. With more training and testing, both department
employees could elevate the complimenting license. Actual benefit is unknown because
the lack of day to day operation duties would not be shared.
Con's
1) A supervisor of Waste Water and Water would be working for two governing bodies (City
Council and Utility Commission) and two different supervisors (City Manager and Utility
General Manager). This is not a workable situation. A better solution is to put Water and
Waste Water under one governing body, City Councilor Utilities.
2) Utilizing a lead person to supervise departments without having financial accountability or
input is not a wise management choice and may be counter productive. This situation can
be solved by placing the combined position under the jurisdiction of the Utilities where
financial responsibility is not a constraint. The current Superintendent of Water has some
financial responsibility.
3) Due to different wage and benefit structures between the City and Utilities- combining the
supervisory positions only while reporting to two governing bodies will cause labor issues
to arise. This can be solved by combining departments and placing under the jurisdiction
of either the City or Utilities.
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4) The Water Superintendent position is comprised of two major duties of supervising the
water department, (55% of time) supervising electric metering and environmental
compliance (45% of time). The City apparently feels supervising the waste water area is
approximately a 50% position if they also have time to supervise the water department.
Currently the Utilities has combined the position of supervising the water and electric
metering to create a full time position. If the Waste Water and Water supervisory positions
are combined, the Utility must still hire an electric meter and environmental compliance
person. This would be an extra half person that is not needed at this time.
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5) It has been suggested that we try on an experimental basis, combining the Water and
Waste Water position. If this arrangement fails, we can go back to one supervisor for
Water and one for Waste Water. Unfortunately the electric meter supervisor hired would
not have the water utility skills necessary to supervise both electric metering and water
areas.
6) The Utilities currently takes many complaint calls for both Water and Waste Water
departments because we bill for both areas. Also many calls are received through the
billing office to install and inspect water services and water meter remotes. If the Water!
Waste Water supervisor is no longer in the business building, communication between this
supervisor and business function will suffer resulting in increased customer dissatisfaction.
If the Water! Waste Water supervisor does office from the Utility office, this can be a
positive for customer relations but may be detrimental to the operation of the Waste Water
facility.
In conclusion, combining the supervisory position of Water and Waste Water or combining the two
departments, does not yield any great customer or economic benefit. It will actually cost the Utilities
an additional half time employee equivalent. The current organizational structure works well. Are we
trying to fix something that is not broken? If change is desired, I would recommend that the City
authorize the Utilities to manage and operate the Waste Water department for the following reasons.
1) This can be done simply with a motion at the City Council level.
2) The supervisory person leading the Water! Waste Water area can then have financial
input and accountability.
3) This will enhance customer response from the utility billing department.
4) This will simplify the organizational structure of the City. The organizational structure is flat
with approximately thirteen department heads reporting to the City Administrator. This will
be one less direct report to the City Administrator, and less work for the City Council.
5) The General Manager of the Utilities is a registered Civil Engineer, also familiar with waste
water facility operations. He is currently the only registered engineer employed by the City
or Utilities. This will preclude the necessity of using a consultant to manage the Waste
Water department, as has been suggested.
6) The Utility already does the billing and collection function.
Enclosed for your information is a correspondence dated June 4, 1999 from Ron Black, Utility
attorney, addressing the legalities of this issue. Due to the large amount of cross training by the
existing Water Superintendent to the new supervisor, I request this issue be resolved expeditiously.
Terpstra, Black, Brandell & Jensen
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.ald G. Black
E. Brandel!
Jeffery J. Jensen
Elizabeth K. Moore
Brian A. Park
James A. Bumgardner
June 4, 1999
Attorneys at Law
913 Main Street
Elk River, MN 55330-1508
(612) 441-7040 ofe
(612) 441-0901 fax
John W. Terpstra (retired)
Bryan C. Adams
Elk River Municipal Utilities
322 King Avenue
Elk River, Minnesota 55330
RE: Utility Commission and the City Council
Dear Mr. Adams:
Pursuant to your request, we have prepared this letter which addresses: 1) the Elk
River City Council's (hereinafter the "City Council") lack of authority to make unilateral
decisions regarding surplus utility funds held by the Elk River Municipal Utilities
Commission (hereinafter the "Commission"); and 2) management of utility operations.
. By way of background, under Minnesota Statute 9 412.331, any utilities commission
in existence prior to July 1, 1949 is subject to Minnesota Statute sections 412.321
to 412.391. As you know, in 1947, the Village of Elk River elected to form what is
now the Commission. Accordingly, the Commission is subject to Minnesota Statute
sections 412.321 to 412.391.
Generally, under 9 412.321, the City Council makes all rules and regulations for the
protection, maintenance, operation, extension, and improvement of the utilities.
However, the City Council's authority in this regard is limited to the extent it placed
certain public utilities--pursuant to 9 412.351--within the Commission's jurisdiction.
See Minnesota Statute 9 412.321 (city has authority over utilities "except as its
powers have been limited through establishment of a public utilities commission in the
city"); Village of Blaine v. Independent School Dist. No. 12, Anoka County, 1 21
N.W.2d 183 (Minn. 1963) (city may vest control of utilities' functions and services in
a public utilities commission).
Further, 9 412.361 details the powers held by a utilities commission over any utility
placed within its jurisdiction. Under 9 412.361, subd. 5, the "commission shall have
power to enter into agreements with the council for... transfers of surplus utility funds
to the general fund...." Therefore, the transfer of funds from any surplus utility fund
to the city's general fund can occur only by agreement of the Commission. This
. position is supported by a 1955 opinion by the Minnesota Attorney General. Per that
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June 4, 1999
Page Two
opinion, if a utility fund is under the exclusive control of the public utilities
commission, there can be no legal transfer of the fund to the city's general fund
absent an agreement between the commission and the city pursuant to g 412.361,
subd. 5. See Op.Atty.Gen., 624-A-6, Aug. 16, 1955. This opinion dovetails with a
later opinion wherein the Minnesota Attorney General opined that a city council cannot
unilaterally interfere with the operation and management of utilities by a utilities
commission. See Op.Atty.Gen., 469-8-6, Feb. 18, 1957.
The above-mentioned sections further the public policy of assuring that any utilities
commission operates independent of city council political pressures. No doubt, this
is why no more than one commission member may be chosen from the city council:
this limitation serves as a further check on the city council and reaffirms the fiduciary
duty owed by each commissioner to the commission, the underlying utilities, and the
customers.
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With regard to the management of utility operations, a joint-management position
directly conflicts with the above-cited provisions and numerous Minnesota Attorney
General opinions. Under the aforementioned g 412.361, subd. 5, the "commission
shall have power to enter into agreements...on...relationships between the commission
and the council." However, based upon our initial research, any such agreements are
limited to contracts with third-parties and matters other than management of the
utilities and jurisdiction. For example, a council and commission may enter into an
agreement regarding the installation of a replacement street lighting system.
Op.Atty.Gen., 624-C-3, June 2, 1955.
Yet a council and a commission cannot enter into agreements transferring the
management of a utility from the commission to the council. Such an agreement would
violate g 412.391 which governs the transfer of a commission's jurisdiction over a
given utility back to the council. Under g 412.391, such a transfer can occur only if:
1) 1 5 percent or more of the electors voting in the last city election petition for an
election on the question of transferring the jurisdiction over the utility from the
commission to the council; and 2) a majority of voters in the election vote to transfer
jurisdiction over the utility from the commission to the council. In short, jurisdiction
over a given utility can be transferred from the Commission to the City Council only
by election. Accordingly, any joint-management position would violate g 412.391; for
any such position necessarily would take jurisdiction from the Commission and
combine it with authority from the City Council. This amounts to a transfer of
jurisdiction from the Commission to the City Council in violation of g 412.391.
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In conclusion, the City Council has no authority to make unilateral decisions regarding
surplus utility funds for utilities under the Commission's jurisdiction; any such transfer
of said funds can occur only by agreement of the Commission. Further, any joint-
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June 4, 1999
Page Three
management position would violate the above cited Minnesota Statutes which provide
that the Commission's jurisdiction of the underlying utilities can be transferred only by
election.
Please call with any questions or concerns.
Sincerely,
~~C~~JENSEN
(tald G. Black
Z~mes A. Bumgardner
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