08-29-2018 ERMU SPECIAL MIN ELK RIVER MUNICIPAL UTILITIES
SPECIAL MEETING OF THE
UTILITIES COMMISSION
HELD AT UTILITIES CONFERENCE ROOM
August 29,2018
Members Present: Chair John Dietz;Vice Chair Al Nadeau;Commissioners Paul Bell,
and Mary Stewart
Members Absent: Matt Westgaard
ERMU Staff Present: Troy Adams,General Manager;
Theresa Slominski,Finance and Office Manager;
Mark Fuchs,Electric Superintendent;
Mike Tietz,Technical Services Superintendent;
Tom Sagstetter,Conservation&Key Accounts Manager;
Michelle Canterbury,Executive Administrative Manager
Others Present: None
1.0 CALL MEETING TO ORDER
The special meeting of the Utilities Commission was called to order at 3:00 p.m.by Chair Dietz.
2.0 DISCUSS AND TAKE ACTION ON AWARDING THE SALE OF$10,000,000 ELECTRIC
REVENUE BONDS,SERIES 2018A
At the July 10 meeting,the Commission passed a resolution to proceed with the issuance of
$10,000,000 2018A Electric Revenue Bonds. Given that the City of Elk River is the qualified
entity to issue bonds,the resolution was approved by the City Council at their July 16 meeting.
At that time it was identified that the award of the bonds by the Utility Commission would
come back for a special meeting to be held on August 29 at 3:00 p.m. Proposals for the sale of
the bonds were received this morning, August 29, until 9:30 a.m.
The bid tabulation was distributed at the meeting. Terri Heaton, Springsted Senior Vice
President/Client Representative,was available by phone and presented the market sale
information results which consisted of six bids. Robert W. Baird & Company, Incorporated
came in as the low bidder with a true interest rate of 3.52%. Based on a premium bid, a lower
interest rate, and reduced underwriter fees,the final results of the bonding reflect a savings of
approximately$400,000.
The Moody's bond rating call was conducted on August 6. Based on the information reviewed,
Moody's has assigned an Aa3 rating to ERMU's $10 million Electric Revenue Bonds, Series
2018A. Ms. Heaton spoke to how this high rating contributed to the favorable results for the
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Special Meeting of the Elk River Municipal Utilities Commission
August 29,2018
$10,000,000 bonding. She also went over ERMU's credit strengths that Moody's used to
determine the rating which included:
• Monopoly service area with expanding customer base
• Electric commission has sole rate setting authority
• History of operating surpluses with strong financial and coverage ratios
• Transition to membership in Minnesota Municipal Power Agency (MMPA)
will lead to the elimination of coal exposure
Mr. Adams provided some comparisons between our rating and other power agencies.
Based on the bids received,the recommendation was to award the issuance and sale of the
$10,000,000 Electric Revenue Bonds, Series 2018A to the low bidder, Robert W. Baird &
Company, Incorporated, per Resolution No. 10-18.
Moved by Commissioner Stewart and seconded by Commissioner Bell to adopt Resolution
No. 18-10 awarding the issuance and sale of$10,000,000 Electric Revenue Bonds,Series
2018A,per the attached resolution.Motion carried 4-0.
Chair Dietz had a question on our final estimated amount for our buy-in to MMPA and$1.7 million
coming out of reserves versus$2.1 million. Staff explained that based on the approximate$400,000
savings realized on the bonding,we would be able to use that savings towards the buy-in,resulting
in that much less coming out of reserves.
3.0 ADJOURNMENT
There being no further business,Chair Dietz adjourned the special meeting of the Elk River
Municipal Utilities Commission at 3:08 p.m.
Minutes prepared by Michelle Canterbury.
AIM
Jo I I . I'etz,E'r'G • mission Chair
________/.1L
Tina Allard,City C - k
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Special Meeting of the Elk River Municipal Utilities Commission
August 29,2018