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3.0 ERMU MINUTES 12-09-2008ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM November 13, 2008 Members Present: Jerry Takle, President; John Dietz, Vice Chair; Jerry Gumphrey, Trustee Staff Present: Theresa Slominski, Finance Director/Office Manager; Troy Adams, Engineering Manager, Mark Fuchs, Line Superintendent; David Berg, Water Superintendent; Judy McSpadden, Recording Clerk; Mike Thiry, Wade Lovelette, Troy Seter, Michael Price, Adam Freiberg, Lonnie Franz, Chad Grande, Kim Sandstrom, Peggy Ferguson, Dolores Andreasen Staff Absent: Bryan Adams, General Manager Others present: Vance Zehringer, Conservation Improvement Program Administrator; Lori Johnson, City Administrator; Sam Diehl and Mark Mathison, Attorneys for Gray Plant & Mooty 1. Call meetine to order November 13 2008 President Jerry Takle called the November 13, 2008, meeting to order at 4:55 p.m. 2. Consider Utilities Agenda Jerry Takle added Attorneys for Gray Plant & Mooty to be addressed upon their arrival. Jerry Gumphrey moved to approve the November 13, 2008, Utilities Agenda. John Dietz seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda Jerry Gumphrey moved to approve the Consent Agenda as follows: October Check Register September 30, 2008, Closed Meeting Minutes October 14, 2008, Closed Meeting Minutes October 14, 2008, Regular Meeting Minutes Financial Reports John Dietz seconded the motion. Motion carried 3-0. 5.1 Staff Uudates Troy Adams reported the year to date usage for electric is up 6.6% year to date and water usage is down 2.5%. Quotes were acquired for frost trenching this winter and Midwest Diversified was the lowest. In a previous meeting staff was directed to look into the Street Light policy. In the past there was an informal Street Light Comrnittee, comprised of Chief of Page 2 Regular meeting of the Elk River Municipal Utilities Commission November 13, 2008 Police, Fire Chief, and Electric Superintendent, and a non -written policy. The police department is satisfied there is sufficient lighting. John Dietz directed staff moving forward to have residents fill out a petition and have it presented to the Utilities Commission for approval. Troy apprised the Commission that Elk River Municipal Utilities (ERMU) policies are still being reviewed by Gray Plant & Mooty. McDowall Company will start re -roofing the power plant as soon as the plans are finalized and materials are delivered. An e-mail was received from a customer commending Michael Price and Adam Freiberg on the extra efforts in solving an off peak issue. Troy also informed the Commissioners about the FR clothing requirements for staff changing out meters. This activity is currently being done by water operators who do not have the necessary FR clothing. Jerry Gumphrey directed staff to look into the cost associated with the clothing requirement for next months meeting. There were seven security sales and 11 installs for the month of October. At this time the Attorneys from Gray Plant & Mooty were recognized. Mark Mathison, Attorney at Law for Gray Plant & Mooty (GPM) addressed the Commission. Mark stated he was present to finalize the workplace investigation. A memorandum was presented to the commission for their review with four points identified. Mark informed the Commission a thorough investigation was performed and completed. Discussion followed as to the outcomes and recommendations. Mark conveyed he met with General Manager, Bryan Adams, regarding the investigation and that he will be stepping down as General Manager and GPM discussed with him the possibility of being retained for offsite consulting without jeopardizing his PERA benefits. John Dietz asked if he would be eligible for PERA. Mark responded he has discussed this with PERA and it would meet the requirements. Jerry Takle asked what the length of the contract was. Mark responded it would be a three year contract. Another issue presented by GPM is the need for strengthening of the Human Resources (HR) functions. Several possibilities were discussed including utilizing the City of Elk River's HR employee, Lauren Wipper. Other items included authorization for GPM to meet with managers and certain employees to communicate the outcome of the investigation, communication to all employees regarding the completion of the investigation, and ongoing training for all employees and managers. John Dietz moved to have the Attorneys Sam Diehl and Mark Mathison meet with employees to convey the outcome and finality of the investigation, and complete the policy approvals. At this time Resolutions were presented to the Commission for their review. The previous motion was withdrawn. John Dietz commented he would like ERMU to work with the City of Elk River on the HR duties. Lori Johnson stated the City Council would have to approve this process and she would address it at the next City Council meeting. John Dietz asked Attorney Mark Mathison Page 3 Regular meeting of the Elk River Municipal Utilities Commission November 13, 2008 to draft an agreement for sharing an HR person with the City of Elk River. Jerry Takle asked Theresa Slominski for her opinion. Theresa responded she has worked with Lauren Wipper before and felt she was a very competent person and could work well with separating the Utility and City issues regarding confidentiality. Lori Johnson said she has received good response from employees regarding the confidentiality of Lauren. John Dietz moved to approve Resolution 08 related to the workplace environment. Jerry Gumphrey seconded the motion. Motion carried 3-0. John Dietz moved to approve Resolution 08 related to the resignation and reassignment of the General Manager. Jerry Gumphrey added he would like the word contractors added in section 2. Jerry Gumphrey also stated he was not comfortable with the time span of three years. John Dietz asked the Attorneys if they could meet with Jerry Gumphrey in private to answer to his concerns. Jerry Takle called for a 5 minute recess to address this. The meeting resumed and Jerry Takle seconded the motion to approve the Resolution. Motion carried 3-0. 5.1 Staff Updates - Continued Mark Fuchs reported the Brentwood rebuild project is finally complete. New commercial construction projects in progress are the Metal Craft building on Business Center Drive, Otsego Auto Care on Parson Avenue in Otsego, and a couple of commercial buildings on Industrial Circle over by The Home Depot. Projects still in progress are the Highway 169 feeder crossing, and Waterfront Fast overhead cable removal. The MN School of Business has applied for service to construct a building on 193`d Avenue but we can not proceed with cable placement until the water line is installed. The Co Rd 39 line extension project in Otsego is still on hold awaiting the decision as to the need for three phase or single phase power. Staff has been busy completing as much as possible prior to the frost, then staff will start the tree trimming process and the cutout replacement along with the maintenance issues and mapping. David Berg reported the October water consumption is up 2 million gallons from last year. Staff continues refurbishing the irrigation meters, pumping down hydrants in low areas, and will be starting well filter maintenance. Theresa Slominski informed Commissioners that due to complications, the electronic processing of checks has stopped and will be done manually from now on. John Gasal of Connexus notified us of a previous PCA waiver that will now be assessed at approximately $45,000 each month for the next three months. Lori Johnson said the State of Minnesota is buying bulk fuel and the City of Elk River is a member of this consortium. Discussion followed regarding the pros and cons to this program. Jerry Takle stated that due to lack of interest the ERMU would not be participating in this program this year. Page 4 Regular meeting of the Elk River Municipal Utilities Commission November 13, 2008 5.2 Review & Consider Waee Salary At the August 12, 2008, Elk River Municipal Utilities Commission meeting, the Commission approved a proposal from Rod Kelsey of Riley, Dettman & Kelsey to conduct a Classification and Pay Study. The timeline for completion of the study is slated for early in 2009. Rod Kelsey met with employees on November 16, 2008, to explain the process of filling out the Job Description Questionnaires (JDQ) for their position. After the employees complete their JDQ, they will be reviewed by their supervisors and then forwarded on to Riley, Dettman & Kelsey. Upon completion of the Study, Rod Kelsey will meet with the Commission to present the results. 5.3 Review All Requirements Contract In September 2008 Connexus Energy executed the termination clause in their 10 year rolling all requirements power contract with ERMU. After the termination notice was received, staff began to research ERMU options. R.W. Beck has been contacted to assist in the process. A meeting was delayed between R.W. Beck, CMMPA, and ERMU staff to discuss the logistics of participating in the Big Stone 2 power plant project. Troy Adams, Theresa Slominski, and Jerry Takle met with John Gasal from Connexus to review the history of the contracts to date, and review the working relationship Connexus and ERMU have shared over the years. It is a good relationship and the desire to continue that relationship is strong, and benefits both parties. Discussion followed regarding the options available. 5.4 Review Proiected 2009 Power Costs Great River Energy Board has approved the 2009 wholesale rate increase of 15%. At the December ERMU Commission meeting, the proposed rates for 2009 will be presented for approval. 5.5 Review Staff Restructurin¢ At the October 2009 ERMU Commission meeting, staff was directed to revisit the staff restructuring that had been implemented the previous month. The staff restructuring involved re -allocating some job duties previously performed by Lead Lineman, Mike Thiry. This process pointed out the need for having a back-up for PCB testing of transformers along with some safety concerns. Mike Thiry was needed in the field to help with the high volume of projects needed to get done before frost sets in. Mike will return to his previous duties with some needed changes. Mike Thiry informed the Commissioners that this restructuring showed improvements needed in tasks that were performed along with having a back-up when he is absent, and also commended the managers of doing a good job. Page 5 Regular meeting of the Elk River Municipal Utilities Commission November 13, 2008 5.6 Review & Consider MMUA Safety Compliance Contract At the October ERMU Commission meeting, staff proposed the 2009 MMUA safety contract. At that time the City of Elk River informed the Commission they have been researching alternative safety providers. The ERMU Commission directed staff to renew the contract contingent upon the ability to change the contract if the City decided to pursue other options. Staff discussed the situation with MMUA, and was awaiting decision from the City prior to renewing the safety contract for 2009. The City safety coordinator and ERMU staff met and reviewed the options they are looking into. Troy Adams informed the Commission of the safety program that is offered by Anoka Technical College. The City is favorable to this program and the cost is considerably less. The question of changing safety programs is of concern. MMUA requires a 30 day notice prior to cancellation. Jerry Gumphrey commented that safety is important. John Dietz moved to allow Troy Adams, Mark Fuchs, and David Berg to review the programs and make a decision for the 2009 safety program. Jerry Gumphrey seconded the motion. Motion carried 3-0. 5.7 Review & Consider Proposed Water Rates Changes —Fixed vs Tier Rate Chanties At the last ERMU Commission meeting, staff was asked to review the possibility of changing the fixed monthly charge instead of the 1 S` step rate for the 2009 budget. The 10¢ increase of the base rate resulted in approximately $50,000 and by raising the fixed monthly charge $1 instead it would result in $47,500. John Dietz moved to raise the fixed monthly charge from $6.50 to $7.50 effective January 1, 2009. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.1 Review & Consider Proposed 2009 Budget and Cash Flow Proiections The proposed 2009 electric and water expense budgets were reviewed. Capital projects were changed in the water department to achieve budgeting a $58,837 replenishment of reserves. 6.2 Review & Consider 800 MHz Radios This month the City of Elk River will be converting from their old analog radio system to a new 800MHz radio system. The new system provides better range and clarity. The City received a grant from Sherburne County to convert to this system. Once the City converts to this system ERMU would not be able to communicate without modifications to the existing system. It is important to keep the analog system as it is still being used by MMUA for emergencies. Discussion followed. The need to communicate with the City of Elk River and Page 6 Regular meeting of the Elk River Municipal Utilities Commission November 13, 2008 Sherburne County is of high importance. The City of Elk River is helping ERMU apply to Sherburne County for an estimated $50,000 grant to obtain the 800MHz radio system. 6.3 Review & Consider Bid Tabulation for CSAH 13 Watermain Improvements On October 30, 2008, bids were taken for the watermain project along CSAH 13 between the future 193rd intersection and Twin Lakes Parkway. Staff recommends awarding to the lowest responsive bidder, Kuechle Underground, Inc. John Dietz moved to award the CSAH 13 Watermain Improvement project to Kuechle Underground, Inc, the lowest responsive bidder. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.4 Review & Consider Proposed Rate Study (Verbal) A work authorization from R.W. Beck was reviewed by the Commission. Discussion followed regarding the need for a rate study at this time. John Dietz moved to table this rate study and revisit in spring of 2009. Jerry Gumphrey seconded the motion. Motion carried 3-0. 6.5 Review & Consider Sherburne County Soil and Water Conservation District Conservation Plan David Berg discussed the possibility of participating in an Irrigation Management and Water Conservation Seminar. The seminar would be open to Elk River residents and neighboring communities with emphasis on the associations and large irrigation users. Sherburne County would be the primary facilitator for this event, but staff is seeking approval to assist in planning and possibly some funding if necessary. There is approximately $2,000 left in the fund that was not used for Eco -grass that could be utilized if necessary. Consensus of Commission was in favor of this program. 6.6 Review & Consider 3rd Quarter Write -Offs Theresa Slominski discussed the third quarter write-offs presented for review. She said Michelle Martindale has been doing a good job of collecting outstanding balances. Staff recommends approval of the third quarter write-offs. John Dietz moved to approve the third quarter write-offs as presented. Jerry Gumphrey seconded the motion. Motion carried 3-0. Page 7 Regular meeting of the Elk River Municipal Utilities Commission November 13, 2008 Other Business Jerry Takle informed staff that Vance Zehringer has agreed to step in on a short term basis as the Interim General Manager. Jerry Gumphrey moved to hire Vance Zehringer as Interim General Manager for ERMU. John Dietz seconded the motion with the condition it was not to exceed 6 months without further negotiations. Motion carried 3-0. John Dietz said he appreciates how everyone has handled this situation and how the Managers have stepped in and are doing a good job, and also commented that there might not be a need for a General Manager. The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, December 9, 2008, at 5:00 p.m. President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Commission at 7:32 p.m. espectfixll ub Judy;c padde Recording Clerk l Theresa 1 ki Finance Director ELK RIVER UTILITIES COMMISSION RESOLUTION 08 - WHEREAS, the Elk River Utilities Commission authorized an investigation related to the workplace environment at Elk River Municipal Utilities; WHEREAS, the Elk River Utilities Commission received recommendations stemming from that investigation that included: 1, additional employee and management training; 2. strengthening Elk River Municipal Utilities' human resources capabilities; 3. communicating the outcome of the investigation to Employees; 4. authorizing Gray Plant Monty attorneys to meet with managers; NOW, THEREFORE, BE IT RESOLVED by the Elk River Utilities Commission that the Utility will: 1. Provide additional employee and management training regarding respectful workplace behavior, non-discrimination, and sexual harassment. This should be explored and planned by the Utility and a report on planned training should be delivered to the Commission at its next regular meeting. 2. The Utility should explore and present options for strengthening Elk River Municipal Utilities' human resources capabilities. This should include discussions with the City of Elk River regarding a possible shared human resources arrangement. 3. Employees should receive a communication summarizing the outcome of the investigation; 4. Gray Plant Mooty attorneys are authorized to meet with Utility managers to discuss the outcome of the investigation. Dated: November 13, 2008 GP:2477993 V I I�J.f,3P/���i 171 L11�Ii18I.YIllill ll% 1 [.Y.9S11►`I WHEREAS, Bryan Adams has indicated he will resign as General Manager of Elk River Municipal Utilities; WHEREAS, the Elk River Utilities seeks to ensure that Mr. Adams exit is orderly and minimally disruptive to the organization. NOW, THEREFORE, BE IT RESOLVED by the Elk River Utilities Commission that Gray Plant Mooty attorneys are authorized to document Adams's resignation as general manager and the following terms of an employment agreement: 1. The agreement should include off-site consulting employment arrangement between Adams and the Utility;�ov, r6 Abvr5 It 2. Adams should no longer have any managerilaj authority at the Utility, will not have access to the Utilities' facilities, employees, or customers and will not otherwise act except at the explicit direction of the Commission or its delegee(s); 3. Adams will receive $1000 in direct monthly compensation subject to PERA contributions by Adams and the Utility; 4. Adams should execute a release of claims effective upon his resignation as General Manager and be required to execute such a waiver at the conclusion of the the 3 year consulting arrangement; 5. Provided he executes such release at the end of his consulting term and has complied with all other terms and conditions of his employment agreement, Adams will be entitled to 6 months' severance pay ($6,000); and 6. The agreement should include other necessary or beneficial non -cost provisions. Dated: November 13, 2008 ;ercmc�aklc, resident GP:2477996 Q