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3.1.B ERMU MINUTES 05-11-2010ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM April 13, 2010 Members Present: John Dietz, President; Jerry Gumphrey, Vice Chair; Daryl Thompson, Trustee ERMU Staff Present: Troy Adams, Director of Operations; Theresa Slominski, Finance Director/Office Manager; Mark Fuchs, Line Superintendent; David Berg, Water Superintendent; Wade Lovelette, Technical Services Superintendent; Judy McSpadden, Recording Clerk; Richard Wagner, Peter Nielsen City Staff Present: Lori Johnson, City Administrator; Tim Simon, Finance Director Others Present: Mark Mathison, Attorney from Gray Plant Mooty Law Firm; Andrew Berg, Auditor for Abdo, Eick & Meyers 1.1 Call meeting to order April 13.2010 John Dietz called the April 13, 2010 meeting to order at 4:00 p.m. 2.1 Consider Utilities Agenda Troy Adams requested 4.0 be added to the agenda titled Resolution for Refunding. John Dietz added two items to discuss under Other Business. Daryl Thompson moved to approve the April 13, 2010 amended Utilities Agenda. Jerry Gumphrey seconded the motion. Motion carried 3-0. 3.1 Consider Consent Agenda John Dietz had questions on the check register and financials, staff responded. Jerry Gumphrey moved to approve the Consent Agenda as follows: a. March Check Register b. March 9, 2010 Minutes c. Financial Reports Darly Thompson seconded the motion. Motion carried 3-0. 4.0 Resolution for Re -funding ERMU, in conjunction with the City of Elk River, refinanced a building bond at a lower rate saving ERMU approximately $97,000. Theresa Slominski informed commissioners that after discussion with Ehlers & Associates it was determined a resolution was necessary. The resolution was reviewed. Page 2 Regular meeting of the Elk River Municipal Utilities Commission April 13, 2010 Daryl Thompson moved to approve the Resolution for Re -funding. Jerry Gumphrey seconded the motion. Motion carried 3-0. Resolution attached. 4.1 Review and Consider Water Tower Antenna Lease Agreement David Berg and Peter Beck have reviewed the lease agreement and consideration bid sent by Sprint, certain areas have been marked where they could improve upon. Mark Mathison asked Commission for direction on preference in order to proceed with the wording and request on the water tower antenna lease agreement. Discussion followed regarding whether the leasing company's equipment should be placed inside of the tower or if ERMU should require them to construct their own building outside. David Berg voiced his concern on the upkeep of the outer buildings in the future. Jerry Gumphrey commented if an outside building was required, he would prefer ERMU to approve the plans prior to construction. John Dietz questioned if ERMU should construct the building and then charge the company. Daryl Thompson said her would prefer the equipment stay inside the tower. David Berg said Sprint has asked for a key. Daryl Thompson asked if Sherburne County had a key, David Berg responded no. John Dietz said he would prefer the equipment be inside of the towers but would not want that to deter Sprint from signing the agreement. Staff and attorney will continue with the revision of the agreement and bring back to the commission for approval. 4.2 Review and Consider Customer Deposit Policv At the March 9, 2010, ERMU Commission meeting, a revised Customer Deposit Policy was approved. In conjunction with the revised policy, staff has been working on a commercial customer application/receipt. Troy Adams informed commission that the form was not ready for the meeting however would be soon. The new form will be brought to the commission for final approval at the May ERMU Commission meeting. Troy Adams said there are a few new commercial customers this would apply to and is asking for authority to use the form in the interim. Jerry Gumphrey moved to give Troy Adams the authority to use the commercial customer application/receipt that will be provided to the commission at next month's meeting. Daryl Thompson seconded the motion. Motion carried 3-0. 5.1 Review and Receive 2009 Financial Audit Andrew Berg of Abdo, Eick & Meyers presented the 2009 audit and answered questions. John Dietz said due to the City of Elk River's new bond rating he would like staff to check on refinancing a bond that is at a higher rate. Jerry Gumphrey moved to approve and accept the 2009 Financial Audit. Daryl Thompson seconded the motion. Motion carried 3-0. Page 3 Regular meeting of the Elk River Municipal Utilities Commission April 13, 2010 John Dietz wanted to say thank you to Theresa Slominski and Lorne Franz on doing a good job on f nmeials and in preparing for the audit. The more information prepared for the auditors saves time and money for the Utilities. 5.2 Review and Consider Reserves Policy At the March 9, 2010, ERMU Commission meeting, the Investment Committee provided an update on the need for a reserves policy. Staff was directed to draft a reserves policy and bring back to the Commission for review. Staff has utilized the resources of MMUA, Ehlers and Associates, and Abdo, Eick & Meyers to compile and compare reserve policies and reserve target criteria from other Minnesota municipal utilities. Troy Adams reviewed the reserve criteria. A six month operating revenue less the depreciation along with the annual P & I for next year is the recommended reserve policy. Tim Simon discussed the recommended reserve policy for the electric and water funds. John Dietz talked about the importance of having a policy and that it should be reviewed yearly. Consensus was for Troy Adams, Theresa Slominski, and Tim Simon to draft a formal reserve policy for adoption at the May ERMU Commission meeting. 5.3 Review and Consider Credit Card Payment Options For several years now it has been a goal to have credit cards as an option for customers to pay their bills. ERMU customers were surveyed back in 2006 and 71 % of the respondents wanted this service. The offering of credit cards comes at a cost for processing the payment, but so do the rental of the drop boxes, and the staff for in house processing of payments. Depending on how you collect the credit card payment, the cost varies from 2% to 4% of the transaction total. After researching numerous credit card vendors, Paymentus is the credit card company that ERMU would like the commission to consider working with for providing credit card payments to customers. They offer a combination of services such as phone payments, web payment (through a link from our website), and face to face. Additionally they allow you to set the processing cost at your comfort level by utilizing the convenience fee at 100% or down to 0% to be passed on to the customer. The 0% would result in a 2.75% transaction fee to ERMU. Discussion followed regarding transaction fees. Daryl Thompson and Jerry Gumphrey preferred the customer pay the convenience fee. John Dietz said a time frame should be established to revisit the convenience fees. Daryl Thompson moved to proceed with the Paymentus credit card company, have customers pay the convenience fee, and re-evaluate in May 2011. Jerry Gumphrey seconded the motion. Motion carried 3-0. 5.4 Review and Consider Wholesale Power Supply Options At the March 9, 2010, ERMU Commission meeting, the commission gave authorization for Troy Adams to further explore whole sale power supply options. Troy Adams talked about the recent power supply coalition meeting he attended which was organized by CMMPA. At this meeting there Page 4 Regular meeting of the Elk River Municipal Utilities Commission April 13, 2010 were representatives from CMMPA, two other municipal utilities, another public power joint action agency representing approximately 15 municipal utilities, and a representative for three small investor owned utilities (IOU). At the time of this meeting, there was no commitment from any of the groups to participate, but rather gather information to take back to their governing bodies. Troy Adams discussed the offering of the proposed power supply coalition. The process for participation in this coalition in Phase I is a rate study performed by R.W. Beck. ERMU currently has the one year associate membership with CMMPA that was part of the process of exploring the BSII project. This agreement runs through May 26th of this year. This could be terminated with fixture fees going to the power coalition program. John Dietz said he thought it would be a good idea to do a rate study with R.W. Beck but to get a contract with phases so ERMU could back out at any time. Jerry Gumphrey moved to terminate associate membership with CMMPA on April 26, 2010. Daryl Thompson seconded the motion. Motion carried 3-0. Jerry Gumphrey moved to authorize Troy Adams to proceed with phase 1 of the power supply coalition, not to exceed $20,000. Daryl Thompson seconded the motion. Motion carried 3-0. 6.1 Staff Updates Troy Adams handed out a recent newspaper article regarding secondary faults. The article talks about the secondary electric service and who is responsible when it fails. Troy wanted to make sure it was understood that ERMU repairs secondary faults and considers it part of the maintenance cost of providing electricity to customers. There was discussion regarding the water and wastewater rate forgiveness for the flushing of filters at the wastewater treatment plant and the backwashing for the water towers. Troy Adams also updated the Commissioners on the Connexus board meeting he recently attended. John Dietz asked Theresa Slominski about the dental insurance rate increase. Theresa Slominski responded that a meeting has been set up for Wednesday, April 14d` for her and Troy Adams to meet with the insurance agent and an update will be given at next month's meeting. Theresa Slominski wanted to give commissioners a heads up regarding the shut -offs that will be occurring on April 20d' and 215c Troy Adams said UHG will be conducting an emergency training on April 23`d and will be shutting down power and running their engines. Lori Johnson said staff has been notified. Jerry Gumphrey asked if the homeowners in the area have been notified. Troy Adams will work with Lori Johnson and UHG to notify them. Jerry Gumphrey said he has received a lot of complaints on the envelopes. Theresa Slominski said they are working on improving the glue on the envelope. David Berg brought up the need for a policy or ordinance regarding new private wells. Discussion followed. Lori Johnson stated Peter Beck has spent considerable time looking into this. Jerry Gumphrey moved to ask the City to look into a policy to prevent any new private wells inside City limits. Daryl Thompson seconded the motion. Motion carried 3-0. Page 5 Regular meeting of the Elk River Municipal Utilities Commission April 13, 2010 John Dietz asked David Berg about his comment in his memo regarding the first joint project with the City flushing hydrants. David Berg responded that water staff was able to aid the City in plowing over the winter, now the City will aid in the flushing of hydrants. Mark Fuchs wanted the Commissioners to know that he appreciated Phil Hals help on procuring the state bid for the recently purchased trailer. Daryl Thompson commented that he likes to see the City of Elk River and ERMU working together. John Dietz and Jerry Gumphrey agreed. John Dietz distributed an article regarding a City implementing a community lighting fee and another on wind power. A brief discussion followed. 6.2 Set Date for Next Meetin¢ The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, May 11, 2010, at 4:00 p.m. 6.3 Adjourn Regular Meeting Daryl Thompson moved to adjourn the regular meeting of the Elk River Municipal Utilities Commission meeting at 5:50 p.m. Jerry Gumphrey seconded the motion. Motion carried 3-0. Minutes prepared by Judy McSpadden. John Dietz President, ERMU Commission Tina Allard City Clerk Extract of Minutes of a Meeting of the Board of Commissioners of the Utilities Commission of the City of Elk River, Minnesota, Sherburne County, Minnesota Pursuant to due call and notice thereof, a regular meeting of the Board of Commissioners of the Utilities Conunission of the City of Elk River, Minnesota, was duly held in the City Hall in the City of Elk River, on April 13, 2010, commencing on or after 4:00 P.M. The following Commissioners were present: and the following were absent: he Commissioner introduced the following resolution and moved its adoption: RESOLUTION NO. �,D IO' 1 RESOLUTION ACKNOWLEDGING AND CONSENTING TO THE REFINANCING BY THE CITY OF ELK RIVER, MINNESOTA OF CERTAIN OUTSTANDING BONDS OF THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF ELK RIVER, MINNESOTA BE IT RESOLVED by the Board of Commissioners (the "Board") of the Elk River Utilities Commission (the "Commission") as follows: Section 1. Background: Findings. 1.01. The Economic Development Authority of the City of Elk River, Minnesota (the "EDA") previously issued its Public Safety Building Lease Revenue Bonds, Series 2002A (City of Elk River, Minnesota Lease Obligation), dated September 1, 2002 366923v2JSB EL185-I1 (the "Series'2002A Bonds"), pursuant to a Mortgage and Security Agreement and Trust Indenture, dated September 1, 2002, between the EDA and U.S. Bank National Association, as trustee (the "Trustee") (the "2002A Indenture") and a resolution adopted by the EDA on August 12, 2002 (the "Series 2002A Bond Resolution"). The proceeds of the Series 2002A Bonds were used for construction and furnishing of a certain public safety facility (the "Safety Facility"). The City currently leases the Safety Facility pursuant to - a Lease Agreement, dated September 1, 2002 (the "Lease Agreement"), between the EDA, as lessor, and the City, as lessee. The City has determined to terminate the Lease Agreement and purchase the Safety Facility from the EDA by refunding the Series 2002A Bonds, which are currently outstanding in the principal amount of $5,840,000. 1.02 The EDA also previously issued its City Hall Expansion Revenue Bonds, Series 2002B (City of Elk River Lease Purchase Obligation), dated September 1, 2002 (the "Series 2002B Bonds'), pursuant to a Trust Indenture, dated November 1, 1991, as supplemented by a Supplement to Trust Indenture dated December 1, 1997, and further supplemented by a Supplement to Trust Indenture dated September 1, 2002, between the EDA and U.S. Bank National Association (formerly First Trust National Association), as trustee (the "Trustee) (collectively the "2002B Indenture") and a resolution adopted by the EDA on August 12, 2002 (the "Series 2002B Bond Resolution'). The proceeds of the Series 2002B Bonds were used for the expansion of the City Hall, including related furnishings, equipment and site improvements (the "City Hall Facility"). The City currently leases the City Facility pursuant to a Lease Purchase Agreement, dated November 1, 1991, as supplemented by a Supplement to Lease Purchase Agreement dated December 1, 1997, as further supplemented by a Supplement to Lease Purchase Agreement dated September 1, 2002 (collectively the "Lease Purchase Agreement"), between the EDA, as lessor, and the City, as lessee. The City subleases a portion of the City Hall Facility to the Commission. The City has determined to terminate the Lease Purchase Agreement and purchase the City Hall Facility from the EDA by refunding the Series 2002B Bonds, which are currently outstanding in the principal amount of $1,270,000. 1.03 Pursuant to a resolution adopted by the City Council of the City on March 15, 2010, the City has determined to issue its General Obligation Capital Improvement Plan Bonds, Series 2010A (the "Bonds') in the aggregate principal amount of $7,370,000, and use a portion of the proceeds of such bonds to finance the acquisition of the Safety Facility and the City Hall Facility and refund the outstanding Series 2002A Bonds and Series 2002B Bonds issued by the EDA. Section 2. Acknowledgement and Consent. The Commission hereby acknowledges and consents to the acquisition of the Safety Facility and the City Hall Facility and the refunding of the outstanding Series 2002A Bonds and Series 2002B Bonds by the City. The Commission will continue to leases a portion of the City Hall Facility from the City. 36692M JSB EL195-I I The motion for the adoption of the foregoing resolution was duly seconded by Member —mmWa—q-, , and upon vote being taken thereon, the following voted in favor thereof: and the following voted against: whereupon said resolution was declared duly passed and adopted. 366923v2 JSB ELI 85-11 STATE OF MINNESOTA ) COUNTY OF SHERBURNE ) SS. CITY OF ELK RIVER ) I, the undersigned, being the duly qualified and acting Secretary of the Elk River Utilities Commission, do hcrcby certify that I have carefully compared the attached and foregoing extract of minutes of a regular meeting of the Board of Commissioners held on April 13, 2010, with the original thereof on file in my office and the same is a full, true and complete transcript therefrom insofar as the same relates to the acknowledging and consenting to the acquisition and refinancing by the City of the Safety Facility and the City Hall Facility. WITNESS my hand as Secretary and this , day of April, 2010. Secretary Utilities Commission of the City of Elk River, Minnesota 366923v2 JSB E1,185-11