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05-11-2021 ERMU MIN ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COMMISSION HELD AT THE ELK RIVER FIRE STATION EOC CONFERENCE ROOM May 11,2021 Members Present: Chair John Dietz,Vice Chair Al Nadeau,Commissioners Paul Bell,and Mary Stewart Members Absent: Commissioner Matt Westgaard ERMU Staff Present: Theresa Slominski,General Manager Melissa Karpinski, Finance Manager Jennie Nelson,Customer Service Manager Tom Sagstetter,Conservation&Key Accounts Manager Michelle Canterbury, Executive Administrative Manager Tom Geiser,Operations Director Chris Sumstad, Electric Superintendent Mike Tietz,Technical Services Superintendent Dave Ninow,Water Superintendent Chris Kerzman, Engineering Manager Tony Mauren,Communications&Administrative Coordinator Others Present: Peter Beck,Attorney;Terri Heaton, Representative with Baker Tilly Municipal Advisors, LLC;Steve Downer, Director of Communications with Minnesota Municipal Utilities Association; Karl Pederson,Tom Bovitz Scholarship winner 1.0 GOVERNANCE 1.1 Call Meeting to Order The regular meeting of the Utilities Commission was called to order at 3:30 p.m. by Chair Dietz. 1.2 Pledge of Allegiance The Pledge of Allegiance was recited. 1.3 Consider the Agenda There were no additions or corrections to the agenda. Moved by Commissioner Bell and seconded by Commissioner Nadeau to approve the May 11,2021 agenda. Motion carried 4-0. Elk River Municipal Utilities Commission Meeting Minutes May 11, 2021 Page 1 1.4 Recognition of APPA 2020 Certificate of Excellence in Reliability Mr.Tietz was honored to present the Certificate of Excellence in Reliability from the American Public Power Association,which ERMU had earned for reliable service in 2020. Mr.Tietz provided background on the award and recognized all employees for their contribution to earning this honor. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to receive the American Public Power Association 2020 Certificate of Excellence in Reliability. Motion carried 4-0. 1.5 Recognition of ERMU and MMUA Tom Bovitz Memorial Scholarship Award Winner Ms. Canterbury was excited to introduce Mr. Pederson, ERMU's local scholarship winner as well as the runner up in the Minnesota Municipal Utilities Association(MMUA)statewide competition.She went on to introduce Mr. Downer,Communications Director with MMUA who provided background on the scholarship program and congratulated Mr. Pederson and wished him the best for his future. Mr. Pederson read his essay for the Commission.The Commission and staff applauded Mr. Pederson. Ms.Canterbury noted there would be commissioners at an event the following night at Elk River High School to honor Karl along with other scholarship winners. Mr. Canterbury asked if Mr. Pederson would share his plans for the future. Mr. Pederson responded that he would be attending the University of Minnesota Twin Cities in the fall where he plans to study aerospace engineering and violin performance. Chair Dietz asked how staff would be promoting Mr. Pederson's scholarship award and essay. Staff responded. 2.0 CONSENT AGENDA(Approved By One Motion) Chair Dietz had a question on the Check Register—April 2021 noting what he considered to be a large expense for uniforms. Ms. Karpinski explained the field staff typically places an order for new and replacement clothing items at the beginning of the year. Mr.Geiser shared that while uniform items are replaced as needed, new hires receive five pairs of pants and 10 assorted shirts for varying climates to ensure staff can rotate their clothing. Mr.Geiser noted with an increase in new employees,there has been larger than normal uniform orders.Chair Dietz had further questions.Staff responded. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to approve the Consent Agenda as follows: 2.1 Check Register—April 2021 Elk River Municipal Utilities Commission Meeting Minutes May 11, 2021 Page 2 2.2 Regular Meeting Minutes—April 13,2021 2.3 2021 First Quarter Utilities Performance Metrics Scorecard Statistics 2.4 2020 Consumer Confidence Report 2.5 Resolution Awarding the Issuance and Sale of Electric Revenue Bonds,Series 2021B 2.6 Transmission Transformed Service Rate Motion carried 4-0. 3.0 OPEN FORUM No one appeared for open forum. 4.0 POLICY&COMPLIANCE 4.1 Payment in Lieu of Taxes and Other Donations to the City of Elk River Ms. Slominski presented her memo detailing a proposed change to Policy G.2a1 Payment in Lieu of Taxes(PILOT) and Other Donations to the City of Elk River.The change is intended to have policies prepared for the implementation of a Transmission Transformed Service Rate (TTSR), ensuring that revenue is correctly calculated for the PILOT disbursement sent to the City.The existing policy states that ERMU shall pay 4%of revenues for electric customers within the corporate boundaries of the City of Elk River. The proposed change to the policy provides an additional PILOT calculation for the TTSR customers that states ERMU shall pay 4%of the margin. Chair Dietz had clarifying questions. Staff responded. Moved by Commissioner Bell and seconded by Commissioner Nadeau to adopt the revised Commission Policy G.2a1 Payment in Lieu of Taxes and Other Donations to the City of Elk River. Motion carried 4-0 5.0 BUSINESS ACTION 5.1 Award of General Obligation Water Utility Revenue Bonds,Series 2021C Ms. Heaton was pleased to present the results of the sale of General Obligation Water Utility Revenue Bonds, Series 2021C for a total of$1,750,000.This bond will represent the water department's 12.5%share of the field services facility expansion. Proposals for the sale of the bonds were received the morning of May 11 until 10:30 a.m. Ms. Heaton distributed the bid tabulation and winning bid form and walked through the information and market sale results. Elk River Municipal Utilities Commission Meeting Minutes May 11, 2021 Page 3 Ms. Heaton noted that the bonds were rated AA+and received three bids with a low bid from Robert W. Baird &Co., Incorporated at 1.7986%on a 20-year bond. Ms. Canterbury had a clarifying question about the appropriate wording of the motion with the results Ms. Heaton had just provided the commission. Ms. Heaton explained that because the bidder had included a premium along with a rate, the combination of the two become the true interest rate.The premium reduces the bond issue from $1,750,000 to $1,615,000. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to adopt the Bid Tabulation and Resolution Awarding the Issuance and Sale of$1,615,000 General Obligation Water Utility Revenue Bonds,Series 2021C to Robert W. Baird &Co., Incorporated. Motion carried 4-0. 5.2 Financial Report—March 2021 Ms. Karpinski presented the Financial Report for March 2021. Ms. Karpinski addressed a question submitted by Commissioner Stewart before the meeting regarding Other Operating Expense. Staff explained that the documented loss was due to the trade in for the bore rig which was not fully depreciated.There was further discussion. Chair Dietz had a question on the Miscellaneous Distribution Expense which was higher than the previous year. Ms. Slominski noted that part of that was the uniform costs addressed earlier in the meeting. Mr. Geiser noted that testing for equipment would also be included in the expense. Staff said they would research this further and report back to the Commission. Chair Dietz also identified an increase in Administrative Expenses from the previous year, noting this appeared to be due to wages and insurance costs. Staff confirmed that with the change in health savings account contributions in 2021 there would be an increase at the beginning of the year with savings realized over the course of 12 months. Moved by Commissioner Nadeau and seconded by Commissioner Stewart to receive the March 2021 Financial Report. Motion carried 4-0. 5.3 2021 First Quarter Delinquent Items Ms. Karpinski presented her memo on the first quarter delinquent items. Chair Dietz had clarifying questions about collections procedures. Staff responded. Chair Dietz had questions about funds being made available related to COVID-19 relief. Ms. Slominski responded. Elk River Municipal Utilities Commission Meeting Minutes May 11, 2021 Page 4 Moved by Commissioner Bell and seconded by Commissioner Nadeau to approve the 2021 first quarter delinquent items submitted. Motion carried 4-0. 5.4 2020 Annual Reliability Report Mr.Tietz presented his memo on the annual reliability report.There was discussion. Chair Dietz had questions about outage mitigation methods. Staff responded. Moved by Commissioner Stewart and seconded by Commissioner Bell to receive the APPA eReliability Tracker 2020 Annual Benchmarking Report for ERMU. Motion carried 4-0. 5.5 Field Services Facility Expansion Project Mr. Kerzman noted a correction to be made in the bid tabulation and presented Resolution No. 21-11 to address the error.This adjustment produces a $7,000 change to the project budget which would be covered by the contingency funds incorporated in ERMU's contract with the construction management company. Mr. Kerzman shared that field services expansion committee had reviewed the alternate bid items, identifying three that they were interested in pursuing.There were two that the contractor agreed to hold prices on until the completion of earthwork. Mr. Kerzman asked the Commission to accept the third alternate item that would not hold its price; installing variable air volume (VAV) capabilities, allowing individual offices the ability to control their own temperature. Mr. Kerzman also presented a project schedule and asked the Commission if they would be interested in a groundbreaking event for the project.The Commission said they would be interested in having the event. Chair Dietz asked whose responsibility it was to remove the debris from the two homes on the property which were used by the Elk River Fire Department for a live burn training. Mr. Kerzman explained that work was included in the earthwork contract and that Nord Excavating, Inc. would be handling the removal.There was further discussion. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to adopt Resolution No.21-11 Awarding and Approving the Assignment of Construction Contract to RJM Construction for Quote Category 12A. Motion carried 4-0. Moved by Commissioner Bell and seconded by Commissioner Nadeau to approve Change Order Accepting Alternate#4—Individual VAV at Offices. Motion carried 4-0. Elk River Municipal Utilities Commission Meeting Minutes May 11, 2021 Page 5 6.0 BUSINESS DISCUSSION 6.1 Staff Updates Commissioner Stewart asked Mr. Sagstetter about his update item on the Annual Data Center Summit. Mr. Sagstetter responded Ms. Canterbury highlighted her update item on the Minnesota Municipal Utilities Association Annual Summer Conference, encouraging commissioners to inform her if they plan to attend. Ms. Canterbury also reminded the Commission that the general manager performance evaluation would be occurring during a closed session at the June commission meeting. Mr. Ninow noted that staff was performing the scheduled flushing of fire hydrants and that everything was on schedule to complete work by the end of the week. 6.2 Future Planning Chair Dietz announced the following: a. Regular Commission Meeting—June 8, 2021 b. 2021 Governance Agenda 6.3 Other Business Chair Dietz had a question about the plan to open the utilities office to the public. Ms. Slominski responded that she intended to coordinate the opening with the date the City had chosen which was July 1 at the time of the meeting; she noted staff would be returning on June 1. Chair Dietz asked if commission meetings would return to their normal location in July. Ms. Slominski confirmed that the plan was to hold the July commission meeting in the utilities' conference room. Commissioner Stewart requested that Commissioner Westgaard communicate the dollar amounts the city receives from ERMU through the Payment in Lieu of Taxes and Other Donations policy in his update to the City Council to aid in that body's understanding of its relationship with ERMU. Ms. Slominski stated that she would provide the information to the City. 7.0 ADJOURN REGULAR MEETING Moved by Commissioner Bell and seconded by Commissioner Nadeau to adjourn the regular meeting of the Elk River Municipal Utilities Commission at 4:13 p.m. Motion carried 4-0. Elk River Municipal Utilities Commission Meeting Minutes May 11, 2021 Page 6 Minutes prepared by Tony Mauren. J¢hn J. Dietz, U Commission Chair (4 Tina Allard,City Clerk Elk River Municipal Utilities Commission Meeting Minutes May 11, 2021 Page 7