4.1 ERMUSR 10-10-2023UTILITIES COMMISSION MEETING
TO:FROM:
ERMU Commission Tony Mauren – Governance & Communications Manager
MEETING DATE: AGENDA ITEM NUMBER:
October 10, 20234.1
SUBJECT:
Commission Policy Review – G.2a1 – Payment in Lieu of Taxes (PILOT) and Other Donations to
the City of Elk River
ACTION REQUESTED:
Review the policy and provide any feedback.
BACKGROUND/DISCUSSION:
This monthcommissioners are reviewing policy G.2a1 – Payment in Lieu of Taxes (PILOT) and
Other Donations to the City of Elk River to make comments, ask questions, or recommend
updates.
While a PILOT and other donations to a City from its municipal utilities are typical, these
contributions should never inhibit ERMU’s ability to make repayment on debt, cause ERMU to
become non-competitive, or inhibit needed investment in personnel or infrastructure to meet
the needs of customers.
ATTACHMENTS:
ERMU Policy – G.2a1 – Payment in Lieu of Taxes (PILOT) and Other Donations to the City
of Elk River
______________________________________________________________________________
Page 1 of 1
35
COMMISSIONPOLICY
Section:Category:
GovernanceGovernance Policies
Policy Reference:Policy Title:
Payment in Lieu of Taxes and Other
G.2a1
Donations to the City of Elk River
PURPOSE:
The success of ERMU is linked with the success of our community. And the success of our
community is linked with the operation of our city government and ERMU. ERMU was
purchased by the City of Elk River in 1945 and separate governance was created per State
Statute in 1947. Although governedseparately, ERMU is still an important component of our
local government and our city services.
It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other
donations to their city, regardless of a separation of governance. Although typical, this
become non-competitive, or inhibit needed investment in personnel or infrastructure which may
r customers. For these reasons the PILOT and other
donations should be reviewed at least once every five (5) years by the ERMU Commission.
POLICY:
The PILOT and other donations to the City of Elk River shall be as follows:
1.Payment in Lieu of Taxes (PILOT)The PILOT transfer from Elk River Municipal Utilities
electric customers,except customers qualifying for the Transmission TransformedService
rate,within the corporate boundaries of the City of Elk River.
For the customers that qualify for the Transmission TransformedServicerate,thePILOT
transfer from ERMU to the City of Elk Rivershall befour percent (4%) of themargin
remaining from the evenly split charge per kWh to cover dispatching,billing, and
administrative costsincurredby the wholesale power provider and ERMU.
2.Donated ElectricityElk River Municipal Utilities shall donate all electricity to the City of
Elk River for street lights and signal lights.
______________________________________________________________________________
Page 1of2
36
ERMU Commission PolicyG.2a1Payment in Lieu of Taxes and Other Donations to the City
of Elk River
______________________________________________________________________________
3.Donated WaterElk River Municipal Utilities shall donate water for use by the Elk River
Fire Department (ERFD) for the purpose of extinguishing fires within the City of Elk River
and other cities under contract with the ERFD.
For the purpose of creating ice rinks for public/ non-enterprise use, ERMU shall donate water
for use by the Elk River Parks Department.
Elk River Municipal Utilities shall donate water for the use by the Elk River Streets
Department for the use of street sweeping.
4.Donated LaborBecause of specialized skills and equipment, ERMU may be able to provide
a better value to our community by donating labor to the City of Elk River. For example,
ERMU has trained employees and the equipment to hang banners where the City does not.
In this example, ERMU is able to provide this donated service to the City for less cost than a
third party, creating greater value to our community. For such situations, ERMU shall donate
labor to the City of Elk River, as appropriate, where a greater value is created for our
community and where ERMU is not subjected to undue burden.
In addition to hanging banners, other examples include: maintenance of street lighting,
relamping signal lights, locating underground fiber optics and/or other facilities,
administration costs associated with the billing of city franchise fees, installation of
temporary lighting, relamping of city ball field lighting, installation and/or maintenance of
POLICYHISTORY:
Adopted December 6, 1994
Revised June 6, 2008
Revised July 2, 2013
Revised October 13, 2015
Revised January 1, 2016
Revised October 8, 2019
Revised May 11, 2021
______________________________________________________________________________
Page 2of2
37