5.4 EMRUSR 12-10-2024�i
Elk River --�-
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson — General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
December 10, 2024
5.4
SUBJECT:
Disposition of City's Utility by Referendum
ACTION REQUESTED:
Recommend City Council approval of the attached Resolution
BACKGROUND:
The right of citizens to determine the disposition of their municipal utilities through referendum
is protected due to enactment of 1949 Minnesota Laws Chapter 119, section 42, codified as
Minnesota (MN) Statutes, Section 412.321, subdivision 4. Although State law mandates a two-
thirds affirmative vote from the community for such sales or closures, the statute has not been
enforced in recent sales.
At the 2024 Minnesota Municipal Utilities Association (MMUA) Summer Conference, Ursula
Schryver, a Senior Vice President with the American Public Power Association (APPA),
presented five recent case studies of MN municipal utilities selling to larger cooperative or
private utility companies. According to MMUA's 2024 Annual Report, however, four of those
utilities were sold without a required referendum.
According to APPA, public power utilities are typically being sold in cases where the system has
not been maintained, the cost of upgrading the system substantial, and/or when there are
other financial stresses on the utility or community. Private utilities often promise to replace
aging system components, but these upgrades typically lead to higher rates, lower customer
satisfaction, and slower response times after outages.
DISCUSSION:
With the support of a strong governing body, APPA states municipal utilities proudly bring
tremendous value to the city, its citizens, and customers. Local control of utility means
enhanced reliability, faster response times, and a singular focus on the customer. Additionally,
municipal utilities provide financial support to their local governments through payments in lieu
of taxes, in kind labor contributions, local employment, and support of local businesses.
It is MMUA's belief that awareness of this referendum requirement empowers voters served by
municipal utilities with the ability to shape their communities as they see fit and in accordance
with their values and state statute. The attached MMUA model resolution provides a locally
binding process that requires a two-thirds community vote before any sale or closure.
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NEXT STEPS:
The ERMU Commission's approval of the resolution is needed prior to placing the attached
resolution on the Elk River City Council agenda for adoption. If approved, ERMU staff will work
with city staff to facilitate the council approval process.
ATTACHMENTS:
• Resolution - Voter Referendum Required for Utility Disposition
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