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INFORMATION #3 08-07-2006 ELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UTILITIES COlVIMISSION July 11, 2006 Members Present: Jerry Takle, Presidellt; Jo1m Dietz, Vice Chair; James Tralle, Tlustee Staff Present: Bryan AdalTIs, General Manager; Glenn Sundeen, Line Superintendent; David Berg, Water Superintendent; Theresa Slominski, Office Manager; Troy Adams, Engineering Manager; Jlldy McSpadden, Recording Clerk Others Present: Lori J omlSon, City Administrator; Bob Pearson, IT Manager for City of Elk River 1. Call meetin2 to order Julv II.. 2006 President Jeny Takle called tIle July 11, 2006, 111eeting to order. 2. Consider Utilities A2enda Janles Tralle moved to approve the July 11, 2006, Utilities Agenda. Jo1m Dietz seconded the motion. Motion carried 3-0. 3. Consider Consent A2enda J olm Dietz had qllestiollS 011 the fulancials, staff responded. He asked for further clarificatiol1 on the tree tri1nming expenses. James Tralle moved to approve the Consent Agenda as follows: June Check Register June 6, 2006, Minutes FUlancials John Dietz seconded tile motion. Motion carried 3-0. 5.1 Staff Up-dates ~rya11 Adams updated the Commission on the Substation projects. Otsego is scheduled to have a nlobile sub brought in while conversion is being done. The Station 14 Substation is on scIledule. Inspection will be done on the Waukesha tratlsformer for the data center next week. Delivery for this transfonl1er will be mid August. Electric llsage is up 7.130;0 and water usage is up 24.63%. There is clliTently 5 to 6 millions gallons of water being pumped per day. These percel1tages do not include the additional 17 conunerciaIlindustrial buildings currently under construction plus the Data Center. Glel11l SU11deell reported the lllstallation of tIle lUldergroU11d 1000 KCMIL feeder \vas cOlnplete and now the crews would be dOlllg the te11nlllations. This job was difficult but went very well due to good contractors. The Otsego feeder ulstallation is almost complete and project is gOlllg well. Page 2 Regular meeting of the Elk River Municipal Utilities Commission July 11, 2006 David Berg said tIlere were 11 new security accounts added in Jlll1e and most of those were :fi:onl referrals. Sununer staff is painting hydrillltS. The spin doctor is being utilized for the water valves and recording the GPS coordinates alollg with the valve operating torque for future referellce. Theresa SlonUnski infanl1ed the Commission of the new employee hired to replace the previous employee that decided not to return fraill maternity leave. Theresa is working with the City regarding a CDL policy and will keep the Commission apprised. R.W. Beck is doing a rate study and in conjUllction with this, cash reserves will be addressed. Theresa will be bringing cash reserve information back to the Corrnnission for approval after the investment committee meets. There will be a Minnesota Sales and Use Tax audit the end of July. Several other utilities llave been audited and llave had to pay monies related to donated utilities not belllg taxed. 5.2 Revie\v Co Rd 40 Rebuild Proiect With tIle Co Rd 40 rebuild project scheduled to start soon, the cost associated with the trunk water main installation has been projected at around $800,000. As in past discussions, the issue has been who would be financing this project. After further discussion with Lori Johnson, City AdmiI1istrator, she indicated that the City would fund the trunk water main. The remaliUng question is if there will be allY interest payments assessed to the utilities. Lori Johnson said the trunk water main issue is a special circumstance and as long as the future developnlent progresses as projected there should not be a long period of time before the trunk \vater main cotlld be assessed. Jo1m Dietz added that this was a urllqlle situation and didn't feel tile City would require interest payments on this trunk water main at this time if it remained short term, however, lle did feel that Elk River Municipal Utilities should have proper reserves for future instances like this. 5.3 Consider Community Wide Internet System TIle last couple of conunission meetings have included discussiollS regarding a COl1U11tmity wide broadballd internet system. Currently there are tlrree providers in the market ill Elk River and they are Qwest, Charter COlmnunicatiollS, and NortIlstar Access. Discussion followed as to the requirenlents needed if Commission desires to proceed with tIus service. TIle 900 Mhz wave is tmlicensed and, therefore free but there are other wireless devices that can cause lllterference, such as baby monitors and garage door openers. Bryan Adams said Nortl1star Access is waiting for a possible 700 Mhz system to become available. Discussion followed regarding the current 900 Mhz that is being utilized by Buffalo and acknowledging that there are interferen~e problelTIs. Tllere is a possibility of leasing an antelula from GRE for a pilot project covering a 2 to 3 mile directional radius on the north east side of Elk River. Bob Pearson discussed the possibilities and problems involved with the 900 Mhz systeln. J anles Tralle felt tlus should be looked into further and brought back to a future COlnmission meeting what the costs and probabilities would be. Page 3 Regular Ineeting of tIle Elk River Municipal Utilities Cormnission July 11, 2006 5.4 Consider LFG'En2ine Maintenance The Elk River Municipal Utilities owns a landfill gas to electric generation facility at the Elk River LaIldfill. The installation of the 4th engine/generator was completed on 6-29-06. The commercial operation date for the 4th engine is 7-1-06. The other three engines are conslll1li11g excessive quantities of oil, which are causing the heads to fail. The Elk River Landfill has tried a number of differellt solutions but to no avail. Elk River Landfill and Utility staff are reconnnellding the piston rings be replaced on these engines at an approximate cost of$65,000. Tile repair should get us to the scheduled overhaul in 18 months. Because this is the lowest cost option, staff recommends this repair be completed. Motion by James Tralle to approve the repair of the three engines at the LFG plant. John Dietz seconded the illotion. Motion carried 3-0. 5.5 Revie\v & ConsiderPropertv Purchase At the March 14, 2006, Elk River Municipal Utilities Corrnnissionmeeting, the possible sale of tile Briggs property was discussed. This property lies directly east of our power plant alld contains 6.28 acres with about 40% being in the flood zone. The appraised value oftrus property is $288,000. To secure room for future facility expansion at our operation center, staff reconunends this property be purchased. . City planning department is concerned as this is viewed as a residential area. They would prefer the facility be moved elsewhere to a more suitable location. There will also be much resistculce to allow some tree removal to Inake roonl for future facilities. Another complicating factor is finances. The Elk River Municipal Utilities is very strapped for cash this year. This purchase may possibly incorporate delayed payment or a stepped pa)'lnel1t structure. JOIUl Dietz asked staff to check on the possibility of the sale price being lower thall the appraisal price. Motion by James Tralle to approve the purchase of the Briggs property. Jolm Dietz seconded the motiol1. Motiol1 carried 3-0. 6.1 Revie\v & Consider 2006 Write-ofrs The list of accoUllts sent to collection and added to the yearly write-offs were reviewed. This will be dOlle three tunes a year instead Ollce at the elld of the year. The currellt write-off totals through April 2006 were $22,441.88. Motion by James Tralle to approve the write-offs through April 2006. John Dietz seconded the nlotioll. Motion carries 3-0. Page 4 Regular meeting of the Elk River Municipal Utilities Conunission July 11, 2006 6.2 Revie\v Electric Utility Issues Bryan Adams updated the Conunission on the future of transmission projects. GRE and Excel are going ahead along with Midwest Municipal Transmission Group (MlvITG) with plans on transmission ownership. This is very costly but is needed for future electric reliability. VariOllS electric isslles were discussed as they relate to M1YfUA. 6.3 Revie\v Water Service Material Issues (Verbal) ERMU's policy currelltly requires copper pipe be used for water service lines from tIle lllaill to the house or building. Copper is becoming very costly. Staff is looking into different types of piping that would be allowed and approved by the state code. A couple different types of polyethylene pipe and connections were displayed. Staffwill continue to look into this and will revisit this at a later meeting. Other Business There is a bid due the end of July for a road improvement project in Otsego that should be awarded as soon as possible. Staff asked the Conunission for approval to the lowest responsive bidder. Conumssion unarrimously approved. The next regularly scheduled meeting of the Elk River Municipal Utilities Conunission will be Tuesday, August 22, 2006. The Septelnber meeting was also scheduled at this time for Wednesday, September 20, 2006. President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities Conunission at 5:30 p.m. Respectfully submitted, Judy McSpadden Recordu1g Clerk