3.0 ERMUSR 09-20-2006ELK RIVER MUNICIPAL UTILITIES
REGULAR MEETING OF THE
UTILITIES COMMISSION
August 22, 2006
Members Present: Jerry Takle, President; John Dietz, Vice Chair; James Tralle, Trustee
Staff Present: Bryan Adams, General Manager; Glenn Sundeen, Line Superintendent;
David Berg, Water Superintendent; Theresa Slominski, Finance Director/Office
Manager; Troy Adams, Engineering Manager; Judy McSpadden, Recording Clerk
Others Present: Lori Johnson, City Administrator
1. Call meeting to order August 22, 2006
President Jerry Takle called the August 22, 2006, meeting to order.
2. Consider Utilities Agenda
James Tralle moved to approve the August 22, 2006, Utilities Agenda. John Dietz seconded
the motion. Motion carried 3-0.
3. Consider Consent Agenda
James Tralle moved to approve the Consent Agenda as follows:
July Check Register
July 11, 2006, Minutes
Financials
John Dietz seconded the motion. Motion carried 3-0.
5.1 Staff Up-dates
Bryan Adams said he will be meeting with United Health Care next week to discuss a
future Data Center building in Elk River. This health care facility will be a large user and
require another main feeder. CIP Funds for 2006 have been exhausted. The remaining rebates
will still be honored but not paid until January 2007. In 2007 GRE will assist with the large user
rebates. There will be an open house at the Elk River Landfill on Thursday, August 24~' from
9:00 a.m. to 11:30 a.m. with a dedication ceremony scheduled for 10:00 a.m. The school district
would like to utilize their existing well at Twin Lakes Elementary for irrigation purposes. They
also desire to add an irrigation well at Parker Elementary. Elk River Municipal Utilities policy
and City ordinance requires them to connect to the municipal water system if it is available.
They have contacted the DNR and have been told that they could drill their own well. Staff will
contact the DNR for further clarification. Bryan Adams, Theresa Slominski and Jerry Takle
recently attended an MMUA conference. Steve McDonald covered internal checks and balances
to avoid any discrepancies, and there was also a presentation on Minnesota Sales and Use Tax
issues.
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Regular meeting of the Elk River Municipal Utilities Commission
August 22, 2006
Glenn Sundeen discussed the current projects. The Otsego Substation is now on line, County
Road 42 rebuild is in progress, County Road 33 rebuild will need numerous poles moved, and
Station 14 Bank 2 transformer is in place. Jerry Takle said it was reported at the MMUA
conference that Arc Flash incidents have been increasing and wanted it known that the Board
wanted the workers to be careful and that good work practices make a difference.
David Berg reported July was an extremely good month as there were 16 security systems
sold. The summer help accomplished a lot of work this year. Many hydrants were painted,
water valves were exercised, hydrants were flushed, valves were located for the GPS system,
and off peak receivers were tested.
Lori Johnson stated the water projects for County Road 42 and County Road 12 were
approved.
Theresa Slominski did not have any additional updates other than the ones that will be visited
in the meeting.
Troy Adams appreciated the recent trip to Waukeska with Bryan Adams to inspect the
transformer for Station 14 Bank 2.
5.2 Update Brigs Property Purchase
Elk River Municipal Utilities made an offer of $288,000 for the Briggs property. There are
some issues that need to be resolved prior to sale of property. The septic system did not pass
inspection so an above ground mound system needs to be installed, or it would need to hook up
to City sewer and water which would cost approximately $32,000. Tearing down the house is
the other option at a cost of about $12,000. This will be revisited at a future meeting when more
information is available as to what the current owner chooses to do.
5.3 Update MN Department of Revenue
Bryan Adams updated the Commissioners on the recent Minnesota Sales and Use Tax
Audit. The period audited was 2003 through June 2006 and some items of concern were found.
The connection fees for all electric and commercial water are viewed as taxable. (This is still
being debated by other utilities.) The electricity that is donated to the City is taxable as a use tax.
The capital equipment bought for the primary distribution system is not taxable (wire, poles,
transformers, and associated material) but we need to pay tax when purchasing and then request
a rebate at the end of the year to get the funds returned. The State can then accrue the interest
throughout the year. For 2003 and 2004, sales tax reported versus sales tax paid seem to be
another issue which should be further investigated, and Bryan Adams feels the auditors should
look into this. Jerry Takle asked Lori Johnson if the City was required to pay taxes on their SAC
fees. Lori Johnson responded that they have had Sales and Use Tax Audits and have not been
required to pay taxes on those funds.
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Regular meeting of the Elk River Municipal Utilities Commission
August 22, 2006
5.4 Update Community Wide Internet System
At the last couple of Elk River Municipal Utilities Commission meetings, the possibility of
providing community wide broadband Internet service for the Elk River area was discussed.
Northstar Access is a reputable local provider of voice, video, and data service and were the
logical people to contact. Northstar Access has decided to do a pilot study involving 45
customers in the Co Rd 33 area using unlicensed wireless broadband without any financial
support form Elk River Municipal Utilities. This pilot study should be operational in a couple of
months. Staff will update Commissioners of the progress.
5.5 Update ASR Well Progress
The aquifer storage and recovery project finally received the go ahead from EPA. This
project was feasible a few years ago however, the anticipated cost now would be approximately
$1,100,000 and the cost of a new treatment plant is $1,300,000. The project is not financially
feasible at this time and staff recommends tabling until future needs require this to be revisited.
6.1 Review and Consider Bid Tab for County Road 42 &
Great River Centre of Otsego Cable Installation
At the July 11, 2006, Elk River Municipal Utilities Commission meeting, the upcoming
County Road 42 and Great River Centre electric cable installation projects were discussed.
Great River Centre is the new Otsego commercial development that will house Super Target and
associated businesses. County Road 42 in Otsego is also being rebuilt to accommodate Great
River Centre development. At the July 11~' Elk River Municipal Utilities Commission meeting,
staff was authorized to award these projects to the lowest responsive bidder to accommodate the
construction schedule.
Motion by James Tralle to approve staff recommendations for MP NexLevel, LLC the lowest
responsive bidder, be awarded both projects. John Dietz seconded the motion. Motion carried
3-0.
6.2 Review DNR Water Appropriation Repuest
Elk River is consuming large quantities of water. This year we will be close if not
exceeding our DNR appropriations of 875 million gallons. A letter to DNR was reviewed
requesting the annual water appropriations be raised to 1400 million gallons. The letter also
explains the reason for the increase and our conservation efforts to minimize water use.
6.3 Review 2007 Budget Schedule
Staff has started the process of assembling the 2007 budget. The proposed schedule for the
budgeting process was reviewed. Due to the expanding water infrastructure, an apprentice water
operator is being budgeted for 2007. The need for a CAD technician/locator has been put off
until the 2008 time frame.
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Regular meeting of the Elk River Municipal Utilities Commission
August 22, 2006
6.4 Review & Consider Policy for Return -Unpaid Items
The Elk River Municipal Utilities has an NSF policy in place that was passed December 15,
1998. The policy is outdated and needs to be revised. Staff recommends the Commission adopt
the following:
"Any items given in payment for services that are returned by the bank marked unpaid shall
be imposed a $20.00 charge, plus assessed the penalty of 10% if not paid by the 15~' of the
month."
Motion by James Tralle to approve the revised NSF policy. John Dietz seconded the motion.
Motion carried 3-0.
6.5 Review Investment Committee Proposals
The investment committee (Bryan Adams, General Manager; John Dietz, Commissioner;
and Theresa Slominski, Finance Director/Office Manager) discussed options and
recommendations for Commission approval. Three changes were addressed.
1. Having the reserve categories of Bond Reserves, Emergency Reserves, and Unrestricted
Reserves, instead of Emergency Reserves and Construction Reserves.
2. Having the desired reserve balances be whatever the mandated bond covenant requirements
are for Bond Reserves (currently $445,900). Having $3,100,000 for Electric Emergency
Reserves, and $1,500,000 for Water Emergency Reserves. The Electric Emergency
Reserves amounts were arrived at by allowing $1,100,000 plus three months operational
expenses, excluding purchased power costs for electric, and $1,000,000 plus three months
operating expenses for water. The amount for Unrestricted Reserves would be $432,919.27
for electric and $10,000 for water.
3. The Reserves monthly contribution of $20,000 would be split 75/25 to electric and
Water, respectively, instead of 50/50 as has been. These contributions would be to the
Emergency Reserves balances.
The line of credit is not an option and so can be disregarded. Since short term borrowing is
not an option, the need to contribute to and build the reserves is even greater.
Motion by James Tralle to approve the changes presented to the Commission. John Dietz
seconded the motion. Motion carried 3-0.
6.6 Review Proposed Water Main Proiects
The 2006 water budget contained two water main projects. One is a loop dead end water
main at Guardian Angels for $12,000 and the second is a loop water main at 175' Avenue to
improve Johnson Street water tower for $75,000.
The water main loop for 175' Avenue was replaced with the Highland Road water main
project due to the rebuild of Highland Road.
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Regular meeting of the Elk River Municipal Utilities Commission
August 22, 2006
Guardian Angels is proposing an addition to their facilities which will necessitate their water
main being extended for fire protection and hydrants, and loop their internal water lines.
Utilities proposes to extend the water main at our cost, estimated to be in the $55,000 range,
thereby closing the water main loop and providing better fire protection to the commercial
buildings adjacent to Guardian Angels. Due to Guardian Angels construction schedule, staff
recommends authorization be given to proceed with this project for completion in 2006.
The looping of the water main at 175' to improve Johnson Street water tower was also put on
hold due to easement issues and additional funds needed for the Highland Road project. Wells
#7 and #8 feed Treatment Plant #7 but the treatment plant has been experiencing high pressure
issues when both wells run at the same time. When we construct Well # 11 this will intensify the
problem. The solution is to construct another 12" water main from Treatment Plant #7 south to
connect to the water main on County Road 12. This addition will also reinforce the flow through
the 10" proposed main from 175' Avenue to Trott Brook Farms South Addition. We are
proposing to do these projects together at an estimated cost of $270,000 for 4500' of water main.
Staff is recommending this project start the engineering process this year for early 2007
construction and be complete by late May 2007 for the summer peak. These water mains will be
directional bored in public right-of--way instead of private easements.
Motion by James Tralle to proceed with the water main extension and loop for the Guardian
Angels project, and the looping of the 175' Avenue water main to improve Johnson Street water
tower. John Dietz seconded the motion. Motion carried 3-0.
Other Business
John Dietz relayed the decision the City Council made regarding the assessment fees for the
Highland Road area would be $15,000. This does not include the SAC and WAC fees along
with the contractors fees to install the lines to the facility. This is an optional hook-up area and
homeowners do not have to hook-up. The City has had complaints regarding having several
utility boxes in their yards. This will be looked into for possible future policy mandates.
The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will
be Wednesday, September 20, 2006.
President Jerry Takle adjourned the regular meeting of the Elk River Municipal Utilities
Commission at 4:50 p.m.
spectfully s i
Judy Mc padden
Recording Clerk