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05-12-2009 ERMU MINELK RIVER MUNICIPAL UTILITIES REGULAR MEETING OF THE UT11.1:TIES COMMISSION HELD AT UTILITIES CONFERENCE ROOM May 12, 2009 Members Present: John Dietz, President; Jerry Gumphrey, Vice Chair; Daryl Thompson, Trustee Staff Present: Troy Adams, Director of Operations; Theresa Slominski, Finance Director/Office Manager; David Berg, Water Superintendent; Wade Lovelette, Technical Services Superintendent; Judy McSpadden, Recording Clerk; Richard Wagner, Michael Price, Richard Cline, Adam Freiberg, Rick Schaust Staff Absent: Mark Fuchs, Line Superintendent Others present: Lori Johnson, City Administrator; Peter K. Beck, City Attorney from Gray, Plant, Mooty, Mooty & Bennett; Vance Zehringer, Conservation Improvement Program Administrator for ERMU 1. Call meeting to order May 12, 2009 John Dietz called the May 12, 2009 meeting to order at 4:00 p.m. 2. Consider Utilities Agenda John Dietz added an item to be discussed under Other Business. Daryl Thompson moved to approve the May 12, 2009 Utilities Agenda. Jerry Gumphrey seconded the motion. Motion carried 3-0. 3. Consider Consent Agenda Staff answered some questions from the Commissioners. Jerry Gumphrey moved to approve the Consent Agenda as follows: April Check Register Apri114, 2009, Minutes Financial Reports Daryl Thompson seconded the motion. Motion carried 3-0. 4.1 Review Company Vehicle Take-Home Practice At the April ERMU Commission meeting, staff was directed to look into the taxation laws of the company vehicles that are taken home by employees. 'The League of Minnesota Cities Page 2 Regular meeting of the Elk River Municipal Utilities Commission May 12, 2009 referred staff to IRS Representative Steve Bruzda for a definitive ruling. The IRS ruling was that tax should be applied for all vehicles taken home with the exception of the Security vehicle. The purpose of the on-call vehicle was to ensure better response in any emergency however this did not meet the ruling of the IRS for being "public safety" vehicles. Discussion followed. John Dietz surveyed other utilities and found some do not take home vehicles year round, just during the summer storm season. Lori Johnson stated the City of Elk River does not have anyone on- call, therefore no employee takes home a vehicle. Jerry Gumphrey stressed the importance of having equipment on hand. John Dietz stated he could understand the need for the on-call person to have the vehicle along with the Superintendents, but did not agree with the Director of Operations taking home a vehicle. John went onto say that the Line Superintendent and the Water Superintendent should be able to take care of any situation and not have to call in the Director of Operations. Taxing methods were discussed along with the need to make the change in the employee handbook. Daryl Thompson said ERMU needs to follow the guidelines of the IRS with the least impact on the employee. Daryl said he also agreed with two electric vehicles and two water vehicles for take home vehicles, along with the Security van, and that the Director of Operations should carry a radio for communication. Jerry Gumphrey again stressed the need for additional vehicles during the storm season. John Dietz moved effective June 1, 2009 to allow take home vehicles for electric on-call, water on-call, electric supervisor, and water supervisor, and Security Technician. Daryl Thompson seconded the motion. Motion carried 2-1. Jerry Gumphrey opposed. At this time Daryl Thompson said he had something he would like to say. There have been a lot of changes made and that can be difficult but sometimes are necessary. There is a whole new management team that has been put onboard over the last few months and he would hope the Utilities Commission will let them do their jobs without any micromanaging. John Dietz asked staff how the vehicle tax issue was going to be assessed. Further discussion followed regarding tax implications. Consensus was to choose the one that would be the least burden on the employee. Jerry Gumphrey directed staffto check on the need for additional take home vehicles during the summer storm season and update the employee handbook. 4.2 Jackson Street Water Tower Update At a previous ERMU Commission meeting, staff was directed to have the Jackson Street water tower inspected. The State of Minnesota Public Health Lab results of the paint on the tower showed high lead contaminants on the tank legs. Page 3 Regular meeting of the Elk River Municipal Utilities Commission May 12, 2009 David Berg reviewed the results of the visual inspection and the lab results on the paint. The tower appears to be structurally sound. The cap or roof of the tower needs to be checked to make sure the J-hooks that hold the top on are still secure. Providing the J-hooks are holding, the tower could remain for a few more years. David Berg will monitor the tower's condition and notify the Commission when necessary. Consensus was to table this issue until a situation arises with the tower. 4.3 Review and Consider Wholesale Power Supply Options On April 15, 2009, John Dietz and ERMU staff met wrth representatives form Central Minnesota Municipal Power Agency (CMMPA) to review power supply opportunities through the Big Stone II project and services available through their agency. Due to the concerns expressed at last months ERMU Commission meeting, CMMPA has provided an option to join as anon-voting associate member for the term of one year. This one year contract would cost $2,500 per month totaling $30,000 for the year. This associate member status would allow ERMU to "piggy back" on a base load planning study being conducted by R.W. Beck. If ERMU were to hire R.W. Beck independently to conduct the same study it would cost over $50,000. Staff recommends entering into this one year associate member contract with CMMI'A which includes the R.W. Beck study and presentation. Vance Zehringer commented that the Big Stone II project was a good opportunity. John Dietz asked Attorney, Peter Beck if he noticed any red flags in the contract, he responded only the risk. Daryl Thompson moved to join CMMPA as an associate member. Jerry Gumphrey seconded the motion. Motion carried 3-0. The Utilities Commission would like to set up a tentative joint meeting with City Council for June 8~' with CMMPA and R.W. Beck. Troy Adams will contact the parties and let Lori Johnson know if June 8~' will work. 4.4 Review and Consider City Attorney Contract Rates At the Apri114, 2009, ERMU Commission meeting, the Commission directed ERMU use City Attorney Peter Beck for all future legal issues. The quotation for the contract rate options was discussed. The legal expenses of the previous three years were reviewed. John Dietz commented based on the history it would be better to go to the hourly rate versus a monthly retainer. Attorney, Peter Beck said he would be willing to take a lower retainer amount and revisit the issue at the end of the year. Page 4 Regular meeting of the Elk River Municipal Utilities Commission May 12, 2009 Jerry Gumphrey moved to contract Attorney, Peter Beck on a $1,000 per month retainer and revisit this at year end. Daryl Thompson seconded the motion. Motion carried 3-0. 4.5 Review and Consider Rebates to Encourage Automatic Sprinkler Controls At the April ERMU Commission meeting, a proposal was presented to offer rebates for properties that install the "SMART" irrigation controllers. After further investigation, it was discovered that there are additional fees involved in the audit and possible upgrade of the existing irrigation system. Staff would like to modify the previous rebate amounts to $250 for a single residential conversion and $500 for Associations, Commercial, and Industrial conversion. The credit would be applied to their monthly water bill and spread out over a 10 month period. John Dietz asked how the audit would be verified. David Berg replied there would be a form to be signed by the auditor. Jerry Gumphrey moved to approve the increased rebates of $250 for single family homes and $500 for Associations, Commercial, and Industrial properties that install the "SMART" irrigation systems. Daryl Thompson seconded the motion. Motion carried 3-0. 5.1 Review and Consider Shared Personnel Agreement of City Public Works Director The agreement between ERMU and the City of Elk River for the City Public Works Director to supervise the Water Superintendent was reviewed. Jerry Gumphrey moved to approve the Shared Personnel Agreement of the City Public Works Director to be presented to the City Council on Monday, May 18, 2009 for approval. Daryl Thompson seconded the motion. Motion carried 3-0. 5.2 Review Cash Flow Projections Cash flow projections were discussed. Discussion followed regarding the process used and assumptions made. No action taken. 5.3 Review and Consider Bids for Co Rd 1 Feeder Project On May 6, 2009, bids were received for the cable installation of the County Road 1 project. Staff is recommending awarding to the lowest responsive bidder, Underground Piercing. Jerry Gumphrey moved to award the County Road 1 electrical cable installation to Underground Piercing. Daryl Thompson seconded the motion. Motion carried 3-0. Page 5 Regular meeting of the Elk River Municipal Utilities Commission May 12, 2009 5.4 Review Water Quality Report The 2008 Water Quality Report to be mailed to all water customers was reviewed. Jerry Gumphrey moved to approve the 2008 Water Quality Report as presented. Daryl Thompson seconded the motion. Motion carried 3-0. 6.1 Staff Updates David Berg clarified the correct amount for updating water hydrants for the Morton Avenue job would be $15,000. David also discussed a situation regarding a customer that is not following the watering restrictions. After talking to Lori Johnson it was explained an ordinance would need to be adopted and published prior to enforcing. Daryl Thompson moved to pass the Water restricting ordinance. Jerry Gumphrey seconded the motion. Motion carried 3-0. Troy Adams updated the Commission on the bore rig that was discussed at last months meeting. Mark Fuchs checked into costs and found them to be very expensive, however the hog that is used for smaller jobs would be feasible and under the $10,000 threshold. Daryl Thompson asked if a lot of resumes for the Lineman position have been received. Troy Adams replied 75 plus so far and plans to go through them next week with Mark Fuchs. Other Business John Dietz directed Theresa Slominski to calculate the savings of employee costs with the restructuring not replacing two lineworker positions, and a zero percent wage increase. He would like to see that amount used instead of passing on to the customers a PCA. Jerry Gumphrey said he would like to hold onto it and apply it against next years rate increase. Troy Adams stated the budget was prepared with conservative estimates for the data centers in the hopes of being able to offset any PCA's with their ramped up service. Vance Zehringer reported UHG is still planning on ramping up power as they originally projected so there might not be a need for a PCA yet. John Dietz thought there were plans to charge PCA to the customers. Staff responded that hasn't been necessary yet and ERMU has incurred and absorbed the PCA's since the beginning of the year. 6.2 Set Date for Next Meeting The next regularly scheduled meeting of the Elk River Municipal Utilities Commission will be Tuesday, June 9, 2009, at 4:00 p.m. Page 6 Regular meeting of the Elk River Municipal Utilities Commission May 12, 2009 President John Dietz adjourned the regular meeting of the Elk River Municipal Utilities Commission at 5:40 p.m. Minutes prepared by Judy McSpadden. .~ hn Dietz resident, E Commis' n -' c--~'~ ~ Tina Allard City Clerk