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Elk River <br /> Municipal, Utilities UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> Elk River Municipal Utilities Commission Troy Adams, RE. —General Manager <br /> John Dietz—Chair <br /> A[ Nadeau—Vice Chair <br /> Daryl Thompson—Trustee <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> October 13, 2 0 15 4.2 <br /> SUBJECT- <br /> Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River <br /> BACKGROUND: <br /> Minnesota municipal utilities do not pay taxes to their city. It is very typical for the utility to <br /> provide a payment in lieu of taxes (PILOT). ERMtJ has a policy which outlines the details of the <br /> P,IL�OT and other donations to the City of Elk River. This policy is reviewed at least once every <br /> five years; the last policy changes were made on Ady 2, 2013, <br /> DISCUSSION: <br /> Delay for PILOT for Electrical Service I I erritory Transfe <br /> On September 8, the commission reviewed proposed changes to the PILOT Policy that would <br /> delay PILOT for the areas acquired from Connexus Energy through the March 20, 2015, <br /> electric service territory transfer agreement. The PILOT was proposed to be delayed for each <br /> customer acquired until the loss of revenue(LOR)payments that are outlined in tile <br /> agreement would complete. These LOR payments are made for 10 years after the acquisition <br /> with a few exceptions for municipal development. <br /> The commission discussed the proposed policy revisions and directed staff to strengthen the <br /> language to be specific to the March 20, 2015, electric service territory transfer agreement. <br /> This would eliminate any confusion regarding PILOT for LOR payments related to previous <br /> ,acquisitions. The proposed policy has been updated to reflect the commission's request, <br /> Shift of Policy Mechanics fi-orn Donated Electricity,to,PILOT <br /> The current PILOT Policy outlines in section 3.0 Donated Electricity stating that ERMU <br /> .'shall donate all electricity to the City of Elk River for all of their facilities not associated <br /> with enterprise funds of the City of Elk River." The adn-iinistrative process associated with <br /> this donation is extremely burdensome. Due to its manual nature, this process is also sub�ject <br /> to hurnan and keying errors, <br /> 14- P 0 W E a I I T <br /> Page I of2 <br /> N A.!T�o <br /> Reh-bie PWjc P T S <br /> o"wer Provider <br /> 59 <br />