7.1. SR 12-07-2015 - Laserfiche WebLink

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\ I Since the September meeting, staff have had discussions with the City about an option to JC maintain the level of donation to the city and reduce the administration burden and risk for error. ERMU and city staff have been evaluating increasing the PILOT percentage contribution from 3% to 4%, and eliminating the donated electricity not associated with street lights and signal lights. An analysis of the donated electricity, less the usage by street and signal lights, is equivalent to 0.8% of revenue generated from electric sales for Elk River customers. An increase in the PILOT of I% with an offsetting reduction for the elimination of donated electricity (with the exception of street and signal lights) would nearly be a cash neutral policy change. The city would be seeing an increased expense because they would be billed the electric usage, but the City would also have an offsetting source of revenue in excess of the increased expense by approximately $38,000 based on projected 2015 sales numbers. For ERMU, this change would eliminate significant staff time to record and post these donations through the billing system and the general ledger. It would also give a more transparent representation of the actual costs of the City facilities. As ERMU grows within the corporate boundaries of the City of Elk River, the additional increase in revenues will be further increased with the I% change to the PILOT, resulting in additional funds contributed to the City. It is extremely likely that ERMU's growth in sales will be a higher rate than the growth of city government and the growth in city facility electric usage. This change is near cash neutral for the City now, but will result in increased PILOT for the future. Due to the 2016 budget approval process, utilities and city staff agree that a January 1, 2016, implementation is better. However, to allow city staff to incorporate this proposed change into their budget, staff looks to get commission approval immediately. This proposed revision is attached separately and reflects the policy change proposed for October 13, 2015. ACTION REQUESTED: • Staff recommends the Commission adopt effective immediately the policy revisions to "ERMU Policy 8.13 — Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River" which reflects a delay for PILOT related to the March 20, 2015, electric service territory transfer agreement. • Staff recommends the Commission adopt the second proposed policy language change to be effective January 1, 2016, which will result in a shift in policy mechanics increasing the PILOT from 3% to 4% and eliminating the donation of electricity with the exception of street and signal lights. ATTACHMENTS: • Proposed October 13, 2015, revision to ERMUPolicy 8.13 —Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River • Proposed January 1, 2016, revision to ERMU Policy 8.13 —Payment in Lieu of Taxes (PILOT) and Other Donations to the City of Elk River PR�ERfO BI {� Page 2 of 2 NAMPE POrdR�k IOVIGN POWERED TO SERVE V/BE P