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Both responded. Mr. Berg reached out to the Commission to see if they had any additional questions on the management letter or the annual financial report. Chair Dietz had a question on page 18 of the annual financial report. He inquired as to what the "Transfers to Other City Funds" line item was for. Staff responded that it was the 4% revenue transfer for the payment in lieu of taxes (PILOT). Chair Dietz also had a question on the Long-term Debt referenced on page 19; he asked if everything referenced, with the exception of the 10 million dollar bond for our buy in to Minnesota Municipal Power Agency(MMPA), would be maturing and paid off by 2023. Ms. Slominski stated that was correct. There was discussion on the dollar amount and timing of bonding for the field services expansion project, and additional bonding for the MMPA buy in. Chair Dietz had one final question on the Accounts Receivable total on page 31. He asked for further clarification if that amount was our actual bad debt. Staff responded that it was the reserve amount for bad debts. There was discussion. Commissioner Stewart had a question on page 36 of the annual financial report. For the Capital Assets, she inquired as to why the decrease of$4,678,093 to construction in progress was more than the increase of$4,435,150 for assets being capitalized. Ms. Slominski shared that there were several large construction projects that were started in the prior year. There was discussion. Ms. Slominski stated she would provide a breakdown of those accounts to Commissioner Stewart. Commissioner Stewart commented on the percentage of line loss presented on page 56 and 57, and how that percentage has gone down significantly over the past ten years. She asked the Electric Superintendent what was contributing to the improvement. Mr. Fuchs and staff responded. Moved by Commissioner Stewart and seconded by Commissioner Nadeau to receive and file the Financial Audit for the year ending December 31,2017. Motion carried 5-0. 4.2 2017 Year End Reserve Balance Ms. Slominski presented the year-end electric reserve balance and calculations. Staff recommended that the unrestricted balance above the target level for the Electric Utility fund be designated toward electric service territory transfer costs, future capital infrastructure costs, and power cost adjustments (PCA's)to be capped at$500,000. In moving forward, Chair Dietz suggested the Financial Reserves and Investment Committee discuss the option of setting aside a portion of the reserves for the field services facility expansion project. There was discussion. Ms. Slominski presented the year-end water reserve balance and calculations. Staff recommended that the unrestricted balance above the target level for the Water Utility fund be designated for future capital infrastructure costs. Page 3 Regular Meeting of the Elk River Municipal Utilities Commission April 10,2018