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�i <br />Elk River --�- <br />Municipal Utilities UTILITIES COMMISSION MEETING <br />TO: <br />FROM: <br />ERMU Commission <br />Mark Hanson — General Manager <br />MEETING DATE: <br />AGENDA ITEM NUMBER: <br />December 10, 2024 <br />5.4 <br />SUBJECT: <br />Disposition of City's Utility by Referendum <br />ACTION REQUESTED: <br />Recommend City Council approval of the attached Resolution <br />BACKGROUND: <br />The right of citizens to determine the disposition of their municipal utilities through referendum <br />is protected due to enactment of 1949 Minnesota Laws Chapter 119, section 42, codified as <br />Minnesota (MN) Statutes, Section 412.321, subdivision 4. Although State law mandates a two- <br />thirds affirmative vote from the community for such sales or closures, the statute has not been <br />enforced in recent sales. <br />At the 2024 Minnesota Municipal Utilities Association (MMUA) Summer Conference, Ursula <br />Schryver, a Senior Vice President with the American Public Power Association (APPA), <br />presented five recent case studies of MN municipal utilities selling to larger cooperative or <br />private utility companies. According to MMUA's 2024 Annual Report, however, four of those <br />utilities were sold without a required referendum. <br />According to APPA, public power utilities are typically being sold in cases where the system has <br />not been maintained, the cost of upgrading the system substantial, and/or when there are <br />other financial stresses on the utility or community. Private utilities often promise to replace <br />aging system components, but these upgrades typically lead to higher rates, lower customer <br />satisfaction, and slower response times after outages. <br />DISCUSSION: <br />With the support of a strong governing body, APPA states municipal utilities proudly bring <br />tremendous value to the city, its citizens, and customers. Local control of utility means <br />enhanced reliability, faster response times, and a singular focus on the customer. Additionally, <br />municipal utilities provide financial support to their local governments through payments in lieu <br />of taxes, in kind labor contributions, local employment, and support of local businesses. <br />It is MMUA's belief that awareness of this referendum requirement empowers voters served by <br />municipal utilities with the ability to shape their communities as they see fit and in accordance <br />with their values and state statute. The attached MMUA model resolution provides a locally <br />binding process that requires a two-thirds community vote before any sale or closure. <br />Page 1 of 2 <br />135 <br />