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Elk River <br />Municipal Utilities <br />13069 Orono Parkway • P.O. Box 430 <br />Elk River, MN 55330-0430 <br />February 24, 2009 <br />To: Elk River Municipal Utilities Commission <br />Jerry Takle <br />Jerry Gumphrey <br />John Dietz <br />From: Vance Zehringer <br />Subject: Met Council Contract <br />Phone: 763.441.2020 <br />Fax: 763.441.8099 <br />The subject Contract is attached. It is for the express purpose of adding communication <br />equipment in, and an antenna on the Gary Street Water Tower. This equipment will be <br />used by North Star Commuter Rail for communication and is similar to equipment in <br />Anoka, Coon Rapids and Fridley. The attached contract has been altered by Met Council <br />from the original we provided them. Those changes are outlined in red. <br />It should be noted that these changes increase our exposure by removing some of the hold <br />harmless language. It eliminates reference to hazardous materials, and it also provides <br />them with free electricity for contract duration (20 years). The lease amount, $9,000 over <br />20 years, or $37.50 per month, is considerably less than other companies pay for similar <br />space on water towers. Example, Verizon pays the City of Ramsey $2000 per month plus <br />electricity for using their tower for communication purposes. Our attorney, Ron Black, <br />recommends that we not sign the contract as is. <br />However, Jim Toulouse, North Star Commuter Rail, indicated the Fridley contract has <br />been signed, the Anoka contract has been approved by staff awaiting Council approval, <br />and the Coon Rapids contract is still under consideration. Further discussions with Mr. <br />Toulouse revealed that the wording in those contracts was identical to the one attached. <br />There are probably political ramifications to not signing the attached contract as is, but it <br />would net be a sound business decision. There is some time left to negotiate better terms, <br />but that may be construed as an unwillingness to work with them. They are eager to <br />begin work as soon as possible because their contractor's work load is at a minimum. <br />My recommendation is to negotiate further until our attorney is satisfied that we are <br />covered in those areas he cites as inadequate. While electrical consumption is relatively <br />low at an estimated 1350 kWh/yr, I think Met Council should be charged for the <br />electricity their equipment uses. Free electricity does not foster innovation or promote <br />conservation! An estimate of that consumption is attached. <br />