3.0 ERMUSR 09-20-2006 - Laserfiche WebLink

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Page 2 Regular meeting of the Elk River Municipal Utilities Commission August 22, 2006 Glenn Sundeen discussed the current projects. The Otsego Substation is now on line, County Road 42 rebuild is in progress, County Road 33 rebuild will need numerous poles moved, and Station 14 Bank 2 transformer is in place. Jerry Takle said it was reported at the MMUA conference that Arc Flash incidents have been increasing and wanted it known that the Board wanted the workers to be careful and that good work practices make a difference. David Berg reported July was an extremely good month as there were 16 security systems sold. The summer help accomplished a lot of work this year. Many hydrants were painted, water valves were exercised, hydrants were flushed, valves were located for the GPS system, and off peak receivers were tested. Lori Johnson stated the water projects for County Road 42 and County Road 12 were approved. Theresa Slominski did not have any additional updates other than the ones that will be visited in the meeting. Troy Adams appreciated the recent trip to Waukeska with Bryan Adams to inspect the transformer for Station 14 Bank 2. 5.2 Update Brigs Property Purchase Elk River Municipal Utilities made an offer of $288,000 for the Briggs property. There are some issues that need to be resolved prior to sale of property. The septic system did not pass inspection so an above ground mound system needs to be installed, or it would need to hook up to City sewer and water which would cost approximately $32,000. Tearing down the house is the other option at a cost of about $12,000. This will be revisited at a future meeting when more information is available as to what the current owner chooses to do. 5.3 Update MN Department of Revenue Bryan Adams updated the Commissioners on the recent Minnesota Sales and Use Tax Audit. The period audited was 2003 through June 2006 and some items of concern were found. The connection fees for all electric and commercial water are viewed as taxable. (This is still being debated by other utilities.) The electricity that is donated to the City is taxable as a use tax. The capital equipment bought for the primary distribution system is not taxable (wire, poles, transformers, and associated material) but we need to pay tax when purchasing and then request a rebate at the end of the year to get the funds returned. The State can then accrue the interest throughout the year. For 2003 and 2004, sales tax reported versus sales tax paid seem to be another issue which should be further investigated, and Bryan Adams feels the auditors should look into this. Jerry Takle asked Lori Johnson if the City was required to pay taxes on their SAC fees. Lori Johnson responded that they have had Sales and Use Tax Audits and have not been required to pay taxes on those funds.