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Elk River <br /> Municipal Utilities UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> Elk River Municipal Utilities Commission Troy Adams, P.E.—General Manager <br /> John Dietz—Chair <br /> Al Nadeau—Vice Chair <br /> Daryl Thompson—Trustee <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> September 8, 2015 5.4 <br /> SUBJECT: <br /> Payment in Lieu of Taxes (PILOT)and Other Donations to the City of Elk River <br /> BACKGROUND: <br /> Minnesota municipal utilities do not pay taxes to their city. It is very typical for the utility to provide a <br /> payment in lieu of taxes(PILOT).ERMU has a policy which outlines the details of the PILOT and other <br /> donations to the City of Elk River. This policy is reviewed at least once every five years;most recently <br /> the policy was review on July 2,2013. <br /> DISCUSSION: <br /> When last reviewed,ERMU was negotiation with Connexus Energy for an electric service territory <br /> acquisition of approximately 2000 customers within 12 square miles in the corporate boundaries of Elk <br /> River. It was discussed that the PILOT associated with these potential future ERMU customers be <br /> delayed until after the loss of revenue(LOR)payments to Connexus were complete.There was consensus <br /> from the board. <br /> On March 20,2015,an electric service territory transfer agreement was executed between ERMU and <br /> Connexus.The first 800 customers are to be transferred in fall of 2015 with additional transfers over the <br /> following five years. The terms of the agreement provide for LOR payments for 10 years,which it <br /> typical. <br /> Now that the negotiations have been completed and the terms finalized,the PILOT provisions should be <br /> revised to reflect an exemption for customers that are subject to LOR payment.As these LOR payments <br /> complete their 10 year term,the revenue associated with these customers would then become subject to a <br /> PILOT per the policy. <br /> ACTION REQUESTED: <br /> Staff recommends the Commission adopt the policy revisions to"ERMU Policy 8.13—Payment in Lieu <br /> of Taxes(PILOT)and Other Donations to the City of Elk River." <br /> ATTACHMENTS: <br /> • Proposed revision to ERMU Policy 8.13—Payment in Lieu of Taxes (PILOT) and Other <br /> Donations to the City of Elk River <br /> EN <br /> POWERED BY <br /> Page 1 of 1 IIATUII E <br /> Reliable Public <br /> Power Provider P 0 WE 0.E 0 T O S ERNE <br /> 168 <br />