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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 /> October 13, 2015 4.2 <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 <br /> provide a payment in lieu of taxes(PILOT). ERMU has a policy which outlines the details of the <br /> PILOT and other donations to the City of Elk River. This policy is reviewed at least once every <br /> five years; the last policy changes were made on July 2, 2013. <br /> DISCUSSION: <br /> Delay for PILOT for Electrical Service Territory Transfer <br /> On September 8, the commission reviewed proposed changes to the PILOT Policy that would <br /> delay PILOT for the areas acquired from Connexus Energy through the March 20,2015, <br /> electric service territory transfer agreement. The PILOT was proposed to be delayed for each <br /> customer acquired until the loss of revenue(LOR)payments that are outlined in the <br /> agreement would complete. These LOR payments are made for 10 years after the acquisition <br /> with a few exceptions for municipal development. <br /> The commission discussed the proposed policy revisions and directed staff to strengthen the <br /> language to be specific to the March 20, 2015, electric service territory transfer agreement. <br /> This would eliminate any confusion regarding PILOT for LOR payments related to previous <br /> acquisitions. The proposed policy has been updated to reflect the commission's request. <br /> Shift of Policy Mechanics from Donated Electricity to PILOT <br /> The current PILOT Policy outlines in section 3.0 Donated Electricity stating that ERMU <br /> "shall donate all electricity to the City of Elk River for all of their facilities not associated <br /> with enterprise funds of the City of Elk River." The administrative process associated with <br /> this donation is extremely burdensome. Due to its manual nature,this process is also subject <br /> to human and keying errors. <br /> rrIVERED D1 <br /> Page 1 of 2 <br /> PP G P O W E R E D T o S E R V E <br /> Power Provider <br /> 59 <br />