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Elk River <br /> Municipal Utilities UTILITIES COMMISSION MEETING <br /> TO: FROM: <br /> ERMU Commission Troy Adams, P.E.—General Manager <br /> MEETING DATE: AGENDA ITEM NUMBER: <br /> October 8, 2019 4.2 <br /> SUBJECT: <br /> Payment in Lieu of Taxes and Other Donations to the City of Elk River <br /> ACTION REQUESTED: <br /> Direction from commission. <br /> BACKGROUND: <br /> As documented in the ERMU Payment in Lieu of Taxes and other Donations to the City of Elk <br /> River policy: <br /> The success of ERMU is linked with the success of our community. And the success of our <br /> community is linked with the operation of our city government and ERMU. ERMU was <br /> purchased by the City of Elk River in 1945 and separate governance was created per <br /> State Statute in 1947.Although governed separately, ERMU is still an important <br /> component of our local government and our city services. <br /> It is typical for a municipal utility to provide a Payment in Lieu of Taxes (PILOT) and other <br /> donations to their city, regardless of a separation of governance. Although typical, this <br /> contribution should never inhibit ERMU's ability to make repayment on debt, cause <br /> ERMU to become non-competitive, or inhibit needed investment in personnel or <br /> infrastructure which may hurt ERMU's ability to meet the needs of their customers. For <br /> these reasons the PILOT and other donations should be reviewed at least once every five <br /> (5)years by the ERMU Commission. <br /> Transfers, PILOT, and other donations from a municipal electric utility to the city are not a legal <br /> obligation or requirement; however,they are common practice. The current ERMU PILOT and <br /> other donations are comparable within national pool data for revenue class as well as <br /> comparable to a regional pool data.The total transfer of PILOT and other donations for 2018 <br /> was$1,403,958 which was 4.7% of Elk River electric revenue. The year-to-date transfers for <br /> 2019 are trending to be higher than 2018. <br /> The city council has discussed asking for an increase in the transfer.The commission discussed <br /> this policy at the September commission meeting and then tabled the discussion for October. <br /> The Payment in Lieu of Taxes and Other Donations to the City of Elk River Policy is attached for <br /> reference. <br /> Page 1 of 2 <br /> 217 <br />