ITEM 4.3 Agreement with ERMUP
CITY OF
Ot�ezo
MINNESOTA <01'
DEPARTMENT INFORMATION
Request for
City Council Action
ORIGINATING DEPARTMENT
REQUESTOR: MEETING DATE:
Public Works
City Engineer Wagner November 27, 2017
PRESENTER(s)
REVIEWED BY: ITEM #:
City Engineer Wagner
City Administrator/Finance Director 4.3
Flaherty
City Attorney MacArthur
AGENDA ITEM DETAILS
RECOMMENDATION:
Approve Agreements with Elk River Municipal Utilities (ERMU) regarding timing of placement of CSAH 39
overhead powerline to underground and transferring above standard street lights owned by the City of
Otsego to ERMU.
ARE YOU SEEKING APPROVAL OF A CONTRACT?
IS A PUBLIC HEARING REQUIRED?
Yes
No
BACKGROU ND/J USTI FICATION:
The City of Otsego and Elk River Municipal Utilities have been discussing the potential of converting City of
Otsego owned street lights to ERMU for several months. Reasons for requesting the switch from City
owned to ERMU owned are:
1) City of Otsego would be able to discontinue Above Standard Street Light assessments which
some assessed property owners object to.
2) City of Otsego would not have to continue the costly process of maintaining street lights or
replace street lights.
3) City of Otsego would not have to locate power for locate calls.
ERMU has developed an agreement where they would maintain and/or modify the existing City owned
street lights over the next few years through the street lights useful life. At the end of the street lights
useful life, ERMU would replacewith typicalstanclard street lights or allow the city to consider an upgraded
style (picked by ERMU) at a one-time cost. This process would be a phased plan that may take several
years as they work through each area. There are 3 distinct areas; Otsego Waterfront near Holiday Inn,
Otsego Waterfront East near Cowboy Jacks, and Great River Centre near Target.
ERMU stated they are willing to split the immediate cost for the maintenance and/or modifications. The
City's share in that cost would be $35,000. The City of Otsego would pay standard monthly lease rates for
the lights going forward.
ERMU has a separate agreement they would like processed concurrent with the street light agreement.
ERMU is requesting the requirement of placing the CSAH 39 overhead power line from CSAH 42 to Naber
Avenue to underground by 2018 is changed to match when the County upgrades CSAH 39 is upgraded
itself. ERMU stated they have too much work to complete it and also there are ROW issues as they would
need to loop the underground line. The inevitable 4 lane upgrade of CSAH 39 would also disrupt the
underground power that would be fairly recently placed.
Attached are the agreements prepared by ERMU. After speaking to ERMIJ regarding the future upgraded
street light style, ERMU staff determined more clarification was needed in the agreement. City staff will
review the revised wording which will generally cover not setting a specific dollar value for the upgraded
style until the specific upgraded street light and a more defined cost is determined.
Staff recommends City Council approve the agreements with staff reviewing any minor adjustments to the
agreements by either side. The City Attorney, staff and public works subcommittee have all reviewed the
agreement and found it acceptable.
SUPPORTING DOCUMENTS ATTACHED:
- Agreements prepared by ERMU with exhibits
PORRIRI F MOTION
PLEASE WORD MOTION AS YOU WOULD LIKE IT TO APPEAR IN THE MINUTES:
Motion to approve agreements between ERMU and City of Otsego regarding transferring ownership of
street lights and timing of placement of CSAH 39 overhead power to underground.
Rtinr.FT INFORMATION
FUNDING: BUDGETED:
225 -Above Standard Street Light District No
ASSET TRANSFER AGREEMENT
TMS ASSET TRANSFER AGREEMENT ("Agreement") effective this day
of ' 20 between Elk River Municipal Utilities, a Minnesota municipal
utility, with principal offices located at 13069 Orono Parkway, Elk River, Minnesota 55330
("ERMU"), and the City of Otsego, a Minnesota municipal corporation, with its principal offices
located at 13400 90'h Street NE, Otsego, Minnesota 55230 ("City").
BACKGROUND
ERMU provides electric service to a portion of the City, including three (3) commercial
developments known as Otsego Waterfront, Otsego Waterfront East and Great River Center
(collectively referred to hereafter as the "Transfer Areas"). Within the Transfer Areas there are
currently one hundred one (101) street lights which are owned and maintained by the City and
seven (7) missing street lights. ERMU currently owns, services and maintains seventy-eight (78)
street lights in the City, as well as over one thousand three hundred (1,300) in the City of Elk
River.
The City and ERMU have agreed that it would be more efficient and cost effective for
their joint taxpayers/rate payers within the Transfer Areas if ERMU took ownership of the
existing 101 street lights and the missing 7 street lights in these areas, and took responsibility
going forward for providing street lighting in the Transfer Areas, including replacing and
supplementing, as necessary, the existing 101 street lights and servicing and maintaining these
street lights and all additional and replacement street lights in the Transfer Areas.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, it is hereby agreed as follows:
ARTICLE I
ASSET TRANSFER
Section 1.1. Attached to this Agreement as Exhibits A, B, C and D, are aerial photos of
the Transfer Areas showing the existing street lights and related infrastructure within the
Transfer Areas. City hereby transfers to ERMU, and ERMU hereby accepts, as of the effective
date of this Agreement, ownership of the 101 existing fixtures and 7 bases for missing fixtures
shown in Exhibits A -D ' along with all underground wiring, control cabinets and all electrical
infrastructure related to these street lights.
Section 1.2. ERMU hereby accepts ownership of the street lights and related
infrastructure shown on Exhibits A -D, and agrees to service, maintain, repair and replace the
street lights and related infrastructure, as determined necessary by ERMU, beginning on the
effective date of this Agreement.
ARTICLE 2
F`EES
Section 2.1. In consideration of ERMU's agreement to accept ownership of and
responsibility for the street lights and related infrastructure within the Transfer Areas, City
agrees to pay EFJV1TJ a one-time transfer fee of Thirty—Five Thousand Dollars ($35,000), payable
on or before the effective date of this Agreement. The transfer fee has been calculated based on
the 2017 ERMU Fee Schedule, attached hereto as Exhibit E.
Section 2.2. In addition to the transfer fee, City will pay, for each existing, replacement
or additional street light within the Transfer Areas, beginning on the effective date of this
Agreement, all monthly fees due pursuant to the then effective ERMU Street/Security Light
Service Tariff ("Tariff") for street lights within ERMU's electric service territory. Pursuant to
the Tariff, attached as Exhibit F hereto, fifty-two (52) of the existing street light locations within
the Transfer Areas will be subject to a Fifteen Dollar ($15) per month fee, and fifty-six (56)
street lights/locations within the Transfer Areas will be subject to a Nine Dollar ($9) per month
fee. Monthly street lighting fees shall be billed by ERMU and paid by City pursuant to all
ERMU billing procedures and requirements in effect and as subsequently modified or amended.
ARTICLE 3
MAINTENANCE AND REPLACEMENT
Section 3.1. ERMU shall be responsible for servicing, maintaining, repairing, replacing
and supplementing the street lights and related infrastructure within the Transfer Areas and shall
do so pursuant to the same policies, requirements and procedures applicable to the existing
ERMU street lights in Otsego, as hereafter modified or amended.
Section 3.2. In order to make it cost effective for ERMU to service and maintain street
lights in the City, it is important that the existing street lights in the Transfer Areas be replaced to
match ERMU's standardized street lights and related infrastructure. Therefore, except as
provided in Section 3.3 below, ERMU shall have the exclusive authority to determine the street
light fixture styles for all street lights within the Transfer Areas that are replaced or added.
Section 3.3. The City of Elk River is currently contemplating replacing the street lights
within downtown Elk River to decorative lights. City shall have the right to request that ERMU
upgrade the street lights in all or any portion of the Transfer Areas to match the Elk River
decorative lights,but City shall make an additional payment for such an upgrade. City shall have
until July 1, 2018, to advise ERMU, in writing, whether it elects to upgrade all or any portion of
the street lights within the Transfer Areas to decorative fixtures. City's written election to
proceed with decorative lights shall include: (a) a schedule of the existing street lights within the
Transfer Areas to be replaced with decorative street lights, and (b) payment in the amount of One
Thousand Dollars ($1,000) per street light for each decorative street light requested.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. ERMU represents and warrants that it is a municipal utility duly organized
and validly existing under the laws of the State of Minnesota and has all requisite power and
11)
authority to enter into, execute and deliver this Agreement and to perform all of its obligations,
undertakings and agreements to be observed and performed by it hereunder. ERMU further
represents and warrants that execution, delivery and performance of this Agreement has been
duly authorized by the ERMU Board of Commissioners and that this Agreement constitutes a
valid and binding agreement of ERMU in accordance with its terms.
Section 4.2. City represents and warrants that it is a Minnesota municipal corporation
duly organized and validly existing under the laws of the State of Minnesota and has all requisite
power and authority to enter into, execute and deliver this Agreement and to perform all of its
obligations, undertakings and agreements to be observed and performed by it hereunder. City
further represents and warrants that execution, delivery and performance of this Agreement has
been duly authorized by the City Council and that this Agreement constitutes a valid and binding
agreement of City in accordance with its terms.
ARTICLE 5
TERMINATION
Section 5.1. This Agreement will only take effect if approved and executed by both
parties hereto prior to the effective date, and may only be terminated by written agreement of
both parties.
ARTICLE 6
GENERAL PROVISIONS
Section 6.1. Preparation of Agreeme . The parties have participated jointly in the
negotiation and drafting of this Agreement. Each party accepts the terms and conditions of this
Agreement, having the right to be represented by legal counsel and other advisors of their
choosing, and each party enters into this Agreement intending to be legally bound hereunder.
Section 6.2. Entire Agreement; Assignme . This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereto. None of the rights or
obligations of either party may be assigned without the prior written consent of the other.
Section 6.3. Notices. Notices, demands and other communications required or permitted
to be given under this Agreement shall be in writing and shall be given by hand delivery,
certified or registered mail, return receipt requested, to the parties at the addresses set forth on
the first page of this Agreement. Either party may designate a different address to which notices
required or permitted to be given shall thereafter be transmitted by giving notice to that effect in
accordance with this Section.
Section 6.4. ' Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Minnesota. Subject to the requirements for
alternative dispute resolution set forth in Section 6.5, venue and exclusive jurisdiction for
enforcement of an arbitration decision shall be in the Minnesota State Courts located in
Sherburne County, Minnesota. The parties hereto waive any right to jury trial in the event any
party files an action related to this Agreement or to the transactions or obligations contemplated
by this Agreement.
Section 6.5. Arbitration. Disputes pursuant to this Agreement shall be subject to
arbitration and be resolved by binding arbitration by a single arbitrator in Elk River, Minnesota.
The selection of arbitrator and all arbitration rules and procedures shall be determined pursuant
to the Uniform Arbitration Act, Minnesota Statutes, Sections 57213.0 1 through 57213.3 1, or any
successor provisions.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
on the day and year first above written.
ERNW:
ELK RIVER MUNICIPAL UTILITIES
By:
its: President
LE
Its: General Manager
CITY:
CITY OF OTSEGO
By:
Its: Mayor
=1
Its: City Administrator
El
EXHIBIT A
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EXHIBIT E
2017 ERMU Street/Security Light Service Tariff
E-1
Adopted by the Utilities Commission on Octobei, 11, 2016 unde)- axhofiopei- Mihnesota Statiae 412.361
Elk River 2017 Utilities
Fee Schedule
Municipal Utilities
ELECTRIC
New Residential Electric Connection - Developer - Lot with ERMU water service
$475.00
New Residential Electric Connection - Developer - Lot without ERMU water service
$575.00
New Residential Electric Connection - Builder
$875.00
New Wire Footages over 200' (per foot)
$4.00
New Service Frost Trenching (per foot)
$5.00
New Commercial & Industrial Electric Connection
50%
Service Upgrades or Additions for Existing Customers
100%
Minimum Temporary Electric Service Fee - Existing Transformer
$150.00
Minimum Temporary Electric Service Fee - Without Existing Transformer
$500.00
Street Light - 30' Decorative Pole with 6' Arm and Fixture
$1,850.00
Street Light - 23' Decorative Pole with Traditionaire Fixture
$1,500.00
Security Light - Wood Pole with Fixture
$975.00
Security Light - Existing Pole
$125.00
Pole Attachment Fee (per pole)
$6.50
E
Water Access Charge = Water Connection Charge + Water Availability Charge
$3,528.00
Water Connection Charge (Per Plumbing Unit) - Builder
$3,183.00
Water Availability Charge (Per Plumbing Unit) - Developer
$345.00
Abandoned Water Service
$2,500.00
Hydrant Water Sales - Rental (per week)
$50.00
Hydrant Water Sales - Units (per 1000 gallons)
$4.00
Deposit for 5/8" Hydrant Meter
$150.00
Deposit for 2 1/2" Hydrant Meter
$1,000.00
Private Hydrant Maintenance Program Monthly Fee
$5.00
ADMINISTRATIVE
Administrative Fee for Continued Submission of Checks After No -Check Notice Given
$20.00
Billable Cost of Materials Markup
15%
Billable Labor Markup
55%
Billable Vehicle / Equipment (per employee per hour)
$30.00
Electric Service Disconnect/Trip Fee - Meter Technician
$50.00
Electric Service Disconnectf-Frip Fee - Line Crew
$150.00
Energy Audit
$150.00
Meter Tampering Fee
$250.00
Meter Testing Fee
$50.00
NSF Fee
$30.00
Penalty Amount
10%
Photocopies (per page)
$0.25
Red Tag Handling Fee
$20.00
Water Shut -Off Fee
$100.00
Adopted by the Utilities Commission on Octobei, 11, 2016 unde)- axhofiopei- Mihnesota Statiae 412.361
EXHIBIT F
2017 ERMU Fee Schedule
F-1
ELK RIVER MUNICIPAL UTILITIES
Street/Security Light Service
Available: To any customer meeting Elk River Municipal Utilities criteria for service under this
schedule, and whose lighting needs are not being furnished under any other schedule. Installation
costs will be determined by Elk River Municipal Utilities per the Utilities Fee Schedule or on a time and
materials basis.
Applicable: As determined by Elk River Municipal Utilities, but generally to non -metered roadway and
area lighting: lighting unit burning time is limited to dusk to daylight (approximately 4,400 hours per
year).
Character Of Service: 120/240 volts, AC, as available.
Street/Security Light Service
Type
Monthly Rate Per
Fixture
Low Output (0-249 Watt HPS, 0-89 Watt LED)
$9.00
Medium Output (250-399 Watt HPS, 90-149 Watt LED)
$15.00
High Output (400 Watt or larger HPS, 150 Watt or larger LED)
$21.00
Sales tax applicable.
Ownership of Equipment: Elk River Municipal Utilities will install, own, and operate the lighting units
including fixtures, and control equipment unless otherwise agreed upon by Elk River Municipal Utilities
and the Customer.
Lamp Replacements: Lamp replacements will be made by Elk River Municipal Utilities when and as
requested by the Customer.
Terms of Payment: Bills are due and payable upon receipt and are considered delinquent if not paid
by the due date noted on the bill, There will be a ten (10) percent late payment charge added to all
accounts that are not paid by the due date.
General Terms and Conditions Applicable To Non -Metered Lighting Service:
1. Area lighting installed on Elk River Municipal Utilities poles shall not be of the type that interferes
with climbing room, work space, or wire clearance as defined by the National Electrical Safety
Code and is to be installed below the secondary line and service drops, all per Elk River
Municipal Utilities' specification.
2. At Elk River Municipal Utilities' option, all area applicable lighting units installed under this
schedule shall be equipped with a photo -electric control which will limit the burning time to
approximately 4,400 hours per year.
3. The rates set forth herein may be modified by the amount of any governmental changes imposed
and levied on transmission, distribution, production, or the sale of electrical power.
4. Exceptions by management approval only.
Approved Adopted December 13, 2016
Effective January 1, 2017
EXIHBIT G
Bill of Sale, Assignment and Assumption Agreement
Know all persons by these presents that the City of Otsego, Minnesota, a Minnesota
municipal corporation ("City"), pursuant to that certain Asset Transfer Agreement (the
"Agreement") dated effective � 20 , by and between City and Elk River
Municipal Utilities ("ERMU"), and for good and valuable consideration, the receipt of which is
hereby acknowledged, hereby sells, assigns, transfers, sets over, conveys and delivers the assets
and property identified in ExhibitsA, B, C and D attached hereto to ERMU, a Minnesota
municipal utility, effective on the effective date of the Agreement, free and clear of all liens,
claims and restrictions of any kind or nature, to have and to hold the entire right, title and interest
of the City in and to the assets hereby sold, transferred, conveyed and assigned to ERMU, its
successors and assigns, to and for its own use and benefit forever.
This bill of sale shall be governed by, construed and enforced in accordance with the laws
of the State of Minnesota. Venue and exclusive jurisdiction for any disputes shall be in the
Minnesota State Courts, located in Sherburne County, Minnesota. City and ERMU each hereby
waive any right to jury trial in the event any party files an action related to the bill of sale or to
the transactions or obligations contemplated hereunder.
IN WITNESS WIIEREOF, City and ERMU have each caused this Bill of Sale,
Assignment and Assumption Agreement to be executed by their respective duly -authorized
representatives effective as of the effective date.
CITY:
CITY OF OTSEGO
By:
Its: Mayor
I'M
Its: City Administrator
ERMU:
ELK RIVER MUNICIPAL UTILITIES
By:
Its: President
By:
Its: General Manager
G-1
ELECTRIC INFRASTRUCTURE AGREEMENT
THIS ELECTRIC INFRASTRUCTURE AGREEMENT ("Agreement") effective this
day of 20 between Elk River Municipal Utilities, a Minnesota
municipal utility, with principal offices located at 13069 Orono Parkway, Elk River, Minnesota
55330 ("ERMU"), and the City of Otsego, a Minnesota municipal corporation, with its principal
offices located at 13400 90th Street NE, Otsego, Minnesota 55230 ("CiV�).
BACKGROUND
ERMU provides electric service to a portion of City. To provide this service, ERMU
owns and operates a 2.5 -mile -long overhead electric distribution feeder (the "Feeder") that runs
from the ERMU Otsego substation on Wright County Road 39 ("CSAH 39") west to the
Mississippi Cove residential subdivision. The Feeder is located within the right-of-way of
CSAH 39. City anticipates that CSAH 39 will be widened and upgraded by Wright County in
the future. This project will require the acquisition of additional right-of-way for CSAH 39 and
will involve significant disruption for -users of and property owners along CSAH 39.
City has adopted an ordinance that would require the CSAH 39 Feeder to be relocated
from overhead to underground in the year 2018. Moving the CSAH 39 Feeder underground
prior to the expansion of the CSAH 39 right-of-way would require ERMU to acquire additional
right-of-way and to make assumptions regarding the final location of the right-of-way for
CSAH 39. In addition, an ERMU project to underground the CSAH 39 Feeder would cause
significant disruption for users of and property owners along CSAH 39.
For these reasons, City and ERMU have agreed that it would be more efficient, more
cost-effective and less disruptive to their joint taxpayers and rate payers, and the users of and
property owners along CSAH 39, if ERMU's project to underground the Feeder is undertaken in
coordination with the widening and upgrading of CSAH 39 by Wright County.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, it is hereby agreed as follows:
ARTICLE 1
AGREEMENT
Section 1.1. City will take such action as it deems appropriate, including an ordinance
amendment if necessary, to delay the requirement that ERMU relocate the CSAH 39 Feeder
from overhead to underground until such time as Wright County has acquired additional right-of-
way for CSAH 39 and has undertaken a project to widen and improve CSAH 39.
Section 1.2. ERMU will coordinate with City and Wright County to relocate the
CSAH 39 Feeder from overhead to underground within an expanded right-of-way for CSA -H 39
in connection with Wright County's project to widen CSAH 39. ERMU will bear the cost of
relocating the overhead lines underground, provided that Wright County or City provides the
right-of-way necessary to underground the lines.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Section 2.1. ERMU represents and warrants that it is a municipal utility duly organized
and validly existing under the laws of the State of Minnesota and has all requisite power and
authority to enter into, execute and deliver this Agreement and to perform all of its obligations,
undertakings and agreements to be observed and performed by it hereunder. ERMU further
represents and warrants that execution, delivery and performance of this Agreement has been
duly authorized by the ERMU Board of Commissioners and that this Agreement constitutes a
valid and binding agreement of ERMU in accordance with its terms.
Section 2.2. City represents and warrants that it is a Minnesota municipal corporation
duly organized and validly existing under the laws of the State of Minnesota and has all requisite
power and authority to enter into, execute and deliver this Agreement and to perform all of its
obligations, undertakings and agreements to be observed and performed by it hereunder. City
further represents and warrants that execution, delivery and performance of this Agreement has
been duly authorized by the City Council and that this Agreement constitutes a valid and binding
agreement of City in accordance with its terms.
ARTICLE 3
TERMINATION
Section 3.1. This Agreement will only take effect if approved and executed by both
parties hereto prior to the effective date, and may only be terminated by written agreement of
both parties.
ARTICLE 4
GENERAL PROVISIONS
Section 4.1. Preparation of Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement. Each party accepts the terms and conditions of this
Agreement, having the right to be represented by legal counsel and other advisors of their
choosing, and each party enters into this Agreement intending to be legally bound hereunder.
Section 4.2. Entire Agreement; Assignme . This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereto. None of the rights or
obligations of either party may be assigned without the prior written consent of the other.
Section 4.3. Notices. Notices, demands and other communications required or permitted
to be given under this Agreement shall be in writing and shall be given by hand delivery,
certified or registered mail, return receipt requested, to the parties at the addresses set forth on
the first page of this Agreement. Either party may designate a different address to which notices
required or permitted to be given shall thereafter be transmitted by giving notice to that effect in
accordance with this Section.
Section 4.4. Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Minnesota. Subject to the requirements for
alternative dispute resolution set forth in Section 6.5, venue and exclusive jurisdiction for
2
enforcement of an arbitration decision shall be in the Minnesota State Courts located in
Sherburne County, Minnesota. The parties hereto waive any right to jury trial in the event any
party files an action related to this Agreement or to the transactions or obligations contemplated
by this Agreement.
Section 4.5. Arbitration. Disputes pursuant to this Agreement shall be subject to
arbitration and be resolved by binding arbitration by a single arbitrator in Elk River, Minnesota.
The selection of arbitrator and all arbitration rules and procedures shall be determined pursuant
to the Uniform Arbitration Act, Minnesota Statutes, Sections 572B.01 through 572B.31, or any
successor provisions.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
on the day and year first above written.
WHOM
ELK RIVER MUNICIPAL UTILITIES
By:
Its: President
LI -A
Its: General Manager
CITY:
CITY OF OTSEGO
By:
Its: Mayor
M
Its: City Administrator
3