Utility Host Community Aid

High on my list of concerns for the city has been the issue of lost property tax values of the Sherco power plant in the city. The State of Minnesota, through the Department of Revenue, determines the values of power plants within the state. The way they determined value was a product of an outdated formula that was being challenged by utility companies. To address this concern the state hired a consultant to help the state develop a better way to value power plants and utility properties. The process of review and recommendation took about 2 years. Upon the conclusion of the study a draft rule was made, hearings held and an administrative law judge ruled in favor of the change. The governor signed the revised rule it into law.

The result of revised rule is a devaluation of utility property in Becker by 21.8%. The rule had provided for a phase in of the rule over a period of three years. The city had already seen a 20% reduction (of the 21.8%) for 2008. The next two years we were to see the value drop to 50% and then 100% in 2010. The net tax capacity that was being lost is $3,598,675, the largest loss in the state. Putting that in perspective the loss is in excess of that created by the new Medtronics campus in Mounds View.

Dealing with the resulting loss of taxes has been an ongoing concern for us and one year of cuts have already taken place for 2008. Looking forward we had developed a contingency plan to address the loss however we felt it nearly impossible to assume cost cutting measures that would be deep enough to make up the difference without raising taxes. More than $1 million is needed. This is particularly true when you factor in the amount of debt service we have as a percentage of the budget. Our overall levy is about $5.15 million where 31.6% of that involves debt service where no adjustment can be made.

During the past two legislative sessions the legislature has provided in the tax bill a provision to adjust the tax rate paid by utilities to make up for the change in value. Last year the governor vetoed the bill which included the change. This year it was again included in tax bill and through negotiations of the legislature and the governor in the final hours of the session a compromise was obtained which addresses the issue. The compromise provides the city with State Aid in an amount equal to replace the lost tax revenues formally paid by the utility companies. This aid is considered permanent aid and reduces over time until a threshold is met.

The budget issues as a result of lost value from utility property have been addressed with adequate aid payments from the State of Minnesota. Our hard work and those of legislators who assisted us in this effort have provided a solution. I thank everyone who played a part in getting this accomplish. I’m sure there will be other battles concerning utility taxation in the future but for now we have the resources to move forward.

More Water

Water for the domestic use is and has been a concern for some time now. I’ve written about the failing well and the new well and wellhouse in Rivers Edge Park. I haven’t however discussed one of our existing wells, number 3.

Well number 3 is located in the golf course behind the golf maintenance building. The well house there supported both well number 3 and number 5. Well number 5 was the well that failed this past year. Using these two wells at the same time posed some problems as they were too close together. Pumping both of them produced less than each rated capacity so we would alternate their use. Upon further analysis it was noted that well number 3 had a larger pumping capacity than the pump was sized for. This pump was originally sized to pump 350 gallons per minute. When this well was installed the city didn’t need the larger capacity that could be achieved from a larger pump so a smaller more efficient motor was installed.

Up until well number 5 failed it didn’t make sense to upgrade the motor as the interference between the two wells wouldn’t have given us any more water. Now with well number 5 out of the picture, the interference problem isn’t there and the full capacity of the well number 3 can be utilized. Recognizing that the city has been in the process of swapping out the 30 hp motor and installing a 40 hp pump motor in well number 3. This change out will give us significantly more gallons per minute. We’re hoping to get 600 gpm but it may be 550 gpm.

In making this change over a good deal of existing equipment is being used in the well house. The piping for the larger well number 5 is being used now for the upgraded well number 3. The VFD (variable frequency drive) controller from well number 5 is being reused to better control the system with slower startups of the pump and use to match the needs for water demand. This not only saves energy but it also reduces wear on the pump motor extending its life. All the disinfection equipment continues to be used as well.

Making these changes is accomplishing more with the resources we have. With these upgrades we benefit with the potential for 60 to 70% increase in the production of the well with limited additional costs. This additional capacity in production doesn’t quite get us to the point of what was lost with the well number 5 failure but it does get us close. With well number 6 coming on board we should be ahead of the game for the summer season.

A Safety Culture

I was struck with the celebration that occurred at LPI this past week as it isn’t often that an organization takes the task of safety to the heights they have. They have achieved almost a million man hours with no lost time due to an injury. That’s not on the heals of luck but rather on a continued hard focused effort to have and maintain an safe environment. They have enrolled in the state sponsored Volunteer Prevention Program which is type of partnership with the state and OSHA to self direct their safety program. They have a very active safety committee which directs their safety effort. These actions have netted them the Mn Star Worksite designation.

As Mike Fiterman, CEO of Liberty Diversified Industries, the parent company to LPI stated they have an obligation to each employee to operate a safe environment. Each employee needs to return home at the end of the day with all the parts he came to work with. The celebration was one of honoring each employee for their commitments towards a safe environment. The celebration included representatives from Minnesota Department Labor and Industry. Commissioner Steve Swiggin congratulated them stating that LPI has a better safety record than 87% of all industries in Minnesota.

I believe we all have something to learn from these efforts. Being safe is something we can get excited about. Having a safe employment situation is possible with hard work and dedicated effort. The lack of lost work days due to injury at the job is worth celebrating and TRULY is a worthy goal. Accomplishing that goal requires a work ethic to operate in a safe manner and as such LPI has been successful in accomplishing that culture. Congratulations to the employees at LPI for your success!