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1c Suburban Rate AuthorityCITYOF CHANHASSEN 7700 Market Bouie,/ard PO Box 147 Chanhasser~ MN 55317 Administration Phone: 952 227 1100 Fax~ 952 2271110 Building Inspections P! sne: 952227!180 Fax 9522271190 Engineering Phone: 9522271160 Fax: 952 227 1170 Finance Phone: 952 2271140 Fax: 952 227 1110 Park & Recreation Phone: 952 227 1120 Fax 952227 1110 Recreation Center 2310 Coulter Boulevard Phone: 9522271400 Fax 952 2271404 Planning & Natural Resources Pho'le: 952.2271130 Fax: 9522271110 Public Works 1591 Park Road Phone 9522271300 Fax: 9522271310 Senior Cenler Pho'le; 952 2271125 Fax; 952 227 1110 Web Site wwwci eilarlhasser~ file us MEMORANDUM TO: Todd Gerhardt, City Manager FROM: Paul Oehme, City Engineer/Dir. of Public Works ~..~__.ff,, DATE: August 3, 2004 SUB J: Consider Authorization to Joint Cooperative Agreement with the Suburban Rate Authority (SRA)- PW416 REQUESTED ACTION Approve Joint Cooperative Agreement with the Suburban Rate Authority (SRA). DISCUSSION The SRA is an organization of 34 suburban cities that is active in matters concerning gas, electric and telephone rate regulations and in legislation concerning the Public Utilities Commission (PUC). The SRA, when appropriate, intervenes in rate matters affecting, gas electric and telephone rate changes to suburban residents and businesses. In addition, the SRA is very active in utility matters involving right-of-way use, gas and electric franchises, wireless cell phone towel' siting and lease agreements and telecommunications as it is evolving into and merging with cable services. This organization fills an important roll fol' suburban communities to ensure their residents and businesses are given a voice when new utility legislation is introduced at the State and during PUC hearings and rulings. The cost for membership to the SRA is $300 per 5000 population or for the City of Chanhassen $1,500 per year. Funding would come out of the Engineering fees and services budget. Attachment G:\ENG\SR,,\~J Pat hbg 80904 doc The City of Chanhassen · A growing community wiP clean lakes quaiity schog;s ~ chang'in j do,,,,, ~'o?~n t'ri,,dla bLISUU!SS(}, ,,,qndir c~ ?ads and ~,eam,ft i [~Arks; ,,q $'eit 1:1i::' l,:; is', :~' ,rk :~rx] c'la'~ SUBURBAN RATE AUTHORITY OVERVIEW INTRODUCTION This summary is intended to describe the history, purposes and accomplishments of the Suburban Rate Authority ("SRA"). The SRA is a joint powers organization consisting of 34 suburban cities (list of member cities attached). The SRA is authorized to intervene in rate matters affecting gas, electric and telephone rates charged to suburban residents and businesses. In addition, the SRA is very active in utility matters involving right-of-way use, gas and electric franchises, wireless cell phone tower siting and lease agreements and telecommunications as it is evolving into and merging with cable services. The material below attempts to demonstrate the tangible savings achieved by the SRA. Though actual dollar savings are often difficult to calculate, the SRA has saved residents and businesses of Twin City suburban communities millions of dollars over the last 29 years. A conservative calculation reflects a $200,000 per SRA member vote savings since 1975. HISTORY AND PURPOSES The SRA was organized in 1963, for the purpose of providing collective strength in negotiating franchises with the Minneapolis Gas Company, which served the original SRA members. In 1974, the legislature adopted the Public Utilities Act to provide for state regulation of gas and electric utilities, except for cooperative electric associations and municipal utilities. SRA assisted the state in setting up regulation and intervened in the early gas and electric cases with the hope of providing leadership and direction in utility regulation. Since that time, it has been active in matters concerning gas, electric and telephone rate regulation and in legislation concerning the Public Utilities Commission ("PUC"). CURRENT ISSUES The traditional rate of return regulation of gas, electric and telephone companies has been substituted for negotiated agreements between utilities and its customers, approved by the Public Utilities Commission and other activities affecting rates. Legislation is always an important arena for utility-municipal-ratepayer issues. Most recently the SRA has been involved in the following: 2004- Minnegasco General Rate Increase Request. The SRA will intervene in a rate proceeding filed by Minnegasco in July seeking a 4.1% rate increase in its base rates. The SRA has traditionally intervened on behalf of suburban ratepayers and cities when utilities have sought rate increases and identified issues of unique import .ance to SRA members. 2004- Consumer/Small Business Protection in Telephone Rates. SRA presence in the legislative process had a significant impact on the comprehensive telecom legislation passed during the 2004 session. The SRA led a group of interests resulting in the defeat of provisions allowing unilateral rate increase authority and lower service standards sought by telephone companies. CITY OF CF~ANHASS[~,N JUL g 7 2004 JMS-243164v 1 SU160-3 ENGINEEFtlNG DEP'L 2003 Xcel Metro Emissions Reduction Plan-Audit. The SRA became a signatory to a plan endorsed by the Governor's Office and approved by the Public Utilities Commission in December 2003. The Plan will have a significant impact on Metro Area pollution reduction as well as a reduction in the need for additional transmission upgrades and sitings. The SRA is forming a group of end user interests to review Xcel costs for the $1 billion project 2003 Qwest Alternative Form of Regulation Petition. The SRA is actively involved in seeking additional infrastructure investment from Qwest in suburban areas, as well as protecting City right- of-way management authority in the proceeding. Several SRA cities have received constituent interest in more DSL (telephone broadband) services in their area. 2003 Municipalization of Electric Utility Service. The SRA funded a review by a local utility consulting firm study of non-municipal utility cities acquiring electric facilities and serving some or all customers within the municipality. This issue has significant cost saving potential for cities and their ratepayers. 2003 Gas and Electric Franchise Agreements and Fees. The renewed interest in franchises and franchise fees is an area of expertise of the SRA. It has assisted many of its member cities in establishing franchises and franchise fees. 1999-2002 Right-of-Way Management. The SRA has done significant work in developing the model right-of-way management ordinance, originally arising out of the 1997 right-of-way legislation and 1999 PUC right-of-way management rules. 1999-2001 The SRA has participated in various matters before the PUC and was very active in right-of-way management ordinances, franchise agreements, advising on cell tower siting case developments and Minnegasco No Surprise Bill as it relates to franchise fees and notice to customers. NOTABLE PAST SRA ACHIEVEMENTS 1998 612 Area Code Split Along Municipal Boundaries. The SRA was the original and primary advocate of boundaries drawn along municipal, rather than telephone wire centers for the 612-651 area code split. Adoption of this position by the Minnesota PUC is the first of its type in the United States. 1997 Right-of-Way Legislation and Task Force. The SRA played an important role in assisting the League of Minnesota Cities in the 1997 comprehensive legislation governing telecommunication providers' use of municipal right-of-way. The SRA also actively participated in the preparation of the model right-of-way ordinance that arises out of this legislation. 1997 US West Alternative Regulation Proposal. The SRA has monitored the recent proposal of US West to freeze certain basic rates and raise other rates over a three to five year period. Many new issues are raised after the Telecommunications Act of 1996 regarding local competition and options of customers in the service territory of local telephone providers. JMS-243164v3 SU160-3 1997 US West Cost Proceeding. There is a very important cost proceeding unfolding during 1997 and 1998 regarding the cost of telephone service of urban, suburban and rural telephone customers in the state of Minnesota. This proceeding will establish the wholesale and possible retail rates for local telephone service in Minnesota. The SRA is monitoring that case. 1996 Model Wireless Communication Lease Agreement. The SRA provided primary drafting contributions to a League of Minnesota Cities Model Site Lease Agreement for PCS/cellular cornmunication antennas. This Model has been distributed to Minnesota cities for use in negotiation on site lease agreements. 1996 US West Right-of-Way Challenge. A significant legal challenge to murficipal authority over rights-of-way was brought by US West to the PUC and the district court. The SRA took an active position in support of the League and the other cities involved directly in the challenge. This issue will be the subject of legislation in the 1997 Minnesota legislative session. 1996 Minnegasco Case. The SRA and the Department Public Service successfully argued against a $1 million annual acquisition adjustment (23 years of recovery requested) Minnegasco sought to recover from ratepayers for its acquisition of Midwest Gas. In addition, the SRA criticized the allocation of Minnegasco to residential customers and the Commission ultimately denied Minnegasco's proposed change, saving residential customers money. The residential basic service charge also remained at the same level ($5 per month) as supported by the SRA. 1995 Updated Model Gas and Electric Utility Franchises. The SRA and the League drafted model utility franchise ordinances. The increasing deregulation in both the electric and gas utility industries necessitated revisions to the previous model franchise ordinances approved by the SRA. 1995 Minnegasco Fixed Residential Customer Charge. The PUC denied Minnegasco's request for an increase in the residential customer fixed monthly gas charge from $5 to $6 per month. The SRA was the sole party to argue that Minnegasco must make a greater showing to justify requested and intended increases in the fixed, non-usage based monthly charge. The requested increase was made without a showing that statutorily required conservation policies would not be inhibited. 1995 Model Telecommunications Permit Ordinance. The SRA prepared and shared its Model Telecommunications Permit Ordinance with the League of Minnesota Cities. In collaboration, the SRA and the League distributed the ordinance to all Minnesota cities. The purpose of the ordinance is to provide orderly police power regulations over telecommunications companies in the city. This ordinance will be reviewed in light of the 1996 Telecommunications Act and legal developments resulting from it. 1993 Minnegasco and NSP Rate Cases-FAS 106. The SRA played a substantial role in one of the major issues to be raised before the Minnesota PUC in several years--FAS 106. A post retirement medical health care benefits "transition obligation" was sought by Minnegasco and NSP as a result of the accounting standard known as FAS 106 which required a change from cash basis to accrual accounting for such benefits. This change involves millions of dollars (Minnegasco $24 million; NSP $160 million) to be borne currently either by the utility shareholders or utility ratepayers. The PUC originally voted in May 1993 to disallow one-half of Minnegasco's transition JMS-243164v3 SU 160~3 obligation, but ultimately reversed its decision and allowed those expenses. These expenses will be spread out over a twenty-year period in rates. This issue is an example of the millions of dollars at stake in utility rates the SRA fights to limit for ratepayers. 1992 US West Telephone Rate Savings. As of November 1, 1992, residential and business telephone rates for US West Twin City local calling area became equal by class of service throughout the metropolitan area. This PUC action eliminated the tiered telephone rates that were in existence since 1980 and has saved outer Metro suburban ratepayers served by Qwest millions of dollars over the last twelve years. The US West Tier System charged higher rates for residential and business customers living in the suburban areas. In 1984 the SRA achieved a reduction of one half of the tier ratios. This elimination of the Tier System is a direct result of SRA's intervention and arguments against differentiating telephone rates by geographic location. 1992 Municipal Pumping Rate Savings. Together with the City of St. Paul and the Mtmicipal 'Pumpers Association, SRA efforts have consistently maintained pumping class rates at 2-3% below general service class and have continued the municipal pumping exemption from the eleven-month demand ratchet rate imposed on commercial-industrial users. The SRA's expert consultant has estimated that avoiding the eleven-month demand ratchet charge alone saves 7.5-10% in annual-al municipal pumping charges paid to NSP. 1991 NSP General Rate Filing. The SRA actively intervened in this NSP filing, wherein the PUC rejected NSP's $120,000,000 rate increase request. The SRA focused on the municipal pumpers' rate and street lighting. The SRA is traditionally the only intervener seeking reduced increases in the municipal pmnping rate and has seen consistent success in that effort. 1990 US West Incentive Regulation Plan. We actively intervened in the case involving US West's request to be partially deregulated in its local service to residential and business customers. The final order established stable rates for Twin City local telephone customers of US West through August of 1994. US West will share 50% of its revenues above a 13.5% return on equity. 1987 Northwestern Bell Extended Area Service Docket. The SPA made significant progress in demonstrating cost in equities in the Twin City Metropolitan Area Northwestern Bell service area. SPA participation in this case helped lay the grohnd work for the order abandoning the Tier System. 1986 Redeliberation on Northwestern Bell Cases. The SRA obtained very substantial reductions in the Tier System ratios. These changes resulted in very significant savings in telephone rates for most SRA business and residential users prior to the elimination of this rate design in 1992. 1985 Rate Structure Task Force. The SPA was active in the formulation of funding proposals for the Combined Sewer Overflow ("CSO") projects in the Cities of Minneapolis, St. Paul and South St. Paul. SRA involvement may have limited the pass-through of these costs to member communities. JMS-243164v3 SU160-3 1985 Northern States Power General Rate Case. The SRA "pioneered" an issue as to fossil fuel inventory. The SRA also helped maintain the municipal pumping rate, and defended prior SRA accomplishments as to accounting practices. Very substantial savings were realized through SRA intervention. This case was appealed to the Court of Appeals and the State Supreme Court and the SRA (alone) participated with MPUC in successfully defending MPUC's action. ESTIMATED DOLLAR SAVINGS FROM SRA EFFORTS These are rough calculations made with the assistance of legal counsel and SRA expert consultants. In an effort to be able to contrast savings with assessments, the calculations are made on a per SRA member vote basis (5,000 of population). They attempt to distinguish savings resulting primarily from SRA efforts and savings that likely would have resulted anyway due to positions taken by state agencies. 1975 NSP SRA's retained expert estimated $18 to $20 per household. Using 3.4 persons per household, this would be approximately $26,500 per vote. The figure does not include business savings. 1977 NSP There is no estimate of dollar savings in the file. The 1975 principles were defended successfully. It is thus reasonable to state that the $26,500 per vote continued from 1975 and onward. To be conservative, use five years of $132,000 per vote for NSP electric through 1980. 1982 Northwestern Bell The SRA commenced its attack on the Tier System. In 1984, the SRA won a significant victory reducing by 50% the tier ratios imposed by Bell. Northwestern Bell has estimated a shift away fi.om suburban conm~unities of about $2 million to $3 million per year as a result of SRA intervention in the three Bell rate cases through the 1980's. Using $2 million per year and the assumption that SRA represents approximately half of the suburban businesses and households (this has not been calculated, it is just an estimate), the savings is about $6500 per vote per year. Over the seven years, since this change became effective, this is $45,500 per vote. 1985 NSP Our consultant estimated savings due solely to SRA intervention at about $8 per household per year. Over the two years the rate was in effect, this is a savings of about $23,500 per vote. 1987 NSP Estimated savings from the fuel issue is $1,600 per vote per year. Uniform Franchises The gas and electric uniform franchises were negotiated in the 1980's at a cost of approximately $40 per vote. Attorney and staff costs for doing it individually might easily have been ten times that, a savings of $1260 per member or $360 per vote. 1992 NSP As mentioned above, the savings per SRA member is about 2-3% per year for municipal pumping rates and 7.5-10% in avoiding ratchet demand. 1992 US West The savings fi.om elimination of the Tier System to tier 2 and 3 SRA residents and businesses is approximately $1 million per yearand counting. JMS-243164v3 SU160-3 1996Minnegasco Collective savings to SRA residents from SRA efforts in the 1996 Minnegasco case is approximately $300,000 per year. 1998 Area Code Boundaries An intangible benefit of maintained "identity" resulted for cities and businesses located within their respective boundaries. 1999-2001 ROW Rules This legislative and rulemaking process gave cities greatly added authority to manage ROWs and collect their reasonable costs for such management. 2004 Blocked Telephone Rate lncreases SRA efforts at the Legislature resulted in the prevention of unilateral rate increase rights of telephone companies that would have totaled hundreds of thousands of dollars each year beginning as early as 2006. Cost Savings Summary A conservative estimate of dollar savings to SRA members because of SRA activities, directly and indirectly, over the years since 1975 is well over $200,000 per vote and counting. A case could be made for multiples of this figure. SRA ASSESSMENTS The SRA members are assessed on the basis of population and voting power. Each 5,000 in population, or fraction thereof, is equal to one vote. For instance, a city of 21,000 would have five votes. Each vote equals a $300 per year annual assessment. In 2002 the SRA voted to reduce its assessment from $400 to $300 through efficient fiscal management. SRA members are encouraged to contact legal counsel for general advice on utility and right-of-way matters. More specific and individualized issues are dealt with on a case-by-case basis with the individual city. If you have any further questions please contact Jim Strommen at (612) 337-9233. JMS-243164v3 SU 160-3 SUBURBAN RATE AUTHORITY MEMBER CITIES Birchwood Village Greenwood Orono Bloomington Hastings Plymouth Brooklyn Park Hopkins Robbinsdale Bumsville Lauderdale Roseville Long Lake Savage Circle Pines Maple Grove Shakopee Columbia Heights Maple Plain Shoreview Deephaven Maplewood Spring Lake Park Eden Prairie Minnetonka Spring Park Edina Mound Wayzata Fridley New Brighton West St. Paul Golden Valley Woodbury JMS-243164v3 SU 160-3 AMENDED JOINT AND COOPERATIVE AGREEMENT I. PARTIES The parties to this agreement are governmental units of the State of Minnesota. This agreement is made pursuant to Minnesota Statutes, section 471.59, as amended. 11. GENERAL PURPOSE The general purpose of this agreement is to establish and continue an organization to monitor the operation and activities of public utilities in the metropolitan area; to conduct resem'ch and investigation of the activities of such utilities; and to conduct such other activities authorized herein as may be necessary to insure equitable and reasonable public utility rates and service levels for the citizens of the members of the organization and for the members themselves. III. NAME The name of the organization is the SUBURBAN RATE AUTHORITY. The name may be changed in accordance with Article XII. IV. DEFINITIONS Section 1. For purposes of this agreement, the terms defined in this article have the meaning given them. Section 2. "Authority" means the joint and cooperative organization created by this agreement. Section 3. "Board" or "Board of Directors" means the Board of Directors of the Authority established by Article VI. Section 4. "Council" means the governing body of a governmental unit. Section 5. "Governmental unit" means a city or town in the metropolitan area. Section 6. "Metropolitan area" means the metropolitan area defined and described by JMS-250750vl SU160-3 Minnesota Statutes, chapter 473, as amended. Section 7. "Member' means a governmental unit which has entered into and become a party to this agreement. Section 8. "Public utility" or "utility" means an investor-owned utility supplying telecommunication services to member residents or gas or electricity under franchise within one or more governmental units; the term may include other utilities as provided in Article XI/. The term does not include municipally owned utilities; the term does include a governmental agency supplying sanitary sewer or other utility services to governmental units in the metropolitan area. Section 9. "Statutory cities" means cities organized under Minnesota Statutes, chapter 412. V. MEMBERSHIP Section 1. Any governmental unit in the metropolitan area is eligible to be a member of the Authority. Section 2. A governmental unit desiring to become a member must execute a copy of this agreement and conform to the membership provisions of this Article V. Section 3. A governmental unit wishing to become a member after the effective date of this agreement may be admitted only upon the favorable vote of two-thirds of the votes of the members of the Board of Directors present and voting at any regular or special meeting. The Board may, in its by-laws, impose conditions upon the admission of additional members. Section 4. The Board may, in its by-laws, establish procedures for temporary membership for governmental units for specified periods of time not exceeding one year with or without the payment of contributions or with the payment of reduced contributions as determined under Article X. ff such memberships are authorized, the cumulative votes of all temporary members may not exceed 25% of the total votes of the directors of permanent members. Section 5. A change in the governmental boundaries, structure, classification or JMS 250750vl SU160-3 organization of a governmental unit does not affect the eligibility of a unit to become or remain a member of the Authority. VI. GOVERNING BODY: BOARD OF DIRECTORS Section 1. The governing body of the Authority is its Board of Directors. Each member is entitled to one director on the Board. Each director is entitled to one vote for each 5,000 of population or fraction thereof, as determined by the official U.S. Census each decade, of the governmental unit represented by the director; provided, however, that each director must have at least one vote and no director may have more than 20 votes. Phor to December 31 of each year following the decennial census, the Secretary-Treasurer of the Authority must deterInine the population of each member in accordance with this section and certify the results to the chairman. Section 2. A director is appointed by resolution of the council of the members for a term of one calendar yew. A director serves until a successor is appointed and qualifies. Directors serve without compensation from the Authority, but nothing in this section is to be construed to prevent a governmental unit from compensating its director for service on the Board if such compensation is otherwise authorized by law. Section 3. The Board, in its by-laws, may provide for the appointment of alternate directors and prescribe the extent of their powers and duties. Section 4. Vacancies in the office of director will exist for any of the masons set forth in Minnesota Statutes, section 351.02, or upon a revocation of a director's appointment by a member duly filed with the Authority. Vacancies are filled by appointment for the unexpired portion of the term of director by the council of the member whose position on the Board is vacant. Section 5. A majority of the votes of the Board of Directors constitutes a quorum, but a smaller number may adjourn from time to time. The votes of temporary members authorized by Article V, Section 4 are not to be considered in determining the presence or absence of a quorum of JMS-250750vl SU160-3 the Board. VII. MEETINGS: ELECTION OF OFFICERS Section 1. A governmental unit may enter into this agreement by resolution of its council and the duly authorized execution of a copy of this agreement by its proper officers. Thereupon, the clerk or other appropriate officer of the governmental unit must file an executed copy of the agreement and a certified copy of the authorizing resolution with the finance director of the City of Columbia Heights, Minnesota. The resolution authorizing the execution of the agreement must also designate the first director for the governmental unit on the Board. Section 2. This agreement is effective on the date when executed agreements and authorizing resolutions of the governmental units presently members of the existing Suburban Rate Authority have been filed as provided in Section 1 of this Article. Section 3. Within 30 days after the effective date of this agreement, the mayor of the member having the largest population must call the first meeting of the Board of Directors which must be held no later than the date of the next regularly scheduled quarterly meeting of the Authority. Section 4. The first meeting of the Board will be the organizational meeting of the Authority. At the organizational meeting, and at each annual meeting thereafter, the Board must select from among the directors a chairman, a vice-chairman, and a secretary-treasurer. Section 5. At the organizational meeting, or as soon thereafter as it may reasonably be done, the Board must adopt by-laws governing its procedures, including the time, place, notice for and frequency of its regular meetings, procedure for calling special meetings, and such other matters as are required by this agreement. The Board may amend the by-laws from time to time. The Board must meet at least once each year and on such other dates as may be provided in its by-laws. The annual meeting is held in the month of January unless otherwise provided in the by-laws. JMS-250750v 1 SU160-3 VflI. POWERS AND DUTIES OF THE BOARD OF DIRECTORS Section 1. The powers and duties of the Board of Directors of the Authority are set forth in this article. Section 2. The Board may make such contracts and enter into such agreements as it deems necessary to make effective any power granted to the Authority by this agreement. It may contract with any of its member governmental units or others to provide space, services or materials on behalf of the Authority. Section 3. The Board may provide for the prosecution, defense, or other participation in actions or proceedings at law in which it may have an interest, and may employ counsel for that purpose. It may employ such other persons as it deems necessary to accomplish its powers and duties. Such employees may be on a full-time or part-time, or consulting basis as the Board determines, and the Board may make any required employer contributions that local government units are authorized or required to make by law. Section 4. The Board may conduct such research and investigation and take such action as it deems necessary, including participation and appearance in proceedings of state and federal regulatory, legislative or administrative bodies, on any matter related to or affecting utility costs, levels of service, rates or franchises, and advise members concerning such matters with a view toward obtaining compliance with franchises granted to utilities and insuring reasonable rates and service levels for the members and their residents. The Board may conduct the activities authorized by this section on behalf of any governmental unit located outside the metropolitan area at the request of such a unit, embodied in a resolution of its governing body; provided however, that the conduct of such activities on behalf of any such governmental unit must be specifically authorized by the Board and shall be subject to such reasonable conditions as to cost of service and other matters as may be imposed by the Board. JMS-250750v 1 SU160-3 Section 5. The Board may obtain from any utility and from any other source such information relating to utility rates, costs and service levels as any of its members is entitled to obtain from such utilities. Section 6. The Board may receive and hold moneys from any utility to the extent and in the manner as may be provided by this agreement or any franchise granted to a utility by a member; and it may accept voluntary contributions from its members or other sources as provided in Article X. The Authority has no taxing power. It may accumulate reserve funds and may invest and re-invest its funds not needed for current expenses in the manner and subject to the limitations applicable by law to statutory cities. The Board may not incur obligations in excess of funds then available to the Authority. Section 7. The Board must make a financial accounting and report to the members at least once each year. The books and records of the Authority will be open and available for inspection by members at all reasonable times. Section 8. The Board may accept gifts, apply for and use grants of money or other property from members or other governmental units or organizations, and may enter into agreements required in connection therewith, and may hold, use, and dispose of such moneys or property in accordance with the terms of the grant, gift or agreement relating thereto. Section 9. The Board must establish the annual budget for the Authority as provided in Article X. Section 10. The Board may, in its by-laws, establish an executive committee and may delegate duties and authority to the executive committee between Board meetings. Section 11. The Board may purchase public liability insurance and such other security bonds and insurance as it may deem necessary. Section 12. The Board may, on behalf of the Authority or on behalf of a number of member JMS-250750vl SU160-3 governmental units or nonmember governmental units, or both, enter into contracts, at the request of such units, with public utilities within or without the state for the purchase and delivery of utility products and services for those governmental units. Section 13. The Board may exercise any other power necessary and convenient to the implementation of the powers and duties given to it by this agreement. IX. OFFICERS Section 1. The officers of the Bo~d are a chair, a vice-chair, and a secretary-treasurer elected by the Board for a term of one year and until their respective successors are elected and qualify, at the annual meeting. New officers take office at the adjournment of the annual meeting at which they were elected. An officer must be a duly qualified and appointed director. A director from a temporary member may not be an officer. Section 2. A vacancy in the office of chair, vice-chair, or secretary-treasurer occurs for any of the reasons for which a vacancy in the office of director occurs. Vacancies in these offices and filled by the Board for the unexpired portion of the term. Section 3. The chair presides at meetings of the Board. The vice-chair acts as chairman in the absence, disqualification or disability of the chairman. Section 4. The secretary-treasurer is responsible for keeping a record of the proceedings of the Board, for custody of funds, for keeping of financial records of the Authority and for such other duties as may be assigned to the Secretary-Treasurer by the Board. Persons may be employed to perform such services under the supervision and direction of the secretary-treasurer as may be authorized by the Board. The secretary-treasurer must post a fidelity bond or other insurance against loss of Authority funds in the account specified by the Board. The cost of such bond or insurance to be paid by the Board. The Board may provide for compensation of the secretary-- treasurer for services to the Board. JMS-250750v 1 SU160-3 X. FINANCIAL MATTERS Section 1. The fiscal year of the Authority is the calendar year. Section 2. Authority funds may be expended in accordance with the procedures established by law for statutory cities. Orders, checks and drafts must be signed by the chairman and countersigned by the secretary-treasurer or such other person as may be designated by the Board in its by-laws. Other legal instruments must be executed on behalf of the Authority by the chairman and the secretary-treasurer. Contracts must be let and purchases made in accordance with the procedures established by law for statutory cities. Section 3. The activities of the Authority may be financed by funds available to it under Article VIII, from voluntary contributions from its members or from other sources, and by contributions from members of the Authority if it is determined by the Board by a two-thirds vote, by written action or at a regular or special meeting, of all votes of then existing members, that such contributions are necessary. This determination must be made by the Board not later than August 1 of each year in order to obligate members to make contributions during the ensuing calendar year. The total annual contribution by members for the ensuing year is established by the Board on the basis of anticipated expenditures and only if the anticipated expenditures are in excess of the anticipated funds otherwise available to the Authority. The contribution in any year by a member must be in direct proportion to the number of votes to which the director representing the member on the Board is entitled. Contributions must be made by the member to the Authority as follows: one-half on or before April 1 of each year and one-half on or before September 1 of each year. Section 4. An annual budget must be adopted by the Board at the regular meeting in July of each year. If a quorum is not present at the regular meeting in July, the budget may be adopted by unanimous vote of the executive committee. chief administrative office of each member. JMS-250750vl SU160-3 Copies of the budget must be mailed promptly to the The budget is deemed approved by the members except one who, at any time prior to the annual meeting gives notice in writing to the secretary- treasurer that it is withdrawing from the Authority. Yd. DURATION AND DISSOLUTION Section 1. The Authority will exist, and this agreement is in effect, for an indefinite term until dissolved in accordance with Section 3 of this article. Section 2. A member may withdraw from the Authority by filing a written notice with the secretary-treasurer by June 15 of any year giving notice of withdrawal at the end of that calendar year; and membership shall continue until the effective date of the withdrawal. A notice of withdrawal may be rescinded at any time by a member. If a member withdraws before dissolution of the Authority, the member will have no claim on the assets of the Authority. Section 3. The Authority must be dissolved whenever the withdrawal of a member reduces total membership in the Authority to less than seven. The Authority may be dissolved at any time by unanimous vote of all the members of the Board of Directors. Section 4. In the event of dissolution, the Board must determine the measures necessary to effect the dissolution and provide for the taking of such measures as promptly as circumstances permit, subject to the provisions of this agreement. Upon dissolution of the Authority all remaining assets of the Authority, after payment of obligations, must be distributed among the then existing members in proportion to the number of their votes on the Board and in accordance with procedures established by the Board. The Authority will continue to exist after dissolution for the period, no longer than six months, necessary to wind up its affairs but for no other purpose. XII. TRANSITIONAL AND MISCELLANEOUS MATTERS Section 1. The activities of the Authority are to be confined to telecommunications, sewage disposal, gas and electric utilities, provided however, that the Authority may extend and broaden its activities to any other public utility as defined in this agreement by a 75% majority vote of all the JMS-250750vl SU160-3 votes of the Board of Directors, taken at a regular meeting of the Board. In the event the activities of the Authority are so extended and broadened, the Authority and its Board of Directors have all of the powers and duties with reference to any other public utility that they have with reference to gas, telecommunications, sewage disposal and electric utilities under this agreement. Section 2. The name of the organization created by this agreement may be changed when deemed appropriate by the Board, but only upon a 75% majority vote of all the votes of the Board of Directors taken at a regular meeting of the Board or by written action. If the name of the organization is so changed, the Board must provide in its by-laws for necessary measures to effect the change in official and unofficial documents, papers, and other essential respects. Section 3. It is the intention of the parties to this agreement that the organization created hereby is the successor to the Suburban Rate Authority in existence on the day prior to the effective date of this agreement. It is further the intention of the parties that any funds made available to the organization created by this agreement from assets of the prior Suburban Rate Authority must be used exclusively for the purposes of this agreement. The adopted budget of the prior Suburban Rate Authority remains in effect until revised and until the new annual budget is adopted. The adoption of this agreement does not affect or modify the obligation of members of the prior Suburban Rate Authority to make contributions authorized by the prior Suburban Rate Authority. JMS-250750v 1 SU160-3 IN WITNESS WHEREOF, the undersigned governmental unit has caused this agreement to be executed by its duly authorized officers and delivered on its behalf. (Governmental unit) By Its Mayor , Minnesota By Its Manager Dated: ., 2004 Filed in the office of the finance director of the City of Columbia Heights this __ ,2004. day of JMS-250750vl SU160-3