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Home My WebLink AboutCouncil Information Memorandum 11-10-2011CITY OF PLYMOUTH rp) COUNCIL INFO MEMO November 10, 2011 UPCOMING MEETINGS AND EVENTS Planning Commission Agenda 11/16/11.............................................................................................. Page 1 HRA Agenda 11/17/11 ......................................................................................................................... Page 2 November, December, 2011 and January 2012 Official City Meeting Calendars .............................. Page 3 Tentative List of Agenda Items for Future City Council Meetings ..................................................... Page 6 INFORMATION News Articles, Releases, Publications, Etc ... Cities weigh services that don't pay their way, article, StarTribune................................................... Page 7 Ehlers Market Commentary, 11/08/11............................................................................................... Page 10 STAFF REPORTS Engineering Dept. Hollydale 11 5K Transmission Line Report ...................................................... Page 13 CORRESPONDENCE Letter from MN Public Utilities Commission, RE: Notice of Comment Periods and Deadlines in the Matter of the 2011 Minnesota Biennial Transmission Projects Report ............................. Page 25 PLANNING COMMISSION AGENDA WEDNESDAY, November 16, 2011 WHERE: CITY COUNCIL CHAMBERS Plymouth City Hall 3400 Plymouth Boulevard Plymouth, MN 55447 CONSENT AGENDA All items listed on the consent agenda are considered to be routine by the Planning Commission and will be enacted by one motion. There will be no separate discussion of these items unless a Commissioner, citizen or petitioner so requests, in which event the item will be removed from the consent agenda and considered in normal sequence on the agenda. 1. CALL TO ORDER - 7:00 P.M. 2. PLEDGE OF ALLEGIANCE 3. PUBLIC FORUM 4. APPROVAL OF AGENDA 5. CONSENT AGENDA A. Approve the November 2, 2011 Planning Commission meeting minutes. B. Phoenix Signs. Variance to expand an existing off-site directional sign at 3015 Harbor Lane. (2011086) 6. PUBLIC HEARINGS A. City of Plymouth. 2012-2016 Capital Improvement Program. (2011087) 7. NEW BUSINESS 8. ADJOURNMENT Page 1 MEETING AGENDA PLYMOUTH HOUSING AND REDEVELOPMENT AUTHORITY THURSDAY, NOVEMBER 17, 2011 - 7:00 p.m. WHERE: Medicine Lake Room City of Plymouth 3400 Plymouth Boulevard Plymouth, MN 55447 CONSENT AGENDA All items listed on the Consent Agenda are considered to be routine by the Housing and Redevelopment Authority and will be enacted by one motion. There will be no separate discussion of these items unless a Commissioner, citizen or petitioner so requests, in which event the item will be removed from the consent agenda and considered in normal sequence on the agenda. 1. CALL TO ORDER - 7:00 P.M. 2. CONSENT AGENDA A. Approve HRA Meeting Minutes from October 27, 2011. B. Plymouth Towne Square. Accept Monthly Housing Report. C. Vicksburg Crossing. Accept Monthly Housing Report. 3. PUBLIC HEARING A. Section 8 Program. Proposed changes to the Housing Choice Voucher Administrative Plan. 4. NEW BUSINESS A. Vicksburg Crossing. Marketing Report. 5. ADJOURNMENT Page 2 City of Plymouth Adding Quality to Life November 2011 Modified on 11/10/11 Page 3 1 2 7:00 PM 3 7:00 PM 4 5 PLANNING HUMAN RIGHTS COMMISSION COMMITTEE MEETING MEETING Medicine Lake Room Parkers Lake Room 6 7 8 8:00 Pm 10 11 12 REGULAR 7:00 PM COUNCIL MEETING ENVIRONMENTAL Medicine Lake Room QUALITY VETERANS DAY SPECIAL COMMITTEE Observed COUNCIL MEETING (EQC) MEETING CITY OFFICES Immediately Follow- Council Chambers CLOSED ing Regular Meeting Budget Study Session Medicine Lake Room 13 14 15 16 17 18 19 6:00 PM 7:00 PM 7:00 PM SPECIAL COUNCIL PLANNING HRA MEETING MEETING COMMISSION Medicine Lake Room Board and Commission MEETING Interviews Council Chambers Medicine Lake Room 20 21 22 23 24 25 26 7:00 PM REGULAR COUNCIL. MEETING Council Chambers THANKSGIVING THANKSGIVING HOLIDAY HOLIDAY CITY OFFICES CITY OFFICES CLOSED CLOSED 27 28 29 30 7:00 PM PLYMOUTH ADVISORY COMMITTEE ON TRANSIT (PACT) MEETING Medicine Lake Room Modified on 11/10/11 Page 3 City of Plymouth Adding Quality to Life December 2011 Modified on 11/10/11 Page 4 1 2 3 4 2:00-5:00 PM 5 6 7 7:00 PM 8 7:00 PM 9 10 OLD FASHIONED PLANNING PARK Et REC CHRISTMAS COMMISSION ADVISORY Plymouth Historical MEETING COMMISSION Society Building Council Chambers (PRAC) MEETING Council Chambers 11 12 13 14 7:00 PM 15 16 17 7:00 PM ENVIRONMENTAL REGULAR COUNCIL QUALITY MEETING COMMITTEE (EQC) Council Chambers MEETING Council Chambers 7:00 PM CHARTER COMMISSION ANNUAL MEETING Medicine Lake Room 18 19 20 21 22 23 24 7:00 PM HRA MEETING Medicine Lake Room Chanukah CHRISTMAS EVE Begins at Sunset 25 26 27 28 29 30 31 CITY OFFICES NEW YEAR'S EVE CLOSED CHRISTMAS DAY Modified on 11/10/11 Page 4 r�Plymouth Adding Quality to Life January 2012 1 2 3 4 5 6 7 NEW YEAR'S DAY 7:00 PM Observed PLANNING NEW YEAR'S DAY COMMISSION MEETING CITY OFFICES Council Chambers CLOSED 8 9 10 11 12 13 14 7:00 PM 7:00 PM 7:00 PM REGULAR COUNCIL ENVIRONMENTAL PARK Et REC MEETING QUALITY ADVISORY Council Chambers COMMITTEE COMMISSION (EQC) MEETING (PRAC) MEETING Council Chambers Council Chambers 15 16 17 18 19 20 21 7:00 PM PLANNING MARTIN LUTHER COMMISSION KING JR. MEETING BIRTHDAY Council Chambers Observed CITY OFFICES CLOSED 22 23 24 25 26 27 28 7:00 PM 7:00 PM REGULAR COUN- PLYMOUTH 7:00 PM CIL MEETING ADVISORY HRA MEETING Council Chambers COMMITTEE ON Medicine Lake Room TRANSIT (PACT) STUDY SESSION Medicine Lake Room 29 30 31 Modified on 11/10/11 Page 5 Tentative Schedule for City Council Agenda Items November 221, Regular, 7:00 p.m., Council Chambers • Announce Old Fashioned Christmas on December 4 • Approve donations to the City (Parks) • Approve change order and final payment for lighting project • Approve change order and final payment for Plymouth Skate Park • Adopt ordinance amending Section 1016 of the City Code regarding Plymouth Ice Center fees • Plymouth Arts Council update • Approve final payment for the Plymouth Dog Park project • Approve Reduction in Retainage for Annapolis Lane Reconstruction Project (11002) • Approve Final Payment for 2011 Edge Mill and Overlay Project (110 12) • Encroachment Agreement for Retaining Wall at Lot 1, Block 1, Seven Greens Second Addition • Approve Lift Station Maintenance Agreement with the City of Medicine Lake • Award contract for Well No. 17, Central Well Field (10024) • Approve plans and specifications for M.I.P. Water Tower refurbishing (1002 1) • Accept Streets for Continual Maintenance for Taryn Hills 8' (2008058) • Approve Metropolitan Council Transit Capital Grant Agreement for replacement of Bus Shelters • Approve Metropolitan Council Transit Capital Grant Agreement for repair and maintenance at Station 73 and The Reserve • Approve drainage easement agreement for Fine property located between Old Rockford Road and Highway 55 • Receive proposals for engineering services and designate a consultant engineer for the Peony Lane/Lawndale Lane Extension (100 15) • Approve Extension of Preliminary and Final Plat for "Gutlovics Addition" for Property Located at the Northwest Corner of the Intersection of 26th Avenue and County Road 101 (200704 1) • Approve appointments of Board and Commission Members • Approve 2012 Council Coordinating Representatives and other agency appointments • Appointment of Deputy Mayor for 2012 • Accept the Four Seasons Mall Redevelopment Study and repeal an interim ordinance temporarily prohibiting development on the Four Seasons Mall site. City of Plymouth. (2010101) • Approve a variance to expand an existing off-site directional sign at 3015 Harbor Lane. Phoenix Signs. (2011086) • Approve Encroachment Agreement for retaining walls within platted drainage and utility easements in Wood Crest of Plymouth 2nd Addition December 131, Regular, 7:00 p.m., Council Chambers • Adopt the 2012 Budgets and Tax Levies and 2012-2016 Capital Improvement Program • Recognize Police Citizen Academy Graduates • Approve 2012 Tobacco License renewals • Approve 2012 Target and Trapshoot License Renewals • Approve 2012 Amusement License Renewals • Announce New Year's Eve Event at the Plymouth Ice Center • Announce Recycling Program changes • Introduce new K-9 Team Note: Special Meeting topics have been set by Council; all other topics are tentative. Page 6 Cities weigh services that don't pay their way Article by: Star Tribune, Mary Jane Smetanka Increasingly, the "fun stuff' owned and run by cities -- art centers, golf courses, community centers and swimming pools -- are no laughing matter. Some cash-strapped cities have started pulling money from funds intended to sustain these amenities to pay for other city needs, causing a cash crunch when a golf course or ice arena needs updating. Making matters worse, many of the amenities that are supposed to pay for themselves are losing money, leaving city officials debating what kind of financial standards those community assets should meet. Edina has hired a consultant to examine the operations of the city's Art Center and the indoor Edinborough Park, both of which recoup less than 80 percent of their cost. Richfield leased its mini -golf course to a private firm. Brooklyn Park is examining the future of golf operations, including Edinburgh USA, because course income is dropping along with interest in golf. "It's a question of whether the model still works," said Edina City Council member Josh Sprague. "I'm quite sure a business couldn't run at 75 percent efficiency." But Edina Mayor Jim Hovland said that view holds community features like art centers and pools to an unfair standard. "Business is designed to make a profit; government is designed to deliver a service," he said. "These were never designed to make a profit; they were intended as a benefit to residents." From golf to cemeteries By definition, city "enterprise operations" are usually expected to be self-sustaining through fees and charges. Those ventures can include municipal liquor stores, water a nd sewer funds and ice arenas. But cities across Minnesota also are running senior developments, nursing homes, fitness centers, and even laundromats and cemeteries as enterprise operations. Records collected by the state auditor's office show those operations are under increasing pressure from cities with tight budgets. Since 2006, large cities in the state have been pulling more of the profits from enterprise operations to spend on other city needs. In 2009, large cities transferred 71 percent of net income, or more than $151 million, out of enterprise operations. But profits can be hard to come by at ice arenas and art centers. Bloomington prohibits use of enterprise funds for other city needs. Page 7 Lori Economy-Scholler, the city's finance director, said that's because places like ice gardens will someday need repairs. Income from things like sale of city water, she said, can soar or plummet depending on the weather. "If they have fund balances, they won't need any subsidy," she said. "Why would you drain that for a one-time property tax fix?" A few years ago, the Brooklyn Park City Council pulled money from its golf enterprise fund to help pay debt service on an ice arena. City Finance Director Cory Kampf said golf operations have been covering their own costs, "but it's been tighter in the last two years or so." Golf employees were laid off in 2008 and equipment purchases were delayed. The City Council decision seemed sound at the time, Kampf said. "Hindsight is 20/20," he said. "They were trying to watch taxes.... If we'd retained those earnings, we'd be drawing on them to deal with the current downturn." In Richfield, the city's 18 -hole golf course once supported other enterprise operations. When the course was lost to airport expansion, the city was compensated with $880,000. That money is used to support operations like the city ice arena. The city also had an aging mini -golf course that needed updating and repair. Last spring, the city contracted those operations out to a private vendor. The vendor has most of the responsibility of running the course and city officials expect to go from losing $20,000 a year on the operation to making a tiny profit -- but a profit -- of $16. "It's a big improvement to our bottom line," said Jim Topitzhofer, recreation services director. Chaska has been able to keep most of its enterprise funds going without subsidies, partly because the city has its own electric utility that helps support other ventures. But the golf courses and the community center are aging and may soon need improvements. That means balancing value with quality, said City Administrator Matt Podhradsky. "We have to face the reality that ... if we don't have a top-notch amenity, people have choices with where they go to get their recreation," he said. Setting financial standards Indeed, cities are acutely aware that continuously raising fees will lead residents to visit the golf course or art center next door. Edina is wrestling with those issues now. Page 8 Edina's liquor stores cleared more than $1 million last year and its aquatic center also made money. But Braemar Arena, the golf courses, Centennial Lakes and Edinborough parks and Edina Art Center all lost money. The Art Center recouped just 71 percent of its cost, losing $221,000. Money from liquor store operations filled the gap. Sprague, the City Council member, believes operations that were intended to be self- supporting should have a set goal for cost recovery. "If they can't achieve 90 percent of cost recovery, then perhaps they should not be in operation or they should be merged with others," he said. If all enterprise operations met that standard this year, he said, the city could have shifted municipal liquor store profits to the city's general fund to avoid a tax increase. Sprague said he wants the enterprises to be successful, but that a more creative approach than just raising fees and cutting staffing needs to be taken. "Once we get the consultants' evaluation, we can break out of this box we've been in and the path will be clearer," Sprague said. "But in the interim, we cannot continue to subsidize these at this level. It's not sustainable." Hovland agrees that enterprise operations need to be more efficient. But he bristles at the idea that they should function as businesses do. He said cities run things like ice arenas at a loss because residents want them but businesses can't make a profit from them. "We need to figure out reasonable performance expectations," Hovland said. "But what do we do if they don't make a profit? Are you going to shut down Braemar or the Art Center? "These are the things that people think are important to the fabric of the community." Page 9 Ehlers Market Commentary November 8, 2011 Interest Rate Markets from 30,000 Feet? Frankly, we would be excited to publish an Ehlers' Market Commentary without once mentioning "Greece," the "Eurozone," or anything to do with our neighbors on the other side of the Atlantic. That being said, it also seems we can't get through a week without this soap opera causing tremendous volatility in our own corner of the world. One day the problem is solved and equity markets rocket higher, the next day the same elected officials and policy -makers decide they didn't mean what they said or that there are still just a few "i's" to dot and "t's" to cross before unloading the next multi -hundred billion Euro bailout package. The past two weeks alone have witnessed a compromise agreement on a voluntary haircut for private holders of Greek debt, to Greece's Prime Minister surprisingly putting that agreement and the next tranche of "bailout" funds that came with it to popular referendum, followed by said Prime Minister recanting on the referendum proposal and then agreeing to resign, and now we are seeing calls for the ouster of Italy's Prime Minister. Why do we continue to mention all this? It seems the world's attention is now being drawn away from the theatre in Greece to the elephant in the room: Italy. Just when we thought European leaders were dealing with the Greek situation in a way that was moving forward towards resolution (albeit at a glacial pace), we are beginning to witness the makings of the next problem in the chain. To put this in perspective, let us understand the nature of these two countries and their indebtedness. Greece's 2010 GDP was roughly $318 billion and reported gross debt is roughly $580 billion, or 182% of GDP. Italy is the Eurozone's third largest economy with 2010 GDP of $1.77 trillion; however, it carries the largest debt balance of any of its EU brethren with gross debt of approximately $2.6 trillion, or about 147% of GDP. As you can see by the sheer scale, the EU may be able to deal with the Greek problem, but there is not a bailout fund big enough to deal with solvency issues relative to Italy. As of the time this Commentary is being drafted, the yield on the Italian 10 -yr. Note is at its highest level since the inception of the Euro, at roughly 6.50%. Until there is some credible blueprint for dealing with the entirety of the issues and funding problems facing the members of the Eurozone, and by extension that continent's financial institutions (which are interconnected with our own), then this story will continue to be the tail wagging the global financial "dog." We cannot escape the fact that European banks are large holders of sovereign debt from these financially troubled countries. These banks, in turn, generate funding from inter -bank and other lending markets from larger money center banks and global financial institutions (including those in the U.S.). Unfortunately, as Warren Buffet reminded us in late 2008, we cannot know who has been swimming naked until the tide goes out. EHL E Rb'Oqh LEADERS IN PUBLIC FINANCE www.ehlers-inc.com Offices in Minnesota: (800) 552-1171 Wisconsin: (800) 717-9742 Illinois: (800) 417-1119 Page 10 Z....ommentary November 8, 20--Vill It is this fear of the unknown that is crippling world financial markets and creating the volatility we see in stocks and bonds on a daily basis. A sovereign default or "haircut" may not result in commercial and investment bank failures in our country a la 2008/2009, but we would not escape the financial shock unscathed. Just last week we saw a major casualty in the demise of brokerage and asset manager MF Global due to its leveraged exposure to primarily Italian and other troubled European debt. From 10,000 Feet The Federal Reserve's monetary policy body, the Federal Open Market Committee (FOMC), concluded its November meeting last Wednesday and released its policy statement. As was generally expected, there were no deviations from previous statements regarding how the FOMC would conduct itself and left its overnight lending rate in a range of 0.00% - 0.25% with a commitment to maintain these "exceptionally low levels" through mid -2013. Additionally, there was no change to that body's actions with respect to extending the average maturity in its U.S. Treasury portfolio ("Operation Twist") and reinvestment of proceeds in its agency mortgage securities portfolio in order to impact the mortgage market. The Fed also released its series of economic projections in conjunction with the aforementioned FOMC release. In summation, the group reduced its projections of economic growth for 2011 (from 2.67% - 2.70% down to 1.60% - 1.70%) and 2012 (3.30% - 3.70% down to 2.50% - 2.90%), as well as also reducing inflation expectations. This was all laid against the backdrop of a large rally in the Treasury market (increases in prices and reductions in yields). The chart below demonstrates the change in the yield of the 10 -yr. U.S. Treasury Note from October 10 through November 4. If you think this resembles a ride at your favorite amusement park, then we concur. UST 10 yr. Yield (%) 2.50 i I i 2.25 1 € € 2.00 f f { 1.75 o\10 o\titi o\yti o\ti�i o\1a o\y1 0\19� o\tiA o\tio o\yti o\ya o\yh o\y�O o\y1 o\y4� o\�ti yy\ti 11\ti 1y\�i 1�\a j--s--UST 10 yr. Yield EHLERS } LEADERS IN PUBLIC FINANCE Page 11 Ehlers Market Commentary November 8 201 In the course of less than one month, we went from a yield just over 2.00%, to right around 2.40% and then back to right around 2.00%. Needless to say, it is tough to gauge an outlook for the future when the present is so unsettled. From 1,000 Feet - Global financial instability, interest rate volatility, economic uncertainty - - we would certainly venture a guess that this all translates into a difficult market for municipal issuers. Well, it has been quite the opposite. National supply has ticked up to levels in the $8 billion a week range, with just under that amount for the week of November 7 (shortened by Veteran's Day). This is up from periods over the spring and summer months when volume was $2 billion - $4 billion per week. A lot of this activity is refunding, as we can certainly attest to. Market participants are indicating that this primary market volume is being absorbed fairly readily, with some pullback from retail buyers at these low rate levels. However, it seems that secondary market activity is a bit muted. This is not surprising given the level of volatility we have been experiencing and the fact that the calendar year is coming to an end. The continuation of high ratios of muni yields to Treasury yields continues to draw interest from non- traditional buyers who like the added yield, but don't much care about the tax exemption. This is consistent with our thoughts from earlier in the year when we first began to discuss the elevated tax- exempt/taxable ratios and the likely emergence of "cross-over" buyers to take advantage. Our attached summary of competitive sale results also confirms that municipal issuers are fording attractive borrowing costs and a strong pool of potential purchasers. There has been no meaningful change from the trend of higher credit quality being rewarded with aggressive bids, but "A" -rated and non -rated bonds are still seeing interest, as well as high-quality essential purpose revenue bonds. We would continue to urge you to formulate capital plans as you approach the start of the next fiscal year and the rapidly approaching construction season. While November and December tend to bring full issuance calendars as borrowers look to tap the market before year-end, January and February can bring some calm and windows of opportunity. You can discuss what may be your preferred approach with your financial advisor and bring those plans before your governing body for consideration. E LEApft- LEADERS IN PUBLIC FINANCE www.ehiers-inc.com Page 12 DATE: November 7, 2011 TO: Laurie Ahrens, City Manager FROM: Doran Cote, Public Works Director SUBJECT: HOLLYDALE 11 5k TRANSMISSION LINE The City Council has received a number of emails and correspondence regarding the above referenced Xcel Energy project. Residents in their correspondence often reference the Hiawatha Line and actions taken by the City of Minneapolis relative to the location of that line. The attached memorandums from Jim Strommen, legal counsel for the Suburban Rate Authority (SRA), summarize the actions taken thus far on the Hiawatha Line as well as the SRA's position relative to underground versus overhead in the case of power transmission and distribution lines. This information may be helpfiil to the City Council in addressing resident's concerns. attachments O: Engineering\GENERAL�MEMOS\DORAN\?011\Hollydale-HiawaSP".J fib` X YY »` 3 James M. Strommen ` �.+ 470 US Bank Plaza 200 South Sixth Street .. Minneapolis MN 55402 ° v" (612)337-92M telephone (612) 337-9310 fax email: jstronirnen@kennedy-graven.com kennedy-graven.com CHARTERED TO: Hiawatha Transmission Line Cost Committee FROM: Jim Strommen DATE: March 18, 2011 RE: Status Report on PUC Hiawatha Line Proceeding; Request for Committee Meeting Times BACKGROUND TO HIAWATHA LINE ISSUES A. SRA Interest This is a report to assist the Hiawatha Transmission Line ("Lines") committee in identifying the issues we will be discussing in the matter of the proposed undergrounding of Lines in Minneapolis and its policy and cost implications to the SRA and SRA member ratepayers. Following your review of this memorandum, I would like you to email me with potential dates for April and preferred locations for a meeting of the committee. At the SRA annual meeting in January, I reported that the City of Minneapolis has argued in a Public Utilities Commission ("PUC") proceeding for routing of two Xcel-proposed transmission lines in south Minneapolis, that the Lines be undergrounded and that the cost be borne by the general ratepayer. This raises SRA member residential and business (mostly served by Xcel) cost issues of paying for a more expensive facility requested by a city in another location within the service territory. It presents an important opportunity to fin-ther develop policy issues the SRA itself was instrumental in first establishing ten years ago regarding:. 1. Xcel standard facilities (typically overhead — at general ratepayer cost) versus special facilities (typically underground — at a subset of ratepayers cost); and 2. If the PUC agrees that facilities are "special", which ratepayer group pays for the incremental undergrounding cost over and above overhead cost. 384036v1 JMS SU160-3 Page 14 From 1999-2002, the SRA worked with Xcel in modifying its tariff provisions regarding recovery of the incremental cost for undergrounding distribution lines. This Minneapolis transmission line proceeding will require the PUC to establish further standards on both the Lines and also distribution lines. This PUC decision will impact suburbs when faced with similar transmission and distribution line considerations. The PUC has not yet made any decision on the Lines. Therefore, the SRA has an opportunity to help formulate these PUC cost responsibility standards. Note that for the Lines, the City does not have authority to order undergrounding, which is subject to PUC Route and CON authority. That is not the case with distribution lines. Under Section 216B.36 of Minnesota Statutes, cities have the authority to require undergrounding of distribution lines of electric utilities. Cities may have retained the right to order shorter distances and lower voltages of transmission lines underground. But when the statute vests authority in the PUC for Route and CON Proceedings, interested cities can only participate as parties. Their permitting and zoning rights are preempted. See,. Minn. Stat. § 216E.10. B. Certificate of Need Proceeding The PUC recently opened PUC proceeding no. E00.2/CN-10-694 identified as the "Hiawatha 115 kV HVTL Project." This proceeding involves Xcel Energy's legislatively -required request for a Certificate of Need ("CON") from the PUC for the requested Lines to provide additional power to the south Minneapolis area, bordered on the east side by Hiawatha Avenue (route of the LRT) and on the west by the Midtown development area on Lake Street and Chicago Avenue South (hereafter "CON Proceeding"). On March 16, 2011, a public hearing was held in the CON Proceeding at a south Minneapolis location. Its purpose was to explain the Proceeding to the public. At the hearing, both Xcel and the state Office of Energy Security ("OES") explained the process and the status of the previous Route Proceeding. Xcel explained why it is necessary to add Lines to service growth and development in the area, emphasizing the addition of high density housing, businesses, urban revitalization projects, hospital growth such as the Children's Hospital addition on 26th and Chicago, and the Midtown development at Chicago and Lake Street. It did not attribute the need for this additional transmission of electricity to the Hiawatha LRT itself, but rather to the development is has helped to generate. At the hearing, there were representatives from the neighborhood groups affected by the Lines. Most of the continents expressed concerns for the environmental impact and urged further consideration of conservation efforts to eliminate the need for Lines. There is no doubt that these Proceedings and the cost decisions that flow out of them will have a high profile, both with neighborhood groups and with the Minneapolis City Council. 384036v17MS SU160 3 Page 15 C. Route Permit Proceeding The CON Proceeding was preceded by a Route Proceeding before the PUC, designated as docket no. ET2/TL-09-38 (hereafter "Route Proceeding"). The Route Proceeding is on hold now and has developed an extensive evidentiary record during 2009 and 2010 regarding Line route options and whether they should be installed overhead or underground. There was also a record established on the cost of the alternatives, The Route Proceeding now awaits completion of the CON Proceeding, which became necessary because of 2010 legislation requiring a CON if a proposed transmission line route would be in a city of the first class where the population density exceeds 8,000 persons per square mile, i.e. passed to allow greater input for the Lines. See, 2010 Minn. Laws. Ch. 361, art. 5, sec. 19. The Route Proceeding has produced an October 8, 2010, the administrative law judge report and recommendations to the PUC ("ALJ Report"). I have read the ALJ Report as well as excerpts from the extensive testimony and briefing submitted in the Route Proceeding. The Route Proceeding has been stayed following the ALJ Report and pending the completion of the CON Proceeding. The OES and PUC staffs expect that a PUC decision on the Route and CON Proceedings will be made this fall. The October 8, 2010 ALJ Report recommends to the PUC that the Lines be installed underground in a concrete conduit along 28h Street. The Report does not give an opinion on the cost bearer of the undergrounding but the general rule is that if the Lines are undergrounded as "standard" facilities, all of Xcel's ratepayers will bear the cost of the Lines. If the undergrounding is ordered and deemed to be a special facility, the general ratepayer will bear only the cost that would have been imposed for overhead Lines and some smaller, regional ratepayer group will pick up the incremental additional cost to underground. The utility shareholders are not required to bear the cost of such facilities because they are deemed by the PUC to be reasonable and necessary in the delivery of electricity to customers. All such costs are recovered from ratepayers. The City of Minneapolis argument for undergrounding is premised on the position that underground installation in these circumstances should be Xcel's "standard" facility rather than a "special" facility. The City of Minneapolis position raises an important policy issue for this committee and the SRA to consider. The "standard" Xcel describes in its tariff is its "least cost" reliable alternative under the "particular circumstances." Predictably, standard is usually overhead, Xcel standard since the 1850s when its predecessor started putting up poles and wires along the rights-of-way. Underground transmission or distribution lines are designated as a "special" facility by Xcel, except for newer developments and downtown areas or where Xcel often installs underground lines. The City of Minneapolis created a substantial record and made persuasive arguments, ultimately adopted by the ALJ, that the Lines should be underground because: 384036v17MS SU160-3 Page 16 1. This high density area (contrasting its 8,700 average per square mile with suburban examples of 1000 — 1400 persons per square mile) is like a downtown where Xcel already undergrounds transmission and distribution lines as standard facilities. 2. The Greenway corridor (a below grade rail corridor along 28th Street now owned by Hennepin County) is protectable from overhead lines as a "Historic District" within the meaning of the Minnesota Environmental Rights Act. 3. Greenway's recreational features (biking, running trails) would be impaired by overhead lines. 4. Development and property values would be impaired by overhead Lines. 5. The economically disadvantaged area surrounding the Lines would suffer additional environmental detriment (visual and safety) with overhead Lines. 6. Underground Lines will be more reliable than overhead. 7. There may be barriers to HUD and FHA financing created by the presence of overhead Lines within densely populated areas in close proximity to the Lines. Hennepin County also took part in the Route Proceeding. As owner of the Greenway Corridor through its Regional Railroad Authority, the County made similar arguments in favor of undergrounding the Lines. Xcel recommended installing overhead Lines at various alternative locations. The ALJ has recommended the undergrounding of the Lines at an estimated total cost of approximately $42,002,250. An overhead route for these Lines has been estimated at approximately $28,390,000. Therefore, the incremental cost over and above an overhead Line (Xcel's standard facility) will be approximately $13,612,250. This number is likely to change but the order of magnitude will be in this range. The Route Proceeding record contains cost estimates depending on what group of ratepayers was to bear the incremental additional underground cost. For example, if all Xcel electric customers were to pick up the entire $42,002,250 and the costs were recovered over five years, it would cost each residential customer an additional $.15 a month for 58 months; $.20 for 60 months for the preferred underground route D (and business customers would pay an amount not contained in the materials I reviewed). If the incremental undergrounding costs were spread only throughout the seven county metropolitan area served by Xcel, the cost would increase for those customers to $.26 a month for 60 months for route D. If those incremental costs were borne solely by the ratepayers of the City of Minneapolis, the surcharge for residential customers would be $1.39 per month for 60 months, in additional to their portion of the cost deemed necessary if the Lines were to be installed overhead (a general ratepayer expense). 384036v1 JMS SU160-3 Page 17 Thus, for a resident in an SRA city served by Xcel, the difference between paying for none of the incremental estimated undergrounding cost versus paying as a general ratepayer would be only $6.60 over five years (general ratepayer overhead portion plus surcharge as seven county Metro customer). Thus, the actual out-of-pocket cost to SRA ratepayers in the allocation issue for an underground transmission line is minimal even for a financially strapped resident, $6.60 extra spread out over five years. Notwithstanding the low cost impact, there are still two issues of importance to consider in establishing SRA policy on this and similar utility cost issues: When a facility should be standard and paid by the general ratepayer and what criteria the PUC should use to determine the area of benefit from an undergrounding decision if the undergrounding is deemed "special." Note that the rule for distribution line undergrounding ordered by the city is that the ratepayers of that city pay the surcharge for the incremental addition cost for undergrounding. Any larger surcharge area (such as implicated by the Route and CON Proceedings) would be an exception to the rule to be applied for transmission lines and probably distribution lines. Confused yet? A. Standard versus Special Facility. The argument advanced by the City of Minneapolis is one with which, in principle, I believe the SRA can align itself. Xcel has maintained a "19'' century" definition of standard facility that manifests itself in the wooden poles and overhead lines one sees in all areas of the urban and outstate communities. Xcel insists that the most cost-effective and most easily repairable delivery system is through overhead transmission and distribution lines. 'While Xcel grudgingly Concedes that an underground distribution (and transmission) line is protected from blizzards and tornadoes, it argues that such lines can be vulnerable to rodents and other breaches that are difficult to locate when there is an interruption in the power. Therefore, Xcel does not advocate a plan of undergrounding its distribution lines over the long term and generally opposes undergrounding. It continues to install on an overhead basis unless ordered to go underground or it is compensated by developers in new developments for underground distribution lines. On the other hand, Xcel has stated that downtown areas are "standard" facility in that area. This is not a formalized tariff statement and probably varies in urban, suburban and rural settings. If relocation were necessary in an area with preexisting underground distribution lines, Xcel typically would relocate at no surcharge cost as a "special" facility. Undergrounding would then be deemed standard. Xcel has not, however, clearly defined what it considers to be the type of area where undergrounding would be standard as opposed to overhead lines, other than a general policy on the downtown area and whatever is already underground. The PUC has authority to make a determination under the general definition of Xcel's tariffs that a facility be deemed standard even if it is underground, based on "circumstances." So the question is whether a more predictable and definable set of criteria can be established to determine when an underground line is standard and 384036v1 JMS SU160-3 Page 18 when it is special. Transmission lines raise a more unique issue, as noted above, because the municipality does not have authority to make the decision regarding undergrounding. Note that the Minnesota Court of Appeals has already stated that underground lines are safer than overhead electric lines,, as a matter of law. Northern States Power v. City of Oakdale, 5$$ N.W.2d, 534 (Minn. Ct. App. 1999). One can argue that the greater the density of the population or record of traffic accidents near poles where the overhead or underground line is replaced, the more likely it is that underground should be a standard facility. This is a substantial part of the City's argument in the Route Proceeding regarding the Lines. P. The Zone of Ratepayers Responsible for Undergrounding Cost When (Tndergrounding is "Special" Assuming that the underground Lines are not deemed to be standard, the question becomes what group of ratepayers pays for the extra cost. It will not be the general Xcel ratepayer, but rather a subset of ratepayers. The electricity delivered through a transmission line to distribution line customers versus the group of people benefiting from the undergrounding of the transmission line are two separable arguments. In my view, one is the primary consideration in allocating ratepayer responsibility for undergrounding as a special facility and the other is only marginally relevant. Even if the Lines at issue deliver electricity to customers outside of Minneapolis, it should be largely irrelevant to the issue of paying for undergrounding costs. Those persons receiving electricity through that transmission line are equally benefited by an overhead delivery system as they are by an undergrounding system. It is the range of persons benefiting from the undergrounding that, in my view, is the most relevant criterion. In this case, the argument has been advanced that the need for additional Lines is driven by large hospitals (Abbott and Children's) that service people from all over the state, and by the LRT and other region -wide services that are not limited to the residents and businesses in the immediate area. Here again, the PUC has not established any criteria for determining when ratepayers other than those within the municipality should bear the incremental costs of undergrounding. It is difficult to determine what percentage of responsibility can be properly allocated to areas outside the immediate benefiting location of the underground transmission line. NEXT STEPS FOR COMMITTEE The CON Proceeding will not deal with the cost issues discussed above. When the CON process goes before the PUC, however, it is anticipated that the PUC will also take up the ALJ Report, Which includes the undergrounding decision. The PUC may take up the cost of that undergrounding at that time. However, depending on consensus or lack of consensus of parties, including Xcel Energy, the cost allocation decision may be the subject of a separate Proceeding that would commence this fall. 384036v1 JMS SU160-3 Page 19 It would be helpful for the committee to meet in April and no later than May to discuss the formulation of a recommended position to the SRA board. I would expect that by late -summer, the SRA may be called upon to articulate a position regarding the cost allocation of an underground Line, both l) standard versus special facility and 2) allocation of ratepayer cost if the undergrounding is deemed special facility. I welcome any of your thoughts on these issues. 384036v1 JMS SU160-3 Page 20 " CHARTERED James M. Strommen 470 US Bank Plaza 200 South Sixth Street Minneapolis MN 55402 (612) 337-9233 telephone (612) 337-9310 fax jstrommen@kermedy-graven.com httl2://www.kennedy-praven.c MEMORANDUM TO: Hiawatha Transmission Lines Committee FROM: James M. Strommen DATE: April 11, 2011 RE: April 8 Meeting The meeting was held at the Golden Valley City Hall beginning at 9:00 a.m. on Friday, April 8, 2011. Present were Jeannine Clancy, John Wallin, Jim Willis and Duane Schwartz. John Gunyou had a conflict and could not attend. The meeting adjourned at 10:20 a.m. This memo summarizes the Committee's consensus on the two major issues identified for SRA board discussion at the April 20 quarterly meeting in connection with the pending issue of cost recovery for Hiawatha transmission lines to be installed in South Minneapolis. Note, however, that this memo contains more than minutes from the meeting. I have added some information not discussed at the meeting, to assist in moving along the Committee process. Please get back to me regarding the accuracy of the consensus summary and as to any other issues you would like conveyed to the board for the April 20 meeting. Committee Consensus 1. Standard v. Special. The Committee agrees that the circumstances when underground transmission (or distribution) lines are regarded as "standard" under Xcel Electric tariffs, should be broader than it is now. The circumstances shown in the pending Hiawatha Transmission Lines ("Lines") justify a designation of "standard" for the underground option. 2. Ratepayer Allocation if Lines are Deemed "Special." Notwithstanding an SRA (and City of Minneapolis and Hennepin County) argument that the Lines should be underground as standard, the PUC may determine that underground installation for the Lines is "special." If so, the consensus is that the SRA should support a rate design for the Lines that shares ratepayer responsibility among City of Minneapolis ratepayers and Hennepin County ratepayers. This is based on the County -wide benefit from the regional centers driving the need for the Lines. 384840vl JMS SU160-94 1 Page 21 1. Discussion: Standard v. Special The Committee consensus was that the surrounding circumstances of the area in which the Lines would be installed warrant underground installation as standard. The ramifications of a standard designation to ratepayers are that all Xcel ratepayers pay equally, by class (e.g. residential, small commercial, large comm./industrial). Therefore, not only would Minnesota Xcel customers pay, but also all customers in Xcel's Upper Midwest service area, including Wisconsin, North Dakota and South Dakota. So the cost to the SRA member ratepayer for underground Lines as standard would be a few pennies a month, built in to general rates, because there is no surcharge for standard facilities. The only way it would be possible to have less of a rate consequence to SRA ratepayers would be if the PUC designated underground Lines as special and required only Minneapolis ratepayers to pick up the entire incremental cost. The Committee agreed this would be short- sighted and unlikely to happen. (see below). The Committee also reached a consensus that Xcel needs an updated, 21 st century, set of criteria for establishing its "standard" and "special" facility designations. The SRA needs to challenge Xcel's known resistance to undergrounding. The South Minneapolis conditions establish a strong case for undergrounding as the most reasonable way to install the Lines. The PUC will be establishing criteria in this case for its future determinations of standard and special. Present in the Hiawatha Lines and probably the criteria were a suburban transmission or distribution line to be evaluated on the standard/special basis, are the following characteristics: 1. High population density 2. Limited above ground corridor space for additional high voltage lines 3. The presence of park and trail amenities (Greenway Corridor) 4. Future development considerations (potential Light -Rail) 5. Improved safety (electrical shocks, stray voltage health issues) 6. Improved aesthetics 7. Improved reliability in storms 8. Avoidance of property value diminution E -10m over head lines 9. General environmental impact Discussed but not decided is the issue of defining how many of the above criteria and other criteria need be present for an underground as standard designation. This will be a key to broaden the standard designation in suburbs in situations that typically cannot match the number of elements favoring underground that are present in the Hiawatha Lines case. Note that transmission and distribution lines are the biggest issue for city ratepayers. But these criteria could be applied to substations and possibly other significant electric facilities that are either placed overhead or at least partially underground. At the one end of the spectrum, it is not very compelling to argue that transmission and distribution lines installed in rural areas or secluded residential neighborhoods should be 384840vl JMS SU160-94 2 Page 22 underground as standard. At the other end, there are certainly areas of high density (downtowns — community centers — large businesses) with compelling aesthetic and safety benefits to underground lines as standard. 2. Discussion: Ratepayer Allocation for Special Facilities If the PUC designates the underground Lines as "special", the issue of what ratepayers pay will be necessary to decide. This will present an equally if not more common issue suburbs will face in situations where the city orders undergrounding of transmission or distribution lines feeding large centers such as a downtown, community center or involving a large business employing people from around the Twin Cities. The Committee consensus favors a broader ratepayer recovery area in the Hiawatha Lines case, beyond just the ratepayers of the City of Minneapolis. The Committee recognizes that arguing for a broader surcharge area in certain circumstances allows suburbs to utilize such a precedent in future cases they may have. That is, the SRA needs to be careful not to argue for a narrow rule limiting surcharge rates only to the City of Minneapolis because any given SRA city may itself be harmed by a narrow rule in the case of a future underground requirement ordered by that SRA city seeking a wider surcharge area. It was noted that the need for the additional Lines is generated by large hospitals and business centers used by people outside of the City. This situation could very well occur in any of the SRA member communities where a large employer drawing workers from all over the Twin Cities needs more power and that need drives new distribution or even transmission lines. It was suggested that a special facility cost spreading could be allocated 20% to Minneapolis ratepayers and 80% to other areas in Hennepin County. The broadest regional area would probably incorporate the seven county metropolitan area — to the extent served by Xcel of course. Note, however, that the Committee did not have any population data available to it. In fact, by the 2010 census, Minneapolis comprises almost exactly one third of the population of Hennepin County. Thus, any percentage of surcharge responsibility that falls below 33% would require Minneapolis ratepayers to pay less than if Hennepin County were simply designated as the surcharge recovery area. I think the point made at the meeting was that the cost should be shared based on the range of beneficiary area. The most immediate beneficiaries are those who live in the area. The underground lines give them greater safety, aesthetics and avoid property value loss. Therefore, one could make the case for a 67% (Mpls) -33% (remaining Henn Cty) sharing of the surcharge. The Hennepin County portion would acknowledge use of e.g. Abbott Northwestern/Childrens Hospital/Light Rail by those in Hennepin County living outside of Minneapolis. In other situations more germane to an SRA city, it could have a large employer or a shopping area that is frequented by persons in surrounding municipalities. Ratepayers in those 384840vl TMS SU160-94 3 Page 23 municipalities may be justified in sharing the cost of undergrounding due to their frequent use of the center. An appropriate adjoining city, however, may not be served by Xcel. So even if the need for the additional power to a downtown suburban area, is driven by people in a neighboring city to the south, that doesn't mean that Xcel can spread the cost there if that is not within Xcel's service territory. That is the exception rather than the rule, however, with respect to Xcel Electric around the Twin Cities and SRA members. In sum, the Committee was open to exploring the policy of criteria for special facilities cost sharing beyond the ratepayers in the city where the undergrounding takes place. It was observed that it is better to have the policy established at the PUC level so that if there is an undergrounding by a city in one of these situations (e.g., downtown), the policy will be applied by the PUC and the city will not necessarily be pitted against its neighboring community for a ratepayer sharing. Without an established PUC policy, if any of the SRA cities seek to include a wider range of ratepayers to pick up the surcharge, the SRA city itself would be forced to choose the adjoining cities and argue for their ratepayers' inclusion in the surcharge area. Please provide your comments prior to the April 20, if possible. Thanks. 384840vl JMS SU160-94 4 Page 24 111 HEST9•�, v .•�SpfLi pp,y •.fA STATE OF MINNESOTA PUBLIC UTILITIES COMMISSION DATE: November 4; 2011 TO: Service List FROM: Burl W. Haar, Executive Secretaryc: t� (�/ ��- DOCKET: E -999/M-11-445 SUBJECT: In the Matter of the 2011 Minnesota Biennial Transmission Projects Report RE: NOTICE OF COMMENT PERIODS & DEADLINES TAKE NOTE that on November 1, 2011 the Minnesota Transmission Owners filed the 2011 Minnesota Biennial Transmission Projects Report with the Minnesota Public Utilities Commission (Commission). The Biennial Transmission Projects Report is required under Minn. Stat. §216.2425. The rules governing the review process are in Chapter 7848. The informational requirements are found in Minn. Rules 7848.1300. NOTE the timing requirements under Minn. Rules 7848.1800, subparts (2), (4), (5) and (7). Challenges to completeness must be received within 20 days of the initial filing. Petitions to intervene, as well as initial comments on the merits of the Report, including procedural recommendations and the identification of contested issues should be filed by January 17, 2012. Reply comments are due by March 1, 2012. The Commission is required to accept, reject, modify or require further action by June 1, 2012. Comments on completeness will be accepted through 4:30 p.m. on Monday, November 21, 2011. Petitions to intervene, as well as initial comments on the merits of the 2011 Report, will be accepted through 4:30 p.m. on Tuesday, January 17, 2012. Replies accepted through 4:30 p.m. Thursday, March.1, 2012. The Report can be found on the web at www.minnelectrans.com. All filings of record can be reviewed in Docket 11-445 on-line at www.puc.state.mn.us using the eDockets link. Questions regarding this matter may be directed to Commission staff person Ben Stearney at (651) 201-225336 or ben.stearney@state.mn.us. This document can be made available in alternative formats (i.e., large print or audio) by calling 651.296.0406 (voice). Persons with hearing or speech disabilities may call us through Minnesota Relay at 1.800.627.3529 or by dialing 711. www puc. s tate. mn. us PHONE (651) 296-7124 • FAX (651) 297-7073 • TDD (651) 297-1200. 121 7th PLACE EAST • SuiTs 350 • SAINT PAUL, MINNEsoTA 55101-2147 Ap q -t opporo ky —pl.y— Complies w th the ADA Page 25