LINCOLN PIPESTONE RURAL WATER SYSTEM

East Highway 14, P.O. Box 188, Lake Benton, MN 56149

(507)368-4248 fax (507)368-4573 email: lprw@itctel.com

MEETING MINUTES

December 30, 2002

The regular scheduled meeting of the Lincoln Pipestone Rural Water (LPRW) System Board of Commissioners was held at the LPRW office in Lake Benton on Monday, December 30, 2002 starting at 10:00 a.m. Chairman Frank Engels called the meeting to order with Commissioners Ken Buysse, Jerry Lonneman, Charlie Simonson, Leonard Swenson, Bill Ufkin, Henry Van Dyke, Joe Weber and Rod Spronk present. Commissioner Roger Gilliland was absent. Also present were Nobles County Commissioner, Diane Their; LPRW Attorney, Dan McDonald; DGR Engineer, John Madden; Field Superintendents, Don Drietz and Tom Muller; Director of Operations, Don Evers; and Director of Finance and Administration, Dennis Healy.

Agenda: The Agenda was approved with the addition of a Search Committee report and rearrangement of items to accommodate commissioner schedules.

Minutes: M/S/P Weber/Van Dyke to approve the minutes of the November 25, 2002 Regular Board meeting.

Treasurer's Report: M/S/P Swenson/Lonneman to approve the Treasurer's Report as presented.

Bills: M/S/P Ufkin/Weber (Engels abstained) to approve the following bills for payment:

· DeWild Grant Reckert and Associates Company: Minneota Tower #28 = $959.35; NE Phase #25 = $6,583.43; Lynd Area #24 = $1,543.10; General Services #21 = $404.50

· McDonald, Gudmestad & Schramel: NE Phase = $175.00; General Legal Services = $1,112.63

· Underground Developers, Inc. and Goldleaf Escrow, LLC.: Lynd Schedule 1B Pipeline – Pay Estimate #3 = $65,132.56

· Eatherly Constructors, Inc.: NE Phase Schedule 1B Mainline-Pay Estimate #2 = $1,026,907.26

· Carstensen Contracting, Inc.: Schedule 1A User Additions-Pay Estimate #4 = $75,169.31

· Caldwell Tanks, Inc.: NE Phase Minneota Tower-Pay Estimate #3 = $44,341.25

· Liesch Associates, Inc.: Well #8 Invoice #4 = $1,197.20; Well #8 Invoice #5 = $2,883.70; Adrian pump test = $3,511.75

· Energy Alternatives: Burr and Verdi Standby Generators = $39,982.84

Attorney’s Report: LPRW Attorney, Dan McDonald reported on the following items:

· McDonald reported that the hearing on assessments for hookups outside the Burr Service Area is scheduled for 10:00 a.m. on December 31^st at the Lyon County Courthouse. Madden, Healy and Board representatives should plan to attend.

· The amended Lewis & Clark Rural Water System agreement is being prepared for Board action at a future meeting.

· A landowner has requested that an easement on his property be “confined” as required by statute. M/S/P Weber/Swenson to authorize the Chairman to execute a replacement easement on the S1/2 of the NW1/4 and W1/2 of the SW1/4 on Section 34, T113N, R45W.

Search Committee Report: Chairman Engels reported that he has appointed Spronk, Van Dyke and Weber to a Search Committee for a Board seat that may become vacant in the near future. McDonald explained the Board appointment process.

Engineer’s Report: John Madden reported on the following items:

• Lynd Project: Winter Brothers Underground has completed all work but they need to complete final paperwork. Engineering America Inc. is done with the Lynd Standpipe and Booster project except for disinfection of the tank that will be done in the spring. Underground Developers Inc. is making good progress on the Schedule 1B Pipeline work, and testing and disinfection of the last portion of the pipeline should be completed soon. U.S. Filter’s shop drawings for the Lynd SCADA are being reviewed.

• Minneota Tower & Booster Project: The Minneota Tower & Booster project is progressing on schedule.

• North Internal Users Project: The Internal Users Expansion is proceeding on schedule, and the substantial completion documents will be issued for the 61 connections completed. The contract will be kept open until spring for final cleanup and any additional users added over the winter.

• Northeast Phase Expansion Project: Eatherly Constructors, Inc. is making good progress, and they plan to continue through the winter.

• The Green Valley booster station is being designed.

• Healy reported that there are currently 245 rural connections enrolled for the Northeast Phase project, and additional signups are being recruited.

Burr Exploration: LTP Enterprises began work on Burr Well #8 but they had a mechanical problem and they will finish the work after January 1^st.

Regional Water Supply: Liesch Associates sent the report for the work at the City of Adrian well field. We will meet with the City of Edgerton after January 1^st. The City of Dawson will be sending a proposal soon.

A Wholesale Connection Cost Policy was presented for Board consideration. M/S/P Spronk/Ufkin to adopt the “Cost of Connection Policy for Wholesale Users” policy as follows:

COST OF CONNECTION POLICY FOR WHOLESALE USERS

Lincoln Pipestone Rural Water has connected 26 wholesale customers (cities and other water systems), and has contracted to connect 3 others. Several other potential customers have inquired about connecting to the system. As LPRW grows and becomes more complex it has become increasingly difficult to arrive at a connection cost for wholesale users that accurately reflects the actual cost to LPRW while still being fair to each customer. Therefore, the Board of Commissioners of the Lincoln Pipestone Rural Water System hereby establishes the following COST OF CONNECTION POLICY FOR WHOLESALE USERS.

• The total “Service Connection Fee” for any new wholesale connection shall consist of the “Common Facilities Cost” plus the “Connecting Pipeline Cost” further clarified and defined as follows:

1. Common Facilities Cost is the total estimated capital cost of the facilities required to provide water within the system. Water source, treatment, storage, pumping, mainline distribution lines, and support equipment and facilities are included in the “Common Facilities Cost.” The “Common Facilities Cost” for the LPRW system will be a fixed cost for any new wholesale connection regardless of its location within the system. The “Common Facilities Cost” as of the date of this policy is $3,900,000 per million gallons per day (MGD) of peak daily demand, but this amount will be evaluated periodically and updated as conditions require.

2. Connecting Pipeline Cost is the total capital cost of the pipeline and appurtenances necessary to make the physical connection to the LPRW system. The “Connecting Pipeline Cost” will be agreed upon by the wholesale user and LPRW based on the estimated cost of the connection prior to installation with provision for adjustment based on actual as-built costs.

• The “Service Connection Fee” shall be included in the Service Agreement executed by LPRW and the wholesale user prior to construction of the wholesale connection. Any provisions for cost adjustments for as-built costs will be included in the Service Agreement or subsequent agreements.

• LPRW reserves the right to review, amend or replace this policy at any time.

Requests for Wholesale Service: The Cities of Rushmore and Lismore have expressed interest in water service, but the Board took no action because more information is needed.

Personnel Committee Report: The Personnel Committee met on December 11^th to meet with the employees and finalize recommendations for 2003 pay. The Committee reported that the employee meetings were among the most positive ever, and that the Committee decided to work on revising the incentive pay aspects of the evaluation process in 2003. M/S/P Ufkin/Lonneman to approve the minutes and the recommendations of the December 11^th Committee meetng.

Election of officers: The new officers will be installed at the January Board meeting.

· Chairman: M/S Buysse/Swenson to nominate Frank Engels. M/S/P Ufkin/Weber to cease nominations and declare Frank Engels elected Chairman for 2003 by unanimous consent.

· Vice-Chairman: M/S Lonneman/Simonson to nominate Joe Weber. M/S/P Swenson/Buysse to cease nominations and declare Joe Weber elected Vice-Chairman for 2003 by unanimous consent.

· Secretary: M/S Swenson/Weber to nominate Rod Spronk. M/S/P Weber/Ufkin to cease nominations and declare Rod Spronk elected Secretary for 2003 by unanimous consent.

· Treasurer: M/S Simonson/Buysse to nominate Bill Ufkin. M/S/P Weber/Van Dyke to cease nominations and declare Bill Ufkin elected Treasurer for 2003 by unanimous consent.

Director of Operations Report: Don Evers reported on the following items:

· Evers provided an update on Lewis & Clark progress, and reported that new agreements are being prepared. LCRWS Executive Director, Pam Bonrud has resigned to take another position.

· The Verdi and Burr standby generators are connected, but the contractors are working on some SCADA related problems.

· The Lynd standpipe will be disinfected and place in operation next spring.

· Don Drietz reported that the last Lynd lines are being tested.

· Pipe sizing in the Northeast expansion area is an issue that needs to be discussed so excessive flushing is not needed.

Director of Finance and Administration Report: Dennis Healy reported on the following items:

· The IRS mileage rate used by LPRW will be $0.36 per mile in 2003.

· The December 19^th system tour went very well and resulted in some good informational stories in the Independent.

· The computer system upgrades previously approved have been completed, and the transition of accounting and utility billing records will be done in 2003.

· Legislators will be invited to future Board meetings.

Committee Reports: The following committee reports were given:

Executive Committee: No report.

Budget & Finance Committee: No report.

Personnel Committee: Previously reported.

Search Committee: Previously reported.

Water Resources and Equipment Committee: Joe Weber reported that a final draft of the Holland/North Holland Wellhead Protection plan was discussed at the December 20^th committee meeting.

Minnesota Rural Water Association, Board Representative: Leonard Swenson updated the Board on the MRWA office project and operations.

Other Business: The regular board meeting schedule for 2003 was reviewed. M/S/P Weber/Lonneman to approve the 2003 regular board meeting schedule. All meetings will be held on the last Monday of each month except May which will be held on May 19^th due to the Memorial Day holiday.

Adjournment: M/S/P Lonneman/Swenson to adjourn the meeting at 2:59 p.m. The next Regular Board meeting will be Monday, January 27, 2003 at 10:00 a.m.

______________________________________________

Rod Spronk, Secretary