LINCOLN PIPESTONE RURAL WATER SYSTEM

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

(507) 368-4248 or (800) 462-0309 fax (507) 368-4573 email: lprw@itctel.com

MEETING MINUTES

May 22, 2006

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, April 24, 2006 starting at 7:00 p.m. Chairman Jerry Lonneman called the meeting to order with Commissioners Ken Buysse, Earl DeWilde, Frank Engels, Charlie Simonson, Rod Spronk, Leonard Swenson, Bill Ufkin, Henry Van Dyke, and Joe Weber present. Commissioner Mike Brunner was absent. Also present were Board Attorney, Ron Schramel; Field Superintendent, Don Drietz; and CEO, Dennis Healy.

Agenda: M/S/P Van Dyke/Swenson to approve the Agenda as presented.

Minutes: M/S/P Ufkin/Engels to approve the minutes of the April 24, 2006 Regular Board meeting, and the May 4, 2006 Water Resources and Equipment Committee meeting.

Treasurer's Report: M/S/P Buysse/Van Dyke to approve the Treasurer’s report as presented.

Bills: M/S/P Ufkin/Swenson to approve the following bills for payment:

· DeWild Grant Reckert and Associates Company: General Services #58 = $3,748.02; Northeast Phase #54 = $17,181.90

· McDonald, Gudmestad & Schramel: General Legal Services = $830.60; ECI litigation = $8,083.08

· US Bank: GO Refunding Bonds 1998, interest = $117,033.75; Lincoln County GO Refunding Bonds 2003, interest = $29,899.38; Nobles County GO Refunding Bonds 2003, interest = $44,151.25

Attorney’s Report: Ron Schramel reported that the ECI litigation has been finalized.

Engineer’s Report: Dennis Healy presented Darin Schriever’s report on the status of the Pump Station Upgrades project, the Hydraulic Model Update, and the Adrian Well No. 7 project.

Regional Water Development:

• New Water Source Development: Healy reported that Jay Frischman from the DNR will be in Adrian to set up the pump test requirements for the new Adrian well. Exploration in the Adrian area will be done at the same time as the observation wells are put in at Adrian.

2006 Expansion Project:

• North Expansion: Healy presented an analysis for a small expansion project in the Clarkfield, Granite Falls and Dawson areas. Approximately 23 hookups are needed to make the project feasible, and Dawson would have agree to provide water service for the hookups in that area. The project needs to be kept small enough to be installed by LPRW staff with very limited use of contractors. The hookup cost for the project will also need to be $13,000 which is higher than a normal hookup, but the hookup density is to low for normal rates. M/S/P Buysse/Weber to authorize staff to move ahead with project so long as it is feasible, and to maintain a minimum $13,000 hookup charge on the new lines for 5 years after the project is completed or until the regular hookup rate is higher.

Field Superintendents’ Report: Don Drietz reported on the following topics:

• New Hookups: Drietz presented 10 requests for hookups for Board consideration. M/S/P Simonson/Van Dyke to approve the 10 requests based on staff recommendations, and the availability of water to serve those locations.

• Equipment: Drietz indicated that the Board might want to consider buying an excavator rather than a backhoe because the staff will be doing more installation. Healy requested that the Board delay action until he can research the issue.

CEO’s Report:

· Lewis & Clark funding is improving with $22 million passed in the U.S. House, and the remainder of the Minnesota included in the bonding bill. The Board discussed prepaying the LPRW local share to avoid future inflationary increases. M/S/P Ufkin/Spronk to authorize prepayment of the LPRW local share, and to include that amount in a bond issue of approximately $2.5 million.

· The annual LPRW update for the County Boards is going very well.

• Topeka Shiner Studies: Healy met with representatives from Wenck Associates, USFWS and the DNR to review procedures and expectations to complete the Topeka Shiner inventories and plans. Representatives from Wenck Associates will meet with the Board at 5:00 p.m. on June 26^th to update the Board on the process.

Committee Reports: The following committee reports were given:

Executive Committee: No report.

Water Resources and Equipment Committee: The Committee will meet at 7:00 p.m. on Thursday, May 4^th for the purpose of reviewing hookup costs and rates to address payment of water development costs. Based on the Committee’s recommendations the Board took the following actions:

• M/S/P Spronk/Simonson to increase the basic hookup fee to $10,400 effective May 22, 2006. Commitments made prior to May 22^nd will be honored if the installation is completed in the 2006 construction season.

• Large water users have created numerous distribution and resource problems for the System, but the hookup fees have not reflected those costs. The Board discussed various options, and determined that large water users need to pay additional hookup costs to provide the revenue needed for the improvements needed to provide them service. M/S/P Spronk/Swenson to add a $4,000 capacity charge per 600,000 gallons per year of projected use after the first 600,000 gallons per year of projected use to all new or expanded rural water hookups. Hookups can use up to the amount they originally signed up for without additional capacity charges.

• Water rates were also discussed, and they will be reviewed by the Budget Committee to consider rate increases for 2007.

Personnel Committee: No report.

Budget & Finance Committee: No report.

Minnesota Rural Water Association, Board Representative: Leonard Swenson reported on MRWA activities.

Minnesota Governmental Agency Finance Group, Board Representative: No report.

Adjournment: M/S/P Engels/Van Dyke to adjourn the meeting at 9:30 p.m. The next Regular Board meeting will be Monday, June 26, 2006 at 6:30 p.m.

______________________________________________

Earl DeWilde, Secretary