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:

MEETING MINUTES

November 25, 2013

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, November 25, 2013 starting at 10:00 a.m. Chairman Rod Spronk called the meeting to order with Commissioners Earl DeWilde, Frank Engels, Joe Weber, Bill Ufkin, Jan Moen, Norris Peterson, Ken Buysse, Jerry Lonneman, Mitch Kling and Brent Feikema present. Also present were Board Attorney, Ron Schramel; DGR Engineer, Darin Schriever; Liesch Hydrologist Jim DeLambert: Field Superintendents, Shawn Nelson and Tom Muller and CEO, Mark Johnson. Joining the meeting late was the Honorable and former Commissioner of LPRW Irvin Vandergrind, introduced by Spronk.

His former service to LPRW was acknowledged and appreciated.

Agenda: M/S/P-U Lonneman/Moen to approve the Agenda.

Minutes: M/S/P-U Ufkin/Feikema to approve the Board minutes of October 28, 2013.

Treasurer's Report: M/S/P-U Engels/Peterson to approve the Treasurer’s Report. The CEO pointed out that the revenues are slightly ahead with the budget but sales to Worthington make this possible and these sales are now beginning to move upwardly. Expenses are over budget of about $148,000 attributable to one time type costs in maintenance, etc. Labor expense is down about 4%.

Pending Bills: M/S/P-U Ufkin/Lonneman to approve the following bills for payment:

·  DeWild Grant Reckert and Associates Company: General Services #145 = $20,694.26 and includes CAPX billing; New Water Source Development – ppe #64 = $2,814.90

·  Schramel: General Legal Services = $ 2,580.40 and CapX = $512.00

·  Liesch Associates: Wellhead Protection Plan = $10,965.53

·  Healy Consultanting: General Services = $2,611.43

·  Carstensen CapX Final Payment = $52,737.59

·  USDA: Loan Code 91-24 = $471.750.00; Loan Code 91-26 = $259,050.00; Loan Code 91-28 = $218930.00; and Loan Code 91-29 = $38,155.00

·  US Bank: Lincoln County Series 2005A Bonds #801337800 = $352,511.25; Yellow Medicine County Series 2008 Bonds Account #802315600 = $250,802.51; Lincoln County Series 2012 Bonds Account #803175100 = $120,500.00

·  Northland Trust: Nobles County Series 2012A Bonds = $146,838.75

·  Steffl: South Dakota Verdi Wellfield Development Invoice # 151244 = $12,959.21

Hydrologist’s Report- South Dakota Wellfield: Jim DeLambert of Liesch that there are two permits in South Dakota- Permit # 7392-3 for the two wells being developed for 200 mgy (614 acre feet; 1200 gpm or 2.67 cfs) and Permit # 7393-3 for the two future wells for 200 mgy and will need to be renewed 5 years from the time of permitting to keep it viable. The CEO will need to develop a system to remind LPRW to timely renew this permit. DeLambert discussed the water quality at each well during the 72 hours test and how the nitrates escalated somewhat during the test and there will be a need to monitor for such whether the South Dakota wells are placed into service or not.. He reviewed the historical data of the area against this test. Test hole inorganics were reviewed. Water level draw down charts were presented and showed 1 foot of draw down on MN DNR observation well with all the MN and SD wells running wide open (2700 gpm and 2350 gpm, repectively) which he stated is not a lot of effect. DeLambert related that when there are dry conditions there could be trouble getting sufficient water but this aquifer recharges quickly from rains and runoff. Liesch has well combination scenarios to follow during dry conditions and aquifer draw down so as to optimize production while preserving aquifer resources. But still dry conditions are a wildcard. DeLambert will provide this production-well use scenario to LPRW. But notably LPRW has survived several drought years in its history. Discussion ensued as to what is the cap that can be gained in the future from South Dakota and what is the real expectation from these new wells in addition to operating with the existing wells. Also discussion ensued about MN DNR reducing MN permitting to LPRW. Schriever pointed out that permit reduction to one site can be problematic as LPRW and other rural water utilities cannot move water around to other service areas to bridge such a loss gap, rather they serve specific service areas. Then DeLambert cautioned beware nitrates can go up but try and prove it out with these new wells. Discussion also ensued as to if a better South Dakota well should be found in the future would the lesser producing South Dakota well #2 be abandon. No, because a variance may be sought to the permit to include a diversion permit well and give operational flexibility. Keep what you have.

Water Systems Clerk Report Written: Connie Bressler, Water Clerk, reported in writing on the progress of online bill payment for the LPRW customers. Email addresses being a part of the information to be provided to make online payments would likely be able to be transferred to the BDS system utilized by the office staff. The contract can be terminated on 30 days’ notice as there is no monetary exchange for the contract. Revtrak will not cap rates and thus the 3.49% charge will be charged on the total bill. If LPRW does differently, it must not exceed the 3.61% cap according to credit card rules and regulations. The turn around for review of payments is instantaneous to determine if the payment is good and that it is a clear payment and then is dropped into the bank the next day.

Attorney’s Report: Ron Schramel presented that the LPRW officers’ elections will take place next month. Also he related that there are some $1,250,000 in assessments to be heard December 18th at the Lyon County Court. 12 individuals have fully paid some $197,000.05 and more may fully pay before the court date. There are some 67 properties over the 10 county service area to be assessed. This is down from previous years of 2010 -117; 2011- 240; 2012- 133 but is approaching the 800 number required for the ’08-’10 expansion. He attached a list as to individual properties by county, Jackson -5, Lac Qui Parle – 3, Lincoln – 6, Lyon – 11, Murray – 5, Nobles – 22, Pipestone – 2, Rock – 1 and Yellow Medicine -12.

Engineer’s Report: Darin Schriever discussed the following items:.

New Water Development:

• City of Madison: Nothing new to report.

• City of Dawson: Dawson is preparing a draft proposal.

• Garvin Area: Red Rock RWS’s test drilling results were disappointing. RRRWS plans to move to the Currie area along the Des Moines River and test drill there.

• Verdi and New Wells: New Wells-- Reference the report by Liesch. The water quality report is incomplete and will need to be reviewed when the test results are available. There is reasonable new capacity to be added at Verdi from the South Dakota wells and Schriever is onboard that currently a water treatment plant is not necessary and the need thereof can be determined after the wells are proven.

Verdi and CIP—A new ground storage reservoir (GSR) and high service pumping station (HSP) need to be installed at Verdi as the current pump station is old and has limited life and service remaining. A new GSR and HSP station will enable water to be sent in all three directions LPRW will be sending this water in the future. Verdi to Lynd pipeline is phased into two parts and would eventually carry 0.5 mgd to the Lynd Stand Pipe. Phase I - the Tyler to Lynd pipeline fixes pressure problems along this area as it is a bigger conduit. Though it has some extra capacity this first phase is limited to supplying the Lynd Stand Pipe during non peak use days. This phase allows some transfer of waters to the Burr service area. It utilizes the existing pump system- Pump Station #1 and the Lake Benton Reservoir.

Schriever presented that there is a need to have a water plant site acquired at Verdi at least for iron/manganese removal to make MN Verdi well #5 viable. Also he needs a good place to which to design the piping necessary to bring all the wells together for pumping and should a water plant be needed. The Board has asked Muller and the CEO to see about acquiring land for this.

• Big Sioux CWS: DGR developed a preliminary hydraulic layout to incorporate a potential Big Sioux water source, but the source would be very expensive.

• Preliminary Engineering Report: The PER is still progressing but is a moving target, but hopes to present it by January 1.

• Holland WTP: Work remains under The Biottta pilot testing. Plans are to re-start the system in December with new media, allow for acclimation, hopefully much faster because of previous test experience; then perform manganese removal testing. The plan is still to design and construct the full scale equipment in the winter of 2014/2015 and be operational in Spring of 2015.

• Miscellaneous Work: Also as a part of the CIP there are several areas in the South of the LPRW system that will be looked at for low flow and/or low pressure problems to be fixed with small main installations.

·  General: The Hydraulic model update is done.

·  Osceola capacity test shows able to get 1225 gpm and can move 600 gpm to Worthington and intermittently 500 gpm pumped from Lismore Booster to Chandler Tower. It was noted that during peak months Worthington should be cut back so that Osceola water can be pushed further North and West and then allow Edgerton to pump west to avoid low pressure problems. The economics of temporary loss of waters sales to Worthington are more than balanced by not constructing and paying over 40 years a costly pipeline to solve this problem otherwise since Worthington is not likely a long term customer.

·  CapX Pipeline Relocation- the construction is basically complete. Clean-up items are being worked on and final quantities are being gathered. Schriever recommended change order #2 be approved. This change order reflects that the unit quantities are less than estimated and lowers the cost about $30,000. M/S/P-U Weber/Kling to approve Change Order # 2.

Lewis and Clark: Worthington approached LPRW regarding a potential joint project which would deliver L & C water from the Hills, MN area to LPRW and Worthington. DGR has developed a very preliminary design, options and cost estimates which were presented to the Board. The Board was of the consensus that a “wait and see” approach be taken until the Minnesota State Legislature has had opportunity to convene and take any action on the L & C bonding request.

Red Rock Rural Water System and LPRW Potential Joint Project: When RRRWS indicated that the Garvin well drilling results failed, Mark Johnson, CEO meet with DGR to see if there were ways LPRW could help RRRWS and thus a meeting with RRRWS was set up. The Verdi pipeline will not carry enough water and what water it has needs to help the Burr service area. An up size in the piping in the Verdi Phase I and II projects with a main to where RRRWS wants water is too expensive plus both phases would have to be completed before water would be available. However, LPRW could with Holland becoming re-viable then be able to provide water wherewith a 12 inch pipeline would go from the Holland plant some 26 miles east to RRRWS and furnish 250,000 gallons water per day. RRRWS will eventually want a total of 500,000 gallons per day. This pipeline carries water basically downhill over the ridge and will not need a pump station. The cost of the pipeline is about $4.4million dollars and RRRWS would need as to ultimate use 42% of the main’s capacity. The current LPRW capacity charge is $6.50/ gallon but needs to be looked at. Splitting the cost in pipe based on RRRWS’s ultimate capacity and RRRWS only buying the current capacity LPRW would still need about $800,000 of funds to pay its portion of the main. Either more capacity bought now by RRRWS or higher capacity charges would cover the LPRW deficit. Also an important part of starting at the Holland water plant is that this well field has the capacity to be expanded. Also just as importantly there is in the long range plans to install a pipeline between the Verdi to Holland facilities. Then water could be transferred either way. Thus Verdi which looks good for more production now with South Dakota wells could supplement Holland without expensive water plant expansion. Kling suggested that when RRRWS needs more capacity in the future that it be assessed a portion of the cost of this interconnection pipeline and that RRRWS be made currently aware of such. Then discussion followed that this project would make viable a south-north pipeline from Chandler to Russell. Thus it followed that the Russell-Lynd pipeline currently be upsized from an 8” to a 10” which DGR will include in the Phase I design.

Field Superintendents’ Report:

Tom Muller related that there 11 services put in in the south 4 in 2013. Most of the Nobles County Road Restoration Project has been satisfactorily completed.

Shawn Nelson stated that he had 2 services left to install. The work at the Minneota Building just started as the rafters were only delivered last week.

CEO’s Report:

·  Lincoln County Bond refinancing- The results showed a 1.84% effective rate and $300,000 present worth savings. A Resolution was presented for signing which on M/S/P-U Weber/Kling to approve and sign the resolution. Discussion followed about how well these bonds did compared to the Nobles County Refinancing. This fact was attributed to the fact Ehlers acted in a single capacity rather than a dual capacity of buying and selling the bonds compared to Northland. It is the consensus of the Board that Schramel and the CEO visit with Nobles County Officials as to this disparity.