Management Report and Recommendations 12/31/1991

Home Search

City of Lino Lakes, Minnesota Management Report, Page 45 In November, 1990, at the request of the City, our office prepared a discussion draft of issues related to the possible purchase of the Lino Lakes Gas Franchise, A summary of considerations is as follows: • The City must pay 125% of cost (less depreciation) for assets placed in service after July 1, 1986. • The tasks associated with administering the system may require added or re- assigned personnel. • The City's current Public Works Director has gas utility operation experience. If the City should lose this position, a replacement would be required at a possibly higher or lower cost. • The cost of application to the FERC was estimated in 1986 at $12,200. The cost of the delivery (border) facility was estimated at $50,000. These amounts may be significantly different than estimated. • Minnesota statutes 216B.46 and 412.321 subd.2 require an election for the acquisition of a gas utility operation. • A more favorable revenue bond rate is probably available if the issue is "general obligation ". The City's charter may require a vote to pledge property taxes to the purchase of the system. • Dealings with the City of Circle Pines has the potential to be less than harmonious. Legal and accounting fees may, therefore, fluctuate significantly. • The City's accounting and billing computer system must be re- evaluated to determine if gas utility billings will be facilitated with the current system. • The City must determine the cost of additional equipment that must be purchased in addition to the Circle Pines system. • Evaluation of the adequacy of existing City staff to absorb all or a portion of the task associated with the gas utility. • The likelihood of voters to approve the acquisition. • Gas purchase price and contract demand negotiations. Probability of growth of the system.