Management Report and Recommendations 12/31/1987

Home Search

City of Lino Lakes, Minnesota Management Report, Page 44 The City has taken the following actions regarding the gas utility operations: • Successfully worked to gain special State legislation to allow a greater number of members on the Joint Gas Utility Commission. • Reviewed optional criteria for representation on the Commission to allow for a fair and equitable method of appointing members from each City. • Analyzed accounting methods of allocating expenses between each City's gas operation. • Negotiated a new franchise agreement. The new franchise agreement will provide a revenue source to the City of Lino Lakes. Key features of the new agreement are as follows: 1. Term - January 1, 1987 through March 31, 2012; 2. Revenue to the City of Lino Lakes based on 7% of sales except for interrup- table sales which is based on 3 %; 3. Cancellable by the City of Circle Pines commencing on January 1, 1992. The City of Lino Lakes has the right to cancel the franchise agreement through the purchase of this system beginning on January 1, 1992. 4. Right to inspect the financial /accounting records to verify revenue calcula- tions. 5. Revenue begins to be earned starting on January 1, 1987. Revenue will be received four and one -half months after the year end (i.e., first receipt is scheduled for May, 1988). 6. The City has the right to purchase the system at stated terms beginning on January 1, 1992. We commend the City for the successful efforts to receive a supplemental financing source for the City. The City received $9,615 in May, 1988 which represents the 1987 share of earnings. Financial uncertainties facing metropolitan cities require diversity of revenue sources to assure adequate funding of operations without severe property tax increases.