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Overcharged water fees less than estimated
Feb. 22, 2016

BY GABE LICHT
Editor

DELANO, MN – When the Delano Water, Light, and Power Commission learned in December that Delano Municipal Utilities had overcharged for water trunk fees on homes built since 2009, the original estimate was between $175,000 and $300,000.

However, commissioners learned Thursday evening that the confirmed, overcharged amount was much lower, at $29,823, according to auditors from CliftonLarsonAllen.

The commission approved acknowledging that liability in the 2015 financial statement.

“That $29,823 identified as a liability will be offset by a reduction in water permit fees revenue in 2015,” DMU Finance Director Chris Hart said.

The $29,823 came from 13 lots in which DMU had charged water trunk fees at the time of the development agreement, and again at the time the building permit was granted.

Auditors also discovered 57 cases in which fees were discussed, but not charged, when the development agreement was signed.

“There was another pot where there was open-ended discussions, but there was no formal agreement in place where we could see the developer took care of any of those, and they were billed as part of the building permit process,” said Chris Knopik, of CliftonLarsonAllen. “The developer agreement didn’t specifically address the trunk fees. They may have alluded to credits being used, but there was no formal agreement produced. They were billed the trunk utility fees as part of the building permit process.”

Those cases totaled $131,727 in water trunk fees.

Auditors also reviewed building permits between 2005 and 2009, and learned that DMU did not collect water trunk fees at the time of the developer agreement nor at the time of the building permit, amounting to $169,616 that the utility underbilled.

Chair Jonathan Ness thanked the auditors for their efforts.

“I appreciate the diligence,” Ness said. “You’ve laid out the process very clearly, and have done what we asked and broke it into three groups. It’s very helpful. We’ve spent a lot of time working on this and trying to work through what is the financial exposure and how do we want to rectify it?”

The last question will be addressed at a future commission meeting.

Interim General Manager Paul Twite also expressed interest in asking the Minnesota League of Cities to review the situation before further action is taken.

Odds and ends
In other business, the commission:

• approved introducing a maximum and minimum amount into the power cost adjustment, which would reduce the amount of refund customers receive in certain months. For example, the amount received in February would decrease from $11 per customer to $5 per customer.

• approved seeking bids for a cooling system upgrade for a power plant engine, which Twite estimated at $30,000 to $35,000.

• approved re-keying all 20 locks in the DMU building at a cost of $900.

• approved moving the next meeting to 6 p.m. Monday, March 28, at Delano City Hall.

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