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Willmar committee recommends council approve agreements between MUC, KPC

WILLMAR -- The service territory agreement and compensation agreement approved by the Willmar Municipal Utilities Commission on Monday and by the Kandiyohi Power Cooperative Board on Wednesday have received the blessing of a City Council committee.

WILLMAR -- The service territory agreement and compensation agreement approved by the Willmar Municipal Utilities Commission on Monday and by the Kandiyohi Power Cooperative Board on Wednesday have received the blessing of a City Council committee.

The council's Community Development Committee voted Thursday evening to recommend that the council approve the agreements at the next meeting on Tuesday night, subject to approval by City Attorney Richard Ronning.

The agreements were presented to the committee by Bruce Gomm, municipal utilities general manager, and Bob Bonawitz, utilities commission chairman. Both spoke in support of the agreements.

Gomm said the council's approval was required because the city is involved in annexation. He said the municipal utilities' territory is directly affected by the location of the municipal boundaries.

"Because of the issues with the last agreement, we just felt it was better that all three parties were involved,'' said Gomm.

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Officials of the municipal utilities and the cooperative say the agreements, worked out after years of discussion and negotiations, will help foster cooperation and avoid the type of disputes that have arisen in other areas when a city annexes new land and expands its municipal utility service territory into the area formerly served by a rural electric cooperative.

State law says rural electric cooperatives are to receive fair compensation for lost service territory, but the law does not establish a formula to determine the amount of compensation. The compensation model provides a formula for both sides to determine how the revenue will be handled.

Approval from Ronning was deemed important because city officials felt the compensation formula needed clarification to handle complicated annexation issues.

"Absent some type of formal process, we think it's going to be extremely difficult in the future for people to deal with complicated annexations,'' said City Administrator Michael Schmit.

He and others at the meeting agreed that the people and personalities at the municipal utilities and the cooperative have an excellent working relationship and that they may be able to meet as reasonable people and figure this out, "but what happens 20 years from now?'' he said.

"Overall, everyone involved in the process is very excited about the agreements that have been structured,'' Schmit said. "I compliment the municipal utilities folks and cooperative folks for taking the time and effort in putting this together, and we support it 100 percent,'' he said.

"It's just that we think it can be a little better defined to protect all of our customers in the future.''

Dave George, Kandiyohi Power general manager, praised the new agreements. In an interview Thursday night, George said the agreements provide fairness and equity not only for cooperative members but for the citizens of Willmar.

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"We truly think it's a win-win situation,'' he said. "The reps of the commission and Kandiyohi Power have worked long and hard on this, and I think have done a very good job.''

In other business, the committee:

- Recommended the council grant tax breaks under the state Job Opportunity Building Zones program to Bollig Inc. Engineering and Environmental Services of Willmar. Owner Brian Bollig requested the benefit after moving his office to a tax-abated building on the MinnWest Technology Campus. Bruce Peterson, city director of planning and development, said the council in the past has never approved subsidies for service businesses. Bollig said he considered the benefit an opportunity to grow.

- Approved a contract with Mid-Minnesota Development Commission of Willmar to provide professional services to review and clarify the city's proposed comprehensive plan. Cost of the contract is $6,500. The third-party review of the revised plan was recommended by the Planning Commission.

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