PUBLIC HEARING OF THE

BOARD OF WATER, ELECTRIC,

AND COMMUNICATIONS TRUSTEES

OF THE CITY OF MUSCATINE, IOWA

JANUARY 28, 2014-5:28 P.M.

The Board of Trustees conducted a public hearing in Muscatine Power and Water's

Administration/Operations Building, 3205

Cedar Street, Muscatine, Iowa, on Tuesday, January

28, 2014, at 5:28p.m.

Chairperson Doyle Tubandt called the meeting to order. Members of the Board were present as

follows: Trustees Doyle Tubandt, Tracy McGinnis, Warren Heidbreder, Steven Bradford, and

Joan Axel.

Also present were Sal LoBianco, General Manager of Muscatine Power and Water; Jerry Gowey,

Board Secretary;

Charles Potter, Muscatine Journal; Erika Cox, Brandy Olson, Tim Reed, Gage

Huston, and Brenda Christensen of Muscatine Power and Water.

The purpose of the public hearing was to receive any citizens' comments regarding the

Construct Well 44 at Main Well Field and Construct Well 45 at Progress Park Well Field Projects.

Mr. Gowey, Board Secretary, opened the public hearing at 5:28 p.m. to receive any citizens'

comments regarding the

Construct Well 44 at Main Well Field and Construct Well 45 at

Progress Park Well Field Projects.

Mr. Gowey stated that no written or oral comments were received regarding these projects,

and that the public hearing notice was published as required by the Code of Iowa.

A resolution passed approving the final plans and specifications of the project.

RESOLUTION 14-01

WHEREAS, the Board of Water, Electric, and Communications Trustees of the

City of Muscatine, Iowa has given tentative approval to plans and specifications

for the Construct Well 44 at Main Well Field and Construct Well 45 at Progress

Park Well Field Projects; and,

WHEREAS, bids have been received and there are no written or oral objections

to proceeding with these projects; now therefore,

BE IT RESOLVED, by the Board of Water, Electric, and Communications Trustees

of the City of Muscatine, Iowa, that the plans and specifications for the Construct

Well

44 at Main Well Field and Construct Well 45 at Progress Park Well Field

Projects be adopted.

ITEM 12C

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Trustee Bradford moved, seconded by Trustee McGinnis, that the said resolution should be

passed, approved, and adopted

this

28th

day of January

2014.

On roll call Trustees Axel,

Heidbreder, Bradford, McGinnis, and Tubandt voted aye. Voting nay, none. Resolution carried.

At 5:30

the Secretary closed the public hearing for the Construct Well

44

at Main Well Field and

Construct Well 45 at Progress Park Well Field Projects.

BOARD OF WATER, ELECTRIC, AND

COMMUNICATIONS TRUSTEES OF

CITY OF MUSCATINE, IOWA

erry Gowey

Board Secretary

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OFFICIAL PROCEEDINGS OF THE

BOARD OF WATER, ELECTRIC,

AND COMMUNICATIONS TRUSTEES

OF THE CITY OF MUSCATINE, IOWA

JANUARY 28,2014-5:30 P.M.

The Board of Trustees met in regular session at Muscatine Power and Water's

Administration/Operations Building,

3205 Cedar Street, Muscatine, Iowa, on Tuesday,

January

28, 2014, at 5:30 p.m.

Chairperson Doyle Tubandt

called the meeting to order. Members of the Board were present

as follows: Trustees Doyle Tubandt, Tracy McGinnis, Warren Heidbreder, Steven Bradford,

and

Joan Axel.

Also present were Sal LoBianco, General Manager of Muscatine Power and Water; Jerry

Gowey, Board Secretary;

Charles Potter, Muscatine Journal; Erika Cox, Brandy Olson, Tim

Reed, Gage Huston, and Brenda Christensen of Muscatine Power and Water.

Chairperson Tubandt

asked if there was anyone in attendance who wished to make any

.

public comments. There were no public comments.

The minutes of the December 19, 2013, regular meeting, and the December 19, 2013,

Audit/Finance Committee Meeting minutes were presented as previously submitted to all

Board members in written form. Trustee Axel moved, seconded by Trustee McGinnis, that

the minutes be approved as submitted. All Trustees voted aye. Motion carried. The

Audit/Finance Committee Meeting minutes were received and placed on file.

The list of expenditures and transactions for December 2013 was presented as previously

submitted

to all Board members in written form. After review and discussion of the

expenditures, Trustee Heidbreder moved, seconded by Trustee Axel,

to ratify payment of

$6,395,146.32 for the Electric Utility, $394,658.91 for the Water Utility, and $856,296.55 for

the Communications Utility for a cumulative total of $7,646,101.78. All Trustees voted aye.

Motion carried.

Mr. LoBianco reviewed the previously submitted memorandum

to all Board members

regarding the receipt and evaluation

of bids for the two projects, Construct Well 44 at Main

Well Field and Construct Well 45 at Progress Park Well Field; revised project summary forms

for these projects were approved at the December 2013 Board meeting. Specifications

pertaining

to the projects were mailed to seventeen (17) potential bidders. A total of three

(3) bids were received, opened publicly, and read aloud on January 14, 2014, with all three

(3) bidders at the opening. The total approved expenditure for these two projects is

$935,769; with a published estimate of $629,982. The bids were reviewed and conformance

of the low bidder to the specifications was established. MP&W Management recommended

that the

low bidder, Northway Well and Pump Company of Marion, Iowa, be awarded the

contract

for the Construct Well 44 at Main Well Field and Construct Well 45 at Progress Park

Well Field Projects

for the total contract price of $593,223.45. The total price of this bid

includes a $3,400 increase to the base bid for the optional 6" steel casing and screens on

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Board Minutes

January 28, 2014

Page 2 of8

both test wells and a $1,800 deduction for award of both wells to the same contractor. The

contract also includes bonus payments for early completion which are capped at 10% of the

contract liquidated damages

for late completion of any well. Mr. LoBianco communicated

that MP&W Management had met with both of the Utility's largest water customers

regarding water usage needs

for the summer, and it was determined that to meet the

projected summer demand the

wells were needed to meet immediate demand. After review

of the project, the following resolution was submitted:

RESOLUTION 14-02

WHEREAS, it appears in a written report from Muscatine Power and Water

Management

that the bid for the Construct Well 44 at Main Well Field and Construct

Well 45 at Progress Park Well Field Projects, as submitted by Northway Well and

Pump Company of Marion, Iowa, in the amount of $593,223.45, was the best and

lowest bid received; now therefore,

BE IT RESOLVED by the Board of Water, Electric, and Communications Trustees of

the City of Muscatine, Iowa, that the proposal from Northway Well and Pump

Company

of Marion, Iowa, in the amount of $593,223.45 for the Construct Well 44

at Main

Well Field and Construct Well 45 at Progress Park Well Field Projects were

hereby accepted

as submitted; and,

BE IT FURTHER RESOLVED, that the General Manager and Secretary of the Board

were hereby authorized, empowered,

and directed to execute a contract in the sum

approved by the Board

of Water, Electric, and Communications Trustees.

Trustee Heidbreder moved, seconded by Trustee

Axel, that the resolution should be

passed, approved, and adopted this 28th day of January 2014. On roll call Trustees

McGinnis, Bradford,

Axel, Heidbreder, and Tubandt voted aye. Voting nay, none.

Resolution carried.

Mr. LoBianco introduced the next item

on the agenda as approval of Unit 8A Reboilers Tube

Replacement Project

with an expected expenditure of $1,250,000. This project involves the

complete replacement of all tubes in the two (2) Reboilers at the Generation Site. Over the

last 12 months, MP&W has been experiencing operational issues with the Reboiler system.

Fouling of the exterior side of the tubes was suspected due to instances of poor water

quality coming back from GPC's process. As described in the project justification included

with the memo, an investigation into the issue led to the discovery that the exterior side of

the Reboiler tubes (i.e. the GPC side) has a significant amount of scaling due to poor water

quality. This scaling has decreased the operating efficiency of the Reboiler system and led to

pitting of the tubes, which ultimately leads to tube failure. The expenditure associated with

this project

is subject to cost sharing with Grain Processing Corporation (GPC) per the first

amendment

to the Steam Sales Contract between MP&W and GPC. The costs associated

with the project will be allocated 80% to GPC and 20% to MP&W. This allocation is a variance

from

that which was prescribed in Section 8.08 of the First Amendment, however, both

Parties have

mutually agreed that operating conditions have varied from what was

prescribed in the Contract and thus warranted a change in the contractually specified cost

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Board Minutes

January 28, 2014

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allocation. GPC's portion of the project cost will be amortized with interest over the

remaining

term of the existing contract and recovered through the ongoing per-unit cost of

steam during that term. At the agreed to cost allocation, the estimated cost impact to

MP&W is $250,000. After review and discussion, Trustee Axel moved, seconded by Trustee

McGinnis,

to approve the Unit 8A Reboilers Tube Replacement Project. All Trustees voted

aye. Motion carried.

Mr. LoBianco reviewed

the previously submitted memorandum regarding the request for

approval for an amendment to the 2013 Borrowing Arrangement between the Water Utility

and the Electric

Utility. In 2013 the Water Utility entered into a $4.5 million Line of Credit

(LOC) with the Electric Utility at an interest rate of 0.10%. Currently the amount advanced

from the Electric Utility

to the Water Utility totals $400,000. The LOC keeps borrowing costs

to a minimum, until financing needs are better defined and long-term financing can be

arranged, and contributes

to Utility liquidity requirements. The interest rate on this LOC may

be adjusted by the Board each January to reflect the Electric Utility's investment opportunity

cost.

Currently, the Electric Utility is earning an average rate of return of 0.18% on all cash,

money market and invested funds. At the December 2013 Audit/Finance Committee

meeting, Management recommended an increase of the interest rate from 0.10% to 0.18%

on the short-term borrowing arrangement between the Water and Electric Utility to be

effective January

1, 2014. The Audit/Finance Committee concurred with this approach and

recommended going

to the full Board for approval.

RESOLUTION 14-03

Amend the Borrowing Agreement between the

Water Utility and the Electric Utility

WHEREAS, the City of Muscatine, Iowa, acting by and through its Board of Water,

Electric, and Communications Trustees (the

"Board") approved an Advance

borrowing arrangement between the Water Utility and the Electric

Utility on

January 29, 2013; and

WHEREAS, the interest rate on the Advance may be adjusted January 1, 2014 and

annually thereafter, to reflect the Electric Utility's investment opportunity cost; and

WHEREAS, the Board reviewed the Electric Utility's investment opportunity costs

and determined

an amendment to the interest rate on the Advance is warranted

NOW, THEREFORE, it is hereby resolved by the Board that the Advance is amended, as

follows:

1. It is directed that the interest rate on the Advance is adjusted from 0.10%

to 0.18% effective January 1, 2014, to reflect the Electric Utility's

investment

opportunity cost.

2. All other terms of the Advance remain as originally stated.

The undersigned hereby certifies that the foregoing is a full, true, and correct

copy

of the declaration of the Board duly made at a meeting on January 28,

2014, and

that said declaration has not been amended, modified, or revoked by

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Board Minutes

January

28

,

2014

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said Board of Water, Electric and Communications Trustees.

Trustee Bradford moved, seconded by Trustee McGinnis,

that the resolution should be

passed, approved, and adopted this

28th

day of January

2014.

On roll call Trustees

McGinnis, Bradford,

Axel, Heidbreder, and Tubandt voted aye. Voting nay, none.

Resolution carried.

Mr. LoBianco introduced

the next item on the agenda as approval of Reimbursement

Resolutions

for all three Utilities, as recommended by Bond Counsel on an annual basis. The

Ten-Year Electric and Water Financial

Projections indicate substantial capital expenditures

which may require various borrowing needs

in

2014

and beyond. The borrowings may be a

combination

of tax-exempt and taxable debt, depending on how the proceeds are to be

used.

The recommended resolutions are similar to what the Board has adopted in past years and

state

that the Board reasonably expects to reimburse itself or pay for capital

expenditures from the proceeds of a future debt issue. The Board may then issue tax-

exempt

debt for capital projects paid within 60 days prior to passage of the resolution or

paid after passage of the resolution. Reimbursement must be completed within

18

months

of (a) the original expenditure; or (b) the date the project is in service, but in no event

more than three

{3) years after the original expenditure is paid. The Reimbursement

Resolutions do

not obligate the Board to include all qualifying capital projects in the debt

issues, but it does give the Board the ability to include them if they otherwise qualify

and the economics warrant.

After discussion and review, the following resolutions were submitted.

RESOLUTION 14-04

Declaration of official intent of the City of Muscatine, Iowa, acting by

and through its Board of Water, Electric, and Communications Trustees

of the City of Muscatine, Iowa, to reimburse certain expenditures

from proceeds

ofindebtedness for the Electric Utility

WHEREAS, the City of Muscatine, Iowa, (the "Issuer") acting by and through its

Board

of Water, Electric, and Communications Trustees (the

"Board")

intends to

acquire land, construct, improve, furnish, and equip extensions, improvements, and

other capital projects related to the MP&W Electric Utility (collectively the

"Projects"); and

WHEREAS, the Issuer expects to pay certain expenditures (the "Reimbursement

Expenditures") in connection with the

Projects prior to the issuance of indebtedness

for the purpose of financing costs associated with the Projects on a long-term basis;

and

WHEREAS, the Issuer reasonably expects that debt obligations in an amount not

expected to exceed

$21,000,000

will be issued with respect to financing of the

Projects and that certain of the proceeds of such debt obligations will be used to

reimburse the Reimbursement Expenditures; and

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Board Minutes

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WHEREAS, the Issuer desires to comply with the requirements of Treasury

Regulation

1.150-2 (the "Regulations") with respect to the Projects;

NOW THEREFORE, it is hereby resolved by the Board of Water, Electric, and

Communications Trustees of the City of Muscatine, Iowa, as follows:

Section

1.

The Issuer finds and determines that the foregoing recitals are

true and correct.

Section 2.

This declaration is made solely for the purpose of establishing

compliance with the requirements

of Section 1.150-2 of the

Treasury Regulations. This

declaration does not bind the Issue to

make any expenditure, incur any indebtedness, or proceed with

the Projects.

Section 3.

The Issuer hereby declares itself its official intent to use

proceeds

of

indebtedness

to

reimburse

itself

for

Reimbursements Expenditures with respect to the Projects.

Section 4.

This declaration shall take effect from and after its adoption.

Trustee Heidbreder moved, seconded by Trustee Bradford,

that the resolution should be

passed, approved, and adopted this 28th day of January

2Cl14.

On roll call Trustees

McGinnis, Bradford, Axel, Heidbreder, and Tubandt voted

aye. Voting nay, none.

Resolution carried.

RESOLUTION 14-05

Declaration of official intent of the City of Muscatine, Iowa, acting by

and through its Board of Water, Electric, and Communications Trustees

of the City of Muscatine, Iowa, to reimburse certain expenditures

from proceeds

ofindebtedness for the Water Utility

WHEREAS, the City of Muscatine, Iowa, (the "Issuer") acting by and through its

Board

of Water, Electric, and Communications Trustees (the "Board") intends to

acquire land, construct, improve, furnish, and equip extensions, improvements, and

other capital projects related to the MP&W Water Utility (collectively the

"Projects"); and

WHEREAS, the Issuer expects to pay certain expenditures (the "Reimbursement

Expenditures")

in connection with the Projects prior to the issuance of indebtedness

for the purpose of financing costs associated with the Projects on a long-term basis;

and

WHEREAS, the Issuer reasonably expects that debt obligations in an amount not

expected

to exceed $11,000,000 will be issued with respect to financing of the

Projects and

that certain of the proceeds of such debt obligations will be used to

reimburse the Reimbursement Expenditures; and

WHEREAS, the Issuer desires to comply with the requirements of Treasury

Regulation

1.150-2 (the "Regulations") with respect to the Projects;

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Board Minutes

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NOW THEREFORE, it is hereby resolved by the Board of Water, Electric, and

Communications Trustees of the City of Muscatine, Iowa, as follows:

Section 1.

The Issuer finds and determines that the foregoing recitals are

true and correct.

Section

2.

This declaration

is

made solely for the purpose of establishing

compliance

with the requirements of Section

1.150-2

of the

Treasury

Regulations. This declaration does not bind the Issue to

make any expenditure, incur any indebtedness, or proceed with

the Projects.

Section

3.

The Issuer hereby declares itself its official intent to use

proceeds

of

indebtedness

to

reimburse

itself

for

Reimbursements Expenditures with respect to the Projects.

Section

4.

This declaration shall take effect f-rom and after its adoption.

Trustee

Axel moved, seconded by Trustee McGinnis, that the resolution should be

passed, approved, and adopted this

28th

day of January

2014.

On roll call Trustees

McGinnis, Bradford,

Axel, Heidbreder, and Tubandt voted aye. Voting nay, none.

Resolution carried.

RESOLUTION 14-06

Declaration ofofficial intent of the City of Muscatine, Iowa, acting by

and through its Board of Water, Electric, and Communications Trustees

of the City of Muscatine, Iowa, to reimburse certain expenditures

from proceeds

ofindebtedness for the Communications Utility

WHEREAS, the City of Muscatine, Iowa, (the

"Issuer")

acting by and through its

Board

of Water, Electric, and Communications Trustees (the

"Board") intends

to

acquire

land, construct, improve, furnish, and equip extensions, improvements, and

other capital projects related to the MP&W Communications Utility (collectively the

"Projects");

and

WHEREAS, the Issuer expects to pay certain expenditures (the "Reimbursement

Expenditures") in connection with the

Projects prior to the issuance of indebtedness

for the purpose of financing costs associated with the Projects on a long-term basis;

and

WHEREAS, the Issuer reasonably expects that debt obligations in an amount not

expected

to exceed

$5,000,000

will be issued with respect to financing of the

Projects and that certain of the proceeds of such debt obligations will be used to

reimburse the Reimbursement Expenditures; and

WHEREAS, the Issuer desires to comply with the requirements of Treasury

Regulation

1.150-2

(the "Regulations") with respect to the Projects;

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Board Minutes

January 28, 2014

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NOW THEREFORE, it is hereby resolved by the Board of Water, Electric, and

Communications Trustees

of the City of Muscatine, Iowa, as follows:

Section

1.

The Issuer finds and determines that the foregoing recitals are true

and correct.

Section

2.

This declaration is made solely for the purpose of establishing

compliance

with the requirements of Section

1.150-2

of the

Treasury Regulations. This declaration does

not bind the Issue to

make any expenditure, incur any indebtedness, or proceed with the

Projects.

Section 3.

The Issuer hereby declares itself its official intent to use proceeds

of indebtedness to reimburse itself for Reimbursements

Expenditures

with respect to the Projects.

Section 4.

This declaration shall take effect from and after its adoption.

Trustee Heidbreder moved, seconded by Trustee Bradford,

that the resolution should be

passed, approved, and adopted this

28th

day of January

2014.

On roll call Trustees

McGinnis, Bradford, Axel, Heidbreder,

and Tubandt voted aye. Voting nay, none.

Resolution carried.

The December Financial Operating Statements and Balance Sheets and the Quarterly

Investment Report were presented as previously submitted to all Board members in written

form. Mr. LoBianco stated that

2013

Year-End Financials would be covered in the Key

Performance Indicators presentation. Trustee Axel moved, seconded by Trustee McGinnis, to

receive and place on file the December Financial Operating Statements and Balance Sheets

for the Water, Electric, and Communications Utilities, along with the Quarterly Investment

Report. All Trustees voted aye. Motion carried.

The Competitive Quotes for Public Improvements Report was presented as previously

submitted

to all Board members in written form. There were no items for approval.

The Quarterly Project Status Report and Variance Analysis were presented as previously

submitted

to all Board members in written form. Trustee McGinnis moved, seconded by

Trustee Bradford,

to receive and place on file the Quarterly Project Status Report and

Variance Analysis. All Trustees voted aye. Motion carried.

The Critical Issues and Key Performance Indicators for the Water, Electric, and Communi-

cations Utilities were previously submitted to

all Board members in written format. Mr.

LoBianco

asked each critical issue leader to review the status of their critical issue and stated

that Mr. Gowey would review the Key Performance Indicators sections. After review and

discussion, Trustee McGinnis moved, seconded by Trustee Axel, to receive and place c_>n file

the

2013

Year End Critical Issues and Key Performance Indicators for the Water, Electric, and

Communications Utilities.

Motion carried. All Trustees voted aye.

The December departmental reports were presented as previously submitted to all Board

members

in written form. After discussion, Trustee Heidbreder moved, seconded by Trustee

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Board Minutes

January 28,

2014

Page 8of8

Axel, to receive and place on file the December departmental reports. All Trustees voted

aye. Motion carried.

The meeting was adjourned at 7:10 p.m.

BOARD OF WATER, ELECTRIC, AND

COMMUNICATIONS TRUSTEES OF THE CITY

OF MUSCATINE, IOWA

ca:t,

Board Secretary