OFFICIAL PROCEEDINGS OF THE

BOARD OF WATER, ELECTRIC,

AND COMMUNICATIONS TRUSTEES

OF THE CITY OF MUSCATINE, IOWA

FEBRUARY 24, 2015-5:30 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,

February

24, 2015, at 5:30 p.m.

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

follows: Trustees Warren Heidbreder, Steven Bradford, Susan Eversmeyer, Doyle Tubandt,

and Tracy McGinnis.

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

Gowey, Board Secretary; David

Fee and Kristin Andrews of Principal Financial Group;

Charles Potter, Muscatine Journal; Erika Cox, Tim Reed, Gage Huston, and Brenda

Christensen of Muscatine Power and Water.

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

public comments. There were no comments.

The minutes

of the January 27, 2015 regular meeting were presented as previously sub

mitted

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

Trustee Heidbreder,

that the January 27, 2015, regular meeting minutes be approved as

submitted. All Trustees voted aye. Motion carried.

The list of expenditures and transactions for January 2015 was presented as previously sub-

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

expenditures, Trustee Tubandt moved, seconded by Trustee Bradford,

to ratify payment of

$10,936,482.71 for the Electric Utility, $827,019.60 for the Water Utility, and

$2,635,081.25 for the Communications Utility for a cumulative total of $14,398,583

All

Trustees voted aye. Motion carried

Mr. LoBianco reminded the Board

that the Pension Investment Policy requires that the

Board review the

Employee Pension Fund performance once a year. Ms. Cox introduced

David

Fee and Kristen Andrews from the Principal Financial Group. Mr. Fee provided the

Board with

an overview of the current market trends and market expectations for 2015.

Mr. Fee then provided an update of the plan's 2014 yearend asset allocation and

investment earnings results; he also reviewed the MP&W portfolio performance, along

with the portfolio and strategic asset allocation and the current asset manager watch list

Ms. Andrews gave a brief update on the pension plan performance. Trustee Eversmeyer

moved, seconded by Trustee Heidbreder,

to receive and place on file the 2014 Employees'

Pension

Plan and Investment Advisory Report. All Trustees voted aye. Motion carried. The

Principal Financial Group representatives left the meeting.

ITEM 12B

Board Minutes

ebruary 24

2015

Page 2 o

The next item on the agenda was a recommendation to approve a revised Project

Summary Form

for the Colorado Street Water Main Replacement Project with a revised

expenditure cost

of $355,206. This project was originally submitted and approved with the

2012 Operating Budget, with an expenditure of $241,000, to replace water main on

Colorado Street due to a history of main breaks in the area. Mr. LoBianco stated that this

project

was done in conjunction with the city road project; he continued that a number of

items affected the final cost of the project between the time the project was designed and

construction completed. Changes to the street elevation required additional granular

backfill and in some areas the water main was found to be deeper than anticipated

requiring additional granular

backfill. Other changes to the project included the need for

additional valves, modifications to customer services, and the number of fittings needed

due

to piping configuration changes. As this project was partially funded by the IDOT, it

required compliance with sourcing U

S. made materials and the Davis-Bacon Act regarding

prevailing wages.

After additional discussion, Trustee Tubandt moved, seconded by Trustee

Bradford,

that the revised Project Summary Form for the Colorado Street Water Main

Replacement Project be approved in the amount

of $355,206

All Trustees voted aye.

Motion carried.

Mr. LoBianco introduced

the next item on the agenda as a recommendation to approve a

revised Project Summary Form

for the Grand Avenue Water Main Replacement Project

with a revised expenditure cost

of $172,530. This project was originally submitted and

approved with the 2013 Operating Budget with a project cost of $95,700 to replace water

main

on Grand Avenue due to a history of main breaks in the area; the project was also

previously revised to $129,585. The original project was to be completed using internal

labor and constructed with HDPE pipe using the Utility's horizontal direction drilling

equipment; prior to construction it was determined that the project was in a leaking

underground storage tank

(LUST) site and therefore HDPE pipe is not acceptable for

construction. The project was completed

by a contractor resulting in higher project costs

than anticipated.

After additional discussion, Trustee Heidbreder moved, seconded by

Trustee Eversmeyer, that the revised Project Summary Form for the Grand Avenue Water

Main

Replacement Project be approved in the amount of $172,530. All Trustees voted aye.

Motion carried.

The next item on the agenda was a recommendation to approve a revised Project

Summary Form

for the West Hill Sewer Separation Water Main Replacement Project with

a revised expenditure cost

of $1,061,000. This project was originally submitted and

approved with the 2015 Operating Budget, with an expenditure of $219,200, to replace

water mains in the 5th Street and Chestnut Street area in conjunction with the City's sewer

separation project. This area

is known as the Phase 3A project area and is scheduled for

construction in

2015. Phase 3B and 3C are scheduled for construction in 2016 and 2017,

respectively. Mr

LoBianco continued that in order to maximize the efficiency of

construction and project management, MP&W is jointly bidding these projects with the

City of Muscatine with the intention of awarding the work to one contractor. In addition,

the

City is bidding all three years' projects at one time, so the MP&W Project Summary

Form

has been revised to include the costs for water main replacement for Phases 3A, 3B,

Board Minutes

February 24, 2015

Page

3 of 4

and 3C. In addition, after the Project Summary Form was submitted and the final plans

were completed, some work in future phases has been shifted to Phase 3A. This has

resulted in the cost for Phase 3A increasing from $219,200 to $320,300. The costs for

Phase 3A will be incurred in 2015, the costs for Phase 3B which will be incurred in 2016,

and the costs for Phase 3C which will be incurred in 2017 will be included in the respective

year's budgets.

After additional discussion, Trustee Heidbreder moved, seconded by

Trustee Eversmeyer, that the revised Project Summary Form for the West Hill Sewer

Separation Water Main Replacement Project

be approved in the amount of $1,061,000. All

Trustees voted aye. Motion carried.

Next Mr. LoBianco advised that,

as included in the 2015 Communications Utility Operating

Budget and approved at the November 2014 Board

of Trustees Meeting, an 8% revenue

adjustment was budgeted

for cable TV services. At the time the budget was prepared,

several major programming contract negotiations had

not been completed. He continued

that programming rates in those contracts were significantly higher than expected and

budgeted, with new programming costs in excess of 15%. Therefore, Staff is recommending

an overall 10.2% revenue adjustment effective April 1, 2015, for MPW Digital TV packages

and services. Although the amount is higher than budgeted, a 10% adjustment only

partially

offsets actual programming increases experienced since September 2013, when

the

last increase was implemented. A price decrease was approved in May of 2014 to

reflect the removal

of Viacom channels. Mr. LoBianco closed with the comment that

MP&W regrets the need

to adjust pricing and understands the impact to our customers;

the

Utility will continue to make adjustments to ensure financial stability remains while

also being fair to customers. After some additional discussion, the following resolution was

submitted:

RESOLUTION 15-04

WHEREAS, review of the financial condition of the Communications Utility has

been completed and reviewed with the Board of Water, Electric, and

Communications Trustees for its consideration; and,

WHEREAS, the Board has reviewed this information and determined that a

revenue increase

is necessary to keep the Communications Utility in a sound

financial condition;

now therefore,

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

of the City of Muscatine, Iowa, that effective April 1, 2015, the

Communications

Utility's price structure for MPW Digital TV Basic service shall

be $26.99 per month and Select service shall by $68.99 per month; and,

BE IT FURTHER RESOLVED, that the General Manager of Muscatine Power and

Water shall continue to be responsible for approving price tiers, premium

services, equipment fees, promotional packages, and discounts

for all

Muscatine Power and Water's Communications services as deemed necessary

to ensure the financial viability of the Communications Utility; and

Board Minutes

February

24,

2015

Page

BE IT FURTHER RESOLVED, that proper notice be given to consumers in

accordance

with the terms of the contracts, Federal Communications

Commission (FCC) and Iowa State Code.

In the General Manager's report, Mr. LoBianco reviewed his previously submitted memo-

randum regarding the

IAMU Leadership and Business Meeting that he attended; he also

updated the Board on the Employee Information Meetings that were held in February and

discussed a House Economic Growth Meeting where he was a presenter.

The January Financial Operating Statements and Balance Sheets were presented as

previously submitted to all Board members in written form. Mr. Gowey reviewed the

January

financials for each Utility. Trustee Bradford moved, seconded by Trustee Tubandt,

to receive and place on file the January Financial Operating Statements and Balance Sheets

for the Water, Electric, and Communications Utilities. All Trustees voted aye. Motion

carried.

The Competitive Quotes

for Public Improvements Report was presented as previously

submitted to all Board members in written format. There were no items for approval. The

report was received and placed on file.

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

members in

written form. Trustee Tubandt moved, seconded by Trustee Heidbreder, to

receive and place on file the January departmental reports. All Trustees voted aye. Motion

carried.

The meeting was adjourned at 6:20 p.m.

BOARD OF WATER, ELECTRIC, AND

COMMUNICATIONS TRUSTEES OF THE

CITY OF MUSCATINE, IOWA

rry

Gowey

card

Secretary