We have been approached by many of our customers regarding this year’s Ballot Question. To help answer those questions, we have compiled the following list of FAQs.
What is the Ballot Question?
All City residents will see the following question on their ballot.
“Shall the Public Utility Commission be abolished?”
A "No" vote will keep all direct oversight and responsibilities with the Princeton Public Utilities Commission whose members are appointed by the City Council.
A “Yes” vote will abolish the Princeton Public Utilities Commission (PUC) and transfer all direct oversight and responsibilities to the Princeton City Council.
What does Princeton Public Utilities do?
Princeton Public Utilities provides electricity and water to a variety of customers both inside and outside of city limits. Princeton Public Utilities is a not-for-profit municipal utility organized under the City of Princeton. Princeton Public Utilities does not have shareholders and therefore all revenues are used for the benefit of the community.
Princeton Public Utilities’ finances and operations are independent of the City of Princeton. The Princeton Public Utilities Commission, appointed by the City Council, provides oversight and guidance over all Princeton Public Utilities policies, finances, and operations.
Is Princeton Public Utilities a profit-making entity?
No, Princeton Public Utilities is a tax exempt - not for profit - municipal business. Which is to say that the money that the utility receives is returned to the utility to ensure the continuity of those goods and services.
How long has the Princeton Public Utilities Commission (PUC) managed Princeton Public Utilities?
The Commission was established when Princeton Public Utilities was first formed in 1911. It has operated as a three-member Commission with staggered three year terms since the beginning. Commissioners are appointed by the City Council and must re-apply at the end of each term if they wish to continue serving.
Why was the PUC created?
The establishment of an independent department of village government was created under Minnesota State Statute (412.321) by the legislature. According to the Minnesota State Supreme Court,
The purpose was to create a water and light commission… and to clothe it with exclusive authority, acting by itself, and independently of the common council or mayor, to operate, control and manage a city water and light plant. This authority is impressed in clear and unambiguous language, and effectually creates a department of village or city government responsible only to the people. (Briggs vs. McIlraith).
The court also stated,
Here the Commission is clearly meant to be an independent department of the village government. We think the manifest object of the legislature was to place the conduct of municipal owned public business enterprises in the hands of a stable and independent body, free from the baneful influences which so often result from the frequent changes of the political complexion of an elective village council. (Village of Chisholm vs. Bergeron).
Who are the members of the PUC?
Chairman Greg Hanson, a retired businessman in International Sales at Hornady Manufacturing in Grand Island, Nebraska, is skilled in staff management, IT, and project management. Greg is a Princeton Public Utilities electric customer and lives in Princeton Township. Greg lived in Princeton and taught at South Elementary in the 1970s and retired to the area in 2014.
Commissioner Dan Erickson, President of Erickson Asphalt, Chief Manager of Railside Properties, and Business Consultant, joined the Commission to serve the community by offering his time, business experience, and knowledge. Dan is a Princeton Public Utilities electric and water customer and lives in the City of Princeton. Dan has lived and worked in Princeton for over 30 years.
Commissioner Richard Schwartz, Owner of Princeton Partnership with several rental properties in Princeton, is skilled in business, finance, business management, and operations. Richard also has a strong electronic/electrical and accounting background. Richard is a Princeton Public Utilities electric customer and lives in Baldwin Township. Richard is a lifetime Princeton area resident.
How are Commissioners selected?
The commission members are chosen by the City Council, that is to say, the city council members were elected by the people in a democratic fashion to choose managers for the municipal public utility. This method was designed and enacted by the State Legislature specifically to avoid having the city councils (political organizations) run the utility for fear of using the utility to meet short-term political needs.
As for the current Commission, the current Mayor and City Council unanimously appointed both Commissioners Greg Hanson and Richard Schwartz. The current Mayor had also endorsed Commissioner Dan Erickson prior to the start of his term. Commissioner Erickson was unanimously appointed by the previous Mayor and City Council.
I don’t live in town but I am a Princeton Public Utilities customer, do I get to vote on this question?
No, the question will only be on the ballot for those that live within city limits.
Will my rates go up or down?
The ballot question is regarding the transfer of direct decision making from the Princeton Public Utilities Commission to the City Council. If the Ballot Question is approved, the City Council would determine all future rates. If the Ballot Question is denied, the PUC would continue to establish electric and water rates for its customers.
What is a PILOT?
The commonly referenced PILOT (or Payment-in-lieu of taxes) is support, which can be both financial and non-financial in nature, that a non-taxable entity can voluntarily donate to various taxing authorities. In addition to a financial transfer, Princeton Public Utilities has been providing various services to the city at little or no cost. This includes the handling all sewer billing on behalf of the city including administration, materials, fees, collections, and reporting. This also includes street lighting, which is a fee for service that many other cities must pay to their local utility – in Princeton's case this is partially funded through the street light fee. PPU also maintains all fire hydrants in town and provides miscellaneous services to the city and first responders when needed (even when it is outside PPU's service territory). Being a local utility, we can often respond to emergencies quicker than other organization located elsewhere. In addition, there are many activities that PPU performs to help the community. One small example is that the city’s Christmas decorations are stored at PPU which we install and remove every year.
Who pays a PILOT?
PILOTs vary from jurisdiction to jurisdiction but it is usually in reference to a non-taxable entity making a voluntary contribution to a governmental entity. In the past, a PILOT contribution was made from Princeton Public Utilities from the electric department, water department, and the municipal waste department (the municipal waste department has since been eliminated).
How was the PILOT changed in 2020?
The financial component of PPU’s PILOT contribution, and only the financial portion of the PILOT, has been withheld to use those funds to bring the reserve funds for the electric utility in line with the guidelines established by the Commission to insure the utility’s ability to respond to emergencies.
The PILOT financial transfer has been deposited into the city’s General Fund and was not earmarked for any particular activity or department. Therefore, no harm was done to law enforcement, fire fighters or first responders as a result of suspending the PILOT financial transfer.
A joint committee to work out the restoration of the PILOT payments was underway and making progress when the Mayor opted to put the abolishment of the Commission on the ballot thereby making further discussions pointless.
Who determines the PILOT arrangement?
The option to make any PILOT contribution is up to the commission as per state statute. Being a non-taxable entity, no tax is due. If there is a surplus at the end of a fiscal period the Commission may negotiate with the city council to share some of that surplus.
The responsibility of the commission is to the rate payers and not to the city council. The Commission is responsible for the structure, maintenance, operation, and financial health of the utility in order to serve the best interests of this community. The goal is to provide both water and electricity at competitive prices and a service level second to none with the ability to rapidly respond in times of need. Being a significant source of income to the city outside of the city’s established taxing authority should not be the primary goal of a municipal utility.
From an opinion page perspective, here is the Union-Times statement on this issue: “It’s our view the Princeton City Council rushed to place a politically charged question on the general election ballot at the 11th hour. Furthermore, city leaders did not allow public comment during a 3 p.m. special meeting Friday, Aug. 21. Not all PPU customers will get a say in abolishing or keeping the commission because the ballot question is city specific, and if this question passes, according to state statute, all powers must be transferred from the commission to the council within 30 days. City leaders have not provided a detailed plan on how that transition would occur.” https://www.hometownsource.com/union_times/opinion/editorials/union-times-editorial-princeton-puc-nov-3-ballot-question-creates-more-issues-than-it-resolves/article_f36eac2c-0983-11eb-b211-571e34fa876d.html
The have also been individual letters to the editor on this topic. Please refer to the Union-Time website to see all comments and opinions. https://www.hometownsource.com/union_times/