2026-02-26 WS & CC Packet - REVISED

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Date: 1//26 To: Karen Anderson, Lino Lakes City Administrator From: Athanasia Lewis, Centerville City Administrator Subject: Proposed Resolution Regarding North End Interconnect Dear Karen, I would like to open a discussion about the water main interconnect between the Cities. Most importantly, we need to look at how to fairly compensate Lino Lakes for the water transferred to Centerville in late 2023 and discuss how to modernize management of that interconnect for future use. We know that approximately 25 million gallons was unknowingly transferred from Lino Lakes to Centerville due to a malfunctioning valve at the north end water system interconnection. This occurrence has remained unresolved for several years. Centerville values its partnership with the City of Lino Lakes and is committed to reaching a fair and reasonable resolution so that we may move forward constructively. The Joint Powers Agreement specifies that the city receiving water will reimburse the supplying city with water. We recognize that Lino Lakes has raised several concerns with this process, including water pressure, mineral content, and other issues. Centerville acknowledges these concerns and is willing to explore other options for reimbursement. Lino Lakes requests compensation in the amount of $40,000, which is 80% of its residential water rate at the time of the water transfer. However, given the unanticipated nature of this large water transfer, we feel that using a cost of production rate is more equitable than the retail rate. We invite Lino Lakes to share its production costs figures with us. By comparison, Centerville’s estimated cost of production for municipal water is $1.0943 per thousand gallons. Based on this rate, we calculate the amount to be reimbursed as follows: 25,000,000 gallons ÷ 1,000 = 25,000 units 25,000 units × $1.0943 = $27,357.06 11