METROPOLITAN UTILITIES DISTRICT Special Board Meeting

8:15 a.m. February 26, 2014

AGENDA

1. Roll Call 2. Open Meetings Act Notice 3. Pledge of Allegiance

JUDICIARY & LEGISLATIVE

4. Reconsider Board Position on LB 1014 – M.U.D. District Elections

BOARD 4. Interview of Finalists for President’s Position

5. Selection of New President (POTENTIAL CLOSED SESSION) 6. Other Matters of District Business for Discussion

METROPOLITAN UTILITIES DISTRICT

Minutes of Special Board Meeting

February 26, 2014

The Board of Directors of the Metropolitan Utilities District of Omaha met in the Board Room of the Headquarters Building at 1723 Harney Street in special session at 8:16a.m. on February 26, 2014.

Advance notice of the meeting was posted on the first floor of the Headquarters Building from February 5, 2014, to February 26, 2014. Notice of the meeting was published in the Omaha World-Herald on Sunday, February 16, 2014. The agenda of the meeting was available for public inspection at the office of the Secretary and President and copies were delivered to Board Members on February 21, 2014.

AGENDA N0.1 ROLL CALL

Chairperson Lindsay called the meeting to order at 8:16a.m. On a roll call vote the following members were present:

Tim Cavanaugh Jim Begley Tom Dowd Dave Friend Jack Frost

Steve Patterson Amy Lindsay

Mark Doyle, Interim Secretary

Also present were various members of the staff, representatives of Local Union IBEW #1521, Chris Marx and Chris Carlson representing Aureus Group, and members of the public.

AGENDA NO.2 OPEN MEETINGS ACT NOTICE

Chairperson Lindsay advised those in attendance that a copy of the Open Meetings Act was posted in the rear of the Board Room.

AGENDA NO.3 PLEDGE OF ALLEGIANCE

Chairperson Lindsay invited those who cared to participate, to stand and recite the Pledge of Allegiance.

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AGENDA N0.4 RECONSIDER BOARD POSITION ON LB 1014- M.U.D. DISTRICT ELECTIONS

At 8:17 a.m., Mr. Kubat reported that LB 1014 had been advanced from Urban Affairs Committee to the floor of the Legislature, and is one of two bills to be declared a Committee priority bill. Mr. Kubat told the Board that this event greatly improves the probability of passage during the 2014 session. Prompted by Board Members' discussions, Mr. Kubat relayed the Board's concerns to Senator Murante. Senator Murante indicated that a reversal of the Board's position would void the prior agreement. Mr. Kubat told the Board what that could mean going forward: an earlier implementation date, no staggered elections, and the possibility of losing participation in drawing election districts. Mr. Kubat also reported that he had obtained clarification from the Secretary of State that shortening current Directors' terms was legally permissible. A recent example of this occurred last year when Senator Lautenbaugh successfully sponsored a bill to alter and shorten the terms of the Omaha Public School District Board Members.

Board Members offered comments regarding their individual positions on LB 1014. Mr. Dowd complimented Mr. Kubat for keeping the Board apprised of the political dynamics surrounding the bill. He also stated that he resented Senator Murante's characterization that the bill would address a need for effective representation of constituencies in North Omaha, South Omaha and Sarpy County. Mr. Dowd relayed his sentiments in a letter to Senator Murante and fellow Board Members.

Mr. Cavanaugh also commented about the drawbacks of district elections, and noted that the Senator's reference to a lack of Sarpy County representation was untrue since Mr. Doyle, the District's current interim President, served twenty years as a Board Member while residing within Sarpy County boundaries.

Mr. Patterson and Mr. Friend shared similar sentiments regarding opposition to the concept of district elections, but Mr. Friend stated he would continue to officially support the bill in its present form so as to continue being actively involved in the bill's formation. Mr. Cavanaugh repeated his resolute opposition to district elections on the basis that it would instill parochialism instead of dissipating it, and would limit ratepayers to one representative on the Board instead of the seven they currently have. Mr. Friend agreed that would be the net result, noting the example of a recent Ralston customer issue which prompted involvement from three or four Board Members before it was ultimately resolved. If district representation had been in place at the time he received the customer call, he stated that he would have felt obligated to refer the customer to "his representative."

Mr. Cavanaugh motioned to reverse the Board's position on LB 1014 from support to opposition, which was seconded by Mr. Patterson. Mr. Friend requested clarification as to what the motion encompassed. Mr. Cavanaugh clarified that the motion would oppose LB 1014 in any form . Ms. Lindsay expressed comments in opposition to the concept of district elections but agreed with Mr. Friend that it was more important for the Board to retain a voice in the final outcome. The motion failed.

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Voting Yes: Cavanaugh, Patterson Voting No: Begley, Dowd, Friend, Frost, Lindsay

MINUTES FILE DOCUMENT NO. 137171

AGENDA NO. 5 INTERVIEW OF FINALISTS FOR PRESIDENT'S POSITION

At 8:26 a.m. , Chairperson Lindsay reported on the activities of the Board's subcommittee on which she, Mr. Patterson and Mr. Begley served. The subcommittee developed the protocol for the selection process, and arrived at the final field of candidates. Mr. Friend confirmed that the third finalist would no longer be considered and there would only be the two internal candidates to interview. Mr. Doyle relayed the protocol regarding the actual interview process, noting the public is permitted to be in attendance, staff people are not permitted unless they are taking vacation time, and the door to the Board Room will stay open. Union representatives are permitted to remain but their attendance is not on District time.

Mr. Bucher reminded Board Members about a recent legal precedent regarding the review and interview of job candidates, and reiterated that the basic premise is that all conversations should take place in an open setting. Closed sessions are permissible only under very limited circumstances. Mr. Begley inquired as to whether a scorecard was permissible. Mr. Bucher responded that it would be permissible but if used or shared amongst other Board Members, it would need to become part of the record.

At 8:47 a.m. , all District employees who did not wish to take vacation leave departed the Board Room while members of the public were permitted to stay for the interview process.

Mr. Keep was interviewed first, followed by Ms. Schneider. The interviews concluded at 10:32 a.m.

AGENDA NO.6 SELECTION OF NEW PRESIDENT (POTENTIAL CLOSED SESSION)

At 10:33 a.m., discussion was held as to whether a vote would be taken on the selection of the new President. Members decided to table the decision until the regular March 5, 2014, Board Meeting. No vote was taken.

At 10:34 a.m., Mr. Dowd requested an explanation from Aureus Group regarding its process for reviewing candidate applications. Chris Carlson, one of its two representatives in attendance at the meeting, reported that 66 formal submitted applications were received, and ten were ultimately interviewed, five of whom were mandated to be internal candidates in accordance with the District's agreement with Aureus. Of that number, three were selected as finalists to be interviewed by the Board. Ms. Carlson relayed the events that led up to the exclusion of the third candidate. She told the Board the candidate's questionable work history related to his employment with a utility company in South Dakota came to light on February 161

h (not the 191h as she

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had stated earlier and as was reported the previous day in the Omaha World-Herald). Chris Marx of the Aureus Group, emailed her on February 161

h to report the results of a Google search, and suggested contacting the hiring committee. The candidate was invited to interview again, which he did via Skype. She said he reviewed with them the 'attorney letter' outlining the details of the settlement. She stated that in retrospect that she should have pulled this candidate's application from the finalists' list at this point, based upon the matrix that was formed and the public nature of the utility business, but she did not. The 'team' all agreed after the interview that he still deserved to be in a final candidate pool.

Mr. Dowd suggested that, based on the information Aureus already had with regard to the fact that the candidate left his employment with the utility company, did Au reus representatives ask why he left? Ms. Carlson stated "absolutely." Mr. Dowd asked whether Au reus learned the company went bankrupt, and whether the candidate was the subject of a fraud investigation by the Securities Exchange Commission. She replied it was an investigation and he was not found guilty. Mr. Dowd stated the candidate was subsequently fined $150,000 in a settlement and he agreed not to serve on any board or serve as an executive officer for five years for any company that falls under the jurisdiction of the SEC. He stated that as an attorney, he understands what 'nolo contendere' means and what 'settlements' are. Mr. Dowd asked whether 'this agreement would not have caused you to believe he had responsibility before he accepted the ban and paid that kind of fine?" Ms. Carlson responded that the matter absolutely did raise many red flags but that after due diligence, and upon review of the references and the documents he provided, the candidate was still considered a viable candidate and still added a lot of value. And the candidate "would love the opportunity to talk to each and every one" of the Board Members. Mr. Dowd stated he was troubled by the fact that he received information about the candidate's qualifications from the Omaha World-Herald and not from the reports that Aureus submitted. Ms. Carlson stated that the documents were in the packets, and Aureus does not speak to the press. Ms. Lindsay interjected that she had not yet received the packets from Aureus at the time the OWH story was being written, but upon being contacted by the reporter responsible for the story, forwarded the candidates' resumes to him. Mr. Dowd stated the point was that he was concerned about the scope of services provided by Aureus Group and that it was Aureus' responsibility to protect the District by virtue of any reasonable screening process. Ms. Carlson stated that the information was detected and addressed.

No action was taken.

AGENDA NO.7 OTHER MATTERS OF DISTRICT BUSINESS FOR DISCUSSION

At 11 :08 a.m., Chairperson Lindsay asked if anyone else had comments for the Board. Mike McGowan commented on the high quality of the two current candidates, and recommended the Board seriously consider questioning the candidates about their vision for the future. He also recommended the Board take a serious look at setting a

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salary commensurate with the responsibilities of the job, and suggested that retaining and rewarding good talent ensures that they will not be lured away by another company.

Tom Riley representing IBEW 1521 offered comments in support of Mr. Keep's selection as President because of his longstanding, intricate knowledge of the District's operations.

John Hemschemeyer requested clarification from Aureus Group regarding the posted job qualifications pertaining to 'past experience in public utilities.' He requested a copy of the online job posting. He asked specifically whether the posting included a provision requiring 'ten years' utility experience.' Mr. Chris Marx of Aureus responded that the posting stated 'ten years' utility experience preferred.' He asked whether both finalists met those minimum requirements, and Mr. Marx stated that they did. Mr. Hemschemeyer also asked whether any potential candidates were excluded because they had fewer than ten years' utility experience, and Mr. Marx stated there were not.

At 11 :13 a.m., Mr. Cavanaugh motioned to adjourn which was seconded by Mr. Friend and carried on a roll call vote.

Voting Yes: Cavanaugh, Begley, Dowd, Friend, Frost, Patterson, Lindsay Voting No: None

The meeting was adjourned.

SLK/mjm

MINUTES FILE DOCUMENT NO. 137172

Scott L. Keep, Secretary

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