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HomeMy WebLinkAbout10-10-2022 Council PacketAgenda Council Meeting Monday, October 10, 2022 6:00 P.M. Orono Council Chambers, 2780 Kelley Parkway, Orono, MN 55356 952-249-4600 / www.ci.orono.mn.us Sign up for email notifications at www.ci.orono.mn.us The public is invited to address the council regarding any item on the regular agenda. If your topic is not on the agenda, you may speak during the Public Comments section. Roll Call Pledge of Allegiance Swearing In Ceremony Approval of Agenda Consent Agenda 1. City Council Meeting Minutes of September 26, 2022 2. Claims/Bills 3. Approval of Seasonal Employees 4. Request to Hire Full Time Maintenance Worker 5. Approval of Non-Waiver of Tort Limits – Resolution No. 7294 6. Adopt New Flexible Spending Plan – Resolution No. 7295 7. Approval to Begin Recruiting Process Full Time Parks Maintenance Worker 8. LA22-000045 – Addilay Homes o/b/o Robert Hannah, 1153 Elmwood Avenue, Variance – Resolution No. 7296 9. LA22-000046 - Eskuche Design o/b/o Marcel Sits, 3345 Fox Street, Guest House, Conditional Use Permit – Resolution No. 7297 10. LA22-000043 – John and Sanja deGarmo, 2675 Fox Street, Variance – Resolution No. 7298 11. Public Works Facility (21-039) – Award – Resolution No. 7299 12. Tree Lighting Event Funding Presentation 13. Senator David Osmek 14. LMCD Representative Update – Richie Anderson Community Development Report 15. LA22-000036 – Scott Gates o/b/o Lisa Thostenson, 2815 Casco Point Road, Variances 16. LA22-000048 – City of Orono Text Amendment related to Accessory Building Height – Ordinance No. 278, Third Series Finance Report City Attorney Report City Administrator/Engineer Report 17. Fire Chief Position and Recruitment Approval Agenda Council Meeting Monday, October 10, 2022 6:00 P.M. Orono Council Chambers, 2780 Kelley Parkway, Orono, MN 55356 952-249-4600 / www.ci.orono.mn.us Sign up for email notifications at www.ci.orono.mn.us Public Comments – (Limit 3 Minutes per Person) This is an opportunity for the public to address the City Council. The council will not engage in discussion or take action on items presented at this time. However, the council may refer issues to staff for follow up or consideration at a future meeting. Speakers should state their name and home address at the podium before speaking. Mayor/Council Report Adjournment Upcoming Events 2022 10-17-2022 Planning Commission Meeting, Monday, 6:00 p.m. (Victoria Seals) 10-24-2022 City Council Work Session, Monday, 5:00 p.m. 10-24-2022 City Council Meeting, Monday, 6:00 p.m. 11-07-2022 Park Commission Meeting, Monday, 6:00 p.m. 11-08-2022 General Election Day, Tuesday, 7:00 am – 8:00 p.m. 11-11-2022 Official Holiday, City Offices Closed 11-14-2022 City Council Work Session, Monday, 5:00 p.m. 11-14-2022 City Council Meeting, Monday, 6:00 p.m. 11-21-2022 Planning Commission Meeting, Monday, 6:00 p.m. (Matt Johnson) 11-24-2022 Official Holiday, City Offices Closed 11-25-2022 Official Holiday, City Offices Closed 11-28-2022 City Council Work Session, Monday, 5:00 p.m. 11-28-2022 City Council Meeting, Monday, 6:00 p.m. AGENDA ITEM Prepared By: Correy Farniok Reviewed By: A. Carlson Approved By: 1. Purpose. The purpose of this action item is for 2 police officers and 1 Sergeant to be given the Oath of Office. Background. In the past year the Orono Police Department has hired two police officers and has promoted one Sergeant. The two police officers have completed their field training program and are on solo patrol. The officers that will be given the oath of office for police officers are Brayden Sherman and Cory Slipka. Collin Hennessy has been promoted to Sergeant and will take the oath of office. 2. Project Scope. Mayor Dennis Walsh to read and administer to the Oath of office to the police officers and Sergeant. Staff Recommendation. I recommend the swearing in and reading of the oath of office officer to Officer Brayden Sherman, Cory Slipka and Sergeant Collin Hennessy. Date: October 10, 2022 Item Description: Oath of Office for Police Officers Presenter: Correy Farniok Police Chief Agenda Section: Swearing in Ceremony MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 1 of 13 ROLL CALL The Orono City Council met on the above-mentioned date with the following members present: Mayor Dennis Walsh, City Council Members Matt Johnson, Aaron Printup, and Richard Crosby III; Council Member Victoria Seals was absent. Representing Staff were City Attorney Soren Mattick, City Administrator/Engineer Adam Edwards, Finance Director Ron Olson, and Community Development Laura Oakden Mayor Walsh called the meeting to order at 6:00 p.m., followed by the Pledge of Allegiance. APPROVAL OF AGENDA CONSENT AGENDA 1. CITY COUNCIL MEETING MINUTES OF SEPTEMBER 12, 2022 2. COUNCIL WORK SESSION MINUTES OF SEPTEMBER 12, 2022 3. CLAIMS/BILLS 4. APPROVAL OF RENTAL LICENSE 5. REDUCE DEBT LEVY REQUIREMENT SERIES 2014A – RESOLUTION NO. 7290A 6. ADOPT 2023 PRELIMINARY TAX LEVY – RESOLUTION NO.7291 7. ADOPT 2023 PRELIMINARY GENERAL FUND BUDGET – RESOLUTION NO. 7292 8. ADOPT 2023 LONG LAKE FIRE OPERATING BUDGET 9. REJECT 2023 LONG LAKE FIRE CAPITAL BUDGET 10. NOTICE OF INTENT TO ESTABLISH A FIRE DEPARTMENT – RESOLUTION NO. 7293 11. FIRE DEPARTMENT CONSULTANT SEARCH COMMITTEE AND RFP PROCESS 12. AUTHORIZATION FOR IMPLEMENTATION AND REPUBLICATION OF ORONO MUNICIPAL CODE 13. PUBLIC WORKS FACILITY (21-039) – AWARD 14. AUTHORIZATION TO PURCHASE 2023 SQUAD CARS 15. LA22-000041 – ESKUCHE DESIGN O/B/O CHRIS HEIM, 3005 CASCO POINT ROAD, VARIANCE – RESOLUTION NO. 7284 16. LA22-000037 – 612 SIGNS, 1444 SHORELINE DRIVE, VARIANCE, DENIAL RESOLUTION NO. 7289 The Applicant asked to remove this item from the agenda. MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 2 of 13 A member of the public asked to talk about items 6 and 13. A member of the public asked to pull item 10 from the Consent Agenda until they hear more about item 19, Fire Department Negotiation Offer to Long Lake. Walsh moved, Crosby seconded, to approve the Consent Agenda with the removal of items 6, 10, 13, and 16. VOTE: Ayes 4, Nays 0. PRESENTATION SCHOOL BOARD LEVY - ROBERT TUNHEIM Mr. Tunheim shared about an important item on the ballot this fall involving the renewal of the technology levy. He thanked the City of Orono for their partnership. He introduced the Superintendent Kristine Flesher. Dr. Flesher thanked the community for the technology levy that has been dedicated for 20 years in Orono Schools. It is now expiring and is up for renewal. She showed a video onscreen and followed up noting that there is no tax increase, it is a flat renewal, and important buckets it supports are about classroom learning, reliable safety, and infrastructure. Crosby asked how much in dollars the levy on a $500,000 home is. Dr. Flesher replied it would be about $120 per year on a $500,000 home, or about $10 per month. Crosby stated the technology there is fantastic and he would be interested in keeping it going. PUBLIC HEARING 17. Fox Street Pedestrian and Bike Infrastructure Public Discussion (Project #23-001) City Administrator/Engineer Edwards noted this is a continuation from the previous meeting. The City received a petition and resident input about looking at pedestrian and bike facilities and have also received input against adding those facilities. Eric Dayton, 1820 Fox Street, is here on behalf of 20 of his neighbors. Together they have 18 children and grandchildren who live along Fox Street. All of those advocating for the consideration of this provision are motivated by the safety of the children and families. He shared a deep concern that the status quo on Fox Street is unsafe and unsustainable. The road is narrow, hilly, has poor visibility, cars regularly exceed the posted speed limit (35 mph), there is no shoulder, and there are no lane markings along that section of the road. Collectively they are asking to explore ways to make the road and neighborhood safer as part of the proposed reconstruction and redesign of Fox Street. It would potentially allow those living along Fox Street to have safe access to the Dakota and Luce Line Trails and Mr. Dayton’s hope is to be able to bike to Bederwood Park or bike into town for ice cream safely. He spoke with Edwards about the options and learned some important things; the lane width would be between 12- 14 feet wide and Mr. Dayton went out to measure Fox Street noting it is roughly 22 feet wide and at the narrowest point through the wetland it is only 20 feet wide. He noted it is really underbuilt for two lanes of traffic at 35 mph. Mr. Dayton also learned the proposed reconstruction through the low-lying area is an infrastructure expected to last 50 years and this is a once-in-a-generation opportunity to anticipate the MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 3 of 13 uses of Fox Street well into the future. Their request is to get that opportunity right. He is asking the City Council to direct Staff to conduct an additional feasibility study for provision of bike and pedestrian safety, including community and neighborhood outreach. This would be a relatively minimal expense and if the budget were a concern, he and others would be willing to contribute to that effort. Most importantly it is an opportunity for resident engagement and education. He noted this would also allow time to explore additional funding options. Mr. Dayton has been in touch with Commissioner LaTondresse at Hennepin County, as well as Representative Dean Phillips and Representative Kelly Morrison. This potential investment in clean, forward-looking, climate-conscious infrastructure aligns with County, State, and Federal funding priorities and he thinks there is an opportunity there. Mr. Dayton thanked Edwards for his guidance and said he has been great and represented the City well. Barbara Schmidt, 50 Landmark Drive, asked if this stretch of road is part of the Comprehensive Plan approved by the City for bike trails. Edwards replied the City does have a bike trail plan and this stretch of road is not included. Penny Saiki, 2874 Casco Point Road, was here for the presentation from the soils engineer who explained that portions of the road that go over the wetland are always going to heave every year. If they widen a road the tendency is to go faster; she noted the upland area surrounding is treed, landscaped, and if they widen it the landscape goes away and it is decades of recovery. She thinks everyone here in Orono came out not because it looks like downtown Minneapolis, Edina, or Eden Prairie, they came out because of the setting and she thinks they need to respect that. To change the wetland, she noted John Miller stated at the previous meeting that in the old days people just went straight from one point to another and it did not matter what the soils or landscape were, it was about the shortest route. Today, in being more educated and with the engineering background, she thinks they need to respect that. Nivin Macmillan stated she has lived on or within 1.5 miles of Fox Street for 45 years. She dreads sounding like a crotchety old lady that doesn’t want anything to change and she certainly wants the children to be safe. It is hard for her to see the pressing need, of course they need to do something about Fox Street, but she does not see the pressing need for the bike lane. They have miles of biking around them and from where she lives on Fox Street it is exactly .3 of a mile to the Dakota Trail and perhaps a little over .5 miles to the Luce Line. It seems like a tremendous expense, she is concerned about the Watershed, and she is not an expert and cannot speak to it specifically but they know what the water is like in the low place at the east end of the road and they have geese swimming there some years. She feels very protective of the wetlands. Ms. Macmillan noted it is hard to argue about taking the children to ice cream because that is good; however, one must weigh the value of the ice cream and the short distance with all that would be involved in widening the road. The final embarrassing thing she has to say which may seem like a very small and unimportant factor, it was “real country” when she moved out there in the 1970’s and they do have a little island of something out there that does not feel like downtown and she feels very protective of that. While she hates to be in opposition to her good friend Eric Dayton and wants his boys to have ice cream, she is against putting a bike and walking trail on Fox Street. Robert McNae 1840 Fox Street, stated as the populations grows in Orono he thinks it is imperative to stay in the forefront of growing with the rest of the City, State, and world. He thinks they must move forward and while it is only half a mile to get to the Dakota or Luce Line, one takes their life in their hands to get there. No matter how wide or narrow that road is, unless they do something to protect pedestrians and MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 4 of 13 people using that road, something tragic is going to happen. He noted people move down that road at faster than 35 mph and it is not safe for anyone to enjoy what they all love in Orono and the trails in the area. He encourages the City Council to explore the opportunity for everyone to enjoy what they have in the City. Rick Hendell, owns the lot on 1735 Fox Street, and is opposed to this as well, it is in the highland, upland area, and there are many mature trees. He builds and remodels homes and he knows roads; this particular stretch has very steep edges and once they start to widen the road it causes a domino effect and he sees a lot of collateral damage regarding vegetation. He loves the idea of a bike path, there is not a bike path connecting anywhere around there and he feels widening the roads would encourage more people to travel in an unsafe area. The wider the roads get, the faster people go and he feels visibility is already not great on that road, he thinks this would encourage more dangerous behavior. He noted there could also be a lot of expense incurred with utilities, gas lines, etcetera, and he does not see it as necessary. He noted he is opposed to it. Anas Abukhadra, 1745 Fox Street, owns three lots on Fox Street and is against this because he believes it will not be safe or make it any safer for anyone else. He also believes it will create noise, take away privacy, and create more maintenance on the property. He is against it. Mary Wray, 1390 Fox Street, noted they previously lived on the corner of Brown Road and Fox Street (680 Brown Road S), and when her sons were younger they wanted to go biking. One day they tried to bike on Fox Street and it was incredibly dangerous how fast the cars were going by. She noted they also would not let them ride on Brown Road because the cars go by so rapidly and trucks drive down the middle of the road as they do not feel comfortable being on one side of the road. She thinks having lines down the center would be very helpful and noted groups of bikers going 25 mph are bypassed by cars going 50 mph. She is sure the police have reports of how fast they have ticketed people driving on Fox Street, and she does not know any additional ways to slow traffic. Ms. Wray noted the amount of traffic on Fox Street has increased with the development in Orono, she has seen it explode, and does not feel it as a safe place, therefore she is against bike lanes. In putting a bike lane in, they are saying it is a safe place for bikes when it is really not. She has talked to Edwards about people parking their cars to get to the Dakota Trail on the east side of Fox Street, they are getting kids out of the cars, getting bikes out, it is so dangerous and she is surprised an accident has not happened there. Joan Migliori, 1655 Fox Street, thanked the Council for hearing concerns regarding a potential bike lane. She would like them not to consider a feasibility study noting they have heard tonight that the road is very narrow, is constrained by vegetation, the Watershed, they cannot change the facts or environment but can improve the road’s surface. They could potentially put fog lanes which would help drivability but encouraging any type of pedestrian or biking on that road will be a dangerous endeavor. Mayor Walsh clarified that the Council approved the engineering bid to start work on the road. They have planned to repair the road and waited until they had the full budget available. When they redo roads, the City tries to widen everywhere they can, manage the water, make it as safe as it can be with striping, and this would be nothing different. There is not a trail plan, there is nothing that connects to these trails, and Mayor Walsh lives on Rest Point where it is about 12 feet wide and he understands biking on the street is dangerous. He thinks the City has done a good job in working with the Park Department and Three Rivers to make connections all around the area, and he thinks there are plenty of places to go and park. He MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 5 of 13 probably would not be in favor of spending any more money beyond what they normally would to make sure residents are engaged and to make the road as safe as possible. He agrees with keeping the rural character of the City as long as they can. Crosby appreciates everyone’s ideas and thoughts and said it was great hearing from each of them. He noted Fox Street is a tough road with peaks and valleys, which is bad for visibility and the decay on the road edges is horrible. Next to the wetland it just makes that softer. In trying to expand upon that he thinks it will just get worse and he does not see it being feasible. He agrees the rural feel of Orono brings charm and community feel to the area and there are a lot of roads in the area where one cannot comfortably walk or ride a bike on. He agrees with Mayor Walsh that people should go to the trails where they have good, safe access. Personally, Crosby wants to build a good solid road that lasts and is as safe as can be for people to drive on. He noted there is not room to do something feasibly well. Johnson used to live on Tanager and Shoreline and has been down Fox on his bike hundreds of times. He tends to ride against traffic on that road to see what is coming rather than getting hit from behind. One thing that will happen when the road is improved, speeds will increase; to Johnson the only way a bike lane would work is if it was completely separated from the road such as a dock/bridge system. However, that is outside the scope of this road improvement project and could be done separately if there are any funds available from different entities to support a bike trail through there. He would not be in favor of adding any taxpayer burden to improving it for the very little benefit to the City as a whole. Printup noted he kind of agreed with everyone pro and con. They want to keep Orono a rural oasis they also have to have a mind toward the future. While Orono may not be growing, people outside of Orono are driving through, and they must keep those things in mind. Widening the road and increasing costs is not something he is in favor of. He asked about striping right now. Edwards clarified they will put that in the preliminary designs for the future. Printup noted widening the road invites the traffic and the speed, as well. Johnson asked about having the majority of the shoulder on one side. Edwards clarified they are looking at that option of adding four feet. As he understood direction from the City Council they would look at where they can widen without widening overall. Johnson suggested looking at putting it all on one side rather than 50/50 with stripes to create a little extra space. Mayor Walsh suggested getting resident input via an open house when they have the plans. Edwards clarified there is not a lot of room to work with so they would only be talking a couple of feet. 18. LA22-000049 – City of Orono, 365 Old Crystal Bay Road, rezone of the official wetland overlay district map, Public Hearing – Resolution No. 7290 Community Development Director Oakden presented a summary packet of information. Oakden gave history noting the official City Wetland Map identifies the boundaries of the wetland overlay district which includes wetland delineations and are included in the boundaries of the wetland overlay district. In order to construct the Public Works Facility, filling .4 acres of wetland is required. Following City Code, MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 6 of 13 in order to remove that wetland from the overlay map a rezoning process is required. A wetland delineation was completed and approved by Minnehaha Creek in 2021 and Minnehaha Creek and Wetland Conservation Act (WCA) have issued permits for approval of the project. Mayor Walsh opened the public hearing at 6:44 p.m. Penny Saiki, 2874 Casco Point Road, noted wetlands are federal, even though they go through the district. She stated four years ago, she pointed out five reeds coming up west of Brackett’s which is an invasive weed. She asked what they would do about it and they said nothing. Now looking at the shore and about 100 feet where there were five reeds, now it goes all the way past the marina and there is also a patch near Lafayette Road. She does not get it, that is a decision by the wetland district. Ms. Saiki spoke about replacement and asked what the plan is before they start changing the land as they need the approval for replacement. The replacement of the wetland is important and just because one has a credit and moves it, it changes the watershed. She knows they are trying to do a good job but asked the Councilmembers to keep in mind what it is doing to the Minnehaha which goes to the Mississippi, and then it is the globe. Ms. Saiki is not a tree-hugger but she is very practical regarding what little they do, how far it goes and the difference that it makes. Kim Carswell, 261 Cygnet Place, asked Oakden to explain again in laymen’s terms. Oakden clarified there is a wetland on the property and in part of construction of the Public Works building that wetland is in the buildable site. They are proposing to fill that wetland which requires a rezoning process to remove it from the overlay district map. Johnson stated they would be filling that wetland and replacing it somewhere else. Barbara Schmidt, 50 Landmark Drive, noted Mr. Crosby just spoke about the rural nature of Orono and Ms. Schmidt was very excited to hear that. She asked what kind of example they are setting by filling in a wetland for a Public Works building? They do not need to do this, she knows the City wants to do it, but why are they setting this example when this is what Orono stands for: wetlands, wildlife, and the rural nature. She noted they cannot just say that and not act accordingly in helping keep their spaces, that just does not fly. She is sad and disappointed that they are filling in a wetland and wants everyone to hear that because this is not a good example for the City. Mayor Walsh closed the public hearing at 6:50 p.m. Mayor Walsh stated this is why there are wetland credits, because sometimes a small piece, such as on this property, needs to be changed on the wetland overlay to manage it. He noted wetland credits and replacement happens in developments and peoples’ homes from time to time. He clarified it is not the entire building but a very small piece of the site. Crosby clarified he does like the rural feel of Orono but that does not mean he does not want to keep improving parks for kids so they are active outside. He still thinks they can have a mostly rural community and improve the parklands. Johnson moved, Printup seconded, to approve Resolution #7290, approving the rezoning of the wetland overlay map. VOTE: Ayes 4, Nays 0. MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 7 of 13 6. ADOPT 2023 PRELIMINARY TAX LEVY – RESOLUTION NO.7291 Finance Director Olson noted the City must certify the Preliminary Tax Levy to the County by September 30. He shared the final levy and budget will be approved on December 12, 2022 and public input will be allowed prior to the final adoption of the levy and budget. He showed a slide on screen regarding tax and tax levy history, noting the average property in Minnesota pays 30% of the property tax to the City, 30% to the schools, and 28% to whatever County they are in. Orono’s share of the tax levy is only 16% with 38% going to the County, and 39% goes to the schools. Olson stated the City has always been conservative on the tax levy, taking a much smaller portion than cities around Orono. This year the total levy is proposed to be $8,387,000, the General Fund levy is $5,641,000 (13% increase mostly due to wage increases in the unions), and he spoke about the pavement management levy which will bring them to the full funding needed to maintain roads in Orono. This City Council has been very dedicated to improving parks and the park levy is increasing to $150,000; Olson noted that fund was at zero 10 years ago with nothing spent on parks other than mowing and portable restrooms. He shared about the community investment fund, bonds, and debt service which is a savings of $416,000. Olson shared it is a sizable increase overall but he thinks it is justified for where Orono is going. He stated based on the increase in property values this year the tax capacity is about $50,000,000 which is a 21% increase. Right now they are estimating the tax capacity rate for Orono will actually decrease slightly by .04. He explained if one owns a property in Orono that does not change in value they would see a very small decrease in taxes. If a property increased by 5% in value they would see increases in property taxes, for example $22-23 on a $250,000 and $210 on a $2,000,000 home in the City share of taxes. Olson showed a slide on tax capacity since 2016 which is trending downward over time. Mayor Walsh noted the City has the road budget in there (they do not assess for roads), as well as the roads and sewer budget, the parks budget, police, and technology. Looking at Long Lake, for example, who is at 36% to Orono’s 16%, they do not have any of those things in their budget. Olson shared a chart comparing taxes between cities and the good job Orono has generally done keeping taxes low. He showed the general fund tax levy noting Orono is around 52%, Medina is over 70%, Mound is 67%, Spring Park is over 80%. He noted Orono has done a great job finding other ways to finance the general fund budget through service contracts for police and public works which allows a bigger, more robust department, and provides services the other cities could not afford on their own. This keeps Orono’s budget much more stable because they are not completely reliant upon taxes. Many of the cities on the graph get some sort of State aid and Orono has not received State aid for 20 years. Gabriel Jabbour, 985 Tonkawa Road, appreciates Mr. Olson’s presentation. As they know, one goes through a tax bill and noted to do anything at the State level will take a long time, planning, getting the right legislator to think the right way, and getting something done at Hennepin County is very difficult. He stated Orono is picking up quite a bit of Hennepin County, Minneapolis, and other areas. The only other area they could make a difference is in the local, City government. Mr. Jabbour said the City will receive close to 21% more taxes out of Orono residents than the previous year. With property values going up they do not need to change the number that they multiply the value to get the taxes. Mr. Jabbour would say the reason it is going up is supply and demand and the good citizens of Orono investing in their own property. If the whole City doubled and the City kept the budget the same, the levy number would go down in half (he does not mean the taxes). He noted Orono is definitely unique with tons of great houses that require very little service which are a great cash cow for the City. The reason Mr. Jabbour is asking the City Council to reconsider the amount of money they are making the budget to be, none of the pie charts really matter to the people, it matters how much more money is coming out of their pocket. Mr. Jabbour stated his house went from $2 million-something to $3 million-something, in using the same levy MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 8 of 13 number as last year they would receive 35% more money. Obviously the City does not need to change that number and he is asking them to consider the amount of money they are spending as it is input/output. He asked them to try to keep the City’s portion of taxes down and to work collectively very hard to see what they can do about the other part of the pie to keep it low, as well. Mayor Walsh noted if someone’s house was $500,000 6 years ago and did not go up in value and it is still $500,000 next year, they are not paying anything more. The only difference is the incremental value that it has gone up. He noted people in the City have to be paid, utilities go up, but otherwise the tax rate has not changed. Mayor Walsh stated this City Council committed 6 years ago to keep that tax rate no higher than it was and that is what they have done, all while funding parks, roads, water/sewer, and everything within that. Johnson moved, Crosby seconded, to adopt Resolution #7291, 2023 Preliminary Tax Levy. VOTE: Ayes 4, Nays 0. 10. NOTICE OF INTENT TO ESTABLISH A FIRE DEPARTMENT – RESOLUTION NO. 7293 Kim Carswell, 261 Cygnet Place, asked to understand the problem this is trying to solve. She hears neighbors talking about the duplication and asked what is the problem and what is the impact if they have two fire departments fairly close to each other? Mayor Walsh noted the “why” is a long discussion which the City has been having for three years. Regarding the notice of intent, the City has committed that they want to have control of their fire department and regardless of whether they are partnered with Long Lake or not, Orono needs to establish their own fire department with the State and must file paperwork to do that. Johnson clarified right now they are just dealing with some of the things they will need to do if they do not have an agreement with Long Lake. He noted they can stop this later on and dissolve it if they come to a resolution with Long Lake. Johnson moved, Crosby seconded, to adopt Resolution #7293, and authorize the Mayor to sign a letter (Exhibit B). VOTE: Ayes 4, Nays 0. 13. PUBLIC WORKS FACILITY (21-039) – AWARD Edwards shared the City has been working on designing a new Public Works Facility and bonded for that facility the previous December. Bids for construction came in above what the City thought prudent to move forward with so they took it back to the design team and asked to divide the scope of the project into different phases. Edwards clarified the project was then rebid and the City received a number of bids, the lowest being Ebert Construction for $16,067,000. Mayor Walsh gave history noting the current 28,000 square foot public works building is surrounded by swamp and as Orono has grown they now need 60,000 feet. The department services other communities and eight years ago the City Council began paying down debt from roads. Then in December they bonded for the Public Works Facility and Fire Department all at the same time for $16,000,000 at 1.9% which would be triple that percentage today. Gabriel Jabbour, 985 Tonkawa Road, noted if they do an EIS (Environmental Impact Statement) or EAW (Environmental Assessment Worksheet) one option they must do is to study doing nothing. He does not totally disagree that Orono has grown and noted they were at 7,800 people when he was around and now MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 9 of 13 are at 8,300 people. As a previous gentleman stated they have not added roads and he would like to give a statistic. In the whole City, only 33% of the people utilize water and sewer, 37% utilize sewer and private water, and 31% do not utilize either sewer or water. He does not think it is fair for those people to be paying for Public Works to service other cities. The revenue they are receiving from Spring Park is under $200,000 which is really peanut butter and jelly. Mr. Jabbour stated they have 48 miles of local roads, 20 miles of private roads that citizens pay to plow on their own, and 30-40 miles of County Roads. At the time they built the current building, Mr. Jabbour made an arrangement to purchase land from the school to add to it, which is perhaps what they referred to as the swamp earlier. He really urges the City to quit spending that kind of money and thinks it is City Hall going a little bit on the wild side in spending. Mayor Walsh noted the Public Works people are not just plowing roads, they do a lot of things in this City, and the City must take care of them, along with many other things. A member of the public asked regarding the wetland on the site of the current Public Works building, is there a reason they cannot do the wetland overlay replacement on what is already owned. Mayor Walsh clarified they did a facility analysis, spent a lot of time with the architects, months with Public Works, noting they did a lot of homework on it. He shared they could not do it over there because there is not enough room. Crosby clarified if they filled in the wetland, there is still not enough room there for the site. Mayor Walsh stated the new site has 28 acres. Edwards noted the City could buy an extreme number of wetland credits to fill in the large wetland over here but the project would have become astronomically expensive because there is not very much dry, buildable land on the second lot to the northeast of the existing facility. Barbara Schmidt is sure someone has checked into the construction company and noted when googling them, up comes the Labors District Council of Minnesota and North Dakota warning of an evident pattern of poor performance by Ebert Construction. It is a two page document listing five projects where they did not meet standard and have been cited. Mayor Walsh noted Ms. Schmidt can send that to Edwards. Crosby moved to award the Public Works Facility construction to Ebert Construction for $16,067,000 and authorize the purchase of the wetland credit at $94,655.88. Johnson asked if they can make a motion to draft the approval so the City can look at the question regarding Ebert Construction. Crosby accepted the friendly amendment to draft the Resolution for approval. Johnson seconded. Ayes 4, Nays 0. FINANCE DIRECTOR REPORT Finance Director Olson had nothing to report. CITY ATTORNEY REPORT Attorney Mattick had nothing to report. MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 10 of 13 CITY ADMINISTRATOR/ENGINEER REPORT Edwards noted the City is proceeding well on the water main replacement project on County Road 19. FIRE DEPARTMENT REPORT 19. Fire Department Negotiation Offer to Long Lake Johnson shared history of the situation noting Orono put Long Lake on notice in April 2021. Mayor Walsh noted a letter was sent to Long Lake three years ago. Johnson explained the 100+ year relationship with Long Lake Fire and noted for the last 20 years Orono has been in contract with them. Currently the City pays about 84.93% of the budget, Long Lake makes up roughly 10% of that, and they also have Medina and Minnetonka Beach. During conversations, Long Lake requested Orono to give a cancellation of the fire contract in writing which was provided. They have also provided a written request to end the relationship with Fire Station #1, there is a 50/50 ownership, and the station is in Orono. Mayor Walsh clarified the contract is ending at the end of 2025, it is not being cancelled. Johnson stated as a citizen and 85% payer of the budget, Orono was asking for administrative control and for the Fire Chief to report to Orono as the majority holder. Negotiations began with the City of Long Lake and the number one goal was to keep the fire department together. This is not a hostile takeover of a fire department that Orono is not proud of, nor do they want to change it, this is just the responsible transition. The department has grown and Orono takes a more active role. In the negotiation, the two cities do not have a lot of trust in each other, which goes back to the 1990’s. Johnson thinks the best thing for both cities is to have a single ownership, maintain the relationship by providing Long Lake services, and that will be part of the offer. Long Lake does not want the Chief to report directly to Orono and Johnson believes the negotiation team talked that out and he does not have any concerns about the quality of service going to Long Lake regardless of who is in the position of leadership at the department. Equipment has also been part of the discussion and Johnson noted Orono has done a really good job with their budget. He thinks Orono can bring that to the table long-term with budgeting which would be better for all cities involved. He spoke about a JPA requested by Long Lake and the risks associated versus having the Fire Chief report to Orono. Long Lake asked Johnson to find out on record if Councilmember Printup is okay with the idea of it going to a Fire Board. Printup thinks they have made it pretty clear over the past few weeks in the discussions. They have City of Orono Staff and employees and they take care of their employees. The sense of local control, they just spoke about roads and the future, and it was mentioned that the model of fire service will change. There was a good article in one of the municipal magazines about legal duties of Fire Chiefs. This exercise is putting a spotlight (even on a State level) of codifying it; right now cities are not legally required to have a Fire Chief. Printup does not think they are at the point of a JPA or a Fire Board, although that may be 20-30 years down the line. Orono has their employees and if things tilt and Orono has a fire department, even if it is called Long Lake Fire Department, it will be an Orono employee. Printup does not understand with the JPA idea, one of the early conversations had with Long Lake was “whose name was going to be on the building?” In a JPA he does not think it would be Long Lake Fire Department and he believes this Council said it will always be called Long Lake Fire Department. He noted this is the responsibility to Orono residents and Printup thinks, as Finance Director Olson said earlier, the City can provide that MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 11 of 13 stability for the department, and they can grow the robust budgets to look at long-term capital. Printup stated Orono has been a cash cow, whether with the cable commission, LMCD, or other bureaucratic entities, and it is time to reign that in. If people want to jump on board and have Orono provide that service such as with police and public works, that is what he is in favor of. The Fire Chief would be an Orono employee reporting to the Orono City Council. Crosby is still in favor of a joint board as an advisory board but not as an employment board. Johnson spoke about the appraisal from Orono ($1,700,000). He noted they still have not received a copy Long Lake’s appraisal. The written agreement was that each City would get their own appraisal and if there was a dispute they would get a third appraisal. Long Lake told Johnson their City Attorney has advised them not to give a copy of their appraisal. Johnson shared about rolling stock which are the vehicles minus the two vehicles Orono purchased at 100% and he shared about estimated market values on equipment. Johnson shared Long Lake’s projected fire cost estimated at $1,430,000 over 10 years which includes operational expense and the contribution to the CIP (Capital Improvement Plan). Long Lake is concerned about giving up their half of fire station #1 and the equipment because they believe one day there will be a JPA or Fire District that comes together and each City must contribute something for that. For a City like Medina, that is a big deal and they will have to build a building. Long Lake is concerned about parting with some of their assets for when/if that day comes. Johnson proposes to overpay Long Lake for their contribution and what is owed in an effort to make this transition, noting the firefighters are the biggest asset, and Orono can give them incentive that pays them more than contractually obligated but perhaps less than Orono’s expenses would be if they started all over from scratch. He feels this is a common ground between Orono not starting from scratch and gives Long Lake the cash to always have assets available. Johnson noted if this contract goes away, so does this deal. Printup asked if the contract says $1,400,000 why would Orono want to give Long Lake more than that? Johnson replied ultimately Orono is trying to give Long Lake incentive to cooperate and put this all behind the cities and allow the firefighters in the crosshairs an incentive so there is a long-term plan in place. He noted the appraisal is $850,000 for the building and Johnson proposes to give Long Lake $1,250,000 for that building, the rolling stock remains the same and Orono will pay 100% of what they are owed, there is an unexpended CIP and Johnson suggests that Long Lake retain the roughly $200,000 of capital improvement funds that are supposed to go into the fire department. The total offer amount would be $1,588,440. Mayor Walsh clarified Orono will take care of the deferred maintenance. Johnson replied in the affirmative, noting included with the building purchase of $1,250,000 Orono would take it as-is and would prioritize that maintenance. Johnson proposes a 10-year contract with Long Lake for $70,000/year and that the City of Orono pays Long Lake’s next 10 years of CIP contribution which is worth about $700,000. He noted putting it all together is about $730,000 savings for Long Lake. Johnson spoke about the rolling stock and donated items which should also be included, and stated the ultimate offer to Long Lake would be $2,488,000 that occurs on or before June 1, 2023. Johnson shared they have done quite a bit of work understanding the Relief funds, retirement, investing, and with this plan that is administered and insured by the City of Orono. There would not be any disruption for the firefighters. Mayor Walsh noted it would be similar to what they do with the police department with a budget and CIP for squad cars, the cities and mayors meet every quarter to go through the budget and everything being MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 12 of 13 purchased so everyone knows years out how they are planning to make sure the police are fully outfitted to take care of citizens. A member of the public asked about Medina and Minnetonka Beach. Crosby clarified they would still be a contract city. Johnson noted the first thing was to work out an arrangement with Long Lake. A member of the public spoke about a fire she witnessed and worries about the setbacks. Mayor Walsh noted Crosby was a firefighter for 10 years and the City wants as much access as possible. He clarified setbacks and turning around is a whole different conversation. Johnson clarified regarding the vesting, the firefighters would be 50% vested at 10 years and 100% at 20 years noting it would stay the same as right now. Johnson shared the City of Long Lake has the first right of refusal for all equipment even if Orono has paid 100%, Long Lake can purchase it for what Orono paid and they only need to notify 90 days prior to the expiration of the contract. Lead time for equipment is upwards of 2 years or more which has put Orono at a disadvantage in preparing because Long Lake holds all the equipment. Currently the equipment is in need of replacement and Johnson has learned that during Covid firefighters were able to serve but other cities have started to see that those people are not available to be volunteers in the fire department anymore so they need duty crews. In going from volunteer to full- time facilities, costs go up, therefore cities start to partner in a broader area to defer the costs of those increases over a wider spectrum. At this point they have a fully staffed and fully functioning fire department and they hope to keep that as long as they can. The Commissioners discussed the pension and vesting, and the role of the legislature in that. Johnson moved, Crosby seconded, to approve the offer to be sent to the City of Long Lake for their consideration. VOTE: Ayes 4, Nays 0. PUBLIC COMMENTS Brad Erickson, 2485 Independence Road, had a lovely meeting with Ms. Seals in the laundromat the previous day and they spoke about Mr. Crosby and Mr. Walsh. One thing he found interesting is that Ms. Seals wondered when Mr. Erickson would get around to the allegations flying around about Mr. Crosby out on the Capitol steps in Washington D.C. on January 6, 2021. This causes Mr. Erickson to wonder about that day and those events and how Mr. Crosby and Mr. Walsh are connected to all of this. He asked what is going on up there? He smells a rat and pointed, stating “I smell you and I’m wondering about you, why you haven’t told me, because we talked about this a month ago, why you haven’t come forward and been honest with the public about who you were with and what you were doing out there in the Capitol.” Those are the allegations flying around. Mr. Erickson understands what Mr. Walsh is doing trying to assail his character, noting he can’t face the music either and asked “Are you going to? Are you going to answer some questions? Mr. Rice tells me you’re not going to.” Mr. Erickson stated, “Good move, you should have shut up a long time ago.” He said this man (pointing) was smart enough to come down and MINUTES OF THE ORONO CITY COUNCIL MEETING September 26, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Page 13 of 13 ask Mr. Erickson in the beginning what can we do for you as a City. Mr. Erickson told him “leave me alone.” Dave Williams, 2055 River Hills Road wants to commend the City Council for the work they are doing. He saw an article in the Star Tribune which he thought was a hit-piece on the City Council and was perhaps sponsored by certain individuals. He wants the Council to know that he is more sure the Council is doing the right thing because the Star Tribune does not like them. If there is an organization dedicated to trying to dismantle good things people are doing, Mr. Williams thinks that is one of them. Regarding January 6, if it had been done by the other side of the political spectrum it would have been viewed as a magnificent showing of their views. MAYOR/COUNCIL REPORT Printup thanked Johnson for his presentation and noted it is homecoming week. Crosby commended the firefighters who are present tonight noting they really appreciate everything they do, how they put their lives on the line for the community and at very little paid on-call pay. Johnson thanked Seals noting they have put a lot of time into trying to understand the contract with Long Lake and he hopes Long Lake sees it that Orono is trying to do right by everyone. He noted political signs are being stolen and taken down. Mayor Walsh thanked the fire department for their service. He shared about Mound homecoming the previous week and the upcoming Orono homecoming. He thanked Johnson for the work on the negotiations and he appreciates all the work they have done. ADJOURNMENT Johnson moved, Crosby seconded, to adjourn the meeting at 8:31 p.m. VOTE: Ayes 4, Nays 0. ATTEST: _____________________________________ _______________________________________ Anna Carlson, City Clerk Dennis Walsh, Mayor AGENDA ITEM Prepared By: Ck Reviewed By: RJO Approved By: 1. Purpose. The purpose of this action item is to approve payment of claims made on the City for services and/or products provided to the City. 2. Background. The attached claims for payment have been received by the City. Staff has reviewed the claims and is recommending approval of the listing for payment. The claims will be paid by checks 119699 to 119780 and ACH transaction 20130296 to 20130298 totaling $895,913.34. 3. Noteworthy Payments. Vendor Amount Description of Payment #119736 Asphalt Surface Tech $235,542.70 Pymt #2 of 2022 Street Project. #119744 City of Long Lake $41,579.08 2022 Tahoe Fire Command Vehicle for Long Lake Fire. #119749 Geislinger & Sons $359,584.03 Pymt #1 of 22-023 Watermain Replacement. 4. Staff Recommendation. Staff recommends approval of a motion authorizing payment to the claims list as presented. COUNCIL ACTION REQUESTED Motion to approve the claims list as presented. Exhibits A. Check Register Item No.: 2 Date: October 10, 2022 Item Description: Claims/Bills Presenter: Ron Olson Finance Director Agenda Section: Consent Agenda City of Orono Check Register - COUNCIL REPORT Page: 1 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount MASTEC 10/05/2022 119052 2022.07 MAS 101-22205 ESCROW REFUND - ROW21-12 3596 SHORELIN 1,500.00- Total 119052:1,500.00- STABNOW, ERIC 09/28/2022 119408 2022.08 STA 101-22205 ESCROW REFUND - RPS20-72 1035 TONKAWA 1,000.00- Total 119408:1,000.00- Batteries + Bulbs 09/27/2022 119699 P55197005 701-49800-215 BATTERIES FOR GENERATOR, MISC EQUIPMEN 165.01 Total 119699:165.01 BOLTON & MENK INC.09/27/2022 119700 292727 225-45200-319 22-055 SUMMIT BEACH MASTER PLAN 4,754.00 Total 119700:4,754.00 CENTERPOINT ENERGY MAIN 09/27/2022 119701 07/23/22-08/601-49400-381 GAS SERVICE 07/23/22-08/22/2022 Water 1,391.17 CENTERPOINT ENERGY MAIN 09/27/2022 119701 07/23/22-08/602-49450-381 GAS SERVICE 07/23/22-08/22/2022 Sewer 504.11 CENTERPOINT ENERGY MAIN 09/27/2022 119701 07/23/22-08/101-41900-381 GAS SERVICE 07/23/22-08/22/2022 Central Services 126.55 CENTERPOINT ENERGY MAIN 09/27/2022 119701 07/23/22-08/101-42110-381 GAS SERVICE 07/23/22-08/22/2022 Police Department 53.29 CENTERPOINT ENERGY MAIN 09/27/2022 119701 07/23/22-08/101-45210-381 GAS SERVICE 07/23/22-08/22/2022 Golf Course 25.14 Total 119701:2,100.26 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-512228 101-42110-402 AUTO MAINTENANCE - OIL FILTER Police Department 9.54 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-517997 101-42110-402 AUTO MAINTENANCE - ACCESSORY PLUG Police Department 3.16 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-518044 701-49800-215 CREDIT FOR TOWELS 23.27- GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-521829 101-42110-402 AUTO MAINTENANCE - WIPERS Police Department 53.84 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-527679 101-42110-402 AUTO MAINTENANCE - BOOS/PAC Police Department 152.10 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-533668 101-42110-402 AUTO MAINTENANCE Police Department 69.99 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-534913 101-42110-402 AUTO MAINTENANCE- FUSE Police Department 2.96 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-536139 101-42110-402 AUTO MAINTENANCE- BOX MINIATURES Police Department 5.37 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-539594 101-42110-402 AUTO MAINTENANCE - OIL DRY Police Department 11.57 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-540319 101-42110-402 AUTO MAINTENANCE- FUSE Police Department 2.96 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-543954 101-42110-402 AUTO MAINTENANCE- BLISTER PACK CAPSULE Police Department 10.45 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-547855 701-49800-215 WIPER SWITCH 64.39 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-548775 701-49800-215 HYDRUALIC FILTER #423 98.70 GENUINE PARTS COMPANY/NA 09/27/2022 119702 3270-549118 701-49800-212 DIESAL EXHAUST FLUID (DEF)550.00 City of Orono Check Register - COUNCIL REPORT Page: 2 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119702:1,011.76 NAVARRE HARDWARE 09/27/2022 119703 339131 101-41900-223 JANITORAL SUPPLIES Central Services 38.48 Total 119703:38.48 REPUBLIC SERVICES #894 09/27/2022 119704 0894-005782 603-49500-442 SPRING CLEAN UP 2022 5,808.20 Total 119704:5,808.20 Superior Striping, Inc.09/27/2022 119705 51591 101-41900-403 PAINTING PD AND PW PARKING LOTS Central Services 500.00 Total 119705:500.00 TALLEN AND BAERTSCHI 09/27/2022 119706 AUG 2022 P 101-41600-306 PROSECUTION SERVICES-8/2022 Law/Legal Services 3,049.59 Total 119706:3,049.59 UNIFIRST CORPORATION 09/27/2022 119707 090 0720934 701-49800-221 SHOP TOWELS - PW 6.70 UNIFIRST CORPORATION 09/27/2022 119707 090 0720934 101-43000-404 RUGS - PW Public Works Department 21.84 UNIFIRST CORPORATION 09/27/2022 119707 090 0720934 602-49450-226 UNIFORMS PW-SEWER DEPT Sewer 26.26 UNIFIRST CORPORATION 09/27/2022 119707 090 0720934 101-45210-226 UNIFORMS-GOLF COURSE Golf Course 26.26 UNIFIRST CORPORATION 09/27/2022 119707 090 0720934 101-43000-226 UNIFORMS - PW Public Works Department 26.27 UNIFIRST CORPORATION 09/27/2022 119707 090 0720934 601-49400-226 UNIFORMS PW-WATER DEPT Water 26.26 UNIFIRST CORPORATION 09/27/2022 119707 090 0720934 101-45200-226 UNIFORMS-PARKS Parks 26.26 Total 119707:159.85 TRESTLE HOMES LLC 09/28/2022 119709 2022.08 STA 101-22205 ESCROW REFUND - RPS20-72 1035 TONKAWA 1,000.00 Total 119709:1,000.00 ALLIANCE BUILDERS 09/30/2022 119710 2022.09 ALLI 101-22205 ESCROW REFUND - LA21-22 15 STUBBS BAY R 700.00 Total 119710:700.00 ALMA HOMES LLC 09/30/2022 119711 2022.09 ALM 101-22205 ESCROW REFUND - LA22-07 65 STUBBS BAY RD 700.00 City of Orono Check Register - COUNCIL REPORT Page: 3 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119711:700.00 BORGSTROM, DON 09/30/2022 119712 2022.09 BOR 101-22205 ESCROW REFUND - SE22-14 50 WEAR LN 1,000.00 Total 119712:1,000.00 CHARLES CUDD CO 09/30/2022 119713 2022.09 CHA 101-22205 ESCROW REFUND - 2017-01439 3257 SHADYW 9,000.00 Total 119713:9,000.00 DAVID WEEKLY HOMES 09/30/2022 119714 2022.09 DAV 101-22205 ESCROW REFUND - RPS21-136 2458 S BLOSSO 9,000.00 DAVID WEEKLY HOMES 09/30/2022 119714 2022.09 DAV 101-22205 ESCROW REFUND - RPS21-137 2454 S BLOSSO 10,000.00 DAVID WEEKLY HOMES 09/30/2022 119714 2022.09 DAV 101-22205 ESCROW REFUND - RPS21-138 2450 S BLOSSO 10,000.00 DAVID WEEKLY HOMES 09/30/2022 119714 2022.09 DAV 101-22205 ESCROW REFUND - RPS21-140 2442 S BLOSSO 10,000.00 Total 119714:39,000.00 DURBIN, BEN 09/30/2022 119715 2022.09 DUR 101-22205 ESCROW REFUND - RAS22-37 521 NORTH STR 1,000.00 Total 119715:1,000.00 EGAN, NICOLE 09/30/2022 119716 2022.08 101-42400-331 MILEAGE - INSPECTIONS JAN-MAY 2022 Building & Zoning 139.91 Total 119716:139.91 HICKEY, MARCIA 09/30/2022 119717 2022.09 HIC 101-22205 ESCROW REFUND - RAS21-77 4640 TONKAVIEW 1,000.00 Total 119717:1,000.00 HOXIE HOMES & REMODELING 09/30/2022 119718 2022.09 HOX 101-22205 ESCROW REFUND - LA21-69 4635 TONKAVIEW 700.00 Total 119718:700.00 JASPER, CURTIS 09/30/2022 119719 2022.09 JAS 101-22205 ESCROW REFUND - RPS21-17 1045 NORTH AR 10,000.00 Total 119719:10,000.00 KOTHRADE SEWER WATER & E 09/30/2022 119720 2022.09 KOT 101-22205 ESCROW REFUND - SE21-26 781 FERNDALE R 1,000.00 City of Orono Check Register - COUNCIL REPORT Page: 4 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119720:1,000.00 MARTINSON, DANIEL 09/30/2022 119721 2022.09 MAR 101-22205 ESCROW REFUND - LA22-28 2605 NORTH SHO 700.00 Total 119721:700.00 PETERS, BILL 09/30/2022 119722 2022.09 PET 101-22205 ESCROW REFUND - LA22-39 1950 CONCORDIA 700.00 Total 119722:700.00 SCHUGAL, JAMES 09/30/2022 119723 2022.09 SCH 101-22205 ESCROW REFUND - LA22-40 1971 FAGERNESS 700.00 Total 119723:700.00 SPARKLE POOL SERVICE 09/30/2022 119724 2022.09 SPA 101-22205 ESCROW REFUND - RAS21-53 1405 6TH AVE N 1,000.00 Total 119724:1,000.00 STEETER & ASSOCIATES INC 09/30/2022 119725 2022.09 STR 101-22205 ESCROW REFUND - RPS21-25 2455 NORTH SH 9,000.00 STEETER & ASSOCIATES INC 09/30/2022 119725 2022.09 STR 101-22205 ESCROW REFUND - RPS21-25 2455 NORTH SH 9,000.00- Total 119725:.00 UNITED STATES POSTAL SERVI 09/30/2022 119726 2022.09 UB 601-49400-322 9/22 UTILITY BILLS Water 505.78 UNITED STATES POSTAL SERVI 09/30/2022 119726 2022.09 UB 602-49450-322 9/22 UTILITY BILLS Sewer 505.78 UNITED STATES POSTAL SERVI 09/30/2022 119726 2022.09 UB 651-49910-322 9/22 UTILITY BILLS Storm Water 505.78 Total 119726:1,517.34 UNITED STATES TREASURY 09/30/2022 119727 2016A SERI 101-19999 2016A SERIES BOND 2,742.63 Total 119727:2,742.63 WATERMARK TITLE 09/30/2022 119728 2022.09 WAT 101-22205 ESCROW REFUND - SE21-22 30 LUCE LINE RID 1,000.00 Total 119728:1,000.00 WILSON, THOMAS 09/30/2022 119729 2022.09 WIL 101-22205 ESCROW REFUND - LA21-41 1955 HERITAGE D 700.00 City of Orono Check Register - COUNCIL REPORT Page: 5 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119729:700.00 ZEBECK, JILLIAN 09/30/2022 119730 2022.09 ZEB 101-22205 ESCROW REFUND - RPS21-46 460 LAKEVIEW P 10,000.00 Total 119730:10,000.00 STEETER & ASSOCIATES INC 09/30/2022 119731 2022.09 STR 101-22205 ESCROW REFUND - RPS21-25 2455 NORTH SH 9,000.00 Total 119731:9,000.00 A 1 ELECTRIC SERVICE OF WA 10/10/2022 119732 4912 101-42110-404 BUILDING MAINT- REPLACE BALLAST/LAMPS Police Department 261.86 Total 119732:261.86 Advance Auto Parts 10/10/2022 119733 3974-448408 701-49800-240 MASTER CYLINDAR BLEEDERKIT FD TK #R21 14.78 Advance Auto Parts 10/10/2022 119733 6974-448411 701-49800-213 BRAKE FLUID - FD TRK #R21 14.34 Total 119733:29.12 ADVANCED IMAGING SOLUTIO 10/10/2022 119734 483359832 710-49970-413 PW COPIER LEASE 09/20/22-10/20/22 132.76 Total 119734:132.76 ALLSTREAM 10/10/2022 119735 18810687 101-42110-321 PHONE SERVICE 09/23/22-10/22/22 Police Department 302.74 ALLSTREAM 10/10/2022 119735 18810687 101-41900-321 PHONE SERVICE 09/23/22-10/22/22 Central Services 423.83 ALLSTREAM 10/10/2022 119735 18810687 601-49400-321 PHONE SERVICE 09/23/22-10/22/22 Water 70.64 ALLSTREAM 10/10/2022 119735 18810687 602-49450-321 PHONE SERVICE 09/23/22-10/22/22 Sewer 161.46 ALLSTREAM 10/10/2022 119735 18810687 101-45210-321 PHONE SERVICE 09/23/22-10/22/22 Golf Course 50.46 Total 119735:1,009.13 ASPHALT SURFACE TECHNOL 10/10/2022 119736 PYTM#2 202 435-20600 2022 STREETS PROJECT 12,396.98- ASPHALT SURFACE TECHNOL 10/10/2022 119736 PYTM#2 202 435-48975-590 2022 STREETS PROJECT 247,939.68 Total 119736:235,542.70 BUESING, DANIEL 10/10/2022 119737 2022.09 BUE 999-10015 UB REFUND - 2700 CASCO POINT RD 131.54 City of Orono Check Register - COUNCIL REPORT Page: 6 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119737:131.54 BUREAU OF CRIM. APPREHEN 10/10/2022 119738 0000071779 101-42110-311 CJDN ACCESS Police Department 2,040.00 Total 119738:2,040.00 Capital One Trade Credit 10/10/2022 119739 3282265220 101-43000-224 SIGN POST CAP TASK 67003 Public Works Department 77.52 Capital One Trade Credit 10/10/2022 119739 3282265220 101-43000-240 TWO WHEEL HAND TRUCK(2)Public Works Department 139.96 Capital One Trade Credit 10/10/2022 119739 3282265220 651-49910-513 PLYWOOD FOR TASK 65145 Storm Water 1,727.20 Total 119739:1,944.68 CENTERPOINT ENERGY MAIN 10/10/2022 119740 08/20/22-09/601-49400-381 GAS SERVICES 8/23/22-9/21/22 Water 1,461.33 CENTERPOINT ENERGY MAIN 10/10/2022 119740 08/20/22-09/602-49450-381 GAS SERVICES 8/23/22-9/21/22 Sewer 506.40 CENTERPOINT ENERGY MAIN 10/10/2022 119740 08/20/22-09/101-41900-381 GAS SERVICES 8/23/22-9/21/22 Central Services 142.11 CENTERPOINT ENERGY MAIN 10/10/2022 119740 08/20/22-09/101-42110-381 GAS SERVICES 8/23/22-9/21/22 Police Department 58.72 CENTERPOINT ENERGY MAIN 10/10/2022 119740 08/20/22-09/101-45210-381 GAS SERVICES 8/23/22-9/21/22 Golf Course 25.14 Total 119740:2,193.70 CENTRAL PENSION FUND SOU 10/10/2022 119741 CFP100622 101-21707 LOCAL UNION #49 9/19/22-10/02/22 805.00 Total 119741:805.00 Century Link 10/10/2022 119742 2022.09 GC 101-45210-321 GC PHONE/INTERNET 09/19/22-10/18/22 Golf Course 212.04 Total 119742:212.04 CHUNKS LAKESHORE AUTO 10/10/2022 119743 0018953 101-42110-402 SQUAD #EKL016 BRAKES/4 NEW TIRES Police Department 529.61 CHUNKS LAKESHORE AUTO 10/10/2022 119743 0018981 101-42110-402 SQUAD MAINT #268 OIL/FILTER, RETORQUE TI Police Department 185.00 CHUNKS LAKESHORE AUTO 10/10/2022 119743 0018990 101-42110-402 SQUAD MAINT #267 OIL/FILTER Police Department 56.81 CHUNKS LAKESHORE AUTO 10/10/2022 119743 0018995 101-42110-402 SQUAD MAINT #254 REPLACE BATTERY Police Department 323.64 CHUNKS LAKESHORE AUTO 10/10/2022 119743 0019004 101-42110-402 SQUAD MAINT #260 OIL CHANGE/FILTER Police Department 62.92 Total 119743:1,157.98 CITY OF LONG LAKE 10/10/2022 119744 20220127 405-48500-550 2022 TAHOE (1748) LL FIRE COMMAND VEH 41,579.08 City of Orono Check Register - COUNCIL REPORT Page: 7 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119744:41,579.08 City of Orono Utilities 10/10/2022 119745 2022.09 CH&101-42110-382 SEPT 2022 UB CH & PD Police Department 1,139.20 City of Orono Utilities 10/10/2022 119745 2022.09 CH&101-41900-382 SEPT 2022 UB CH & PD Central Services 1,139.20 City of Orono Utilities 10/10/2022 119745 2022.09 PO 101-41900-382 SEPT 2022 UB - PO Central Services 84.72 City of Orono Utilities 10/10/2022 119745 2022.09 PW 101-41900-382 SEPT 2022 UB - PW Central Services 266.14 City of Orono Utilities 10/10/2022 119745 2022.09 WT 601-49400-382 SEPTEMBER 2022 WTP Water 145.70 City of Orono Utilities 10/10/2022 119745 20220.9 GC 101-45210-382 QTR 3 2022 - GC Golf Course 72.58 Total 119745:2,847.54 CITY OF WAYZATA 10/10/2022 119746 SEPTEMBE 601-49400-387 SEPT 2022 WATER Water 4,713.65 CITY OF WAYZATA 10/10/2022 119746 SEPTEMBE 602-49450-387 SEPT 2022 SEWER Sewer 9,625.50 Total 119746:14,339.15 David Goman 10/10/2022 119747 123458 101-45200-226 SAFETY BOOTS Parks 244.99 Total 119747:244.99 FASTENAL 10/10/2022 119748 MNPLY1373 701-49800-215 VEHICLE EQUIPMENT AIR LINE PARTS 831.43 FASTENAL 10/10/2022 119748 MNPLY1374 701-49800-240 STEP DRILL BIT 45.29 Total 119748:876.72 GEISLINGER AND SONS INC.10/10/2022 119749 PYMT #1 202 601-16500 22-023 WATERMAIN REPLACEMENT 378,509.50 GEISLINGER AND SONS INC.10/10/2022 119749 PYMT #1 202 601-20600 22-023 WATERMAIN REPLACEMENT 18,925.47- Total 119749:359,584.03 GENUINE PARTS COMPANY/NA 10/10/2022 119750 3270-549527 701-49800-215 CUT OFF WHEEL REPAIR 432 22.98 GENUINE PARTS COMPANY/NA 10/10/2022 119750 3270-550113 701-49800-215 BRAKE ROTORS FOR FIRE RESCUE TRUCK R21 424.04 GENUINE PARTS COMPANY/NA 10/10/2022 119750 3270-550139 701-49800-215 BRAKE CALIPERS FIRE RESCUE TRUCK R21 291.44 GENUINE PARTS COMPANY/NA 10/10/2022 119750 3270-550213 701-49800-240 AIR LINE REGULATER 74.09 GENUINE PARTS COMPANY/NA 10/10/2022 119750 3270-550214 701-49800-215 BRAKE FLUID FIRE TRUCK R21 34.99 GENUINE PARTS COMPANY/NA 10/10/2022 119750 3270-55057 701-49800-215 BRAKES FOR FIRE RESCUE TRUCK R21 881.89 Total 119750:1,729.43 City of Orono Check Register - COUNCIL REPORT Page: 8 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount GOPHER ACE 10/10/2022 119751 12843 601-49400-223 SHORT SHOVEL FOR WATER DIG Water 31.99 GOPHER ACE 10/10/2022 119751 12844 601-49400-227 SHORT SHOVEL FOR WATER DIG Water 31.99 GOPHER ACE 10/10/2022 119751 12862 701-49800-215 GALVANIZED PIPE TO REPAIR 432 48.98 GOPHER ACE 10/10/2022 119751 12864 101-45200-221 MOUNTING SCREWS FOR CONTROL PANEL Parks 5.56 GOPHER ACE 10/10/2022 119751 12898 101-41900-223 BRUSH TO CLEAN SHOP FLOOR Central Services 13.99 GOPHER ACE 10/10/2022 119751 12923 101-45200-221 WIRE FOR PUMP Parks 11.12 Total 119751:143.63 H & L MESABI 10/10/2022 119752 10579 101-43000-221 CUTTING EDGE BACKHOE BUCKET Public Works Department 371.00 Total 119752:371.00 HOLIDAY COMPANIES 10/10/2022 119753 07960110220 101-42110-402 SQUAD WASHES Police Department 220.00 Total 119753:220.00 JR'S ADVANCED RECYCLERS 10/10/2022 119754 108351 603-49500-442 FALL CLEAN UP 2022 - TIRES ONLY 133.00 Total 119754:133.00 KANNA, RYAN & PAULA 10/10/2022 119755 2022.09 KAN 999-10015 UB REFUND - 2920 CASCO POINT RD 169.32 Total 119755:169.32 MANSFIELD OIL COMPANY 10/10/2022 119756 23543127 101-42110-212 UNLEADED FUEL Police Department 736.09 MANSFIELD OIL COMPANY 10/10/2022 119756 23564561 101-42110-212 UNLEADED FUEL Police Department 1,010.58 MANSFIELD OIL COMPANY 10/10/2022 119756 23622002 101-42110-212 UNLEADED FUEL Police Department 3,430.09 MANSFIELD OIL COMPANY 10/10/2022 119756 23622347 101-42110-212 UNLEADED FUEL Police Department 1,127.62 MANSFIELD OIL COMPANY 10/10/2022 119756 23622698 101-45210-212 DIESEL FUEL Golf Course 850.27 Total 119756:7,154.65 MASTEC 10/10/2022 119757 2022.07 MAS 101-22205 ESCROW REFUND - ROW21-12 3596 SHORELIN 1,500.00 Total 119757:1,500.00 Metro Sales Inc 10/10/2022 119758 INV2127104 710-49970-401 COPIERS - LEASE 9/19/22 - 12/18/22 77.00 Metro Sales Inc 10/10/2022 119758 INV2127104 710-49970-401 COPIERS - USAGE 6/19/22-9/18/22 93.37 Metro Sales Inc 10/10/2022 119758 INV2127105 710-49970-401 COPIERS - LEASE 6/19/22 - 9/18/22 306.00 City of Orono Check Register - COUNCIL REPORT Page: 9 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Metro Sales Inc 10/10/2022 119758 INV2127105 710-49970-401 COPIERS - USAGE 06/19/22-9/18/22 2,175.76 Total 119758:2,652.13 MN CHIEF OF POLICE ASSN 10/10/2022 119759 13443 101-42110-437 TRAINING - OCT 12 SESSION Police Department 100.00 Total 119759:100.00 NAVARRE HARDWARE 10/10/2022 119760 339154 101-43000-224 SIGN REPAIR TASK 67002 Public Works Department 27.05 Total 119760:27.05 Newegg Business Inc 10/10/2022 119761 1304102563 710-49970-221 SERIAL CABLE 40.99 Total 119761:40.99 OPD BUSINESS SOLUTIONS LL 10/10/2022 119762 2670066440 101-41900-201 PENS Central Services 27.28 OPD BUSINESS SOLUTIONS LL 10/10/2022 119762 2670070330 101-41900-201 MONTHLY PLANNER Central Services 31.56 OPD BUSINESS SOLUTIONS LL 10/10/2022 119762 2672762840 710-49970-221 MONITOR STAND 59.99 OPD BUSINESS SOLUTIONS LL 10/10/2022 119762 2680033490 101-42110-201 OFFICE SUPPLIES Police Department 110.53 OPD BUSINESS SOLUTIONS LL 10/10/2022 119762 2687515480 101-42110-201 OFFICE SUPPLIES Police Department 132.31 Total 119762:361.67 PLUNKETT S 10/10/2022 119763 7719880 101-42110-404 BUILDING MAINT- GENERAL PEST CONTROL Police Department 250.96 Total 119763:250.96 QUADIENT INC 10/10/2022 119764 N9600297 101-41900-401 POSTAGE MACHING LEASE 10/28/22-01/27/23 Central Services 878.94 Total 119764:878.94 RESSLER, JON 10/10/2022 119765 2022.09 RES 101-22205 ESCROW REFUND - LA22-17 3683 NORTHSHOR 700.00 RESSLER, JON 10/10/2022 119765 2022.09 RES 101-11500 OUTSTANDING INVOICE - LA22-17 302.50- Total 119765:397.50 RYAN AUTO MALL 10/10/2022 119766 664615 101-42110-402 SQUAD REPAIR #266 NEW BATTERY/BUMPER Police Department 656.56 City of Orono Check Register - COUNCIL REPORT Page: 10 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119766:656.56 Safety Vehicle Solutions 10/10/2022 119767 22059 405-48500-550 FIRE COMMAND VEHICLE #2 SET UP 17,264.00 Total 119767:17,264.00 SCOTT, DAVID 10/10/2022 119768 2022.09 SCO 999-10015 UB REFUND - 1905 HERITAGE DR 47.87 Total 119768:47.87 SHERWIN WILLIAMS 10/10/2022 119769 0121-0 101-43000-224 SIGN REPAIR TASK 67002 Public Works Department 108.46 Total 119769:108.46 SNAP-ON TOOLS INC 10/10/2022 119770 0930221443 701-49800-240 BRAKE LINE FLUID AIR BLEEDER 238.05 SNAP-ON TOOLS INC 10/10/2022 119770 1003221443 601-49400-240 5/8 SOCKET SWIVAL FIRE HYDRANJT REPAIRS Water 154.75 Total 119770:392.80 SONICLEAR 10/10/2022 119771 73012 710-49970-416 ANNUAL SUPPORT - RECORDING SOFTWARE 473.00 Total 119771:473.00 SPRING PLUMBING 10/10/2022 119772 2022.09 SPR 101-32590 REFUND P21-177 DUP PERMIT 3247 CASCO CIR 492.81 SPRING PLUMBING 10/10/2022 119772 2022.09 SPR 101-20802 REFUND P21-177 DUP PERMIT 3247 CASCO CIR 19.71 Total 119772:512.52 STREICHERS POLICE EQUIP 10/10/2022 119773 1590607 101-42110-226 NEW HIRE UNIFORM - SLIPKA Police Department 75.98 Total 119773:75.98 TALLEN AND BAERTSCHI 10/10/2022 119774 SEPT 2022 P 101-41600-306 PROSECUTION SERVICES-9/2022 Law/Legal Services 3,046.56 Total 119774:3,046.56 THOMAS REUTERS - WEST 10/10/2022 119775 847093610 101-42110-311 INV DATABASE Police Department 270.53 City of Orono Check Register - COUNCIL REPORT Page: 11 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119775:270.53 U.S. AutoForce 10/10/2022 119776 6117693 101-42110-402 AUTO MAINTANANCE Police Department 523.36 U.S. AutoForce 10/10/2022 119776 6218618 101-42110-402 SQUAD TIRES Police Department 664.28 Total 119776:1,187.64 UNIFIRST CORPORATION 10/10/2022 119777 090 0722278 101-43000-404 RUGS - PW Public Works Department 21.84 UNIFIRST CORPORATION 10/10/2022 119777 090 0722278 701-49800-221 SHOP TOWELS - PW 6.70 UNIFIRST CORPORATION 10/10/2022 119777 090 0722278 602-49450-226 UNIFORMS PW-SEWER DEPT Sewer 26.26 UNIFIRST CORPORATION 10/10/2022 119777 090 0722278 101-43000-226 UNIFORMS - PW Public Works Department 26.27 UNIFIRST CORPORATION 10/10/2022 119777 090 0722278 601-49400-226 UNIFORMS PW-WATER DEPT Water 26.26 UNIFIRST CORPORATION 10/10/2022 119777 090 0722278 101-45210-226 UNIFORMS-GOLF COURSE Golf Course 26.26 UNIFIRST CORPORATION 10/10/2022 119777 090 0722278 101-45200-226 UNIFORMS-PARKS Parks 26.26 UNIFIRST CORPORATION 10/10/2022 119777 090 0723630 701-49800-221 SHOP TOWELS - PW 6.70 UNIFIRST CORPORATION 10/10/2022 119777 090 0723630 101-43000-404 RUGS - PW Public Works Department 21.84 UNIFIRST CORPORATION 10/10/2022 119777 090 0723630 602-49450-226 UNIFORMS PW-SEWER DEPT Sewer 26.26 UNIFIRST CORPORATION 10/10/2022 119777 090 0723630 101-43000-226 UNIFORMS - PW Public Works Department 26.27 UNIFIRST CORPORATION 10/10/2022 119777 090 0723630 601-49400-226 UNIFORMS PW-WATER DEPT Water 26.26 UNIFIRST CORPORATION 10/10/2022 119777 090 0723630 101-45210-226 UNIFORMS-GOLF COURSE Golf Course 26.26 UNIFIRST CORPORATION 10/10/2022 119777 090 0723630 101-45200-226 UNIFORMS-PARKS Parks 26.26 UNIFIRST CORPORATION 10/10/2022 119777 0900719572 101-41900-223 RUGS CITY HALL/ CC Central Services 66.34 UNIFIRST CORPORATION 10/10/2022 119777 0900719573 602-49450-226 UNIFORMS PW-SEWER DEPT Sewer 26.26 UNIFIRST CORPORATION 10/10/2022 119777 0900719573 101-43000-226 UNIFORMS - PW Public Works Department 26.27 UNIFIRST CORPORATION 10/10/2022 119777 0900719573 601-49400-226 UNIFORMS PW-WATER DEPT Water 26.26 UNIFIRST CORPORATION 10/10/2022 119777 0900719573 101-45210-226 GOLF COURSE UNIFORMS Golf Course 26.26 UNIFIRST CORPORATION 10/10/2022 119777 0900719573 101-45200-226 UNIFORMS-PARKS Parks 26.26 UNIFIRST CORPORATION 10/10/2022 119777 0900719573 101-43000-404 RUGS - PW Public Works Department 21.84 UNIFIRST CORPORATION 10/10/2022 119777 0900719573 701-49800-221 SHOP TOWELS - PW 6.70 Total 119777:545.89 US Bank Equipment Finance 10/10/2022 119778 483468005 710-49970-413 COPIERS 596.76 Total 119778:596.76 WASTE MANAGEMENT RECYC 10/10/2022 119779 0096656-280 603-49500-316 RECYCLING SEPT 22 ORGANICS 86.81 WASTE MANAGEMENT RECYC 10/10/2022 119779 0096656-280 603-49500-316 RECYCLING 10/2022 17,726.20 City of Orono Check Register - COUNCIL REPORT Page: 12 Check Issue Dates: 9/27/2022 - 10/10/2022 Oct 05, 2022 03:36PM Check Check Invoice Invoice GL Account Description Department Invoice Payee Issue Date Number Number Amount Total 119779:17,813.01 XCEL ENERGY 10/10/2022 119780 0993233408 101-41900-381 ELECTRIC SERVICE 8/22/22-09/21/22 Central Services 1,923.58 XCEL ENERGY 10/10/2022 119780 0993233408 101-42110-381 ELECTRIC SERVICE 8/22/22-09/21/22 Police Department 5,350.33 XCEL ENERGY 10/10/2022 119780 0993233408 101-42110-381 ELECTRIC SERVICE 8/22/22-09/21/22 Police Department 46.37 XCEL ENERGY 10/10/2022 119780 0993233408 101-43000-381 ELECTRIC SERVICE 8/22/22-09/21/22 Public Works Department 2,673.10 XCEL ENERGY 10/10/2022 119780 0993233408 101-45200-381 ELECTRIC SERVICE 8/22/22-09/21/22 Parks 80.96 XCEL ENERGY 10/10/2022 119780 0993233408 601-49400-381 ELECTRIC SERVICE 8/22/22-09/21/22 Water 18,775.08 XCEL ENERGY 10/10/2022 119780 0993233408 602-49450-381 ELECTRIC SERVICE 8/22/22-09/21/22 Sewer 3,553.05 XCEL ENERGY 10/10/2022 119780 0993233408 101-45210-381 ELECTRIC SERVICE 8/22/22-09/21/22 Golf Course 1,573.54 XCEL ENERGY 10/10/2022 119780 0993233408 101-43000-381 ELECTRIC SERVICE 8/22/22-09/21/22 Public Works Department 211.33 Total 119780:34,187.34 YTS Utility Group LLC 10/10/2022 119781 2469 101-43100-489 BRUSH SITE BRUSH / LOG CHIPPING / HAULIN Brush Site 27,200.00 Total 119781:27,200.00 NCPERS GROUP LIFE INS.09/27/2022 201302 6732001020 101-21710 PERA LIFE 10/2022 320.00 Total 20130296:320.00 MEDSURETY LLC 10/10/2022 201302 18603 101-41900-319 SECTION 125 PLAN Central Services 750.00 MEDSURETY LLC 10/10/2022 201302 18603 101-41900-319 VEBA/FSA FEE Central Services 39.00 Total 20130297:789.00 PSN: PAYMENT SERVICE INVOI 10/10/2022 201302 266134 601-49400-312 WATER FUND PSN FEES Water 315.76 PSN: PAYMENT SERVICE INVOI 10/10/2022 201302 266134 602-49450-312 SEWER FUND PSN FEES Sewer 641.09 PSN: PAYMENT SERVICE INVOI 10/10/2022 201302 266267 101-41900-312 MISC PSN FEES Central Services 4.40 PSN: PAYMENT SERVICE INVOI 10/10/2022 201302 266424 101-41900-312 BUILDING PERMIT PSN FEES Central Services 14.85 Total 20130298:976.10 Grand Totals: 895,913.34 AGENDA ITEM Prepared By: A.Carlson Reviewed By: A.Carlson Approved By: 1. Purpose. The purpose of this action item is to gain Council approval of seasonal employees. 2. Background. The city employs seasonal employees to accomplish a variety of tasks. The hourly pay is proposed to be $14.00-$15.00 for the Golf Course Clubhouse Attendants, Brush Site Attendants, and Sledding Attendants; $14.00-$16.00 for Parks and Golf Course Maintenance Employees, $14.00-$18.00 for Utilities Maintenance Workers, $15.00-$20.00 for the Assistant Golf Course Superintendent, and $14.00-$16.00 for Administrative Scan Clerk. Seasonal employees fall under the 6 month PERA Classification and are therefore excluded from PERA membership. 3. Seasonal Employee Appointments and Candidates. Name Position Wage (Per hour) Remarks Approved 01-10-2022 Bonnie Kaster Scan Clerk $14.00 Returnee Brian Torney Scan Clerk $14.00 Returnee Approved 02- 14-2022 Mitchell Hall Asst. Superintendent $18.00 Returnee Alex Collins GC Maintenance $14.00 Returnee Lloyd Engler GC Maintenance $14.00 Returnee Barry Blievernicht Clubhouse Attendant $14.50 Returnee Marshall Hambro Clubhouse Attendant $14.50 Returnee Wendy Middendorf Clubhouse Attendant $14.50 Returnee Paul Tolzman Clubhouse Attendant $14.50 Returnee Steve Persian Clubhouse Attendant $14.00 New Hire Max Dailey Clubhouse Attendant $14.00 New Hire Zachary Conway Parks Maintenance $16.00 Returnee Approved 02-28-2022 Ron Steffenhagen GC Maintenance $16.00 Returnee Cal Schmidt GC Maintenance $16.00 Returnee Logan Reynolds Clubhouse Attendant $14.00 Returnee Approved 3-28-2022 Vicki Hines Brush site Attendant $14.50 Returnee Approved 4-11-2022 Chris Fowke Clubhouse Attendant $14.00 New Hire Dennis Goneau Clubhouse Attendant $14.00 New Hire Jessica Olson Clubhouse Attendant $14.00 New Hire Approved 5-9-2022 Gavin Fabor Brush site Attendant $14.00 New Hire Approved 5-23-2022 Kylee Fuder Clubhouse Attendant $14.00 New Hire Joseph Tilzer Clubhouse Attendant $14.00 New Hire Zachary Schindler Clubhouse Attendant $14.00 New Hire Approved 6-13-2022 Chad Stowell GC Maintenance $16.00 Returnee Approved 9-12-2022 Danielle Middendorf Clubhouse Attendant $14.50 Returnee Requesting Approval Bonnie Kaster Scan Clerk $15.00 Returnee 10-10-2022 Brian Torney Scan Clerk $15.00 Returnee 4. Staff Recommendation. Staff recommends approval to hire of the seasonal employees in Table 3. Item No.: 3 Date: October 10, 2022 Item Description: Appointment of 2022 Seasonal Employees V9 Presenter: Joshua Lemons Parks and Golf Superintendent Agenda Section: Consent Agenda AGENDA ITEM Prepared By: A.Carlson Reviewed By: A.Carlson Approved By: COUNCIL ACTION REQUESTED Motion to approve hiring the seasonal employees as listed in the table above. Prepared By: D.J.Goman Reviewed By: A. Carlson Approved By: AGENDA ITEM 1. Purpose. The purpose of this action item is to gain approval to hire a full-time public works maintenance worker. An opening exists for a full-time public works maintenance worker. 2. Background. The Public Works Department currently has 7 full time maintenance worker positions. The maintenance worker positions are critical to meet current service needs and are essential to City operations. 3. Recruitment. The selection process for the position involved advertising the position, application screening, and interviews. First round interviews are completed by a panel of public works supervisor, Superintendent and maintenance worker and second round practical exercise testing, background checking and interviews conducted by the Public Works staff and first round staff. 4. Recommended Candidate. James Nelson has 10 years of material handling and water & sewer plumbing experience. James is excited about the opportunity to work for the Orono Public Works Department. 5. Recommended Compensation. I recommend to hire James Nelson as a full-time public works maintenance worker with an effective start date of October 11th, 2022, a. Salary. Starting rate of $26.03/hour (IUOE Local 49 Agreement pay scale). b. Benefits. As a full-time employee the position is eligible for benefits as outlined in the IOUE Local 49 Agreement and personnel handbook. This includes enrollment in the Public Employees Retirement Association (PERA). COUNCIL ACTION REQUESTED Motion to approve the hiring of James Nelson as a full-time public works maintenance worker at the rate of $26.03 per hour with a start date of October 11th, 2022. Item No.: 4 Date: October 10, 2022 Item Description: Request to Hiring Full-Time Public Works Maintenance Worker Presenter: D.J. Goman Superintendent of Public Works Agenda Section: Consent Agenda AGENDA ITEM Prepared By: RJO Reviewed By: Approved By 1. Purpose. The purpose of this action item is to adopt a resolution making a selection not to waive the statutory tort limits for liability. 2. Background. Minnesota Statutes 466.04 limits a city’s tort liability to a maximum of $500,000 per claimant and $1,500,000 per occurrence. Because cities have the right to waive the liability limit, our insurance carrier, the League of Minnesota Cities Insurance Trust (LMCIT), requires that the City Council adopt a resolution stipulating whether the City will or will not waive the statutory limits under the laws. A waiver of the limits would result in increased liability exposure and an increase in premiums. 3. Cost. Because waiver of the statutory limits increases the amount that the LMCIT could potentially be responsible for, waiver of the limit will increase the city’s general liability insurance premium by approximately 3% ($4,500). The City also carries excess liability coverage in the amount of $3,000,000. A wavier of tort limits would increase this premium by 25% ($10,000). 4. Staff Recommendation. Staff recommends that the adoption of the resolution not to waive tort limits. COUNCIL ACTION REQUESTED Motion to adopt a Resolution No. 7294. Exhibits A. Tort Limit Waiver Form B. Resolution Item No.: 5 Date: October 10, 2022 Item Description: Non-Waiver of Tort Limits Presenter: Ron Olson Finance Director Agenda Section: Consent Agenda LIABILITY COVERAGE – WAIVER FORM Members who obtain liability coverage through the League of Minnesota Cities Insurance Trust (LMCIT) must complete and return this form to LMCIT before the member’s effective date of coverage. Return completed form to your underwriter or email to pstech@lmc.org. The decision to waive or not waive the statutory tort limits must be made annually by the member’s governing body, in consultation with its attorney if necessary. Members who obtain liability coverage from LMCIT must decide whether to waive the statutory tort liability limits to the extent of the coverage purchased. The decision has the following effects: • If the member does not waive the statutory tort limits, an individual claimant could recover no more than $500,000 on any claim to which the statutory tort limits apply. The total all claimants could recover for a single occurrence to which the statutory tort limits apply would be limited to $1,500,000. These statutory tort limits would apply regardless of whether the member purchases the optional LMCIT excess liability coverage. • If the member waives the statutory tort limits and does not purchase excess liability coverage, a single claimant could recover up to $2,000,000 for a single occurrence (under the waive option, the tort cap liability limits are only waived to the extent of the member’s liability coverage limits, and the LMCIT per occurrence limit is $2,000,000). The total all claimants could recover for a single occurrence to which the statutory tort limits apply would also be limited to $2,000,000, regardless of the number of claimants. • If the member waives the statutory tort limits and purchases excess liability coverage, a single claimant could potentially recover an amount up to the limit of the coverage purchased. The total all claimants could recover for a single occurrence to which the statutory tort limits apply would also be limited to the amount of coverage purchased, regardless of the number of claimants. Claims to which the statutory municipal tort limits do not apply are not affected by this decision. 2 LMCIT Member Name: __________________________________________________________________________ Check one: o The member DOES NOT WAIVE the monetary limits on municipal tort liability established by Minn. Stat. § 466.04. o The member WAIVES the monetary limits on municipal tort liability established by Minn. Stat. § 466.04, to the extent of the limits of the liability coverage obtained from LMCIT. Date of member’s governing body meeting: _____________________________________________ Signature: Position: ________________________________ CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7294 A RESOLUTION MAKING A SELECTION NOT TO WAIVE THE STATUTORY TORT LIMITS FOR LIABILITY INSURANCE PURPOSES WHEREAS, pursuant to previous action taken, the League of Minnesota Cities Insurance Trust has asked the City to make an election with regards to waiving or not waiving its tort liability established by Minnesota Statutes 466.04; and WHEREAS, the choices available are as follows: to not waive the statutory tort limit, to waive the limit but to keep insurance coverage at the statutory limit, and to waive the limit and to add insurance to a new level. NOW, THEREFORE, BE IT RESOLVED that the Orono City Council does hereby elect not to waive the statutory tort liability limit established by Minnesota Statutes 466.04. Adopted by the City Council of the City of Orono, Minnesota, at a regular meeting held October 10, 2022. ATTEST: ________________________________ ________________________________ Anna Carlson, City Clerk Dennis Walsh, Mayor AGENDA ITEM Prepared By: RJO Reviewed By: A. Carlson Approved By: 1. Purpose: To adopt a new Flexible Spending Plan (Section 125 Cafeteria Plan) that incorporates all legislative requirements and identifies Medsurity as the new plan administrator. 2. Background: In order to provide employees flexibility in their health insurance decisions, the City adopted a Flexible Spending Plan in 1991. The plan has been amended over the years as changes in legislation have required updates. Earlier this year the Council approved a transition from Further to Medsurity as the administrator of both our Health Reimbursement Arrangement (VEBA) and Flexible Spending Accounts. As part of the transition, Medsurity has drafted a new Flexible Spending Plan that meets all legal requirements and identifies Medsurity as the Administrator. In addition, there are a few benefit changes that have been incorporated into the plan. The first is increasing the Medical Spending Account maximum from $1,800 to the IRS maximum of $2,850. Another is the addition of a voluntary vision plan. Neither of these employee benefit increases will result in additional costs to the City. 3. Staff Recommendation: Staff recommends approval the attached resolution to adopting a new Flexible Spending Plan administered by Medsurity to replace City’s original 1991 Flexible Spending Plan. COUNCIL ACTION REQUESTED Motion to approve a Resolution No. 7295. Exhibits A. Resolution B. Flexible Spending Plan Item No.: 6 Date: October 10, 2022 Item Description: Adopt New Flexible Spending Plan – Resolution No. 7295 Presenter: Ron Olson, Finance Director Agenda Section: Consent Agenda CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7295 A RESOLUTION ADOPTING THE CITY OF ORONO FLEXIBLE SPENDING PLAN WHEREAS, the City of Orono previously adopted a Flexible Spending Plan on January 1, 1991; and WHEREAS, the City has amended the plan from time to time to comply with legal requirements and add additional benefits; and WHERAS, the City would like to amend the plan to include a voluntary vision plan and increase limit for the medical flexible spending account; and WHEREAS, the City has recently changed Plan Administrators and a new plan has been drafted by them meeting all current requirements and including all benefits offered under the plan; NOW, THEREFORE, BE IT RESOLVED, that a new City of Orono Flexible Spending Plan effective September 1st 2022 be adopted, replacing the plan originally adopted on January 1, 1991; BE IT FURTHER RESOLVED, that any proper members of the City are hereby authorized to make such contributions from the funds of the City as are necessary to carry out the provisions of said plan at any time; and BE IT FURTHER RESOLVED, that in the event any conflict arises between the provisions of said Plan or any other applicable law or regulation (as such law or regulation may be interpreted or amended), the City shall resolve such conflict in a manner which complies with such law or regulation. CITY OF ORONO By: _______________________________ Its Mayor ATTEST: ______________________________ Its City Clerk © Copyright 2020 Hitesman & Wold, P.A. Cafeteria Plan Adoption Agreement 0 City of Orono SECTION 125 CAFETERIA PLAN CAFETERIA ADOPTION AGREEMENT September 1, 2022 CAFETERIA PLAN ADOPTION AGREEMENT FOR City of Orono © 2020 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan Adoption Agreement 1-888-816-4234, www.medsurety.com 1 This is the Adoption Agreement referred to in the Cafeteria Plan Basic Plan Document. The Adoption Agreement plus the Cafeteria Plan Basic Plan Document constitute the “Plan.” The Adopting Employer hereby makes the following representations and selections: EMPLOYER INFORMATION: EMPLOYEES: Employer Name: City of Orono Address: 2750 Kelley Parkway City, State Zip: Orono, MN 55356 Phone/Fax Number: 952-249-4600 / 952-249-4611 Type of Business Entity: Municipal Government / City Agent for Service of Legal Process: None Provided State of Incorporation: Minnesota EIN: 41-6008585 If the Plan Administrator is different than the Employer, please provide the following: Name: Employer / Ronald Olson Address: Same as above City, State Zip: Same as above, Phone/Fax Number: Same as above / rolson@ci.orono.mn.us There were more than fifty (50) Employees in the last twelve months? Yes No There were more than twenty (20) Employees in the last calendar year? Yes No PLAN INFORMATION: Check the one that applies (check only one box): Except as otherwise provided in the Basic Plan Document, the Optional Benefits are intended to comply with ERISA. The Optional Benefits are not intended to comply with ERISA, and any references to ERISA do not bind the Plan to comply with ERISA. Addendum(s) Attached? Yes No ARTICLE II: DEFINITIONS 2.10 Effective Date means: September 1, 2022 Is this a restatement: Yes No If Yes, original Effective Date: N/A Notwithstanding the foregoing, the amendment to Section(s) N/A of the Plan is effective on :N/A 2.16 Subsidiaries and/or affiliates participating in the Plan are:N/A 2.18 Entry Date means: September 1, 2022 2.27 Optional Benefit(s) means (check all that apply): 2.29 Plan Name means: City of Orono Cafeteria Plan 2.31 Plan Year commences on the first day of January and ends on the last day of December. A short plan year begins on September 1, 2022 and ends on December 31, 2022. Group Premiums: Group Medical Benefits Group Dental Benefits Group Term Life Benefit and/or Group AD&D Benefits Group Vision Benefits Group Disability Benefits Group Voluntary Insurance Benefits Other: Dependent Care Flexible Spending Account Health Flexible Spending Account Individual Premium Feature Individual Medical Premium Feature Limited Scope Health Flexible Spending Account HSA Contribution Feature Cash Payment ARTICLE III: ELIGIBILITY AND PARTICIPATION 3.1 Eligibility requirements are as follows (check and complete only those that apply): Eligible for coverage under the Employer’s Group Medical Plan Length of service: First of the month following thirty (30) days from the date of hire. Minimum number of hours: Average of thirty (30) hours of service per week. Employment Classification: All Other: 3.3(b) Special rule for new hires: As provided in the Basic Plan Document. Does not apply. CAFETERIA PLAN ADOPTION AGREEMENT FOR City of Orono © 2020 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan Adoption Agreement 1-888-816-4234, www.medsurety.com 2 ARTICLE IV: CONTRIBUTIONS 4.1 Salary reduction contributions shall occur: Every payroll period. Only two payroll periods per month. 4.3 Amount of the Employer Contribution for the Plan Year is as follows: None. Flex Credit amounts for the specific Plan Year are indicated on the City of Orono Intranet, linked in the document named “Flexible Spending Plan Credits.” Employees can apply any remaining Flex Credits, after enrolling in Group Medical or waiving Group Medical, towards Group Dental, FSA, LPFSA, DCAP and/or any remainder can be taken as cash. 4.3 The Employer Contribution shall be provided as follows: No Employer Contribution. Per pay period. Per month Per quarter. Per year on or about the first day of the Plan Year. Other: 4.3 Restrictions on use of Employer Contribution: No Employer Contributions. Employer Contribution may be used as flex credits Employer Contribution is available only to provide cash in lieu of Group Medical Benefits Other: May be used as Flex Credits to pay for Group Medical, Group Dental, FSA, LPFSA, DCAP and/or taken as cash 4.3 Employer Contributions during leaves of absence (other than FMLA): No Employer Contributions. Employer Contributions only during paid leaves. Employer Contributions during any leave. 4.3 Employer Contributions for mid-Plan Year enrollees: No Employer Contribution. Employer Contributions are prorated. Employer Contributions are not prorated. ARTICLE V: ELECTIONS 5.1 Initial Elections: As provided in the Basic Plan Document. Other: 5.1(a) Use of Employer Contribution upon failure to make initial Election: N/A – no Employer Contribution. Employer Contribution forfeited. Other: 5.3 Annual Elections: As provided in the Basic Plan Document. Other: 5.3(a) Use of Employer Contribution upon failure to make annual Election: N/A – no Employer Contribution. Employer Contribution is forfeited. Other: Same as waiver of Medical, Flex credit - Can be used for Group Dental, FSA, LPFSA, DCAP or taken as cash. 5.4 Irrevocable Election rules are: As provided in the Basic Plan Document. Modified as follows: ARTICLE VI: ADMINISTRATION 6.1(b) Plan Administrator means: As provided in the Basic Plan Document. Other: 6.8(b) Electronic payment cards for Health Flexible Spending Accounts are: N/A. Available. Not available. 6.8(c) Electronic payment cards for Dependent Care Flexible Spending Account: N/A. Available. Not available. 6.8(d) Automatic reimbursements for Individual Premium Feature are: N/A. Available. Not available. 6.8(d) Automatic reimbursements for Individual Medical Premium Feature are: N/A. Available. Not available. ARTICLE VIII: GENERAL PROVISIONS 8.10 General law – State of Minnesota CAFETERIA PLAN ADOPTION AGREEMENT FOR City of Orono © 2020 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan Adoption Agreement 1-888-816-4234, www.medsurety.com 3 ARTICLE X: DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT Not offered as a part of the Cafeteria Plan. 10.3(b) Claims Run-Out period: Thirty (30) days. Sixty (60) days. Ninety (90) days. Other: 10.9 Reimbursement Upon Termination of Participation: Expenses incurred while a Participant may be reimbursed if submitted within Claims Run-Out Period identified in Section 10.3(b). Expenses incurred while a Participant may be reimbursed if submitted within 30 days following termination of participation. Expenses incurred during the Plan Year (whether while a Participant or after participation ceases) may be reimbursed if submitted within Claims Run-Out Period identified in Section 10.3(b). Other: 10.12(a) Grace Period: Does not apply to DC Account. Applies to the DC Account. 10.12(a)(1) Grace Period expires: N/A Two and one-half months after end of Plan Year. Other: 10.13(b) Other dependent care limitations are as follows: N/A Other: ARTICLE XI: HEALTH FLEXIBLE SPENDING ACCOUNT Not offered as a part of the Cafeteria Plan. 11.3(b) Claims Run-Out period: Thirty (30) days. Sixty (60) days. Ninety (90) days. Other: 11.3(c) Dependent means: As provided in the Basic Plan Document. Other: 11.3(e) Medical Expense means: As provided in the Basic Plan Document. Other: 11.8 The maximum reimbursement a Participant may receive for a Plan Year is: An amount equal to the maximum salary reduction contribution allowed under Code § 125(i). Other: $2,850 is the maximum election a Participant may make for a Plan Year. $500 is the minimum election a Participant may make for a PLan Year. For a short Plan Year, the maximum reimbursement is: Not applicable. Pro-rated. Unchanged. For Participants joining the Plan mid-Plan Year, the maximum is: Pro-rated. Unchanged. 11.9 Reimbursement Upon Termination of Participation: Expenses incurred while a Participant may be reimbursed if submitted within the Claims Run-Out Period identified in Section 11.3(b). Expenses incurred while a Participant may be reimbursed within 30 days following termination of participation. Other: 11.12(a) Grace Period: Does not apply to ME Account. Applies to the ME Account. 11.12(a)(1) Grace Period expires: N/A Two and one-half months after end of Plan Year. Other: 60 days from the last day of the Plan Year. 11.12(b)(1) Account carryover: Does not apply to ME Account. Applies to the ME Account. Maximum Account Carryover is: $_ _______ 11.12(b)(5) Carryover available to: N/A As provided in the Basic Plan Document. Only Participants who elect a benefit for the following Plan Year. 11.12(b)(6) Forfeiture of carryover: As provided in the Basic Plan Document. Other:_ _______ 11.17(e) Other limitations are as follows: None. Other: CAFETERIA PLAN ADOPTION AGREEMENT FOR City of Orono © 2020 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan Adoption Agreement 1-888-816-4234, www.medsurety.com 4 ARTICLE XV: DISABILITY BENEFITS Not offered as a part of the Cafeteria Plan. 15.3(c) Type of Benefits: Long term disability coverage Short term disability coverage 15.6 Tax Consequence: Insurance Premiums paid pre-tax Insurance Premiums paid after-tax ARTICLE XVI: INDIVIDUAL PREMIUM FEATURE Not offered as a part of the Cafeteria Plan. 16.3(a) Claims Run-Out period: N/A – no reimbursements provided. Thirty (30) days. Sixty (60) days. Ninety (90) days. Other: 16.3(b) Dependent means: As provided in the Basic Plan Document. Other: 16.3(g) Insurance Contract means: As provided in the Basic Plan Document (i.e., just specialty coverages). Other: 16.6 Benefit administered by: Claims Administrator. Plan Administrator. 16.6 Form of Benefit: Reimbursements. Direct payments. Both reimbursements and direct payments. 16.7 Reimbursement Upon Termination of Participation: N/A – no reimbursements provided. Expenses incurred while a Participant may be reimbursed if submitted within Claims Run-Out Period identified in Section 16.3(a). Expenses incurred while a Participant may be reimbursed within 30 days following termination of participation. Expenses incurred during Plan Year (whether while a Participant or after participation ceases) may be reimbursed if submitted within Claims Run-Out Period identified in Section 16.3(a). Other: ARTICLE XVII: INDIVIDUAL MEDICAL PREMIUM FEATURE Not offered as a part of the Cafeteria Plan. 17.3(a) Claims Run-Out period: N/A – no reimbursements provided. Thirty (30) days. Sixty (60) days. Ninety (90) days. Other: 17.3(b) Dependent means: As provided in the Basic Plan Document. Other: 17.6 Benefit administered by: Claims Administrator. Plan Administrator. 17.6 Form of Benefit: Reimbursements. Direct payments. Both reimbursements and direct payments. 17.7 Reimbursement Upon Termination of Participation: N/A – no reimbursements provided. Expenses incurred while a Participant may be reimbursed if submitted within Claims Run-Out Period identified in Section 17.3(a). Expenses incurred while a Participant may be reimbursed within 30 days following termination of participation. Expenses incurred during Plan Year (whether while a Participant or after participation ceases) may be reimbursed if submitted within Claims Run-Out Period identified in Section 17.3(a). Other: ARTICLE XVIII: HSA CONTRIBUTION FEATURE Not offered as a part of the Cafeteria Plan. 18.3(b) HSA Trustee/Custodian: As provided in the Basic Plan Document. A trustee/custodian selected by Participant. 18.3(d) High Deductible Health Plan means: As provided in the Basic Plan Document (i.e., any HDHP). A group high deductible health plan sponsored by the Employer. A high deductible health plan the cost of which is at least partially reimbursed under the Employer’s individual coverage health reimbursement arrangement Other: 18.4 Certification of HSA eligibility is: Required. Not required. 18.7 Limits on Contributions: As provided in the Basic Plan Document. Other: CAFETERIA PLAN ADOPTION AGREEMENT FOR City of Orono © 2020 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan Adoption Agreement 1-888-816-4234, www.medsurety.com 5 ARTICLE XIX: LIMITED SCOPE HEALTH FLEXIBLE SPENDING ACCOUNT Not offered as a part of the Cafeteria Plan. 19.3(b) Claims Run-Out period: Thirty (30) days. Sixty (60) days. Ninety (90) days. Other: 19.3(c) Dependent means: As provided in the Basic Plan Document. Other: 19.3(f) Limited Scope Medical Expense means: As provided in the Basic Plan Document. Only expenses for dental and vision. Other: 19.8 The maximum reimbursement a Participant may receive for a Plan Year is: An amount equal to the maximum salary reduction contribution allowed under Code § 125(i). Other: $2,850 is the maximum election a Participant may make for a Plan Year. $500 is the minimum election a Participant may make for a Plan Year. For a short Plan Year, the maximum reimbursement is: Not applicable. Pro-rated. Unchanged. For Participants joining the Plan mid-Plan Year, the maximum is: Pro-rated. Unchanged. 19.9 Reimbursement Upon Termination of Participation: Expenses incurred while a Participant may be reimbursed if submitted within the Claims Run-Out Period identified in Section 19.12(b). Expenses incurred while a Participant may be reimbursed within 30 days following termination of participation. Other: 19.12(a) Grace Period: Does not apply to Limited Scope ME Account. Applies to the Limited Scope ME Account. 19.12(a)(1) Grace Period expires: N/A Two and one-half months after end of Plan Year. Other: 60 days from the last day of the Plan Year. 19.12(b)(1) Account carryover: Does not apply to Limited Scope ME Account. Applies to the Limited Scope ME Account. Maximum Account Carryover is: $_ _______ 19.12(b)(4) Carryover available to: N/A As provided in the Basic Plan Document. Only Participants who elect a benefit for the following Plan Year. 19.12(b)(5) Forfeiture of carryover: N/A As provided in the Basic Plan Document. Other: 19.17(d) Other Limited limitations are as follows: None. Other: ARTICLE XX: CASH PAYMENT Not offered as a part of the Cafeteria Plan. 20.2(a) Cash out of the “unspent” portion of the Employer Contribution: Not available. Available for Employees selecting Employee only Medical - $915 (Can be used as above, cost of Medical is $734.84 leaving $180.16 in credits) and for Employees Selecting Employee Plus - $1,638.25 – (Emp Children cost is $1,305.12 leaving $333.13 in credits; 20.2(b) Cash in lieu of coverage: Not available Available for Employees waiving Medical - $180.16 - Can be used for Dental, FSA, LPFSA, Dep Care, or taken as cash 20.3 Payment: Annual amount of Cash Payment is prorated and paid in equal monthly installments. Annual amount of Cash Payment is prorated and pain in equal installments each payroll. Other: Will be paid out Post Tax to Employee ARTICLE XXI: GROUP VOLUNTARY INSURANCE BENEFITS Not offered as a part of the Cafeteria Plan. 21.3(a) Group Voluntary Insurance includes the following types of insurance policies: CAFETERIA PLAN ADOPTION AGREEMENT FOR City of Orono © 2020 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan Adoption Agreement 1-888-816-4234, www.medsurety.com 6 ACKNOWLEDGEMENTS 1. This Plan has been duly adopted or authorized to be adopted by the Employer’s Managing Body. 2. Portions of this Plan are intended to be a “covered entity” for purposes of the Health Insurance Portability and Accountability Act (HIPAA). EMPLOYER: City of Orono Date: August 31, 2022 Signature: Print Name: Title: MEDSURETY, LLC 18001 Highway 7, Suite 204 Minnetonka, MN 55345 www.medsurety.com City of Orono SECTION 125 CAFETERIA PLAN BASIC PLAN DOCUMENT © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document i TABLE OF CONTENTS ARTICLE I. INTRODUCTION ...................................................................................................... 1 ARTICLE II. DEFINITIONS ........................................................................................................ 2 ARTICLE III. ELIGIBILITY AND PARTICIPATION ..................................................................... 6 ARTICLE IV. CONTRIBUTIONS .................................................................................................. 8 ARTICLE V. ELECTION OF AVAILABLE BENEFITS .................................................................... 10 ARTICLE VI. ADMINISTRATION .............................................................................................. 18 ARTICLE VII. PLAN AMENDMENT AND TERMINATION ........................................................... 27 ARTICLE VIII. GENERAL PROVISIONS ................................................................................... 28 ARTICLE IX. GROUP MEDICAL BENEFITS ............................................................................... 30 ARTICLE X. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT ............................................. 32 ARTICLE XI. HEALTH FLEXIBLE SPENDING ACCOUNT ............................................................ 38 ARTICLE XII. GROUP DENTAL BENEFITS ................................................................................ 43 ARTICLE XIII. HSA CONTRIBUTION FEATURE ........................................................................ 45 ARTICLE XIV. LIMITED SCOPE HEALTH FLEXIBLE SPENDING ACCOUNT ............................... 48 ARTICLE XV. CASH PAYMENT .................................................................................................. 53 ARTICLE XVI. HIPAA PROVISIONS ......................................................................................... 54 ARTICLE XVII. COBRA PROCEDURES ...................................................................................... 58 © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 1 ARTICLE I. INTRODUCTION 1.1 Establishment/Restatement. By execution of the Adoption Agreement, the Employer hereby establishes or amends and restates (as indicated in the Adoption Agreement) the Plan as of the Effective Date. 1.2 Purpose. The purpose of the Plan is to provide Participants with a choice between cash and certain “qualified benefits” as defined in Section 125 of the Code. The Plan is intended to qualify as a “cafeteria plan” under Section 125 of the Code so that the payments made by a Participant for the Optional Benefits he/she elects to receive under the Plan are eligible for exclusion from the Participant’s gross income to the fullest extent possible under the Code. 1.3 Gender and Number. Pronoun references in this Plan shall be deemed to be of any gender relevant to the context, and words used in the singular may also include the plural. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 2 ARTICLE II. DEFINITIONS The following words and phrases are used in this Plan and shall have the meanings set forth in this Article unless a different meaning is clearly required by the context or is defined within an Article. 2.1 Adoption Agreement means the separate agreement that shall be executed by the Employer sponsoring the Plan and that shall contain Employer-specific information and the Employer’s selections of options under the Plan. 2.2 Cafeteria Plan Regulations means any final regulations, or proposed regulations on which employers may rely, issued by the Department of Treasury under Section 125 of the Code. 2.3 Cash Payment means the amount received by a Participant described in Article XX, if applicable. 2.4 Change in Status means the situations that permit an Eligible Employee or Participant to make a change in his or her Election mid-Plan Year and include events that: (a) Change an Eligible Employee’s or Participant’s legal (under applicable state and federal law) marital status, (b) Change the number of an Eligible Employee’s or Participant’s dependents (as defined in Section 5.4), (c) Change an Eligible Employee’s or Participant’s employment status, or the employment status of the Participant’s Spouse or dependents (as defined in Section 5.4), (d) Cause an Eligible Employee’s or Participant’s dependent (as defined in Section 5.4) to satisfy or cease to satisfy the eligibility requirements for an Optional Benefit, and (e) Change the place of residence of an Eligible Employee or Participant, or his or her Spouse or dependents (as defined in Section 5.4). 2.5 Claims Administrator means Medsurety, LLC, as appointed under Section 6.1(c). 2.6 Code means the Internal Revenue Code of 1986, as amended from time to time. 2.7 Compensation means the total salary, wages, bonuses, pay for overtime, vacation pay, sick pay, pay for shift differentials, and other cash compensation paid by the Employer to a Participant (without regard to any salary reduction under this Plan or any pre -tax program recognized under the Code), but excluding reimbursed expenses, car expense allowances, credits for benefits under any plan of deferred compensation to which the Employer contributes, and any additional compensation payable in a form other than cash. 2.8 Covered Individual means a person, including a Participant, a Dependent of a Participant, a Spouse of a Participant, and any other person, appropriately covered under an Opt ional Benefit subject to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”). 2.9 Dependent means “Dependent” as defined in each Optional Benefit provision in which such term is used. Dependent is not necessarily the same as a dependent for t ax purposes. See the definition of Tax Dependent in Section 2.37. 2.10 Effective Date means the date specified in the Adoption Agreement on which the Plan, or Plan restatement, is effective and applicable to the Eligible Employees and Participants. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 3 2.11 Election means the choice of Optional Benefits and means of payment made by the Participant, as described in Article V. 2.12 Election Period means the period of time identified by the Plan Administrator prior to the start of a Plan Year during which a Participant may chan ge his or her Election. For a Participant who enters the Plan other than at the start of a Plan Year, Election Period means the period of time identified by the Plan Administrator prior to the date on which the Eligible Employee begins participation during which an Eligible Employee may make an Election or change a deemed Election. 2.13 Electronic Protected Health Information (“ePHI”) means PHI maintained or transmitted in electronic media including, but not limited to, electronic storage media (i.e., hard drives, digital memory medium) and transmission media used to exchange information in electronic stor age media (i.e., internet, extranet, and other networks). PHI transmitted via facsimile and telephone is not considered to be transmissions via electronic media. 2.14 Eligible Employee means each Employee who has met the eligibility requirements of Section 3.1. 2.15 Employee means any person employed by the Employer and on the Employer’s W -2 payroll on or after the Effective Date, except that it shall not include: (a) Any self-employed individual as described in Section 401(c) of the Code; (b) Any employee included within a unit of employees covered by a collective bargaining unit unless such agreement expressly provides for coverage of the employee under this Plan; (c) Any employee who is a nonresident alien and receives no earned income from the Employer from sources within the United States; (d) Any employee who is a leased employee as defined in Section 414(n)(2) of the Code; (e) An individual classified by the Employer as a contract wor ker, independent contractor, temporary employee, or casual employee, whether or not any such persons are on the Employer’s W-2 payroll or are determined by the IRS or others to be common-law employees of the Employer; or (f) Any individual who performs services for the Employer but is paid by a temporary or other employment or staffing agency such as “Kel ly,” “Manpower,” etc., whether or not such individuals are determined by the IRS or others to be common-law employees of the Employer. All employees who are treated as employed by a single employer under subsections (b), (c) or (m) of Section 414 of the Code are treated as employed by a single employer for purposes of this Plan. 2.16 Employer means the Employer named in the Adoption Agreement and any affiliate that, with the consent of the Employer, becomes an Employer by adopting the Plan or any successor business organization that assumes the obligations of the Employer. For non-governmental Employers, “affiliate” means an entity (other than the Employer) which i s part of a group of entities which includes the Employer and which constitutes (a) a controlled group of corporations (as defined in Section 414(b) of the Code), (b) a group of trades or businesses, whether or not incorporated, under common control (as defined in Section 414(c) of the Code), or (c) an affiliated service group (within the meaning of Section 414(m) of the Code). © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 4 2.17 Employer Contribution means amounts, if any, described in Section 4.4 that have not been actually or constructively received by the Participant that are made available to the Participant by the Employer for the purpose of electi ng Optional Benefits under the Plan. 2.18 Entry Date means the date(s) specified by the Employer in the Adoption Agreement as of which Eligible Employees may become Participants in this Plan, provided all necessary forms have been completed. 2.19 ERISA means the Employee Retirement Income Security Act of 1974, as amended. Governmental entities, public schools, and some church-related entities and some Indian Tribe operations are not subject to ERISA. 2.20 Highly Compensated Individual means individuals who are highly compensated as defined in Section 125(e)(2) of the Code. 2.21 Highly Compensated Participant means Participants who are highly compensated as defined in Section 125(e)(1) of the Code. 2.22 HIPAA means Health Insurance Portability and Accountability Act of 1996, and reg ulations thereunder, as amended from time to time. 2.23 HSA means a health savings account within the meaning of Section 223 of the Code. 2.24 Insurer means any insurance company, health maintenance organization, or similar entity that has issued a policy through which benefits are made available under this Plan. 2.25 IRS means the Internal Revenue Service. 2.26 Key Employee means Participants who are “Key Employees” as defined in Section 416(i) of the Code. Governmental employers do not have Key Employees. 2.27 Optional Benefits means the benefits made available through this Plan as indicated in the Adoption Agreement. To the extent a benefit described in this Basic Plan Document is n ot an Optional Benefit available under the Plan (as indicated in the Adoption Agreement), the provisions in this Basic Plan Document applicable to such benefit shall be ineffective. 2.28 Participant means an Eligible Employee who participates in the Plan in acc ordance with Article III and has not ceased to be a Participant under Section 3.4. 2.29 Plan means the cafeteria plan and the completed Adoption Agreement as each may be amended from time to time. This Plan shall be known by the name indicated in the Adoption Agreement 2.30 Plan Administrator means the entity determined under Section 6.1. 2.31 Plan Year means the twelve-month period commencing on the first day of the month elected in the Adoption Agreement and ending on the last day of the twelfth month following. A “sh ort” Plan Year consists of less than a twelve-month period and must be indicated in the Adoption Agreement. 2.32 Privacy Rules means the Standards and Privacy of Individually Identifiable Health Information at 45 C.F.R. Part 160 and Part 164 at subparts A and E . © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 5 2.33 Protected Health Information (“PHI”) means health information that: (a) Is created or received by a health plan, health care provider, or health care clearinghouse; (b) Relates to the past, present and future physical or mental health or condition of an individual (including “genetic information” as that term is defined in the Genetic Information Nondiscrimination Act of 2008); the provision of health care to an individual; or the past, present or future payment for the provision of health care to an individual; and (c) Either identifies the individual or reasonably could be used to identify the individual. PHI includes ePHI. 2.34 Security Rules means the Security Standards and Implementation Specifications at 45 C.F.R. Part 160 and Part 164, subpart C. 2.35 Spouse means an individual who is legally married to a Participant (under applicable state law). 2.36 Summary of Health Information means “summary health information” as defined in 45 C.F.R. Section 164.504, which generally defines “summary health information” to include inform ation, which may be PHI, that summarizes claims history, claims expenses, or the type of claims experienced by individuals receiving benefits under the Plan from which certain identifiers have been deleted. 2.37 Tax Dependent means an individual (other than the Participant and the Participant’s Spouse) with respect to whom amounts expended for medical care are excluded from the Participant’s gross income under Section 105(b) of the Code, as amended. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 6 ARTICLE III. ELIGIBILITY AND PARTICIPATION 3.1 Eligibility Requirements. Each Employee shall be eligible to participate in this Plan upon meeting the eligibility requirements as set forth in the Adoption Agreement. 3.2 Notification of Participants. The Plan Administrator shall provide each Eligible Employee written notice of the Employee’s eligibility to participate in the Plan in sufficient time to enable such Eligible Employee to submit an application for participation in the Plan on or before the applicable Entry Date. 3.3 Application for Participation. (a) Generally. In general, unless an Eligible Employee is deemed to have made an Election as provided in Article V, to become a Participant, an Eligible Employee shall execute and deliver to the Plan Administrator, prior to the applicable Entry Date, an application signed by the Eligible Employee in which the Eligible Employee: (1) Applies to participate in the Plan; (2) Designates the required portion of Compensation for the pre-tax and after-tax (if any) contributions; (3) Makes a benefit Election; and (4) Supplies any other pertinent information that the Plan Administrator may reasonably require. By signing such application or agreement, the Eligible Employee shall be deemed for all purposes to have agreed to participate and to conform to the requirements of the Plan. Such application or agreement may be the same as, or separate from, the application or agreement required to participate in any O ptional Benefit under this Plan. Alternatively, or in addition to the forgoing application process, the Plan Administrator may require or permit application of same scope by electronic means. Participation shall begin on a Participant’s Entry Date. (b) Newly Hired. For new hires, an Eligible Employee shall execute and deliver to the Plan Administrator within thirty (30) days of employment, such written applicatio n. In this situation, if provided in the Adoption Agreement, participation in this Plan is retroactive to the date of hire pursuant to Cafeteria Plan Regulations. However, salary reduction contributions to pay for coverage during the period preceding the submission of the application shall be taken prospectively from compensation paid following submission of the application. 3.4 Termination of Participation. Participant automatically ceases to be a Participant at midnight of the earliest of the following dates: (a) The date of the death of the Participant; (b) The date of termination of the Participant’s employment with the Employer; (c) The date of the Participant’s failure to meet the eligibility requirements of Section 3.1, as may be amended from time to time; or (d) The date of termination of the Plan in accordance with Article VII. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 7 Note: This provision applies to participation in this Plan. With respect to the Optional Benefits that involve premium payments for other plans sponsored be the Employer, coverage under the underlying plan may extend beyond the date on which a Participant ceases to be a Participant in this Plan. In the event the Plan does not learn that a Participant has automatically ceased to be a Participant until a date after the date participation cease d, participation will be terminated retroactively and the Plan shall be entitled to recover any amounts paid as benefits paid after the date participation is terminated. Termination of participation in this Plan shall not prevent a former Participant from continuation coverage, conversion coverage or benefits under the respective Optional Benefit plans if and to the extent provided by such plans. 3.5 Conditions of Participation. As a condition of participation and receipt of benefits under this Plan, the Participant agrees to: (a) Observe all Plan rules and regulations; (b) Consent to inquiries by the Plan Administrator with respect to any provider of services involved in a claim under this Plan; (c) Submit to the Plan Administrator all notifications, reports, bills, and other information required by the Plan or which the Plan Administrator may reasonably require; and (d) Repay any overpayments or incorrect payments received under the Plan. Failure to do so relieves the Plan, Plan Administrator, and Claims Administrator from a ny and all obligations under this Plan. 3.6 Participation in Optional Benefit Plans. In order to elect a particular Optional Benefit provided under this Plan, a Participant must elect that Optional Benefit on such forms as the Plan Administrator may require (unless the benefit is provided to all Participants) and, if the cost of Optional Benefit is not fully paid by the Employer, shall be required to share the cost of the Optional Benefit as provided in Article IV. Further, the Participant must meet any elig ibility, participation, etc., requirements applicable to that Optional Benefit in accordance with the terms of the underlying plan through which the Optional Benefit is provided. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 8 ARTICLE IV. CONTRIBUTIONS 4.1 Salary Reduction Contributions. To the extent the Participant’s cost of an Optional Benefit exceeds the Employer Contribution (if any), a Participant may ele ct in accordance with the Election procedures described in Article V to receive his or her full Compensation in cash, or to have a portion of such Compensation applied by the Employer toward the Participant’s cost of Optional Benefits. If so elected, the Participant’s Compensation will be reduced, and an amount equal to the reduction shall be allocated by the Employer to the Optional Benefits designated by the Participant. A Participant’s Compensation shall be reduced by pro-rata amounts of the Participant’s total salary reduction Election. Salary reduction is done on a pre-tax basis before any withholdings have been made. The frequency of salary reduction co ntributions shall be as specified in the Adoption Agreement. Notwithstanding the forgoing, if participation in an Optional Benefit extends to the last day of the month in which a Participant’s employment terminates, if necessary, additional salary reduction contributions shall be taken from the Participant’s final pay check to pay for the coverage provided during the period of time following the date on which the Participant’s employment terminates. 4.2 Imputation of Income. To the extent a Participant participates in an Optional Benefit that covers a Dependent who is not the Participant’s Spouse or Tax Dependent, the entire cost of coverage for which the Participant is responsible shall be paid pre-tax through this Plan and the fair market value of the coverage for that Dependent shall be imputed as income to the Participant as the coverage is provided (pursuant to Cafeteria Plan Regulations). This provision applies regardless of whether the cost of coverage is paid by salary reduction or allocation of available Employer Contributions, if any. 4.3 Employer Contribution. The Employer may make a fixed dollar contribution per Plan Year, or portion of the Plan Year (e.g., month, pay period), per Participant. The amount of the Employer Contribution and any restrictions on the use thereof shall be identified in the Adoption Agreement and communicated to the Participants prior to the start of each Plan Year so that they may consider it in making their Elections. The annual Employer Contribution amount shall be prorate d and made available in equal monthly installments except that any Employer Contribution allocated to the Health Flexible Spending Account or Limited Scope Health Flexible Spending Account shall be made available on the first day of the Plan Year (or the P articipant’s Entry Date if later than the first day of the Plan Year). The amount of the Employer Contribution may change from year to year as announced by the Employer prior to the Plan Year start and reflected in the Adoption Agreement. Unless otherwise specified in the Adoption Agreement, no Employer Contribution shall be credited to any Employee during a period of leave of absence, whether authorized or unauthorized, unless required by the Family Medical Leave Act (“FMLA”), if applicable. Unless otherwise specified in the Adoption Agreement, Employees who are not eligible for participation on the first day of the Plan Year shall have their annual Employer Contribution pro-rated by multiplying the annual available Employer Contribution by a fraction, the numerator of which is the number of months the Employee is eligible for participation for the Plan Year, the denominator which is twelve. 4.4 Maximum Under the Plan. Under no circumstances may a Participant’s total salary reduction exceed the sum of (a) the cost of benefits paid on a pre-tax basis provided through insurance or insurance types of benefits plus (b) the maximum Election amounts permitted under the reimbursement-type Optional Benefits plus (c) the maximum Election permitted under the HSA Contribution Feature (if applicable) minus (d) the Employer Contribution, if any. 4.5 No Trust. Nothing in this Plan is intended to require the establishment of a trust. Employer Contributions made to this Plan remain the Employer’s general assets until used to pay benefits or purchase coverage through the Plan. Participant contributions to the Plan including, but not limited to, salary reduction contributions, are Plan assets. To the extent ERISA applies, such Plan © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 9 assets are not required to be held in trust pursuant to ERISA Technical Release 92-01. For all other purposes not addressed in ERISA Technical Release 92-01, such amounts retain their character and shall be treated as Plan assets. 4.6 Insurer Refunds. Any refund provided to the Employer by an Insurer that has issued an insurance contract for any Optional Benefit will be allocated as provided herein. The refund will constitute Plan assets only to the extent required by applicable law. If the Optional Benefit is subject to ERISA, the refund will be allocated between the Employer and the Participants in accordance with the then prevailing United States Department of Labor (DOL) guidance. The portion of the refund allocated to Participants will be (a) used solely for the benefit of the Participants participating in the Optional Benefit with respect to which the refund was provided, and (b) returned to such Participants in a manner allowed by applicable law (e.g., to provide a refund of Participant premiums, a premium holiday, an increase in benefits, etc.), as determined by the Plan Administrator in its sole discretion. The portion of the refund allocated to Participants will be returned to the Participants no later than three (3) months following the date on which the Employer receives such refund from the Insurer. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 10 ARTICLE V. ELECTION OF AVAILABLE BENEFITS 5.1 Initial Elections. Except as provided in Section 3.3(b), an Election must have been made prior to the date on which an Eligible Employee becomes a Participant. Unless otherwise specified in the Adoption Agreement, upon initial eligibility, Elections shall be made as follows: (a) Affirmative Elections. With respect to Optional Benefits other than those providing for premium payments for group coverage, an affirmative Election to participate is required as part of the application to participate described in 3.3. If the Election Period ends and an Election has not been received by the Plan Administrator, the Eligible Employee will be deemed to have elected not to participate in the above -referenced Optional Benefits, provided that any unused Employer Contribution shall be handled as provided in the Adoption Agreement. (b) Automatic Elections. With respect to Optional Benefits providing for premium payments for group coverage, an Eligible Employee is deemed to have elected to participate and to pay the Participant’s share of the cost of such Optional Benefits through salary reduction unless (1) the Eligible Employee specifically elects not to participate with respect to such Optional Benefit(s) and notifies the Plan Administ rator in writing on or before the close of the Election Period, or (2) such deemed Election is otherwise prohibited by law. 5.2 Subsequent Elections. During the Election Period prior to each subsequent Plan Year, each Participant shall be given the opportunity to make a new Election, including the following: (a) An Eligible Employee who is not participating may elect to begin participating by electing Optional Benefits during the Election Period; (b) A Participant may terminate participation in the Plan; or (c) A Participant may elect different Optional Benefits or different levels of Optional Benefits. An Election must have been made, or deemed to have been made, prior to the start of the Plan Year to which it relates. 5.3 Failure to Make Annual Election. Unless otherwise specified in the Adoption Agreement, if a Participant does not make a new Election during the Elect ion Period prior to each Plan Year, then: (a) Affirmative Elections. With respect to Optional Benefits other than those providing for premium payments for group coverage, the Participant shall be deemed to have elected not to participate in such Optional Bene fits for the upcoming Plan Year, provided that any unused Employer Contribution shall be handled as provided in the Adoption Agreement. (b) Automatic Elections. With respect to Optional Benefits providing for premium payments for group coverage, the Participant shall be deemed, unless prohibited by law, to have elected to pay any portion of the cost for which the Participant is responsible through salary reduction unless (1) the Eligible Employee specifically elects not to participate with respect to such Optional Benefit(s) and notifies the Plan Administrator in writing on or before the close of the Election Period, or (2) such deemed Election is otherwise prohibited by law. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 11 5.4 Elections Irrevocable. For purposes of this Section 5.4, the term “dependent” shall m ean (a) a Tax Dependent if the election relates to health benefits, or (b) a Qualifying Individual (as defined in Article X) if the election relates to the Dependent Care Flexible Spending Account. Unless modified in the Adoption Agreement, an Election becomes effective and shall be irrevocable for the Plan Year or the remainder of the Plan Year except under the following circumstances: (a) Change in Status. A Participant may change or terminate his or her actual or deemed Election under the Plan upon the occurrence of a Change in Status, but only if such change or termination is made on account of and corresponds with a Change in Status that affects coverage eligibility of a Participant, a Participant’s Spouse, or a Participant’s Dependent (referred to as the general consistency requirement). The Plan Administrator (in its sole discretion) shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a Change in Status. Assuming that the general consistency requirement is satisfied, a requested change must also satisfy the following specific consistency requirements in order for a Participant to be able to alter his or her Election based on that change. (1) Loss of Dependent Eligibility. For a Change in Status involving a Participant’s divorce, annulment or legal separation from a Spouse, the death of a Spouse or a Dependent, or a Dependent ceasing to satisfy the eligibility requirements for coverage, a Participant may only elect to cancel accident or health insurance, or insurance type, coverage for the Spouse involved in the divorce, annulment, or legal separation, the deceased Spouse or Dependent, or the Depe ndent that ceased to satisfy the eligibility requirements. Canceling coverage for any other individual under these circumstances does not correspond with that Change in Status. (2) Gain of Coverage Eligibility Under Another Employer’s Plan. For a Change in Status in which a Participant, a Participant’s Spouse, or a Participant’s Dependent gains eligibility for coverage under another employer’s cafeteria plan (or another employer's qualified benefit plan) as a result of a change in marital status or a change in employment status, a Participant may elect to cease or decrease coverage only if that coverage becomes effective or is increased under the other employer’s plan. (3) Dependent Care Flexible Spending Account. With respect to the Dependent Care Flexible Spending Account, a Participant may change or terminate his or her Election only if (i) such a change or termination is made on account of and corresponds with a Change in Status that affects eligibility for coverage under the Plan; or (ii) the Election change is on account of and corresponds with a Change in Status that affects eligibility of depe ndent care expenses for the tax exclusion available under the Code. (4) Group Term Life Insurance and Disability Coverage. For a Change of Status involving a Participant’s legal marital status or the employment status of a Participant’s Spouse or Dependent (disregarding the requirement that the event cause a loss or gain of eligibility), a Participant may elect either to increase or to decrease group term life insurance or disability coverage (as defined in Treas. Reg. §1.125-4(i)(4)) offered under the Plan. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 12 (5) COBRA Coverage. If the Participant becomes eligible for COBRA (or similar health plan continuation coverage under state law) under an Optional Benefit, the Participant may increase the Election for that Optional Benefit to pay for such coverage provided the Participant remains eligible to participate in the Plan and still receives Compensation. (b) HIPAA Special Enrollment Rights. If a Participant, a Participant’s Spouse, and/or a Participant's dependent enrolls in a group health plan that is an Op tional Benefit of this Plan and subject to the HIPAA special enrollment rights provided by Code § 9801(f), the Participant may make a new election that corresp onds with the special enrollment. For purposes of this provision (1) an Election to add previously eligible dependents as a result of the acquisition of a new Spouse or dependent child (a/k/a the Tag -along Rule), shall be considered consistent with the special enrollment right; and (2) a HIPAA special enrollment Election attributable to the birth or adoption of a new dependent child may be effective retroactive (up to thirty (30) days), provided it applies to Compensation not yet currently available. (c) Certain Judgments, Decrees and Orders. If a judgment, decree, or order (an “Order”) resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) requires accident or health coverage for a Participant's Dependent child (including a foster child who is a Dependent of the Participant), a Participant may: (1) change his or her Election to provide coverage for the Dependent child (provided that the Order requires the Participant to provide c overage and subject to the provisions of the underlying group health plan); or (2) change his or her Election to revoke coverage for the Dependent child if the Order requires that another individual (including the Participant’s Spouse or former Spouse) provide coverage under that individual's plan. (d) Medicare and Medicaid. If a Participant, a Participant’s Spouse, or a Participant’s Dependent who is enrolled in a health or accident benefit under this Plan becomes entitled to Medicare or Medicaid (other than coverage consisting solely of benefits under Section 1928 of the Social Security Act providing for pediatric vaccines), the Participant may prospectively reduce or cancel the health or accident coverage of the person becoming entitled to Medicare or Medicaid. Further, if a Participant, a Participant’s Spouse, or a Participant’s Dependent who has been entitled to Medicare or Medicaid loses eligibility for such coverage, then the Participant may prospectively elect to commence or increase the health or accident coverage provided under this Plan of the person losing entitlement to Medicare or Medicaid. (e) Change in Cost. (1) Automatic Increase or Decrease for Insignificant Cost Changes. If the cost of an Optional Benefit (other than the Health Flexible Spending Account or Limited Scope Health Flexible Spending Account) increases or decreases during a Plan Year by an insignificant amount, then the pre-tax contributions or after-tax contributions (as applicable) under each affected Participant Election shal l be prospectively increased or decreased to reflect such change. The Plan Administrator, on a reasonable and consistent basis, will automatically effectuate this prospective increase or decrease in Participant contributions in accordance with such cost changes. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether increases or decreases in costs are “insignificant” based upon all the surrounding facts and circumstances (including, but not limited to, the dollar amount or percentage of the cost change). © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 13 (2) Significant Cost Increases. If the Plan Administrator determines that the cost of an Optional Benefit (other than the Health Flexible Spending Account or Limited Scope Health Flexible Spending Account) significantly increases during a Plan Year, the Participant may, on a prospective basis, either (a) make a corresponding increase in his or her Election, (b) enroll in another benefit package option providing similar coverage and make a correspond ing Election change, or (c) revoke his or her Election if no other benefit package option providing similar coverage is available. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a cost increase is significant and what constitutes “similar coverage” based upon all the surrounding facts and circumstances. (3) Significant Cost Decrease. If the Plan Administrator determines that the cost of an Optional Benefit (other than the Health Flexible Spending Account or Limited Scope Health Flexible Spending Account) significantly decreases during a Plan Year: (i) an Eligible Employee or Participant may commence participation in such Optional Benefit; and (ii) the Plan Administrator shall automatically effectuate a prospective decrease in a Participant’s Election with respect to such Optional Benefit in accordance with the cost decrease. (f) Change in Coverage. (1) Significant Curtailment. If the Plan Administrator determines that coverage under an Optional Benefit (other than the Health Flexible Spending Account or the Limited Scope Medical Reimbursement Plan) is significantly curtailed during a Plan Year, the Participant may prospectively enroll in another benefit package option providing similar coverage and make a corresponding Election change. Coverage under an accident or health plan is deemed “significantly curtailed” only if there is an overall reduction in coverage provided to Participants u so as to constitute reduced coverage to Participants in general. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a curtailment is “significant”, and whether a substitute Optional Benefit constitutes “similar coverage” based upon all the surrounding facts and circumstances. (2) Loss of Coverage. If the Plan Administrator determines that coverage under an Optional Benefit (other than Health Flexible Spending Account or the Limited Scope Medical Reimbursement Plan) is lost during a Plan Year, the Participant may, on a prospective basis: (i) enroll in another benefit package option providing similar coverage and make a corresponding Election change; or (ii) revoke his or her Election if no other benefit package option providing similar coverage is available. Coverage under an accident or health plan is deemed “lost” only if there is a complete loss of coverage under the benefit package option (e.g., due to elimination of the benefit package option or application of an annual or lifetime maximum) or other fundamental loss of coverage. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a “loss” has occurred, and whether a benefit package option constitutes “similar coverage” based upon all the surrounding facts and circumstances. (3) Addition or Improvement of an Optional Benefit. If during a Plan Year, the Plan adds a new Optional Benefit or a new benefit package option under the Optional Benefit (other than the Health Flexible Spending Account or Limited Scope Health Flexible Spending Account), or if coverage under an existing Optional Benefit is significantly improved: (i) an affected Participant may © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 14 prospectively change his/her Election with respect to the newly-added or improved Optional Benefit; and (ii) an Eligible Employee may commence participation in such Optional Benefit. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether an Optional Benefit has been “significantly improved” based upon all the surrounding facts and circumstances. (4) Change Under Another Employer Sponsored Plan. A Participant may make a prospective Election change (other than the Health Flexible Spending Account or Limited Scope Medical Reimbursement Plan) that is on account of and corresponds with a change made under another employer -sponsored plan (including a plan of the Employer or a plan of another employer), provided (i) the other cafeteria plan or qualified benefits plan permits its participants to make an Election change that would be permitted under the Cafeteria Plan Regulations, or (ii) this Plan permits Participants to make an Election for a Plan Year period of coverage which is different from the plan year period of coverage under the other cafeteria plan or Optional Benefit. The Plan Administrator shall determine, based on prevailing IRS guidance, whether a requested change is on account of and corresponds with a change made under another employer - sponsored plan. (5) Loss of Governmental or Educational Coverage. A Participant may prospectively change his or her Election to add group health coverage for the Participant or his or her Spouse or Dependent, if such individual(s) loses coverage under any group health coverage sponsored by a governmental or educational institution, including (but not limited to) the following: a state children’s health insurance program (“SCHIP”) under Title XXI of the Social Security Act; a medical care program of an Indian Tribal government (as defined in Code § 7701(a)(40)), the Indian Health Service, or a tribal organization; a state health benefits risk pool; or a foreign government group health plan, subject to the terms and limitations of the applicable benefit package option(s). (6) Enrollment in Marketplace Coverage. (i) A Participant who has made an Election to pay for Group Medical Benefits may revoke that Election if the following conditions are satisfied: (A) The Participant either (I) is eligible to enroll in a qualified health plan through a public insurance exchange (the “Marketplace”) via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (II) seeks to enroll in a qualified health plan through the Marketplace during the Ma rketplace’s annual open enrollment period; (B) The Participant cancels coverage under the Group Medical Benefits in accordance with the terms and conditions of that plan; and (C) The Participant, and any related individuals who were also enrolled in the Group Medical Benefits, have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will be effective no later than the day immediately following the last day for which coverage under the Group Medical Benefits was effective (i.e., there is no break in coverage). The Plan © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 15 Administrator may rely on the reasonable representation of the Participant that the requirements of this paragraph (C) are met. (ii) Unless determined by the IRS not to be available, a Participant who has made an Election to pay for Group Medical Benefits may reduce that Election if the following conditions are satisfied: (A) The Participant’s Spouse and/or dependents either (I) are eligible to enroll in a qualified health plan through the Marketplace via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (II) seek to enroll in a qualified health plan through the Marketplace during the Marketplace’s annual open enrollment period; (B) The Participant cancels coverage under the Group Medical Benefits for such Spouse and/or dependents in accordance with the terms and conditions of that plan; and (C) Such Spouse and/or dependents have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will be effective no later than the day immediately following the last day for which the coverage under the Group Medical Benefits was effective (i.e., there is no break in coverage). The Plan Administrator may rely on the reasonable representation of the Participant that the requirements of this paragraph (C) are met. (g) Reduction in Hours Without Loss of Eligibility. A Participant who has made an Election to pay for Group Medical Benefits may rev oke that Election if the following conditions are satisfied: (1) The Participant has been in an employment status under which the Participant was reasonably expected to average at least thirty (30) hours of service per week; (2) The Participant has experienced a change in employment status such that the Participant will reasonably be expected to average less than thirty (30) hours of service per week after the change but nevertheless remains eligible for Group Medical Benefits; (3) The Participant cancels coverage under the Group Medical Benefits in accordance with the terms and conditions of that plan; and (4) The Participant, and any related individuals who were also enrolled in the Group Medical Benefits, have enrolled or intend to enroll in other medical coverage that provides minimum essential coverage and that will be effective no later than the first day of the second month following the month in which coverage under the Group Medical Benefits ends. The Plan Administrator may rely on the reasonable representation of the Participant that the requirements of this paragraph (4) are met. (h) Family and Medical Leave Act. A Participant taking a leave governed by the Family and Medical Leave Act of 1993 (“FMLA”) may revoke or change an Election as may be provided for under the FMLA and the Employer’s FMLA policy required thereunder, provided the Employer is subject to FMLA. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 16 (i) Special Rule for HSA Contribution Feature. A Participant may change his or her Election with respect to the HSA Contribution Feature prospectively on at least a monthly basis. A Participant may also revoke his or her Election w ith respect to the HSA Contribution Feature prospectively if the Participant becomes ineligible to make or have made HSA contributions under the HSA Contribution Feature. (j) Other. The Plan Administrator shall have the discretion to allow a change to or termination of an Election to the extent such change or termination is the result of any other situation informally recognized by the Internal Revenue Service as providing an exception to the general rule that Elections are irrevocable (e.g., corrections o f mistakes, changes to meet nondiscrimination requirements). A Participant entitled to make a new Election under this Section must do so within thirty (30) days of the event. An Employee who is eligible to elect benefits but declined to do so during the initial Election period, or during a subsequent Election period, may file a new Election within thirty (30) days of the occurrence of an event described above, but only if the new Election is made on account of and corresponds with the event. Subject to th e provisions of the underlying group health plan, Elections made to add medical coverage for a newborn or newly adopted Dependent child pursuant to a HIPAA special enrollment right may be retroactive for up to thirty (30) days. All other new Elections shall be effective prospectively immediately following the date the Participant files the new Election with the Plan Administrator. Elections made pursuant to this Section shall be effective for the balance of the Plan Year in which the Election is made unless a subsequent event (described above) allows a further Election change. 5.5 Rehire and Eligibility Loss. Termination of employment shall automatically revoke a ny Election. Former Participants who are rehired: (a) After thirty (30) days following a termination of employment, shall have two “periods of coverage;” that period prior to the termination of employment and that period following the re-employment of the terminated Employee. Expenses incurred prior to the termination of employment shall be subject to the Election in effect upon termination; while the Employee shall have an opportunity to make a new Election and expenses incurred after re-employment shall be subject to the Election made upon re-employment. (b) Within thirty (30) days following a termination of employment, shall have the Election in effect prior to the termination of employment reinstated upon re -employment. 5.6 Benefit Descriptions. Although an Election to pay for insurance and insurance-type Optional Benefits is made under this Plan, the benefits themselves will be provided in accordance with the documents or contracts describing the types and amounts of benefits available, the requirements for participation, the procedures for submitting claims, and the other terms and conditions of such coverage. Such underlying documents or contracts, if any, are incorporated into this Plan by reference. 5.7 Forfeiture. (a) Entities Subject to ERISA. Any amounts, whether obtained through salary reduction, salary deduction, Employer Contributions, or otherwise, unde r this Plan that are Plan assets and which cannot be distributed by the Plan Administrator to cover the cost of Optional Benefits for the applicable Plan Year, shall be forfeited by the Participant. The Plan Administrator may use such forfeited amounts to defray the reasonable administrative costs of the portion of the Plan yielding the forfeiture. To the extent forfeited amounts remain, the Plan Administrator shall arrange for the provision of a benefit for a broad cross section of Participants of the sa me type as the benefit which resulted in the forfeitures. Under no circumstances shall the Plan Administrator establish © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 17 an outside formal or informal arrangement under which the forfeited amounts are allocated among Participants based (directly or indirectly) on their individual claims experience under the Plan. This forfeiture requirement shall be applied separately for each Optional Benefit and shall only apply with respect to Plan assets. (b) Entities Not Subject to ERISA. Any amounts, whether obtained through salary reduction, salary deduction, Employer Contributions, or otherwise, under this Plan which cannot be distributed by the Plan Administrator to cover the cost of Optional Benefits for the applicable Plan Year, shall be forfeited by the Participant. Forfeited amounts, in accordance with the Cafeteria Plan Regulations, may be: (1) retained by the Employer, (2) used to defray the reasonable administrative costs of the Plan, (3) used to reduce required salary reduction amounts for the immediately following Plan Year on a reasonable and uniform basis, and/or (4) returned to the Participants on a reasonable and uniform basis. Under no circumstances shall the Plan Administrator establish an outside formal or informal arrangement under which the forfeited amounts are allocated among Participants based (directly or indirectly) on their individual claims experience under the Plan. 5.8 Limitations on Benefits. Benefits shall be limited as determined by the Plan Administrator in accordance with Section 6.16 for the purpose of ensuring compliance with any nondiscrimination requirement applicable to the Plan or an Optional Benefit. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 18 ARTICLE VI. ADMINISTRATION 6.1 Plan Administrator. (a) The Plan Administrator shall be responsible for the general supervision of the Plan. The Plan Administrator shall also be the named fiduciary (in accordance with Section 402 of ERISA) of any Optional Benefit (if any) that is subject to ERISA unless the underlying plan documentation or insurance contract identifies a different named fiduciary. The Plan Administrator shall have the discretionary authority to control and manage the operation and administration of the Plan, including but not limited to, the inte rpretation and application of the terms of the Plan. The Plan Administrator shall perform any and all acts necessary or appropriate for the proper management and administration of the Plan. (b) The Employer shall be the Plan Administrator unless provided otherwise in the Adoption Agreement. The Employer shall also be the Plan Administrator if the person or persons so designated cease to be the Plan Administrator. (c) The Plan Administrator may designate an individual or entity to act on its behalf with respect to certain powers, duties, responsibilities, etc. with respect to the operation and administration of this Plan. Where Optional Benefits purchased through this Plan are provided through an Insurer, that Insurer shall be the Claims Administrator with respect to those benefits. In all other situations, the Plan Administrator shall be the Claims Administrator unless the Plan Administrator contracts with another entity to act on its behalf and that other entity is identified in the Adoption Agreement. 6.2 Agent for Service of Legal Process. The agent for service of legal process for the Plan is the Plan Administrator. 6.3 Allocation of Responsibility for Administration. The Plan Administrator shall have the sole responsibility for the administration of this Plan as is specifically described in this Plan. The designated representatives of the Plan Administrator shall have only those specific powers, duties, responsibilities, and obligations as are specifically given to them under this Plan. The Plan Administrator warrants that any directions given, information furnished, or action taken by it shall be in accordance with the provisions of the Plan authorizing or providing for such direction, information or action. It is intended under this Plan that the Plan Administrat or shall be responsible for the proper exercise of its own powers, duties, responsibilities, and obligations under this Plan and shall not be responsible for any act or failure to act of another Employee of the Employer. Neither the Plan Administrator (including any designee) nor the Employer makes any guarantee to any Participant in any manner for a ny loss or other event because of the Participant’s participation in this Plan. 6.4 Rules and Decisions. Except as otherwise specifically provided in the Plan, the Plan Administrator may adopt such rules and procedures as it deems necessary, desirable, or appropriate to fulfill the purposes of the Plan. All rules and decisions of the Plan Administrator shall be uniformly and consistently applied to all Participant s in similar circumstances. When making a determination or calculation, the Plan Administrator s hall be entitled to rely upon information furnished by a Participant, the Employer, or legal counsel. 6.5 Procedures. The Plan Administrator may act at a meeting or in writing. The Plan Administrator may adopt by-laws and regulations as it deems desirable for the conduct of the Plan’s affairs and as are consistent with the terms of the Plan. 6.6 Records and Reports. The Plan Administrator shall be responsible for com plying with all reporting, filing and disclosure requirements for the Plan. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 19 6.7 Reimbursement-Type Account Balances. Participants can obtain a statement of their account balances for the reimbursement-type accounts on the Claims Administrator’s website. 6.8 Claim for Benefits. This Section addresses the requirements for claims for reimbursement -type Optional Benefits offered under the Plan and the provisions of general applicability, regardless of whether the Optional Benefit is subject to ERISA. Claims require ments for other Optional Benefits shall be handled in accordance with the governing documents for those Optional Benefits. A Participant may apply to the Claims Administrator for reimbursement of eligible expenses incurred during such Plan Year (and applicable Grace Period) by submitting a paper claim, or, if provided in the Adoption Agreement, through electronic payment as described below: (a) Paper Claims. A Participant may make a claim by completing a claim form and submitting such form to the Claims Administrator via email, facsimile, mail, or the Claims Administrator’s website setting forth at least the following: (1) The amount, date and nature of the expense, including the identity of the individual who incurred the expense; (2) The name of the person or entity to which the expense was paid; (3) The Participant’s statement that the expense has not been reimbur sed and the Participant will not seek reimbursement for the expense; and (4) Such other information as the Claims Administrator may require. Such claim form shall be accompanied by such bills, invoices, receipts, explanations of benefits (“EOB”) issued by a health plan, or other statements from an independent third party as is necessary to establish that an eligible expense has been incurred and the amount of the expense. The Claims Administrator is entitled to rely on the information provided on the claim form in processing claims under this Plan. Where circumstances beyond the Participant’s control prevent submission within the described time frame, notice of a claim with an explanation of the circumstances may be accepted by the Claims Administrator as a timely filing. Claims shall be determined in accordance with Article VI. Reimbursement shall be made weekly or pursuant to a schedule established by the Pla n Administrator and Claims Administrator. Claims (including all information substantiating the claim) must be submitted by the deadline established and communicated by the Claims Administrator. Reimbursements shall be made from the Participant's respecti ve reimbursement-type account for eligible expenses incurred during the applicable Plan Year for which the Participant submits the required documentation. (b) Electronic Payment Cards – Health Flexible Spending Accounts. If provided in the Adoption Agreement, a Participant may receive reimbursement of an eligible expense under the Health Flexible Spending Account and the Limited Scope Health Flexible Spending Account (as applicable) by use of an electronic payment card at the time the eligible expense is incurred. A Participant must elect to use the electronic payment card, and must agree to abide by the terms and conditions of the electronic payment card program as set forth in a separate agreement with the electronic payment card provider. If required, Participants must execute a new agreement prior to the start of each Plan Year. In addition to the terms and conditions of the electronic payment card program, the use of the electronic payment card shall be subject to the following conditions: © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 20 (1) The electronic payment card will be cancelled when the Participant ceases to participate in the Health Flexible Spending Account and the Limited Scope Health Flexible Spending Account (as applicable). (2) The balance of the electronic payment card shall be limited to th e amount in the applicable Participant’s reimbursement-type account(s). (3) A Participant must certify in writing prior to issuance of the electronic payment card that: (i) the electronic payment card will be used only for eligible expenses that have not been reimbursed under any other plan covering similar benefits; (ii) the Participant will not seek reimbursement for any expense paid with the electronic payment card under any other plan covering benefits; and (iii) the Participant will obtain and retain a third party statement from the health care provider containing the information necessary to substantiate that the expense paid by the card was an eligible expense. The electronic payment card shall include a statement providing that each use of the card shall constitute a reaffirmation of the certification. (4) For eligible expenses, the electronic payment card may be used only at merchants who are health care providers (e.g., doctor’s office, hospital, pharmacy, etc.) or other merchants identified in applicable IRS guidance. (5) Each time the electronic payment card is used, a Participant shall obtain and retain a third party statement from the health care provider containing the information necessary to substantiate that the expense paid by the card was an eligible expense. (6) Claims shall be substantiated in one of the following manners: (i) The Participant shall provide, upon request by the Claims Administrator (or its designee), the third party statement with respect to the claim; (ii) For eligible expenses, the payment was made to a merchant who is a health care provider and it matches a specific copayment the Participant has under a group medical or group dental plan sponsored by the Employer or a multiple of that copayment of not more than five (5) times the dollar amount of the copayment; (iii) For eligible expenses, the payment was made to a merchant who is a health care provider and is for an expense with the same amount, duration, and health care provider as a previously approved expense under this Plan; (iv) For eligible expenses, the payment was made to a merchant who is a health care provider and the electronic claim file with respect to the expense is accompanied by an electronic or written confirmation from the health care provider that identifies the amount of the e xpense and verifies that the expense is an eligible expense; or © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 21 (v) For eligible expenses, the electronic payment card is used at a merchant (of any kind) that participates in an inventory information approval system developed by the card provider that verifies, at the time of purchase, that the goods being purchased constitute medical care. (7) Special rules may apply to the use of the electronic payment card to purchase over-the-counter drugs and medicines other than insulin. Notwithstanding the rules described above regarding the use of the card to purchase medical care, unless and until the IRS issues guidance providing the following procedures need not be followed (in which case such guidance shall be incorporated herein by reference), the card may be used to purchase such over-the-counter drugs and medicines only in the following circumstances: (i) At any 90% pharmacy if the expense is substantiated after the purchase in accordance with paragraph (6)(i) above. (ii) At drug stores, pharmacies, non-health care merchants that have pharmacies, and mail order or web-based merchants that sell prescription drugs if (a) the cardholder presents the prescription to the pharmacist; (b) the pharmacist assigns a prescription number and dispenses the over-the-counter drug or medicine in accordance with applicable law; (c) the pharmacy retains a record of the transa ction, including the name on prescription, prescription number, date, and the amount of the purchase; (d) the pharmacy’s records are accessible by the employer or its agent; (e) the debit card system does not allow over - the-counter drugs or medicines without a prescription number; and (f) the expense is substantiated in accordance with the standard rules described above in paragraph (6). (iii) At merchants having healthcare related merchant codes (other than merchants described in item ii above) if the expe nse is substantiated in accordance with the standard rules described above in paragraph (6). Note: If the over-the-counter medicine cannot be purchased with the electronic payment card, it may still be reimbursed using the manual reimbursement procedures described in paragraph (a) above. (8) If a claim is not substantiated pursuant to items (ii) through (v) of paragraph (6) above, and the Participant does not substantiate the claim pursuant to paragraph (6)(i) above within a particular time period (as established by the Plan Administrator or is designee), the Participant’s use of the card will be terminated at least until such time as the claim is substantiated or the unsubstantiated claim is recovered by the Plan. Furthermore, the Plan shall seek to recover any unsubstantiated electronic payment card claim by demanding repayment from the Participant, withholding an amount equal to the unsubstantiated expense from the Participant’s compensation (if and as allowed by applicable law), and/or offsetting such amount against future eligible claims under the Plan. If such amounts cannot be recovered, the Participant shall be indebted to the Employer and the Employer shall treat the debt as any other business indebtedness. (9) The use of an electronic payment card does not constitute a “claim” under the claims procedures. (10) For purposes of the Grace Period that overlaps with the first portion of the next Plan Year, claims incurred during the Grace Periods must be submitted as paper © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 22 claims (as discussed above) in order for the claim to be processed and paid from the Participant’s remaining account balance from the Plan Year just ended. If the electronic payment card is used for expenses incurred during the Grace Period, the benefit shall be paid from the Participant’s account balance for the new Plan Year, not the Plan Year to which the Grace Period relates. (c) Electronic Payment Cards – Dependent Care Flexible Spending Account. If provided in the Adoption Agreement, a Participant may receive reimbursement of an eligible expense under the Dependent Care Flexible Spending Account (if applicable) by use of an electronic payment card at the time the eligible expense is incurred. A Participant must elect to use the electronic payment card, and must agree to abide by the terms and conditions of the electronic payment card program as set forth in a separate agreement with the electronic payment card provider. If required, Participants must execute a new agreement prior to the start of each Plan Year. In addition to the terms and conditions of the electronic payment card program, the use of the electronic payment care shall be subject following conditions: (1) At the beginning of each Plan Year or, if later, upon the Participant’s Entry Date, the Participant must pay the initial eligible expense to the dependent care provider and submit a paper claim to the Plan for such expense. (2) Upon substantiation by the Claims Administrator of the initial eligible expense, the Plan will make available through the electronic payment card an amount equal to the lesser of: (i) the amount of the approved claim, or (ii) the contributions made by or on behalf of the Participant to the Dependent Care Expense Reimbursement Plan for the Pan Year to date. (3) The electronic payment card may then be used to pay for subsequently incurred eligible dependent care expenses. (4) The amount available through the electronic payment card may be increased only as additional dependent care expenses are incurred and substantiated via submission of a paper claim, except as provided in paragraph (5) below. In no case will the amount available through the electronic payment card exceed the contributions made by or on behalf of the Participant to the Dependent Care Expense Reimbursement Plan for the Plan Year to date minus the amount o f expenses previously reimbursed during such Plan Year (whether such reimbursement was made in cash or by crediting the electronic payment card). (5) Dependent care expenses may be automatically substantiated without submission of a paper claim only as provided in this paragraph (5). If (i) an electronic payment card transaction collects information that matches information for a previously approved paper claim with respect to the dependent care provider, and (ii) the amount of the electronic payment card tran saction is equal to or less than the previously approved paper claim, then the claim paid via the electronic payment card is substantiated without further revi ew. In such instances, the balance of the electronic payment card may be increased with respect to the automatically substantiated claim once the expense paid through the electronic payment card has been incurred. Example: If a Participant uses an electronic payment card to pay a day care provider on the first day of the week for the care to be pr ovided during that week, and the claim is automatically substantiated as provided above, the balance of the electronic payment card may be increased with respect to such claim at the end of the week. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 23 (d) Automatic Reimbursement of Recurring Claims – Individual Premium Feature and Individual Medical Premium Feature. If selected in the Adoption Agreement, the Plan provides for automatic reimbursements of certain eligible expenses under the Individual Premium Feature and/or Individual Medical Premium Feature. To receive automatic reimbursements as provided herein, the Participant must complete and return a form to the Plan Administrator electing to do so. A Participa nt must submit a claim for the first eligible expense incurred during a particular Plan Year purs uant to the standard paper claim procedures described above. Upon approval of that claim, the Claims Administrator will provide the claim reimbursement by paying the reimbursed amount directly to the insurance carrier. Thereafter, the Claims Administrato r will automatically reimburse, without submission of an additional paper claim, an amount equal to the amount of the first claim by paying that amount to the insurance carrier at the appropriate payment interval. For purposes of this provision, the appropriate payment interval shall be the time period reflected in the first claim for which the services or coverage was provided (e.g., weekly, monthly, quarterly, etc.). Notwithstanding anything herein to the contrary, reimbursements for recurring claims shall be made only after the eligible expense was incurred. In the event the amount of the eligible expense or the identity of the insurance carrier changes, the Participant must submit a paper claim with respect to the new amount or insurance carrier. 6.9 Determination of Benefits. This Section addresses the claims determination and appeal procedures for reimbursement-type Optional Benefits chosen in the Adoption Agreement, and the provisions of general applicability, regardless of whether any portion of this Plan is subject to ERISA. Claims determination and appeal procedures for other Optional Benefits shall be handled in accordance with the governing documents for those Optional Benefits. (a) Initial Determination. The Plan Administrator, or Plan Administrator’s designee, shall notify a person within thirty (30) days of receipt of a written claim for benefits of that person's eligibility or non-eligibility for benefits under the Plan. If it is determined that a person is not eligible for benefits or for full benefits, the notice shall set forth: (1) The specific reasons for the denial; (2) A specific reference to the provision of the Plan on which the denial is based; (3) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; and (4) An explanation of the Plan's claims review procedure and other appropriate information as to the steps to be taken if the Participant wishes to have the claim reviewed. If the Plan Administrator, or Plan Administrator’s designee, determines that there are special circumstances requiring additional time to make a decision, the Plan Administrator, or Plan Administrator’s designee, shall notify the Participant of the special circumstances and the date by which a decision is expected to be made, and may extend the time for up to an additional fifteen (15) days. (b) Appeals. If a Participant is determined by the Plan Administrator, or Plan Administrator’s designee, not to be eligible for benefits, or if the Participa nt believes that he or she is entitled to greater or different benefits, the Participant shall have the opportunity to have the claim reviewed by the Plan Admi nistrator, or Plan Administrator’s designee, by filing a petition an appeal within one hundred eighty (180) days after receipt by the Participant of the notice issued by the Plan Administrator, or the Plan © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 24 Administrator’s designee. The appeal shall state the specific reasons the Participant believes he or she is entitled to benefits or greater or different benefits. Within sixty (60) days after receipt of the appeal, the Plan Administrator, or Plan Administrator’s designee, shall afford the Participant (and the Participant's counsel, if any) an opportunity to present the Participant's position to the Plan Administrator, or Plan Administrator’s designee, orally or in writing, and the Participant (or the Participant's counsel) shall have the right to review the pertinent documents. (c) Decision on Appeal. The Plan Administrator shall notify the Participant of its decision on appeal in writing within said sixty (60) day period of said decision. If it is determined that a person is not eligible for benefits or for full benefits the notice shall set forth: (1) The specific reasons for the denial; (2) A specific reference to the provision of the Plan on which the denial is based; (3) A statement of the Participant’s right to review (on request and at no charge) relevant documents and other information; (4) If the Plan Administrator relied on “internal rule, guideline, protoc ol, or other similar criterion” in making the decision, a description of the specific rule, guideline, protocol, or other similar criterion or a statement that such a rule, guideline, protocol, or other similar criterion was relied on and that a copy of such rule, guideline, protocol, or other similar criterion will be provided free of charge to you upon request; and (5) If the Optional Benefit is subject to ERISA, a statement of the Participant’s right to bring suit under ERISA § 502(a). In the event of the death of a Participant, the same procedure shall be applicable to the Participant's beneficiaries. 6.10 Authorization of Benefit Payments. The Plan Administrator shall issue directions to the Employer concerning all benefits which are to be paid from the Employer’s assets, pursuant to the provisions of the Plan, and shall warrant at the time the directions are provided that all such directions are in accordance with the Plan. 6.11 Overpayments. If a payment for benefits is made by the Plan in excess of the benefit to which a Participant is entitled under the Plan, the Plan shall have the right to recover such overpayment from the Participant. Repayment of an overpayment is a condition of participation in the Plan. 6.12 Inability to Locate Payee. (a) Entities Subject to ERISA. If benefits are due under this Plan and the Plan Administrator is unable, after reasonable attempts to do so, to locate the Participant to whom such benefits are payable, such benefits shall be forfeited in accordance with Section 5.7. For purposes of the foregoing, the Plan Administrator shall be deemed to be unable to locate a Participant if a check issued for benefits payable under the Plan has been sent to the payee’s last known address and has not been cashed within twelve (12) months of its date of issuance (b) Entities Not Subject to ERISA: If benefits are due under this Plan and the Plan Administrator is unable, after reasonable attempts to do so, to locate the Participant to whom such benefits are payable, such benefits shall be handled in accor dance with © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 25 applicable state law regarding unclaimed property or escheat. For purposes of the foregoing, the Plan Administrator shall be deemed to be unable to locate a Participant if a check issued for benefits payable under the Plan has been sent to the payee’s last known address and has not been cashed within three (3) years of its date of issuance. 6.13 Facility of Payment. Whenever, in the Plan Administrator’s opinion, a person entitled to receive any payment of a benefit or installment under the Plan is under a legal disability or is incapacitated in any way so as to be unable to manage their financial affairs, the Plan Administrator may request the Employer to make payments to such person, or the Plan Administrator may request the Employer to apply the pa yment for the benefit of such person in such manner as the Plan Administrator considers advisable. Any payment of a benefit, or installment, in accordance with the provisions of this Section, shall be a complete discharge of any liability for the making of such payment under the provisions of the Plan. To the extent the Plan is not subject to ERISA, the same procedure shall be followed. 6.14 Other Powers and Duties of the Administrator. The Plan Administrator shall also have such other duties and powers as may be necessary to discharge its duties under the Plan including, but not limited to, the following: (a) Discretion to construe and interpret the Plan in a non-discriminatory manner, to decide all questions of eligibility, except to the extent the eligibility determinations are governed by an Insurance Contract, and to determine all questions arising in the administration and application of the Plan, except to the ex tent such eligibility determinations are governed by an insurance contract; (b) To receive from the Employer and from Participants such information as shall be necessary for the proper administration of the Plan; (c) To furnish the Employer, upon request, such ann ual reports with respect to the administration of the Plan as are reasonable and appropriate; and (d) To appoint individuals to assist in the administration of the Plan and any other agents the Plan Administrator deems advisable, including legal and actuarial counsel. The Plan Administrator shall not have the power to add to, subtract from, or modify any of the terms of the Plan, to change or add to any benefits provided by the Plan, or to waive or fail to apply any requirements of eligibility for a benefit under this Plan. 6.15 Indemnification. To the maximum extent allowed by, and in accordance with applicable law, the Employer shall indemnify and hold harmless any Employee that is deemed to be a fiduciary against any and all losses, claims, damages, expense (including court costs and attorneys’ fees), and liability arising from the Employee’s duties and res ponsibilities in connection with the Plan, unless the same is determined to be intentional or willful. 6.16 Changes by the Plan Administrator. If the Plan Administrator determines before or during any Plan Year that the Plan or an Optional Benefit may fail to satisfy any nondiscrimination requirement imposed by the Code or other applicable law (including any limitation on benefits provided to Key Employees), the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to assure compliance with such requirements or limitation. Such action may include, without limitation, a modification of the Elections of Highly Compensated Participants or Key Employees with or without consent of such Employees and/or a re-characterization within the Plan Year of benefits provided under the Plan as taxable income with or without consent of such Employees. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 26 6.17 Plan Interpretation. This Plan will be administered in accordance with its terms. The Plan Administrator and/or a fiduciary acting as a fiduciary with respect to this Plan, to the extent that such individual or entity is acting in its fidu ciary capacity, shall have the complete and final authority, responsibility, and control, in its sole discretion, to manage, administer and operate this Plan, to make factual findings, to construe the terms of this Plan, and to determine all questions arising in connection with the administration, interpretation, and application of this Plan, including, but not limited to, the eligibility and coverage of individuals and the authorization or denial of payment or reimbursement of benefits. All determinations and decisions will be binding on this Plan, Covered Individuals, claimants, and all other interested parties. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 27 ARTICLE VII. PLAN AMENDMENT AND TERMINATION 7.1 Employer Amendments. The Employer reserves the right to amend this Plan, or any portion of the Plan, at any time. The Employer expressly may make any amendment it determines necessary or desirable, with or without retroactive effect, to comply with the law. Such amendment shall not affect any right to benefits that accrued prior to such amendment. Such amendment shall be made in writing and in accordance with Section 8.4. 7.2 Employer’s Right to Terminate. Although the Employer expects the Plan to be maintained for an indefinite time, the Employer reserves the right to terminate the Plan or any portion of the Plan at any time. In the event of the dissolution, merger, consolidation, or reorganization of the Employer, the Plan shall terminate unless the Plan is continued by a successor to the Employer in accordance with the resolution of such successor’s managing body. Such termination shall not affect any right to benefits that accrued prior to such termination. Such action shall be taken in writing and in accordance with Section 8.4. 7.3 Amendments by Claims Administrator. Claims Administrator reserves the right to ame nd the Plan from time to time. Although it is intended that this power of amendment will be used primarily to ensure compliance with the provisions of ERISA (if applicable), the Code, and/or other applicable law, this power of amendment may be used for any purpose deemed appropriate by Claims Administrator. Unless required by law, such amendments sh all not affect any right to benefits that accrued prior to such amendments. Such amendment shall be accomplished by providing written notice to the Employer. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 28 ARTICLE VIII. GENERAL PROVISIONS 8.1 Plan Not a Contract of Employment. The Plan is not an employment agreement and does not assure the continued employment of any Employee or Participant for any period of time. Nothing contained in the Plan shall interfere with the Emp loyer’s right to discharge an Employee or Participant at any time, regardless of the effect such discharge may have upon the individual as a Participant in this Plan. 8.2 No Right to Employer’s Assets. No Employee, Participant or beneficiary thereof shall hav e any right to, or interest in, any assets of the Employer upon termination of employment, or otherwise except as provided from time to time under this Plan, and then only to the extent of the benefits payable under the Plan to such Employee, Participant o r beneficiary thereof. In addition, the Claims Administrator shall not be liable in any manner for such payments. 8.3 Non-Alienation of Benefits. Benefits payable under this Plan shall not be subject to anticipation, alienation, sale, transfer, execution, or levy of any kind either voluntary or involuntary, including any such liability which is for alimony or other payments for the support of a Spouse or former Spouse, or for any other relative of the Participant, prior to actually being received by the person entitled to the benefit under the terms of the Plan. Any attempt to anticipate, alienate, sell , transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable under the Plan shall be void. The Employer, Plan Administra tor and/or Claims Administrator shall not in any manner be made liable for, or subject to, the de bts, contracts, liabilities, engagements or torts of any person entitled to benefits under the Plan. 8.4 Action by Employer. Whenever the Employer, under the terms of this Plan, is permitted or required to do or perform any act or matter or thing, it shall be done and performed by the managing body of the Employer or such representatives of the Employer as the managing body may designate. 8.5 No Guarantee of Tax Consequences. Notwithstanding any provision in this Plan to the contrary, neither this Plan nor the Em ployer make any commitment or guarantee that any amounts paid to or on behalf of a Participant under this Plan will be excludable from the Participant’s gross income for federal or state or local income tax purposes. It shall be the obligation of each Participant to determine whether each payment is excludable from the Participant’s gross income for federal, state and local income tax purposes, and to notify th e Employer if the Participant has reason to believe that any such payment is not so excludable. 8.6 Indemnification of Employer by Participants. To the maximum extent allowed by, and in accordance with, applicable law, f any Participant receives one or more payments or reimbursements under this Plan that are not for eligible expenses, such Participant s hall indemnify and reimburse the Employer for any liability it may incur for failure to withhold applicable federal, state or local income tax or Social Security tax from such payment or reimbursements. However, such indemnification and reimbursement shall not exceed the amount of additional federal, state and local income tax that the Participant would have owed if the payments or reimbursements had been made to the Participant as regular cash compensation, plus the Participant's share of any Social Security tax that would have been paid on such compensation, less any such additional income and Social Security tax actually paid by the Participant. 8.7 Benefits Provided Through Third Parties. In the case of any Optional Benefit provided through a third party (e.g., an Insurer), if there is any conflict or inconsistency between the description of benefits contained in this Plan and the contract or policy, the terms o f the contract or policy shall control, unless prohibited by applicable law or specifically addre ssed in this Plan. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 29 8.8 Mistakes and Errors. It is recognized that in the administration of the Plan, certain administrative and accounting errors may be made or situations may arise by reason of factual errors in information supplied to the Employer or the Plan Administrator. The Employer and/or the Plan Administrator shall have the power to take such equitable steps as may be necessary to correct the mathematical, accounting or factual errors, as they, in their sole discretion, determine(s) to be appropriate. 8.9 Limitation on Liability. The Employer does not guarantee benefits payable under any insurance policy or other similar contract described or referred to here in, and any benefits thereunder shall be the exclusive responsibility of the Insurer or other entity that is required to provide such benefits under such policy or contract. 8.10 Governing Law. This Plan shall be construed and enforced according to the laws of the state identified in the Adoption Agreement except to the extent preempted by federal law. 8.11 Family and Medical Leave Act of 1993. Notwithstanding any provision of this Plan to contrary, this Plan shall be operated and maintained in a manner consistent with the Family and Medical Leave Act of 1993 (“FMLA”) and the Employer’s FMLA policy required th ereunder, provided the Employer is subject to FMLA. 8.12 Uniformed Services Employment and Reemployment Rights Act of 1994. Notwithstanding any provision of this Plan to the contrary, this Plan shall be operated and maintained in a manner consistent with the Uniformed Services Employment and Reemployment Act of 1994 (“USERRA”). The Plan Administrator may within the parameters of the law, establish uniform policies by which to provide such continuation coverage required by USERRA, which shall be incorporated herein by reference. 8.13 Genetic Information Nondiscrimination Act of 2008. Notwithstanding any provision of this Plan to contrary, this Plan shall be operated and maintained in a manner consistent with the Genetic Information Nondiscrimination Act of 2008 (“GINA ”). 8.14 Children’s Health Insurance Program Reauthorization Act of 2009 . Notwithstanding any provision of the Plan to the contrary, the Plan shall be operated and maintained in a manner consistent with the Children’s Health Insurance Program Reauthorization A ct of 2009 (“CHIPRA”). © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 30 ARTICLE IX. GROUP MEDICAL BENEFITS 9.1 Separate Written Plan. For purposes of Sections 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the direct payment of Insurance Premiums. To the extent necessary, other provisions of the Plan are incorporated by reference in this document. 9.2 Purpose. The purpose of this Article is to provide Participants an opportunity to make pre-tax payments for the cost of Group Medical Coverage through the Plan. The Employer provides Group Medical Coverage through one or more “plans” within the meaning of Sections 105 and 106 of the Code. 9.3 Definitions. (a) Dependent means an individual (e.g., Spouse, child, domestic partner, etc.) who qualifies as a “dependent” under the terms and conditions of the applicable plan document governing the Group Medical Coverage. (b) Group Medical Coverage means the medical coverage made available by the Em ployer to which the Insurance Premiums relate. It does not include individual insurance policies. (c) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (d) Insurance Contract means (1) any insurance contract secured from an Insurer authorized to do business in the state in which such co ntract is issued, which has been obtained for the purpose of providing Group Medical Coverage, or (2) a self-insured plan administered by a third party providing Group Medical Coverage. (e) Insurance Premiums means the amount that must be paid on a periodic ba sis in return for coverage under the Insurance Contract, which may include premiums for continuation coverage provided under applicable federal or state law . 9.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts for the provision of Group Medical Coverage. Coverage under the Group Medical Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts. Such Insurance Contracts are expressly incorporated into and made part of this portion of the Plan. 9.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Medical Coverage on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such payments shall be made from Employer Contributions, if any, provided by the Emplo yer under the Plan and, if necessary, contributions made in accordance with the salary reduction arrangement and other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participant. The Plan Administrator shall also make such payments on behalf of the Participa nt’s Dependents who are enrolled in the Group Medical Coverage. To the extent a Dependent is provided coverage under the Group Medical Coverage and that Dependent is not the Participant’s Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 31 9.6 Nondiscrimination. To the extent the Group Medical Coverage is subject to Section 105(h) of the Code or, directly or indirectly, Section 2716 of the Public Health Services Act, it shall not discriminate in favor of Highly Compensated Individuals with respect to eligibility to participate or benefits. If the Plan Administrator determines that the Group Medical Coverage is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid su ch a result as described in Section 6.16. 9.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, the Plan shall recognize medical child support orders regarding the Group Medical Coverage to the extent required by applicable law. 9.8 Continuation of Coverage. Continued coverage under the Group Medical Coverage shall be provided if it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as amended. The Plan Admini strator may, within the parameters of the law, establish uniform policies by which to provide such continuation coverage required by COBRA, which shall be incorporated herein by reference. There shall also be compliance with applicable state laws concerning continuation of health insurance coverage to the extent not preempted by federal law. 9.9 HIPAA. The Group Medical Coverage shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in the Insurance Contract and/or the HIPAA policies established by the “covered entity” (as that term is defined in HIPAA). In addition, the Group Medical Coverage shall comply with the portability requirements under HIPAA. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 32 ARTICLE X. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT 10.1 Separate Written Plan. For purposes of Section 129 of the Code, this Article shall constitute a separate written plan providing reimbursement of certain Dependent Care Expen ses. To the extent necessary, other provisions of the Plan are incorporated by reference. 10.2 Purpose. The purpose of this Article is to provide Participants with the opportunity to be reimbursed for eligible Dependent Care Expenses. This Article is intende d to qualify as a “dependent care assistance program” under Section 129 of the Code so that payme nts received under this portion of the Plan are excludable from the gross income of the Participant under Section 129(a) of the Code. This Dependent Care Flexible Spending Account is not subject to ERISA. 10.3 Definitions. (a) Claims Run-Out Period means the period of time specified in the Adoption Agreement that begins on the first day following the close of the Plan Year or, if applicable, the Grace Period. (b) Dependent Care Account (“DC Account”) means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Election to create such an account is received. (c) Dependent Care Center shall have the meaning given such term in Sections 21(b)(2)(C) and 21(b)(2)(D) of the Code: a facility that (1) complies with al l applicable laws and regulations of the state and town, city or village in which it is located; (2) provides care for more than six individuals (other than individuals who reside at the facility); and (3) receives a fee, payment or grant for providing ser vices for any of the individuals (regardless of whether such facility is operated for profit). (d) Dependent Care Expenses means amounts paid by the Participant for services that would be considered employment-related expenses under Section 21(b)(2) of the Cod e, any applicable proposed or final regulations issued thereunder, or any guidance issued by the IRS interpreting or applying any of the foregoing. Employment -related expenses for purposes of this Plan include expenses incurred to enable a Participant to be Gainfully Employed during any period for which there are one or more Qualifying Individuals with respect to the Participant for (1) household services, and (2) care of a Qualifying Individual. However, employment-related expenses which are incurred for services outside the Participant’s household shall be considered Dependent Care Expenses only if incurred for the care of a Qualifying Individual described in Section 10.3(j)(1)(i) below or a Qualifying Individual not described in Section 10.3(j)(1)(i) be low who regularly spends at least eight (8) hours each day in the Participant’s household. Dependent Care Expenses do not include expenses which are incurred for services provided by a Dependent Care Center if such center does not comply with all applicab le laws and regulations of the applicable State or other unit of local government which regulates the center. In addition, Dependent Care Expenses shall not include any amounts paid to an individual who: (1) Is a child of such Participant (within the meaning of Section 152(f)(1) of the Code) who is under the age of nineteen (19) at the close of such taxable year; (2) With respect to whom, for such taxable year, a deduction is allowable under Section 151(c) of the Code (relating to personal exemptions for dependents) to such Participant or the Spouse of such Participant; © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 33 (3) Is the Spouse of the Participant at any time during the taxable year; or (4) Is the parent of the Participant’s child who is a Qualifying Individual. (e) Earned Income shall have the meaning given such term in Section 32(c)(2) of the Code (which refers to wages, salaries, tips and other Employee compensation as well as net earnings from self-employment), but shall not include any amounts reimbursed by the Employer under this portion of the Plan. Further, if a Participant’s Spouse is a Student or incapable of caring for himself or herself, the provisions of Section 21(d)(2) of the Code shall apply in determining the Earned Income of that Spouse. Generally, this Section provides that a Spouse of a Participant shall be deemed to have Earned Income of not less than $250 per month if there is one Qualifying Individual with respect to the Participant or $500 per month if there are two or more Qualifying Individuals with respect to the Participant. (f) Gainfully Employed means the earning of income for services performed or the period of active search for gainful employment. Nominal reimbursement for volunteer work is not considered gainful employment. (g) Grace Period means the period described in Section 10.12(a). (h) Highly Compensated Employees means Employees who are “highly compensated” as defined in Section 414(q) of the Code. (i) Non-Highly Compensated Participants means Employees who are not Highly Compensated Employees. (j) Qualifying Individual means a person for whom expenses can be submitted for reimbursement. (1) A Qualifying Individual is: (i) The Participant’s “qualifying child” under Section 152 of the Code who is under age thirteen (13); (ii) The Participant’s “qualifying child” under Section 152 of the Code (determined without regard to Sections 152(b)(1) and (b)(2) of the Code) who is mentally or physically unable to care for himself or herself; (iii) The Participant’s “qualifying relative” under Section 152 of the Code (determined without regard to Sections 152(b)(1), (b)(2), and (d)(1)(B) of the Code) who: (1) is mentally or physically unable to care for himself or herself, and (2) has the same principal place of abode as the Participant for at least one-half of the year; or (iv) The Participant’s Spouse who: (1) is mentally or physically unable to care for himself or herself, and (2) has the same principal place of abode as the Participant for at least one-half of the year (2) With the exception of two parents that file income taxes jointly, only one person is entitled to treat the child as a Qualifying Individual. Where multiple people are involved, there two special rules to determine which person is entitled to treat the child as a Qualifying Individual. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 34 (i) Divorced or Separated Parents, or Parents Living Apart. If a child’s parents are divorced, legally separated, separated pursuant to a written agreement, or live apart at all times during the last six (6) months of the calendar year, a special rule applies if: (i) the child is under age 13 or is mentally or physically unable to care for himself or herself; (ii) the child receives more than 50% of his or her support from the parents (in aggregate); and (iii) the child resides with the parents (in aggregate) for more than 50% of the year. In such situations, the child is the Qualifying Individual of the custodial parent even if the custodial parent has released the right to claim the child as a dependent. The custodial parent is the parent identified in Section 152(e) of the Code (i.e., generally the parent with whom the child resides for the greater number of nights during the calendar year or, if the child resides with both parents for an equal number of nights, the parent with the higher adjusted gross income for the year). (ii) Two or More Persons Claiming a Child as a Qualifying Individual. If the special rule described above regarding divorce, etc. does not apply, the special tie-breaker rules of Section 152(c)(4) of the Code may apply. If an individual is a qualifying child (as defined in Section 152 of the Code) with respect to more than one person, then: a. If both persons are the individual’s parents and they file a joint federal income tax return, the child is the Qualifying Individual of both parents. b. If both persons are the individual’s parents and they file separate federal income tax returns, then the child is the Qualifying Individual of the parent with whom the child resided for the longest period of time during the calendar year (or, i f child resides with both parents for the same amount of time during the year, the parent with the highest adjusted gross income for the year). However, if that parent (i.e., the custodial parent or the parent with the highest adjusted gross income) does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other parent (i.e., the non-custodial parent or the parent with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual. c. If one person is the individual’s parent and the other is not, the child is the Qualifying Individual of the parent. However, if the parent does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the non-parent). This is the one person that is entitled to treat the child as a Qualifying Individual. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 35 d. If neither person is the individual’s parent, the child is the Qualifying Individual of the person with the highest adjusted gross income for the year in question. However, if that person does not claim the child as a qualifying child (as defined in Section 152 of the Code) for any purpose (i.e., a dependent care expense reimbursement program, the Earned Income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the person with the lowest adjust ed gross income). This is the one person that is entitled to treat the child as a Qualifying Individual. (k) Student shall have the meaning provided in Section 21(e)(7) of the Code which means an individual who during each of five (5) calendar months during the taxable year is a full time student at an educational organization which normally maintains a regular facility and curriculum and normally has a regularly enrolled body of students in attendance at the place where its educational activities are regularl y carried on as provided in Sections 21(e)(8) and 170(b)(1)(A)(ii) of the Code. 10.4 Credits and Debits to DC Account. The DC Account will be credited as of each d ate contributions are made pursuant to Article IV with a pro-rated portion of the Participant’s Election for the Plan Year. A Participant’s DC Account will be decreased from time to time in the amount of payments made to the Participant for eligible Dependent Care Expenses incurred during the Plan Year or, if applicable, the Grace Period. 10.5 Claims Determination. Claim submission, determination, and appeals shall be handled in accordance with Article VI. 10.6 Incurred Expenses. To be reimbursable, an eligible Dependent Care Expense must have been incurred after participation in this portion of the Plan bega n and during the Plan Year or, if applicable, the Grace Period, for which reimbursement is claimed. An expense is “incurred” when the Participant is provided with the care which gives rise to the eligible Dependent Care Expense, not when the service is billed or paid. Reimbursement shall not be made for future or projected expenses. 10.7 Reimbursement of Expense. The Participant shall be reimbursed as specified i n Section 6.8(a) from the Participant’s DC Account for eligible Dependent Care Expenses incurred during the applicable Plan Year or, if applicable, the Grace Period for which the Participant submits the documentation required under Article VI. In no case shall a payment be made which exceeds the balance in the Participant’s DC Account at the time reimbursement is processed. Claims for reimbursement with respect to a Plan Year and, if applicable, the Grace Period, must be submitted prior to the close of the Claims Run-Out Period for such Plan Year. If a claim for reimbursement exceeds the available b alance in the Participant’s DC Account, the excess part of the claim will be carried over and paid as the Participant’s DC Account becomes adequate. Under no circumstances (a) will any balance remaining in a Participant’s DC Account at the end of the Plan Year or, if applicable, the Grace Period be carried over to the next Plan Year, or (b) will an otherwise eligible Dependent Care Expense be carried over to the next Plan Year. 10.8 Maximum Reimbursement. The maximum reimbursement which a Participant may receive in a tax year under this portion of the Plan shall be the lesser of: (a) The Participant’s Earned Income for the tax year; © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 36 (b) The actual or deemed Earned Income of the Participant’s Spouse for the tax year; or (c) $5,000 (or in the case of a Participant who is m arried and filing a separate income tax return from his or her Spouse, $2,500). This maximum includes the Employer Contribution, if any, DC Account forfeitures and the Participant’s salary reduction. If a Participant is married and the Spouse of the Parti cipant also participates in a dependent care program under Section 129 of the Code, the combined reimbursements may not exceed the limits described above for t he tax year. It shall be the Participant’s responsibility to monitor the combined reimbursements. 10.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan during a Plan Year, no further cont ributions will be credited to the DC Account. Reimbursements shall continue as provided in the Adoption Agreement. 10.10 Participant’s Death. In the event a Participant dies having incurred an eligible Dependent Care Expense which (a) would have been reimbursable out of the Participant’s DC Account had the Participant not died, and (b) for which a person or the Participant’s estate has paid for or assumed liability for the expense, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant’s DC Account shall be forfeited in accordance with Section 5.7. 10.11 Nondiscrimination. Not more than twenty-five percent (25%) of the amounts paid or incurred by the Employer for dependent care assistance during the Plan Year shall be provided to Participants who are shareholders or owners (or their Spouses or Ta x Dependents) of more than five percent (5%) of the stock or of the capital or profit interest in the Employer. This portion of the Plan shall not discriminate in favor of Highly Compensated Employees or their Dependents with respect to eligibility, contributions or benefits. The average eligible Dependent Care Expenses paid to Non-Highly Compensated Employees shall be at least fifty-five (55%) of the average eligible Dependent Care Expenses paid to Highly Compensated Employees. If benefits are provided through salary reduction agreements, Employees with annual compensation less than $25,000 may be excluded. If the Plan Administrator determines that the Plan i s or will be discriminatory, the Plan Administrator may take any action permitted by law to avoid such result in accordance with Section 6.16. 10.12 DC Account Forfeiture. (a) Grace Period. If selected in the Adoption Agreement, the Grace Period shall apply to this Optional Benefit. (1) Length. For purposes of determining whether an expense may be reimbursed from a Participant’s DC Account, an expense incurred prior to the fifteenth day of the third calendar month following the close of the Plan Year (or such othe r date provided in the Adoption Agreement) shall be deemed to have been incurred for purposes of both the preceding Plan Year and the current Plan Year. Such period of time shall be referred to as the “Grace Period.” (2) Processing of Claims. Claims incurred during the Grace Period, and submitted prior to the close of the Claims Run-out Period, shall be first allocated to and reimbursed from the Participant's DC Account for the preceding Plan Year until such DC Account is exhausted. Thereafter, any such claims shall be allocated to and reimbursed from the Participant’s DC Account for the current Plan Year. Claims incurred during the Grace Period will be allocated based upon the date the claim is received. Once a claim is allocated, there shall be no chang es, © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 37 modifications, or adjustments to the allocation of the account. In accordance with this part (1), a claim incurred during the preceding Plan Year and submitted during the Claims Run-out Period will be processed subsequent to a previously submitted claim incurred during the Grace Period, even if the account from the preceding Plan Year is exhausted by reimbursement of the claim incurred during the Grace Period. (3) Elections. No adjustment to a Participant’s election for the current Plan Year shall be made or allowed based upon the amount of claims reimbursed from the prior Plan Year’s account in accordance with part (1) hereof. (b) Claims Run-Out Period. Except as otherwise provided in this Section 10.12, (i) amounts attributed to a Participant’s DC Account f or any Plan Year shall be used only to reimburse the Participant for eligible Dependent Care Expe nses incurred during such Plan Year, and (ii) any balance remaining in a Participant’s DC Account for a Plan Year shall be forfeited following the end of the Claim Run-Out Period and shall be forfeited in accordance with Section 5.7. The Plan Administrato r may extend this period in the event the Participant cannot obtain proper documentation until after the expiration of the period. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 10.13 Dependent Care Limitations. (a) Reimbursement or payment of eligible Dependent Care Expenses shall be made to the Participant only in the event and to the extent that such reimbursement or payment is: (1) not otherwise provided for under any insurance policy, whether the premium on such policy is paid by the Employer or an individual, and (2) not provided for or reimbursable under any other plan or policy. (b) Other limitations, if any, shall be set forth in the Adoption Agreement. 10.14 Reporting and Disclosure. Each Participant must be furnished with a written statement showing the amounts paid under this portion of the Plan by an Employer on behalf of the Participant for a calendar year. The statement must be furnished before January 31st of the following year. If the actual amount paid is not known by this deadline, the Employer may report a reasonable estimate of the amounts paid under this portion of the Plan. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 38 ARTICLE XI. HEALTH FLEXIBLE SPENDING ACCOUNT 11.1 Separate Written Plan. For purposes of Section 105 of the Code, this Article shall constitute a separate written plan providing for the reimbursement of certain Medical Expenses. To the extent necessary, other provisions of the Plan are incorporated by reference. 11.2 Purpose. The purpose of this Article is to provide Participants with the opportunity to be reimbursed for certain eligible Medical Expenses. This Article is intended to qualify as a self - insured medical reimbursement plan under Section 105(h) of the Code so that payments received under this portion of the Plan are excludable from the gross income of the Participant under Section 105(b) of the Code. 11.3 Definitions. (a) Account means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Electi on to create such an account is received. (b) Claims Run-Out Period means the period of time specified in the Adoption Agreement that begins on the first day following the close of the Plan Year or, if applicable, the Grace Period. (c) Dependent means, unless otherwise specified in the Adoption Agreement, Tax Dependent. (d) Grace Period means the period described in Section 11.12(a). (e) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (f) Medical Expense means, unless otherwise limited in the Adoption Agreement, an expense incurred during the applicable Plan Year by a Participant, Spouse, or Dependent for medical care as defined in Sections 213(d) and 106(f) of the Code, excluding premiums for any health coverage (e.g., medical, dental, vision, etc.) and long-term care insurance or coverage. Medical care generally refers to the diagnosis, cure, treatment, or prevention of disease or for the purpose of affecting any structure or function of the body. Also included, are reasonable transportation expenses for and essential to medical care. 11.4 Credits and Debits to Account. The Account will be credited with the amount elected by the Participant and the amount of carry over, if any, at the beginning of the Pla n Year. A Participant’s Account will be decreased from time to time in the amount of payments made to the Participant for eligible Medical Expenses incurred d uring the Plan Year and the Grace Period, if applicable. 11.5 Claims for Reimbursement. Claim submission, determination, and appeals shall be handled in accordance with Article VI. 11.6 Incurred Expenses. To be reimbursable, an eligible Medical Expense must have b een incurred after participation in this portion of the Plan began and during the Plan Year for w hich reimbursement is claimed or the Grace Period related to such Plan Year, if applicable. An expense is “incurred” when the Participant is provided with the care which gives rise to the eligible Medical Expense, not when the service is billed or paid. Reimbursement shall not be made for future projected expenses. Notwithstanding the foregoing, pursuant to and in © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 39 accordance with the Cafeteria Plan Regulations, the Plan reimburses Medical Expenses for orthodontia care in advance. 11.7 Reimbursement of Expense. The Participant shall be reimbursed as specified in Section 6.8 from the Participant’s Account for eligible Medical Expenses incurred during the applicable Plan Year and the Grace Period, if applicable, for which the Participant submits the documentation required under Article VI. An amount up to the sum of the Participant’s Election and the amount of carryover, if any, and reduced as of any particular time for prior reimbursements for the same Plan Year, and the Grace Period, if applicable, shall be available for reimbursement at all times during the Plan Year, and the Grace Period, if applicable. Claims for reimbursement within a Plan Year, and Grace Period, if applicable, must be submitted prior to the close of the Claims Run -Out Period for such Plan Year. In no case shall a payment be made which exceeds the balance in the Participant’s Account at the time reimbursement is processed. If a claim for reimbursement exceeds the balance in the Participant’s Account, the excess part of the claim will be denied. Except as provided in Section 11.13(b), under no circumstances (a) will any balance remaining in a Participant’s Account at the end of the Plan Year, and the Grace Period, if applicable, be carried over to the next Plan Year, or (b) will an otherwise eligible Medical Expense be carried over to the next Plan Year. 11.8 Annual Maximum. The maximum reimbursement a Participant may receive for a Plan Year under this portion of the Plan shall be the dollar amount indicated in the Adoption Agreement. The maximum reimbursement amount applies to the Participant, Spouse, and Dependent children on an aggregate basis, not an individual basis. For Plan Years that are less than 12 months, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro-rated by multiplying the applicable maximum by a fraction with a numerator of the number of months in the short Plan Year and with a denominator of 12. For Pa rticipants beginning participation in the Plan mid-Plan Year, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro-rated by multiplying the applicable maximum by a fraction with a numerator of the number of complete calendar months remaining in the Plan Year at the time the Participant begins participation and with a denominator of 12. Notwithstanding the foregoing, salary reduction contributions to this portion of the Plan shall not exceed any maximum imposed under applicable law. 11.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan, coverage shall cease (which means that reimbursements shall cease) unless benefits under the Plan are continued as provided in Sec tion 11.14, if applicable. If coverage ceases, reimbursements for eligible Medical Expenses incurred before participation terminated will continue to be made as provided in the Adoption Agreement. 11.10 Participant’s Death. In the event a Participant dies having incurred an eligible Medical Expense (a) which would have been reimbursable out of the Partici pant’s Account had the Participant not died, and (b) for which a person or the Participant’s estate has paid for or assumed liability for the expense, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant’s Account shall be forfeited in accordance with Section 5.7. 11.11 Nondiscrimination. The Health Flexible Spending Account shall not discriminate in favor of Highly Compensated Individuals as to eligibility to participate or benefits. If the Pl an Administrator determines that the Health Flexible Spending Account is or may be discriminatory, the Plan Administrator may take action permitted by law to a void such result as provided in Section 6.16. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 40 11.12 Account Forfeiture. (a) Grace Period. If selected in the Adoption Agreement, the Grace Period shall apply to this Optional Benefit as described herein. (1) Length. For purposes of determining whether an expense may be reimbursed from a Participant’s Account, an expense incurred prior to the fifteenth day of the third calendar month following the close of the Plan Year (or such other date provided in the Adoption Agreement) shall be deemed to have been incurred for purposes of both the preceding Plan Year and the current Plan Year. Such period of time shall be referred to as the “Grace Period.” (2) Processing of Claims. Claims incurred during the Grace Period, and submitted prior to the close of the Claims Run-Out Period, shall be first allocated to and reimbursed from the Participant's Account for the preceding Plan Year until such Account is exhausted. Thereafter, any such claims shall be allocated to and reimbursed from the Participant’s Account for the current Plan Year. Claims incurred during the Grace Period will be allocated based upon the date the claim is received. Once a claim is allocated, there shall be no changes, modifications, or adjustments to the allocation of the account. In accordance with thi s part (1), a claim incurred during the preceding Plan Year and submitted during the Claims Run-out Period will be processed subsequent to a previously submitted claim incurred during the Grace Period, even if the account from the preceding Plan Year is exhausted by reimbursement of the claim incurred during the Grace Period. (3) Elections. No adjustment to a Participant’s election for the current Plan Year shall be made or allowed based upon the amount of claims reimbursed from the prior Plan Year’s account in accordance with part (1) hereof. (b) Carryover. If selected in the Adoption Agreement, a limited carryover of Account balances from Plan Year to Plan Year will be provided in accordance with the following conditions and restrictions: (1) The amount that may be carried over is limited to the lesser of (i) the amount specified in the Adoption Agreement, or (ii) the balance of the Participant’s Account. (2) The balance of a Participant’s Account available for the carryover shall be determined upon expiration of the Claims Run-out Period. Notwithstanding the foregoing, the balance of the Participant’s Account as of midnight on the last day of the Plan Year, up to the amount specified in paragraph (1) above, shall be available to reimburse Medical Expenses incurred on and after the first day of the new Plan Year. The Claims Administrator will administer claims sub mitted during the Claim Run-out Period (including allocating claims between the Participant’s carryover balance and the Participant’s election for the new Plan Year (if any)) in a manner consistent with applicable law (including regulatory guidance). For purposes of this paragraph, the balance of a Participant’s Account at any point in time shall be equal to the amount credited to the Account for the Plan Year minus claims paid to date with respect to that Plan Year. (3) In general, a carryover made in accordance herewith shall occur within the Health Flexible Spending Account. However, if the Plan includes a Limited Scope Health Flexible Spending Account and unless otherwise prohibited under © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 41 applicable law (including regulatory guidance), a Participant entitled to an Account carryover in accordance herewith shall receive the carryover to a Limited Scope Health Flexible Spending Account if: (i) the Participant enrolls in the Limited Scope Health Flexible Spending Account for the following Plan Year, or (ii) the Participant directs the Plan Administrator, by no later than the last day of the Plan Year from which the carryover is to be made and in accordance with procedures adopted by the Plan Administrator, to make the carryover to the Limited Scope Health Flexible Spending Account. (4) In general, a carryover made in accordance herewith shall occur automatically. However, unless otherwise provided under applicable law (including regulatory guidance), a Participant entitled to an Account carryover in accordance herewith may elect, by no later than the last day of the Plan Year from which the carryover is to be made and in accordance with procedures adopted by the Plan Administrator, to waive the carryover. (5) Unless provided otherwise in the Adoption Agreement, a carryover of an Account balance shall be available even if the Participant has not made an Election under the Health Flexible Spending Account or the Limited Scope Health Flexible Spending Account (as applicable) for the Plan Year to which the carryover will be made. (6) Unless provided otherwise in the Adoption Agreement, carried over amounts are available indefinitely. If the Adoption Agreement specifies a time period after which carried over amounts are forfeited, then for purposes of applying that restriction, amounts carried over to a subsequent Plan Year shall be used to pay benefits under the Health Flexible Spending Account prior to any funds contributed during that Plan Year. (7) A carryover shall not count against the maximum reimbursement a Participant may receive as specified in Section 11.8. (c) Claims Run-Out Period. Except as otherwise provided in this Section 11.12, (1) amounts attributed to a Participant’s Account for any Plan Year shall be used only to reimburse the Participant for eligible Medical Expenses incurred during such Plan Year, and (2) any balance remaining in a Participant’s Account for a Plan Year shall be forfeited following upon the expiration of the Claims Run-out Period and shall be forfeited in accordance with Section 5.7. The Plan Administrator may extend this period in the event the Participant cannot obtain proper documentation until after the expiration of the period. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 11.13 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, this Health Flexible Spending Account shall recognize child support orders regarding coverage hereunder to the extent required by applicable law. 11.14 Continuation of Coverage. Continued coverage shall be provided under the Health Flexible Spending Account as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as amended. The Plan Administrator may, within the pa rameters of the law, establish policies and procedures regarding the COBRA continuation coverage provided under the Health Flexible Spending Account, which shall be incorporated herein by reference. 11.15 HIPAA. The Health Flexible Spending Account shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in Article XXII. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 42 11.16 Patient Protection and Affordable Care Act. The Health Flexible Spending Account is intended to be an excepted benefit under HIPAA because: (a) All Participants of this Optional Benefit are eligible for Group Medical Coverage, and (b) The maximum reimbursement available does not exceed the greater of (1) two times the Participant’s salary reduction election or (2) the Participant’s salary reduction elec tion plus $500. Accordingly, certain provisions of the Patient Protection and Affordable Care Act, as amended, including the preventative care mandate, do not apply to the Health Flexible Spending Account. 11.17 Further Limitations on Benefits. (a) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are payable under any worker’s compensation law or other employer, union, association or governmental sponsored group insurance plan. (b) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are received by the Participant, the Participant ’s Spouse or the Participant’s Dependent under any health and accident insurance policy or program, whether or not premiums are paid by the Employer or the Participant, the Participant’s Spouse or the Participant’s Dependent child. (c) Amounts reimbursed under a dependent care assistance program described in Section 129 of the Code shall not be reimbursed under this Plan. (d) A Participant of the Health Flexible Spending Account is not eligible for contributions to a health savings account (“HSA”) (within the meaning of Section 223 of the Code) during the Plan Year. (e) Other limitations, if any, shall be set forth in the Adoption Agreement. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 43 ARTICLE XII. GROUP DENTAL BENEFITS 12.1 Separate Written Plan. For purposes of Sections 105 and 106 of the Code, this Article shall constitute a separate written plan providing for the dire ct payment of Insurance Premiums. To the extent necessary, other provisions of the Plan are incorporated by reference in this document. 12.2 Purpose. The purpose of this Article is to provide Participants the opportunity to make pre-tax payments for the cost of Group Dental Coverage through this Plan. The Employer provides Group Dental Coverage through one or more “plans” within the meaning of Sections 105 and 106 of the Code. 12.3 Definitions. (a) Dependent means an individual (e.g., Spouse, child, domestic partner, etc.) who qualifies as a “dependent” under the terms and conditions of the applicable plan document governing the Group Dental Coverage. (b) Group Dental Coverage means the dental coverage made available by the Employer to which the Insurance Premiums relate. It does not include individual insurance policies. (c) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (d) Insurance Contract means (1) any insurance contract secured from an Insurer authorized to do business in the state in which such contract is issued, which has been obtained for the purpose of providing Group Dental Coverage; or (2) ) a self-insured plan administered by a third party providing Group Dental Coverage. (e) Insurance Premiums means the amount that must be paid on a periodic basis in return for coverage under the Insurance Contract, which may include premiums for continuation coverage provided under applicable federal or state law . 12.4 Terms, Conditions and Limitations. The Employer shall secure the necessary Insurance Contracts for the provision of Group Dental Coverage. Coverage under the Group Dental Coverage shall begin, benefits shall be provided, and coverage shall terminate in accordance with the applicable Insurance Contracts. Such Insurance Contracts are expressly inc orporated into and made part of this Plan. 12.5 Payments. The Plan Administrator shall make Insurance Premium payments for the Group Dental Coverage on behalf of the Participant in an amount necessary to provide the benefit applicable to the Participant under this portion of the Plan for the applicable Plan Year. Such payments shall be made from Employer Contributions, if any, provided by the Employer under the Plan and, if necessary, contributions made in accordance with the salary reduction arrangement and other arrangements applicable to the Participant under the terms of the Plan. The appropriate portions shall depend on the coverage elected by the Participan t. The Plan Administrator shall also make such payments on behalf of the Participant’s Dependents who are enrolled in the Group Dental Coverage. To the extent a Dependent is provided coverage under the Group Dental Coverage and that Dependent is not the Participant’s Spouse or Tax Dependent, the tax consequence of such coverage shall be addressed as described in Section 4.2. 12.6 Nondiscrimination. To the extent the Group Dental Coverage is subject to Section 105(h) of the Code, it shall not discriminate in favor of Highly Compensated Individuals as to eligibility to © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 44 participate or benefits. If the Plan Administrator determines that this portion of the Plan is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such a result as described in Section 6.16. 12.7 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, the Plan shall recognize child support orders regarding the Group Dental Coverage to the extent required by applicable law. 12.8 Continuation of Coverage. Continued coverage under the Group Dental Coverage shall be provided if it is required under, and in accordance with, the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as amended. The Plan Administrator may, wit hin the parameters of the law, establish uniform policies by which to provide such continuation c overage. There shall also be compliance with state laws concerning continuation of dental insurance coverage to the extent not preempted by federal law. 12.9 HIPAA. The Group Dental Coverage shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in the Insurance Contract and/or the HIPAA policies established by the “covered entity” (as that term is defined in HIPAA). © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 45 ARTICLE XIII. HSA CONTRIBUTION FEATURE 13.1 Separate Written Plan. For purposes of Section 223 of the Code, this Article shall constitute a separate written plan. To the extent necessary, other provisions of the Plan are incorporated by reference. This HSA Contribution Feature and the underlying HSAs are not subject to ERISA. 13.2 Purpose. The purpose of this Article is to provide Participants an opportunity to make HSA contributions through this Plan. 13.3 Definitions. (a) HSA means a health savings accounts under Code Section 223 established and owned by a Participant to which contributions are made under this portion of the Plan. The Employer does not sponsor a Participant’s HSA and a Participant’s HSA is not an employer-sponsored group health plan. Unless indicated otherwise in the Adoption Agreement, for administrative convenience, an HSA must be established only at the trustee/custodian selected by the Employer. (b) HSA Contribution Feature means the portion of the Plan described in this Article, which consists of contributions to a Participant’s HSA throug h salary reduction and Employer Contributions, if any. (c) High Deductible Health Plan means, unless otherwise specified in the Adoption Agreement, a “qualifying high deductible health plan” under Section 223(c)(2) of the Code. (d) Permitted Insurance or Permitted Coverage means: (1) Insurance in which substantially all of the coverage relates to liabilities incurred under workers’ compensation laws, tort liabilities, liabilities related to ownership or use of property, or similar liabilities as specified by the IRS; (2) Insurance for specified disease or illness (e.g., cancer insurance); (3) Insurance that pays a fixed amount per day (or other period) of hospitalization (e.g., hospital indemnity insurance); (4) Coverage for accidents, disability, dental care, vision care, preventive care, or long-term care; (5) Some medical reimbursement accounts and health reimbursement arrangements (“HRAs”) (e.g., limited scope medical reimbursement accounts and HRAs, suspended HRAs, post-deductible medical reimbursement accounts and HRAs, and retirement HRAs); and (6) Some wellness programs and employee assistance programs (e.g., those that do not provide significant benefits in the nature of non-preventive medical care or treatment). © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 46 13.4 Eligibility for HSA Contributions. To be eligible to participate in the HSA Contribution Feature, the Employee must: (a) Be eligible to participate in this Plan under Section 3.1; (b) Be covered by the High Deductible Health Plan; (c) Not have any health coverage through the Employer other than Permitted Insurance, Permitted Coverage, or coverage under the High Deductible Health Plan; and (d) If provided in the Adoption Agreement, certify to the Plan Administrator (on a form provided by the Plan Administrator) that he/she is eligible to make contribut ions to an HSA upon the Participant’s initial Election to participate in the HSA Contribution Feature and periodically thereafter as requested by the Plan Administrator. 13.5 Contributions. (a) Employer Contributions. Employer Contributions, if any, will be contributed to the Participant’s HSA at the times established by the Employer. (b) Employee Contributions. Amounts withheld from a Participant’s Compensation pursuant to an agreement authorizing salary reduction with respect to this Optional Benefit shall be contributed to the Participant’s HSA as soon as administratively feasible. 13.6 Limits on Contributions. Except as otherwise provided in the Adoption Agreement, the maximum contribution a Participant may make through this HSA Contribution Feature shall be determined in accordance with the following rules: (a) General Limit. During a taxable year, contributions to the HSA may not exceed the statutory indexed amount applicable under Code § 223 . (b) Catch Up Contributions. An additional “catch-up” amount (determined on a monthly basis) can be contributed for eligible individuals who attain age 55 before the close of the taxable year. (c) Pro-rated limit if Not Eligible on December 1st. If a Participant ceases to satisfy the eligibility requirements described in Section 18.4 prior to December 1st of any calendar year, the contribution limit for that year shall be determined by multiplying 1/12 of the applicable limit by the number of months the first day of which the Participant had satisfied the eligibility requirements described in Section 18.4. The Employer shall not be required to take an corrective action in the event the amount of HSA contributions made by the Participant prior to the date on which he/she ceased to satisfy the eligibility requirements described in Section 18.4 exceed the pro-rated limit described herein (as adjusted under paragraph (e)). (d) Special Rule if Eligible on December 1st. If a Participant becomes eligible to make contributions under this HSA Contribution Feature (as provided in Section 18.4) during the taxable year and is eligible on December 1st of such year, the Participant shall be deemed to have been eligible for each month in such taxable year and may make HSA contributions up to the full annual limit. This special rule applies to all contrib utions made during the applicable taxable year, including contributions made prior to or after December 1st. Example: An Eligible Employee becomes eligible for HSA contributions on July 1st and remains eligible through December 1st. The Eligible Employee may begin making © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 47 contributions to his or her HSA through this Plan on July 1st at a rate pursuant to which the full annual contribution will have been made by the end of the taxable year. (e) Employer Contributions. The applicable limit on Participant contributions, as determined in accordance with the above-described rules, shall be reduced by the amount of contributions made by the Employer to the Participant’s HSA. 13.7 Investment of HSA Funds. A Participant may invest his or her HSA funds as allowed by the HSA trustee/custodian. The Employer shall have no control or responsibility for how a Participant’s HSA funds are invested. 13.8 Tax Consequences. It is intended that the HSA contributions made under this Plan shall be excluded from the Participant’s gross income under Section 106 of the Code. 13.9 Distribution of HSA Funds. The Employer shall have no responsibility or control over distributions made from a Participant’s HSA. The Employer shall have no responsibility to substantiate expenses for which such distributions are made. Sections 6.7 and 6.8 of this Plan shall not apply to distributions from a Participant’s HSA. An individual need not be a Participant in this Plan, be covered by the Employer’s High Deductible Health Plan, nor be covered by any qualified high deductible health plan in order to receive a distribution from the Participant’s HSA. 13.10 Reporting. The Employer shall be responsible for reporting contributions made to a Participant’s HSA through this Plan on the Participant’s Form W -2. Participants shall be responsible for reporting contributions to their HSAs and distributions from their HSAs on appropriate forms. Participants shall also be responsible for determining whether an HSA distribution is taxable. 13.11 Continuation of Coverage. This HSA Contribution Feature and the underlying HSAs are not group health plans for purposes of the Consolidated Omnibus Budget Reconciliation Act of 1985, (“COBRA”), as amended, and reflected in the Public Health Services Act (“PHSA”), as amended, the Family and Medical Leave Act (“FMLA”), and the Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”). COBRA, FMLA, and USERRA do not apply to this HSA Contribution Feature and the underlying HSAs. 13.12 ERISA. This HSA Contribution Feature and the underlying HSAs are not employee welfare benefit plans under ERISA. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 48 ARTICLE XIV. LIMITED SCOPE HEALTH FLEXIBLE SPENDING ACCOUNT 14.1 Separate Written Plan. For purposes of Section 105 of the Code, this Article shall constitute a separate written plan providing for the reimbursement of Limited Scope Medical Expenses. This is a separate and distinct “plan” from the Health Flexible Spending Account described under Article XI. To the extent necessary, other provisions of the Plan are incorporated by reference. 14.2 Purpose. The purpose of this Article is to provide Participants with the opportunity to be reimbursed for certain eligible Limited Scope Medical Expenses. This Article is intended to qualify as a medical reimbursement plan under Section 105 of the Code so that pay ments received under this portion of the Plan are excludable from the gross income of the Participant under Section 105(b) of the Code. This Article is also intended to be “permitted coverage” for purposes of determining eligibility for health savings account contributions under Section 223 of the Code. 14.3 Definitions. (a) Account means the record keeping account established by the Plan Administrator for each Plan Year for each Participant from whom an Election to create such an account is received. (b) Claims Run-Out Period means the period of time specified in the Adoption Agreement that begins on the first day following the close of the Plan Year or, if applicable, the Grace Period. (c) Dependent means, unless otherwise specified in the Adoption Agreement, a Tax Dependent. (d) Grace Period means the period described in Section 19.12(a). (e) Highly Compensated Individual means an individual who is highly compensated as defined in Section 105(h)(5) of the Code. (f) Limited Scope Medical Expense means, unless otherwise limited in the Adoption Agreement, an expense: (1) for dental or vision care within the meaning of “medical care” as defined in Section 213(d) of the Code, incurred during the applicable Plan Year by a Participant or by the Participant’s Spouse or Dependent before they have incurred expenses in excess of the Minimum Annual Deductible; and (2) for medical care as defined in Sections 213(d) and 106(f) of the Code, incurred during the applicable Plan Year by a Participant or the Participant’s Spouse or Dependent after they h ave incurred expenses in excess of the Minimum Annual Deductible. Notwithstanding the foregoing, Limited Scope Medical Expenses shall not include: (1) expenses incurred prior to satisfaction of the Minimum Annual Deductible for dental and vision care of t he type covered under the Participant’s “qualifying high deductible plan” under Section 223(c)(2) of the Code, and (2) premiums for any health (e.g., medical, dental, vision, etc.) or long - term care insurance or coverage. For purposes of determining wheth er the Minimum Annual Deductible has been satisfied, only expenses for medical care (as defined in Section 213(d)) that are also covered by the Participant’s high deductible health plan (e.g., count toward such plan’s deductible) shall be taken into account. (g) Minimum Annual Deductible means the applicable minimum annual deductible for a high deductible health plan under Section 223(c)(2)(A)(i) of the Code. For Participants who have either a Spouse or Dependents during the Plan Year, the Minimum Annual Deductible shall be the minimum deductible for family coverage. For Participants who © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 49 have no Spouse or Dependents during the Plan Year, the Minimum Annual Deductible shall be the minimum deductible for single coverage. 14.4 Credits and Debits to Account. The Account will be credited with the amount elected by the Participant and the amount of the carryover, if any, at the beginning of the Plan Year. A Participant’s Account will be decreased from time to time in the amount of payments made to the Participant for eligible Limited Scope Medical Expenses incurred during the Plan Year and Grace Period, if applicable. 14.5 Claims for Reimbursement. Claim submission, determination, and appeals shall be handled in accordance with Article VI. 14.6 Incurred Expenses. To be reimbursable, an eligible Limited Scope Medical Expense must have been incurred after participation in this portion of the Plan began and during the Plan Year for which reimbursement is claimed or the Grace Period related to such Plan Year, if applicable. An expense is “incurred” when the Participant is provided with the care which gives rise to the eligible Limited Scope Medical Expense, not when the service is billed or paid. Reimbursement shall not be made for future projected expenses. Notwithstanding the foregoing, pursuant to and in accordance with the Cafeteria Plan Regulations, the Plan may reimburse expenses for orthodontia care in advance. 14.7 Reimbursement of Expense. The Participant shall be reimbursed as specified in Section 6.8 from the Participant’s Account for eligible Limited Scope Medical Expenses incurred during the applicable Plan Year, and the Grace Period, if applicable, for which the Participant submits the documentation required under Article VI. An amount up to the sum of the Participant’s E lection and the carry over amount, if any, and reduced as of any particular time for prior reimbursements for the same Plan Year, shall be available for reimbursement at all times during the Plan Year, and the Grace Period, if applicable. Claims for reimbursement within a Plan Year, and the Grace Period, if applicable, must be submitted prior to the close of the Claims Run-Out Period for such Plan Year. In no case shall a payment be made which exceeds the balance in the Participant’s Account at the time reimbursement is processed. If a claim for reimbursement exceeds the balance in the Participant’s Account, the excess part of the claim will be denied. Except as provided in Section 19.13(b), under no circumstances (a) will any balance remaining in a Partic ipant’s Account at the end of the Plan Year, and the Grace Period, if applicable, be carried over to the next Plan Year, or (b) will an otherwise eligible Medical Expense be carried over to the next Plan Year. 14.8 Annual Maximum. The maximum reimbursement a Participant may receive for a Plan Year under this portion of the Plan shall be the dollar amount indicated in the Adoption Agreement. The maximum reimbursement amount applies to the Participant, Spouse, and Dependent children on an aggregate basis, not an individual basis. For Plan Years that are less than 12 months, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro-rated by multiplying the applicable maximum by a fraction with a numerator of the number of months in the short Plan Year and with a denominator of 12. For Participants beginning participation in the Plan mid-Plan Year, unless indicated otherwise in the Adoption Agreement, this maximum shall be pro-rated by multiplying the applicable maximum by a fraction with a numerator of the number of complete calendar months remaining in the Plan Year at the time the Participant begins participation and with a denominator of 12. Notwithstanding the foregoing, salary reduction contributions to this portion of the Plan shall not exceed any maximum imposed unde r applicable law. 14.9 Reimbursement Upon Termination of Participation. If an individual ceases to be a Participant in this portion of the Plan, coverage shall cease (which means that reimbursements shall cease) unless benefits under the Plan are continued as provided in Section 19.15. If © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 50 coverage ceases, reimbursements for eligible Limited Scope Medical Expenses incurred before participation stopped will continue as provided in the Adoption Agreement. 14.10 Participant’s Death. In the event a Participant dies having incurred an eligible Limited Scope Medical Expense (a) which would have been reimbursable out of the Participant’s Account had the Participant not died, and (b) for which a person or the Participant’s estate has paid for or assumed liability for the expense, reimbursement may be made to that person or the estate for that payment or assumption. The remainder of the Participant’s Account shall be forfeited in accordance with Section 5.7. 14.11 Nondiscrimination. The Limited Scope Health Flexible Spending Account shall not discriminate in favor of Highly Compensated Individuals as to eligibility to participate or benefits. If the Plan Administrator determines that the Limited Scope Health Flexible Spending Account is or may be discriminatory, the Plan Administrator may take action permitted by law to avoid such result as provided in Section 6.16. 14.12 Account Forfeitures. (a) Grace Period. If selected in the Adoption Agreement, the Grace Period shall apply to this Optional Benefit as described herein. (1) Length. For purposes of determining whether an expense may be reimbursed from a Participant’s Account, an expense incurred prior to the fifteenth day of the third calendar month following the close of the Plan Year (unless a different date is provided in the Adoption Agreement) shall be deemed to have been incurred for purposes of both the preceding Plan Year and the current Plan Year. Such period of time shall be referred to as the “Grace Period.” (2) Processing of Claims. Claims incurred during the Grace Period, and submitted prior to the close of the Claims Run-out Period, shall be first allocated to and reimbursed from the Participant's Account for the preceding Plan Year until such Account is exhausted. Thereafter, any such claims shall be allocated to and reimbursed from the Participant’s Account for the current Plan Year. Claims incurred during the Grace Period will be allocated based upon the date the claim is received. Once a claim is allocated, there shall be no changes, modifi cations, or adjustments to the allocation of the account. In accordance with this part (1), a claim incurred during the preceding Plan Year and submitted during the Claims Run-Out Period will be processed subsequent to a previously submitted claim incurred during the Grace Period, even if the account from the preceding Plan Year is exhausted by reimbursement of the claim incurred during the Grace Period. (3) Elections. No adjustment to a Participant’s election for the current Plan Year shall be made or allowed based upon the amount of claims reimbursed from the prior Plan Year’s account in accordance with part (1) hereof. (b) Carryover. If selected in the Adoption Agreement, a limited carryover of Account balances from Plan Year to Plan Year will be provided in accordance with the following conditions and restrictions: (1) The amount that may be carried over is limited to the lesser of (i) the amount specified in the Adoption Agreement, or (ii) the balance of the Participant’s Account. The balance of a Participant’s Account shall be determined upon expiration of the Claims Run-out Period. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 51 (2) The balance of a Participant’s Account available for the carryover shall be determined upon expiration of the Claims Run-out Period. Notwithstanding the foregoing, the balance of the Participant’s Account as of midnight on the last day of the Plan Year, up to the amount specified in paragraph (1) above, shall be available to reimburse Limited Scope Medical Expenses incurred on and after the first day of the new Plan Year. The Claims Administrator will administer claims submitted during the Claim Run-out Period (including allocating claims between the Participant’s carryover balance and the Participant’s election for the new Plan Year (if any)) in a manner consistent with applicable law (including regulatory guidance). For purposes of this paragraph, the balance of a Participant’s Account at any point in time shall be equal to the amount credited to the Account for the Plan Year minus claims paid to date with respect to that Plan Year. (3) In general, a carryover made in accordance herewith shall occur automatically. However, unless otherwise provided under applicable law (including regulatory guidance), a Participant entitled to a Account carryover in accordance herewith may elect, by no later than the last day of the Plan Year from which the carryover is to be made and in accordance with procedures adopted by the Plan Administrator, to waive the carryover. (4) Unless provided otherwise in the Adoption Agreement, a carryover of an Account balance shall be available even if the Participant has not made an Election under the Limited Scope Medical Expense Plan for the Plan Year to which the carryover will be made. (5) Unless provided otherwise in the Adoption Agreement, carried over amounts are available indefinitely. If the Adoption Agreement specifies a time period after which carried over amounts are forfeited, then for purposes of applying that restriction, amounts carried over to a subsequent Plan Year shall be used to pay benefits under the Limited Scope Health Flexible Spending Account prior to any funds contributed during that Plan Year. (6) A carryover shall not count against the maximum reimbursement a Participant may receive as specified in Section 19.8 (c) Claims Run-Out Period. Except as otherwise provided in this Section 19.12, (1) amounts attributed to a Participant’s Account for any Plan Year shall be used only to reimburse the Participant for eligible Limited Scope Medical Expenses incurred during such Plan Year, and (2) any balance remaining in a Participant’s Account for a Plan Year shall be forfeited upon expiration of the Claims Run -out Period in accordance with Section 5.7. The Plan Administrator may extend this period in the event the Participant cannot obtain proper documentation until after the expiration of the period. Such forfeited amount shall not be distributed in cash, carried over to the next Plan Year or used by the Participant for any other purpose. 14.13 Medical Child Support Orders. Notwithstanding any provision of this Plan to the contrary, the Limited Scope Health Flexible Spending Account shall recognize child support orders regarding coverage hereunder to the extent required by applicable law. 14.14 Continuation of Coverage. Continued coverage shall be provided under the Limited Scope Health Flexible Spending Account as required under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), as amended. The Plan Administrator may, within the parameters of the law, establish uniform policies by which to provide such cont inuation coverage, which shall be incorporated herein by reference. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 52 14.15 HIPAA. The Limited Scope Health Flexible Spending Account shall comply with the Privacy Rules and Security Rules under HIPAA (if applicable) as further provided in Article XXII. 14.16 Patient Protection and Affordable Care Act. The Limited Scope Health Flexible Spending Account is intended to be an excepted benefit under HIPAA because: (a) All Participants of this Optional Benefit are eligible for Group Medical Coverage, and the maximum reimbursement available does not exceed the greater of (1) two times the Participant’s salary reduction election or (2) the Participant’s salary reduction election plus $500; or (b) Limited Scope Medical Expense is defined to include only expenses for dental and visi on care, in which case the Health Flexible Spending Account provides only HIPAA excepted benefits. Accordingly, certain provisions of the Patient Protection and Affordable Care Act, as amended, including the preventative care mandate, do not apply to the Limited Scope Health Flexible Spending Account. 14.17 Further Limitations on Benefits. (a) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are payable under any worker’s compensation law or other employer, union, association or governmental sponsored group insurance plan. (b) This Article does not cover expenses incurred for any loss caused by or resulting from injury or disease for which benefits are received by the Participant, the Participant ’s Spouse or the Participant’s Dependent under any health and accident insurance policy or program, whether or not premiums are paid by the Employer or the Participant, the Participant’s Spouse or the Participant’s Dependent child. (c) Amounts reimbursed under a dependent care assistance program described in Section 129 of the Code shall not be reimbursed under this Plan. (d) Other limitations, if any, shall be set forth in the Adoption Agreement. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 53 ARTICLE XV. CASH PAYMENT 15.1 Purpose. The purpose of this Article is to describe the cash payment, if any, available under this Plan as an Optional Benefit. All or a portion of the Employer Contribution that is not allocated for the purposes of purchasing Optional Benefits may be available to the Participant in cash. 15.2 Terms, Conditions and Limitations. (a) Cash Out of Employer Contribution. If provided in the Adoption Agreement, a Participant who is entitled to allocate the Employer Contribution to pay for Optional Benefits and who does not allocate all of the Employer Contributions to other Optional Benefits available under this Plan shall receive a Cash Payment equal to the amount of the unallocated Employer Contribution, subject to any restrictions specified in the Adoption Agreement. (b) Cash In Lieu Of Coverage. If provided in the Adoption Agreement, if an Employee is eligible for coverage under a group benefit plan sponsored by the Employer and the Employee waives such coverage, the Employee will receive a Cash Payment in lieu of such coverage. The amount of the Cash Payment and the conditions of receiving it shall be as described in the Adoption Agreement. 15.3 Payment. Cash Payments shall be made as provided in the Adoption Agreement. If a Participant ceases to meet the eligibility requirements, then Cash Payments cease. 15.4 Tax Consequences. Any cash payment received through the Plan is taxable income to the Participant. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 54 ARTICLE XVI. HIPAA PROVISIONS This Article XXII applies to the Health Flexible Spending Account and the Limited Scope Health Flexible Spending Account (if they are Optional Benefits), unless such Optional Benefits are self-insured and have less than fifty (50) Participants and the Employer is the Claims Administrator for such Optional Benefit. 16.1 Use and Disclosure of PHI. The Plan will use PHI to the extent allowed by, and in a ccordance with the uses and disclosures permitted by, HIPAA. Specifically, the Plan will use and disclose PHI for purposes related to health care treatment, payment for health care, and health ca re operations. The Plan will also use and disclose PHI as required by law and as permitted by authorization of the subject of PHI. If the Plan discloses PHI to the Employer in accordance with this Article XXII, the Employer may use and further disclosure PHI for the same purposes and in the same situations as the Plan may use and disclose PHI, provided that such use or disclosure is for Plan administration functions performed by the Employer for the Plan or is required by law or permitted by authorization. All uses and disclosures of PHI, whether by the Plan or by Employer, shall be limited to the minimum PHI necessary to accomplish the intended purpose of the use or disclosure in accordance with HIPAA. Notwithstanding the foregoing, neither the Plan nor the Employer shall use PHI that is genetic information in a manner that is prohibited by the Genetic Information Nondiscrimination Act of 2008. (a) Payment includes activities undertaken by the Plan to obtain premiums or determine or fulfill its responsibility for coverage and provision of Plan benefits that relate to an individual to whom health care is provided. These activities include, but are not limited to, the following: (1) Determination of eligibility, coverage and cost sharing amounts (for example, cost of a benefit, plan maximums and copayments as determined for an individual’s claim); (2) Coordination of benefits; (3) Adjudication of health benefits claims (including appeals and other payment disputes); (4) Subrogation of health benefit claims; (5) Establishing employee contributions; (6) Risk adjusting amounts due based on enrollee health status and demographic characteristics; (7) Billing, collection activities, and related health care data processing; (8) Claims management and related health care data processing, including audi ting payments, investigating and resolving payment disputes and responding to participant inquiries about payments; (9) Obtaining payment under a contract for reinsurance (including stop-loss and excess of loss insurance); (10) Medical necessity reviews or reviews of appropriateness of care or justification of charges; © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 55 (11) Utilization review, including pre-certification, preauthorization, concurrent review and retrospective review; (12) Disclosure to consumer reporting agencies related to the collection of premiums or reimbursement (the following PHI may be disclosed for payment purp oses: name and address, date of birth, Social Security number, payment history, account number and name and address of provider and/or health Plan); and (13) Reimbursement to the Plan. (b) Health care operations include, but are not limited to, the following activities: (1) Quality assessment; (2) Population-based activities relating to improving health or reducing health care costs, protocol development, case management and care coordination, disease management, contacting health care providers and patients with informati on about treatment alternatives and related functions; (3) Rating provider and Plan performance, including accreditation, certification, licensing or credentialing activities; (4) Underwriting, premium rating and other activities relating to the creation, renewal or replacement of a contract of health insurance or health benefits, and ceding, securing or placing a contract for reinsurance of risk relating to health care claims (including stop-loss insurance and excess of loss insurance); (5) Conducting or arranging for medical review, legal services and auditing function, including fraud and abuse detection and compliance programs; (6) Business planning and development, such as conducting cost-management and planning-related analyses related to managing and operating the Plan, including formulary development and administration, development or improvement of payment methods or coverage policies; (7) Business management and general administration activities of the Plan, including, but not limited to: (i) Management activities relating to the implementation of and compliance with HIPAA’s administrative simplification requirements; (ii) Customer service, including data analyses for policyholders. (8) Resolution of internal grievances; and (9) Due diligence in connection with the sale or transfer of assets to a potential successor in interest, if the potential successor in interest is a covered entity under HIPAA or following completion of the sale or transfer, will become a covered entity. 16.2 Employer’s Obligations under the Privacy Rules. Under the Privacy Rules, the Plan may not disclose PHI to the Employer unless the Employer certifies that the Plan document has been amended to provide that the Plan will make such disclosures only upon receipt of a certification from the Employer that the Plan has been amended to include certain conditions to the Employer’s receipt of PHI and that Employer agrees to those conditions. By adopting this Plan © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 56 document, the Employer certifies that the Plan has been amended as required by the Privacy Rules and that it agrees to the following conditions, thereby allowing the Plan to disclose PHI to the Employer. The Employer agrees to: (a) Not use or further disclose PHI other than as permitted or required by the Plan document or as required by law; (b) Ensure that any agents, including a subcontractor, to whom the Plan provides PHI received from the Plan agree to the same restrictions and conditions that apply to the Employer with respect to such PHI; (c) Not use or disclose PHI for employment related actions and decisions unless authorized by an individual; (d) Not use or disclose PHI in connection with any other benefit or employee benefit plan of the Employer unless authorized by an individual; (e) Report to the Plan any PHI use or disclosure of which it becomes aware that is inconsistent with the uses or disclosures permitted hereunder and/or may constitute a “breach” as that term is defined in HIPAA; (f) Make PHI available for access by the individual who is the subject of the PHI in accordance with HIPAA; (g) Make PHI available for amendment and incorporate any amendments to PHI in accordance with HIPAA; (h) Make available the information required to provide an accounting of disclosures in accordance with HIPAA; (i) Make internal practices, books and records relating to the use and disclosure of PHI received from Plan available to the HHS Secretary for the purposes of determining the Plan’s compliance with HIPAA; and (j) If feasible, return or destroy all PHI received for the Plan that the Emp loyer still maintains in any form, and retain no copies of s uch PHI when no longer needed for the purpose for which disclosure was made (or if return or destruction is not feasible, limit further uses and disclosures to those purposes that make the return or destruction infeasible). 16.3 Employer’s Obligations under Security Rules. If the Employer creates, receives, maintains, or transmits ePHI (other than enrollment and disenrollment information and Summary Health Information, which are not subject to these restrictions), the Employer will: (a) Implement administrative, physical, and technical safeguards that reasonably and appropriately protect the confidentiality, integrity, and availability of ePHI; (b) Ensure that any agents, including subcontractors, who create, r eceive, maintain, or transmit ePHI on behalf of the Plan implement reasonable and appropriate security measures to protect the ePHI; (c) Report to the Plan any Security Incident of which it becomes aware; and © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 57 (d) Implement reasonable and appropriate security measures to ensure that only those persons identified below have access to ePHI and that such access is limited to the purposes identified below. 16.4 Adequate separation between the Plan and the Employer must be maintained. In accordance with HIPAA, only the following employees or classes of employees may be given access to PHI: (a) The person employed in the position that is given primary responsibility for performing the Employer’s duties as the Plan Administrator of the Optional Benefits; and (b) Staff designated by the person described in (a) above. 16.5 Limitation of PHI Access and Disclosure. The persons described above may only have access to and use and disclose PHI for Plan administration functions that the Employer performs for the Plan. 16.6 Noncompliance Issues. If a person described above does not comply with this Plan document, the Employer shall provide a mechanism for resolving issues of noncompliance including, but not limited to, disciplinary sanctions. © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 58 ARTICLE XVII. COBRA PROCEDURES 17.1 COBRA Notification Procedures. The following notification procedures apply to the Health Flexible Spending Account and the Limited Scope Health Flexible Spending Account (if they are Optional Benefits). Such plans are collectively referred to herein as the “Health Plan(s).” (a) Notice of qualifying event. Under the law, a Covered Individual (or a representative acting on behalf of the Covered Individual) has the responsibility to inform the Health Plans of a divorce, legal separation, or a child losing Dependent status under the Health Plans (the “qualifying event”) within sixty (60) days of the latest of: (1) the date of the qualifying event; (2) the date coverage would be lost because of the qualifying event; or (3) the date on which the Covered Individual was informed of the responsibilit y to provide notice and the procedures for doing so. The notification must be provided in writing and be mailed to the Health Plans. Oral notification, including notification by telephone is not acceptable. Electronic (including emailed or faxed) or han d-delivered notifications are not acceptable. The notification must be postmarked no later than the last day of the sixty (60) day notice period described above. The notification must: (1) state the name of the Health Plan; (2) state the name and address of the employee or former employee who is or was covered under the Health Plan; (3) state the name(s) and address(es) of all Covered Individuals who lost coverage due to the qualifying event; (4) include a detailed description of the event; (5) identify the effective date of the event; and (6) be accompanied by any documentation providing proof of the event (i.e., the divorce decree). If no notification is received within the required time period, no continuation coverage will be provided. If the notification is incomplete, it will be deemed timely if the Health Plans are able to determine the Health Plan to which it applies, the identity of the employee and the Covered Individuals, the qualifying event, and the date on which the qualifying event occurred, provided that the missing information is provided within thirty (30) days. If the missing information is not provided within that time, the notification will be ineffective and no continuation coverage will be provided. (b) Notice of second qualifying event. A Covered Individual (or a representative acting on behalf of the Covered Individual) must notify the Health Plans of the death of the employee, divorce or separation from the employee, or a Dependent child ’s ceasing to be eligible for coverage as a Dependent under the Health Plans, if that event occurs within the eighteen (18) month continuation period (or an extension of that period for disability or for pre-termination Medicare entitlement). The notification must be provided within sixty (60) days after such a second qualifying event occurs in order to be entitled to an extension of the continuation period. The notification must be provided in writing and be mailed to the Health Plans. Oral notification, including notice by telephone is not acceptable. Electronic (including emailed or faxed) or hand-delivered notifications are not acceptable. The notification must be postmarked no later than the last day of the sixty (60) day notice period described above. The notification must: (1) state the name of the Health Plan; (2) state the name and address of the emp loyee or former employee who is or was covered under the Health Plan; © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 59 (3) state the name(s) and address(es) of all Covered Individuals who lost coverage due to the initial qualifying event and who are receiving COBRA coverage at the time of the notice; (4) identify the nature and date of the initial qualifying event that entitled the Covered Individuals to COBRA coverage; (5) include a detailed description of the event; (6) identify the effective date of the event; and (7) be accompanied by any documentation providing proof of the event (i.e., the divorce decree). If no notification is received within the required time period, no extension of the continuation period will be provided. If the notification is incomplete, it will be deemed timely if the Health Plans are able to determine the Health Plan to which it applies, the identity of the employee and the Covered Individuals, the qualifying event, and the date on which the qualifying event occurred, provided that the missing information is provided within thirty (30) days. If the missing information is not provided within that time, the notification will be ineffective and no extension of the continuation period will be provided. (c) Notice of disability. A Covered Individual (or a representative acting on behalf of the Covered Individual) must notify the Health Plans when a Covered Individual has been determined to be disabled under the Social Security Act within sixty (60) days of the latest of: (1) the date of the disability determination; (2) the date of the qualifying event; (3) the date coverage would be lost because of the qualifying event; or (4) the date on which the Covered Individual was informed of the responsibility to provide notice and the procedures for doing so. Notwithstanding the foregoing, notification must be provided before the end of the first eighteen (18) months of continuation coverage. The notification must be provided in writing and be mailed to the Health Plans. Oral notification, including notice by telephone is not acceptable. Electronic (including emailed or faxed) or hand-delivered notices are not acceptable. The notification must be postmarked no later than the last day of the sixty (60) day notice period descr ibed above. The notification must: (1) state the name of the Health Plan; (2) state the name and address of the employee or former employee who is or was covered under the Health Plan; (3) state the name(s) and address(es) of all Covered Individuals who lost coverage due to the initial qualifying event and who are receiving COBRA coverage at the time of the notice; (4) identify the nature and date of the initial qualifying event that entitled the qualified beneficiaries to COBRA coverage; (5) state the name of the disabled Covered Individual; (6) identify the date upon which the disabled Covered Individual became disabled; (7) identify the date upon which the Social Security Administration made its determination of disability; and (8) include a copy of the determination of the Social Security Administration. If no notification is received within the required time period, no extension of the continuation period will be provided. If the notification is incomplete, it will be deemed timely if the Health Plans are able to determine the Health Plan to which it applies, the identity of the employee and the Covered Individuals, the qualifying event, and the date on which the qualifying event occurred, provided that the missing information is provided within thirty (30) days. If the missing information is not provided within that time, the © 2019 Hitesman & Wold, P.A. MEDSURETY, LLC Cafeteria Plan 1-888-816-4234, www.medsurety.com Basic Plan Document 60 notification will be ineffective and no extension of the continuation period will be provided. If such person has been determined under the Social Security Act to no longer be disabled, the person must notify the Health Plans of that determination within thirty (30) days of the later of: (1) the date of such determination; or (2) the date on which the Covered Individual was informed of the responsibility to provide notice and th e procedures for doing so. The notification must be in writing and be mailed to the Health Plans. Regardless of when the notification is provided, continuation coverage will terminate retroactively on the first day of the month that begins thirty (30) days after the date of the determination, or the end of the ini tial coverage period, if later. If the notification is not provided within the required time, the Health Plans reserve the right to seek reimbursement of any benefits provided by the Health Plans between the date coverage terminates and the date the notification is provided. (d) Notice of Coverage Under Another Group Health Plan or Medicare. A Covered Individual must notify the Health Plan(s) immediately if any Covered Individuals receiving continuation coverage actually become covered by another group health plan or Medicare. Regardless of when such notification is provided, coverage will terminate retroactively to the date of the coverage under the other group health plan or Medicare. If, for whatever reason, a Covered Individual on continuation covera ge receives any benefits under the Health Plan(s) after coverage is to cease under the foregoing rule, the Health Plan(s) reserve the right to seek reimbursement from such Covered Individual. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) i City of Orono SECTION 125 CAFETERIA PLAN SUMMARY DESCRIPTION September 1, 2022 © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) ii TABLE OF CONTENTS INTRODUCTION ................................................................................................................................. 1 PART I. GENERAL INFORMATION ABOUT THE PLAN ............................................................................. 2 1.1 What is the purpose of the Cafeteria Plan? ................................................................... 2 1.2 When did the Cafeteria Plan take effect? ...................................................................... 2 1.3 What Optional Benefits are offered through the Cafeteria Plan? ..................................... 2 1.4 Who can participate in the Cafeteria Plan? .................................................................... 3 1.5 When do I become a Participant and how long does participation last? .......................... 3 1.6 How do I enroll and make benefit elections? ................................................................. 4 1.7 What is the maximum election I can make under the Cafeteria Plan? ............................. 5 1.8 Can I change my election during the Plan Year? ........................................................... 5 1.9 Who holds the funds I have set aside under the Cafeteria Plan? .................................. 13 1.10 What if I terminate my employment during the Plan Year? .......................................... 13 1.11 Will I have any administrative costs under the Cafeteria Plan? ..................................... 13 1.12 How long will the Cafeteria Plan remain in effect? ....................................................... 13 1.13 Are my benefits taxable? ........................................................................................... 13 1.14 What is the impact on my Social Security benefits? ..................................................... 14 1.15 What contributions are made to the Cafeteria Plan? .................................................... 14 1.16 What if coverage is provided to someone other than your spouse and tax dependents? 15 1.17 How are claims determined? ...................................................................................... 16 1.18 How are insurance refunds handled? .......................................................................... 18 1.19 Who has authority to interpret the Plan? .................................................................... 18 PART II. GROUP MEDICAL BENEFITS ................................................................................................. 19 2.1 What benefits are provided? ...................................................................................... 19 2.2 How do I become a Participant in this portion of the Cafeteria Plan? ............................ 19 2.3 How is my cost of group medical coverage paid? ........................................................ 19 2.4 What if I am no longer eligible? ................................................................................. 20 2.5 Can coverage be continued? ...................................................................................... 20 2.6 What if I am subject to a medical child support order? ................................................ 20 PART III. GROUP DENTAL BENEFITS ................................................................................................. 21 3.1 What benefits are provided? ...................................................................................... 21 3.2 How do I become a Participant?................................................................................. 21 3.3 How is my cost of group dental coverage paid? .......................................................... 21 3.4 What if I am no longer eligible? ................................................................................. 22 3.5 Can coverage be continued? ...................................................................................... 22 3.6 What if I am subject to a medical child support order? ................................................ 22 PART IV. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT .............................................................. 23 4.1 What benefits are provided? ...................................................................................... 23 4.2 How do I become a Participant in the Dependent Care FSA? ........................................ 23 4.3 What is my account? ................................................................................................. 23 4.4 What are the maximum benefits I may receive?.......................................................... 23 4.5 Who is a “Qualifying Individual” for whom I can submit claims for reimbursement? ...... 24 4.6 What if two people claim a child as a Qualifying Individual? ......................................... 26 4.7 What is an "Eligible Expense"? ................................................................................... 27 4.8 How do I receive reimbursements under the Dependent Care FSA? ............................. 28 4.9 What limits apply to reimbursements under the Dependent Care FSA? ......................... 30 © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) iii 4.10 Will I be taxed on the Dependent Care FSA benefits I receive? .................................... 30 4.11 If I participate in the Dependent Care FSA, will I still be able to claim the household and dependent care tax credit on my federal income tax return? ........................................ 30 4.12 What is the dependent care tax credit? ...................................................................... 30 4.13 When would it be better for me to use the tax credit? ................................................. 31 4.14 What if I am no longer eligible? ................................................................................. 31 4.15 What if I receive benefits in error? ............................................................................. 31 4.16 What if the dependent care expenses I incur during the Plan Year are less than the annual benefit I have elected? .............................................................................................. 31 4.17 What reporting will I receive? .................................................................................... 31 4.18 Is the Dependent Care FSA Plan governed by ERISA? ................................................. 32 4.19 Is the Dependent Care FSA Plan subject to COBRA? .................................................... 32 4.20 Is the Dependent Care FSA Plan subject to HIPAA? ..................................................... 32 PART V. HEALTH FLEXIBLE SPENDING ACCOUNT ............................................................................... 33 5.1 What benefits are provided? ...................................................................................... 33 5.2 How do I become a Participant?................................................................................. 33 5.3 What is my account? ................................................................................................. 33 5.4 What are the maximum reimbursements I may receive?.............................................. 33 5.5 What is an "Eligible Expense"? ................................................................................... 33 5.6 How do I receive my reimbursements under the Health FSA? ...................................... 35 5.7 What limits apply to reimbursements under the Health FSA? ....................................... 39 5.8 What is the Grace Period? ......................................................................................... 39 5.9 What if I am no longer eligible? ................................................................................. 40 5.10 Can coverage be continued? ...................................................................................... 40 5.11 Can I carryover my account to the next Plan Year? ..................................................... 40 5.12 What if I receive benefits in error? ............................................................................. 40 5.13 What if I am subject to a child support order? ............................................................ 40 PART VI. HSA CONTRIBUTION FEATURE ............................................................................................ 41 6.1 What benefits are provided? ...................................................................................... 41 6.2 Am I eligible and how do I become a Participant? ....................................................... 41 6.3 What is Permitted Insurance and Permitted Coverage? ................................................ 41 6.4 What is my HSA? ...................................................................................................... 42 6.5 What are the limits on the amount of contributions? ................................................... 42 The maximum contributions you may make through this HSA Contribution Feature shall be determined in accordance with the following rules: ..................................................... 42 6.6 What happens if my contributions exceed the contribution limit? ................................. 43 6.7 What are the tax consequences of the HSA Contribution Feature? ............................... 43 6.8 What are the rules regarding distributions from my HSA? ............................................ 43 6.9 When does my participation end? .............................................................................. 43 6.10 Can the contributions made to my HSA be forfeited? ................................................... 43 6.11 What are the reporting requirements? ........................................................................ 44 PART VII. LIMITED SCOPE HEALTH FLEXIBLE SPENDING ACCOUNT .................................................... 45 7.1 What benefits are provided? ...................................................................................... 45 7.2 How do I become a Participant?................................................................................. 45 7.3 What is my limited scope medical expense account? ................................................... 45 7.4 What are the maximum reimbursements I may receive?.............................................. 45 7.5 What is an "Eligible Expense"? ................................................................................... 46 7.6 How do I receive my reimbursements under the Limited Scope Health FSA? ................. 48 7.7 What limits apply to reimbursements under the Limited Scope Health FSA? .................. 51 7.8 What is the Grace Period? ......................................................................................... 52 © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) iv 7.9 What if I am no longer eligible? ................................................................................. 52 7.10 Can coverage be continued? ...................................................................................... 52 7.11 Can I carryover my Limited Scope account to the next Plan Year? ................................ 53 7.12 What if I receive benefits in error? ............................................................................. 53 7.13 What if I am subject to a child support order? ............................................................ 53 PART VIII. CASH PAYMENT ............................................................................................................... 54 8.1 What benefits are provided? ...................................................................................... 54 8.2 How do I become a Participant?................................................................................. 54 8.3 What amount of cash may I receive? ......................................................................... 54 8.4 When is the cash payment made? .............................................................................. 54 8.5 What if I am no longer eligible? ................................................................................. 54 PART X. CONTINUATION COVERAGE ................................................................................................. 55 10.1 What are my continuation rights under COBRA?.......................................................... 55 10.2 What special COBRA rules apply to the Health FSA and Limited Scope Health FSA? ....... 55 10.3 What are my continuation rights under USERRA? ........................................................ 55 10.4 What are my continuation and/or conversion rights for group health plan coverage under state law? ................................................................................................................. 56 PART XI. FAMILY AND MEDICAL LEAVE ACT ....................................................................................... 57 PART XII. ADMINISTRATIVE INFORMATION ....................................................................................... 58 Exhibit A - Eligible Medical Care Expenses .......................................................................................... 59 Exhibit B - DC PLAN v. Claiming Dependent Care Tax Credit ................................................................ 62 © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 1 INTRODUCTION Your employer, City of Orono ("Employer"), is pleased to sponsor an employee benefit program known as the City of Orono Cafeteria Plan (the " Cafeteria Plan") for its employees. Under federal tax laws, it is also known as a "cafeteria plan." The Employer provides you with the opportunity to use pre -tax dollars to pay certain benefit costs by entering into a salary reduction arrangement. This arrangement helps you because many of the benefits you elect are nontaxable; you should save social security and income taxes on the amount of your salary reduction. This summary describes the basic features of the Cafeteria Plan, how it operates, and how you can get the maximum advantage from it. To make use of this Cafeteria Plan, be sure to proceed through this booklet carefully so that you can make informed decisions that are right for you. This document is only a summary of the key parts of the Cafeteria Plan and a brief description of your rights as a Participant. If there is a conflict between the underlying plan document and this summary, the intention is for the plan document to govern. If you have any questions after reading this summary, please contact the Plan Administrator at the number listed in the Administrative Information section of this summary. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 2 PART I. GENERAL INFORMATION ABOUT THE PLAN 1.1 What is the purpose of the Cafeteria Plan? The purpose of the Cafeteria Plan is to allow eligible employees to use funds provided through employee salary reduction and Employer flexs to choose (and pay for) certain benefits made available by the Employer. 1.2 When did the Cafeteria Plan take effect? This Plan became effective September 1, 2022. The Plan operates on a Plan Year running from January through December. The Plan Year beginning on September 1, 2022 is a short Plan Year that ends on December 31, 2022. 1.3 What Optional Benefits are offered through the Cafeteria Plan? This Plan makes the following checked “Optional Benefits” available: GROUP PREMIUMS: Group Medical Benefits The group medical benefit allows a Participant to pay the employee's share of the cost for medical coverage made available by the Employer with pre -tax dollars through: Salary reduction Employer contributions Group Dental Benefits The group dental benefit allows a Participant to pay the employee's share of the cost for dental coverage made available by the Employer with pre-tax dollars through: Salary reduction Employer contributions OTHER: Dependent Care Flexible Spending Account The dependent care reimbursement benefit allows a Participant to fund an account with pre -tax dollars through: Salary reduction Employer contributions, that may be used to reimburse the Participant for eligible dependent care expenses. Health Flexible Spending Account The medical expense reimbursement benefit allows a Participant to fund an account with pre -tax dollars through: Salary reduction Employer contributions, which may be used to reimburse the Participant for eligible medical expenses. Limited Scope Health Flexible Spending Account The limited scope medical expense reimbursement benefit allows a Participant to fund an account with pre-tax dollars through: © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 3 Salary reduction Employer contributions, which may be used to reimburse the Participant for limited medical expenses. It is made available for Participants wishing to make or receive contributions to a health savings account. HSA Contribution Feature The HSA contribution feature allows a Participant to make contributions to an HSA with pre -tax dollars to receive contributions through: Salary reduction Employer contributions. Cash Payment The cash payment benefit allows a Participant to receive cash in lieu of using the Employer contribution to pay for other benefits provided through the Cafeteria Plan. Cash payments are taxable to the Participant. 1.4 Who can participate in the Cafeteria Plan? Each employee who (a) is employed an average of thirty (30) hours or more per week, and (b) has been employed by the Employer for thirty (30) days is eligible to participate in the Cafeteria Plan on the first of the month following the thirty (30) day wait . In addition, any Employee who is eligible for group health or accident coverage that is an Optional Benefit shall be eligible to participa te in the Plan solely for purpose of paying premiums for that Optional Benefit regardless of whether he/she satisfies the foregoing eligibility requirements. These employees are called “Eligible Employees.” Those Eligible Employees who actually participate in the Cafeteria Plan are called "Participants." There are certain exceptions. They are described in the underlying Plan document. You will be notified if you fall within one of the exceptions. “Employee” means a common-law employee of the Employer who is on the Employer’s W-2 payroll, except that the term “Employee” does not include any common-law employee who is a leased employee (including, but not limited to, an individual defined in Internal Revenue Code § 414(n)), or any common-law employee who is an individual classified by the Employer as a contract worker, independent contractor, temporary employee or casual employee, whether or not any such person is on the Employer’s W -2 payroll. The term “Employee” also does not include any individual who performs services for the Employer but who is paid by a temporary or other employment agency such as “Kelly,” “Manpower,” etc., or any employee covered under a collective bargaining agreement unless the collective bargaining agreement so provides. The term “Employee” includes “former employees” for the limited purpose of allowing continued eligibility for benefits as provided hereunder after an employee ceases to be employed by the Employer. 1.5 When do I become a Participant and how long does participation last? For newly eligible Employees, participation may begin on the first of the month following thirty days from the date of hire or from the date on which you satisfy the definition of Eligible Employee or, if later, the first day of the first pay period following your completion and submission of any required enrollment forms. If they are required, you must submit the enrollment forms within the time period established and communicated to you by the Plan Administrator. NOTE: With respect to group premiums, if you have enrolled in those benefits, you may automatically become a Participant in this Cafeteria Plan as described in Section 1.6. If you do not become a Participant when first eligible, you may become a Participant at the start of any subsequent Plan Year. As a condition to participation in the Cafeteria Plan, you must also: © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 4 (a) observe all Plan rules and regulations; (b) agree to inquiries by the Plan Administrator with respect to any physician, hospital, or other provider of medical care or other services covered by this Cafeteria Plan; (c) submit to the Plan Administrator all notifications, reports, bills, and other information that the Employer may reasonably require; and (d) agree to repay any overpayments or incorrect payments you receive from the Cafeteria Plan. Participation continues until you elect not to participate, you are no longer an Eligible Employee, the Cafeteria Plan terminates, your contributions cease, or your participation is terminated for cause. 1.6 How do I enroll and make benefit elections? (a) Generally. The Plan Administrator will provide you with the forms necessary to enroll and make elections, including information about the costs of the various Optional Benefits. (b) Initial Enrollment. If you become an Eligible Employee other than at the start of a P lan Year, the initial enrollment period takes place at the time you become eligible to participate as described in Section 1.5. If you do not make an election during the initial enrollment period, you must generally wait until the next annual enrollment period to begin participation. However, if you have enrolled in the Group Medical Plan, Group Dental Plan, Dependent Care Assistance Plan, Flexible Spending Account, Limited Purpose Flexible Spending Account or the Health Savings Account Contribution Feature, you will be deemed to have elected to pay through salary reduction any portion of the cost for which you are responsible under such plans. This will occur unless you specifically elect not to participate with respect to such coverage. Such an election must be in writing and must be received by the Plan Administrator prior to the date your participation in the Cafeteria Plan would otherwise begin. Furthermore, if you fail to make an election, the Employer contribution will be considered same as a Waiver of Medical, in which case the remaining Employer Contribution of $180.16 can be used for Dental, FSA, DCAP or taken as cash. (c) Annual Enrollment. The annual enrollment period for the coming Plan Year begins and ends on or before the last day of each Plan Year. If you do not make an election during the annual enrollment period, you will be deemed to have elected to not participate in the Cafeteria Plan. However, if you have enrolled the Group Medical Plan, Group Dental Plan, Dependent Care Assistance Plan, Flexible Spending Account, Limited Purpose Flexible Spending Account or the Health Savings Account Contribution Feature, you will be deemed to have elected to pay through salary reduction any portion of the cost for which y ou are responsible under such plans. This will occur unless you specifically elect not to participate with respect to such coverage. Such an election must be in writing and must be received by the Plan Administrator prior to the first day of the Plan Year. Furthermore, if you fail to make an election, the Employer contribution will be considered the same as a Waiver of Medical - $180.16 - Can be used for Dental, FSA, DCAP or taken as cash. NOTE: Enrollment forms received after the close of the enrollment period shall be void. CAUTION: With limited exceptions, once made, elections remain in effect for the entire Plan Year. The exceptions are described below at Question 1.8. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 5 1.7 What is the maximum election I can make under the Cafeteria Plan? The maximum salary reduction election available under this Cafeteria Plan is the sum of your cost of coverage under the Group Medical Plan, Group Dental Plan, the maximum election permitted under the Health Flexible Spending Account, Limited Scope Health Flexible Spending Account, Dependent Care Flexible Spending Account, and the HSA Contribution Feature minus any Employer contribution. 1.8 Can I change my election during the Plan Year? Generally, you cannot change your election regarding participation in the Cafeteria Plan or the Optional Benefits you have selected under the Cafeteria Plan during the Plan Year. You may change your elections only during the annual enrollment period, and then, only for the coming Plan Year. However, your elections will terminate automatically if you cease to be eligible to participate in the Cafeteria Plan. In addition, there are several other exceptions to this general rule. Caution: The circumstances in which you are allowed to change your election, as further described below, are based upon the facts and circumstances of each particular situation. The descriptions of the r ules below are general in nature. If you have questions regarding the application of the rules to your specific fact situation, please contact the Plan Administrator immediately. Any request to change your election must be within the deadline described below. NOTE: The exceptions to the general rule that elections are irrevocable for the Plan Year are determined under regulations issued by the IRS. NOTE: The IRS recognizes only marriages that are valid under applicable state law. Accordingly, a reference to marital status or spouse in this Section 1.8 is applicable only if you are married to an individual and the marriage is valid under applicable state law. NOTE: For purposes of this Section 1.8, if the election relates to an Optional Benefit involving health benefits (e.g., Group Medical Plan, Group Dental Plan, Health Flexible Spending Account, Limited Purpose Flexible Spending Account), the term “dependent” means a “tax dependent” as defined below in Section 1.16. If the election relates to the Dependent Care Flexible Spending Account, the term “dependent” means a “qualifying individual” as defined below in Section 3.5. (a) Change in Status. You may change or revoke your previous election during the Plan Year if one or more of the following changes in status occur: (1) a change in your legal marital status, including marriage, divorce, death of your spouse, legal separation or annulment; NOTE: A change in the status of a domestic partnership is not a change in status. (2) a change in the number of your dependents, including birth of a child, adoption or placement for adoption of a dependent, or death of a dependent ; (3) any of the following events that change your employment status or the employment status of your spouse or dependent: termination or commencement of employment, a reduction or increase in hours worked, a switch between part- time and full-time, a strike or lockout, a change in worksite, commencement or return from an unpaid leave of absence, a switch between hourly and salaried, a switch between union and non-union, or any similar event; © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 6 (4) an event causing a dependent to satisfy or cease to satisfy the eligibility requirements applicable under a plan provided or paid for through this Cafeteria Plan; or (5) a change in place of residence for you, your spouse or your dependent. A change or revocation shall be allowed in these circumstances only if such change or revocation is made on account of, and corresponds with, the change in status and the change in status affects eligibility for coverage under a plan sponsored by the Employer or another employer (referred to as the general consistency requirement). The Plan Administrator (in its sole discretion) shall determine, based on prevailing IRS guidance, whether a requested change or revocation satisfies the general consistency requirement. Example 1: An employee enrolls in single coverage under the Employer’s Group Medical Plan and elects to pay the cost of that coverage through the Cafeteria Plan. The employee also elects to participate in the Health Flexible Spending Account. During the Plan Year, the employee gets married. If the employee enrolls his or her new spouse in the Group Medical Plan, the employee may change his or her election to pay the increased cost of that coverage through the Cafeteria Plan. In addition, the employee may increase his or her election under the Health Flexible Spending Account. Example 2: Employer has three medical plan options: an indemnity option, an HMO option with a service area covering the location of on e of Employer’s operations, and an HMO option with a service are covering the location of the other operation. An employee enrolls in the HMO option with a service area covering the area in which employee works and makes an election to pay the cost of the coverage through the Cafeteria Plan. Employee also elects to participate in the Health Flexible Spending Account. If employee is transferred to the other location, the employee may switch to the other HMO option or the indemnity option and change his or her election to pay the cost of the new option. The employee may also drop medical coverage and terminate his or h er election under the Cafeteria Plan to pay the cost of medical coverage. The employee cannot change his or her election under the Health Flexible Spending Account because the change in work location does not affect his or her eligibility under the Health Flexible Spending Account. A requested change or revocation must also satisfy the following specific consistency requirements in order for you to be able to alter your election based on the change in status: (1) Loss of Dependent Eligibility. For a change in status involving your divorce, annulment or legal separation from your spouse, the death of your spouse or dependent, or your dependent ceasing to satisfy the eligibility requirements for coverage, you may elect to change your election only to reflect the cancellation of group health plan coverage for the affected spouse or dependent. Canceling coverage for any other individual under these circumstances fails to correspond with that change in status. For example, if you have elected group medical coverage for you, your spouse, and your child, and you divorce during the Plan Year, you may drop your ex-spouse from the coverage and make an election change under this Cafeteria Plan to reflect the reduced cost of coverage. However, you would not be allowed to change your election to reflect the reduced cost attributable to dropping coverage for yourself or your child. (2) Gain of Coverage Eligibility Under Another Employer's Plan. If you, your spouse, or your dependent gains eligibility for coverage under another employer's © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 7 plan as a result of a change in marital status or a change in employment status, you may elect to terminate or decrease your election under this Cafeteria Plan on account of that change in status only if coverage becomes effective or is increased under the other employer's plan. (3) Dependent Care Flexible Spending Account. With respect to the Dependent Care Flexible Spending Account, you may change or terminate your election only if (i) the change or termination is made on account of and corresponds with a change in status that affects eligibility for coverage under the Flexible Benefit Dependent Care Flexible Spending Account; or (ii) the election change is on account of and corresponds with a change in status that affects eligibility of dependent care expenses for the tax exclusion available under the Internal Revenue Code. For example, if your child attains age 13 during the Plan Year, you may terminate your election under the Dependent Care Flexible Spending Account because your child is no longer eligible to participate in the Dependent Care Flexible Spending Account (i.e., she is no longer a qualifying individual). (4) COBRA Coverage. If you, your spouse, and/or your dependent elects COBRA continuation coverage (or similar health plan continuation coverage under state law) with respect to a group health plan sponsored by the Employer , you may increase your election for the purpose of paying the cost of the increased premium for such continuation coverage, provided you are still eligible under the Cafeteria Plan and are receiving compensation from the Employer. (b) Other Change in Election Events. You may also change or revoke your previous election during the Plan Year in the following circumstances. (1) HIPAA Special Enrollment Rights. In certain cases, individuals are allowed to enroll in the Employer’s Group Medical Plan pursuant to HIPAA special enrollment at times other than open enrollment. Generally, special enrollment is available upon: (i) acquiring a new spouse or dependent, (ii) losing other group coverage, (iii) losing coverage under Medicaid or a state children’s health insurance program (“SCHIP”), and (iv) becoming eligible for a subsidy under Medicaid or SCHIP for coverage under the Employer’s group health plan. (Please refer to the plan documentation for the Group Medical Plan for additional information regarding HIPAA special enrollment, including information regarding the situations in which special enrollment is available and the deadline for requesting special enrollment under that plan.) If you, your spouse, and/or your dependent actually enroll in the Group Medical Plan pursuant to HIPAA special enrollment, then you may make a new election under the Cafeteria Plan to pay the cost of that new or increased coverage. For purposes of this provision an election to add previously eligible dependents as a result of the acquisition of a new spouse or dependent child (a/k/a the Tag -along Rule), shall be considered consistent with the special enrollment right. Note: There are two separate steps involved in making an election change under this exception. You and/or your spouse and dependents must enroll in the Group Medical Plan within the HIPAA special enrolment time period required under that plan. If such enrollment in the Group Medical Plan changes your share of the cost of coverage, you must also request a change to your election under the Cafeteria Plan in accordance with paragraph (h) below. The time period described in paragraph (h) begins to run on the effective date of the special enrollment in the © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 8 Group Medical Plan. It is the coverage attributable to the HIPAA special enrollment that triggers the need to change election under the Cafeteria Plan. (2) Certain Judgments, Decrees and Orders. If a judgment, decree, or order (an "Order") resulting from a divorce, legal separation, annulment or change in legal custody (including a qualified medical child support order) requires you to cover your child (including a foster child who is your dependent) under the Group Medical Plan, Group Dental Plan, the Health Flexible Spending Account, or the Limited Scope Health Flexible Spending Account, you may change your election to pay the increased cost of coverage incurred to add the dependent child to your coverage. If an Order requires another individual to provide health coverage for your child (including a foster child who is your dependent) and the child is currently enrolled in the Group Medical Plan, Group Dental Plan, the Health Flexible Spending Account, or the Limited Scope Health Flexible Spending Account, you may terminate coverage for the child and change your election to reflect the reduced cost of coverage (if any), provided the other individual actually provides coverage to the child as required by the Order . For example, if you have enrolled in single coverage under the Group Medical Plan, become divorced during the Plan Year, and are ordered to provide coverage to your child following the divorce, you may increase your election to pay the additional cost of the child’s coverage under the Group Medical Plan. (3) Medicare and Medicaid. If you, your spouse, or your dependent is enrolled in the Group Medical Plan or Group Dental Plan, such individual subsequently enrolls in Medicare or Medicaid, and such individual’s coverage under the Employer’s plan is cancelled, you may change your election to reflect the reduced cost of coverage (if any) under the applicable Employer-sponsored group health plan. You may also reduce or cancel your election with respect to the Health Flexible Spending Account or the Limited Scope Health Flexible Spending Account. Further, if you, your spouse, or your dependent has been enrolled in Medicare or Medicaid, such individual loses eligibility for such coverage, and such individual enrolls in the Group Medical Plan or Group Dental Plan, you may change your election to reflect the increased cost of coverage (if any) under the applicable Employer -sponsored group health plan. You may also make or increase your election with respect to the Health Flexible Spending Account and the Limited Scope Health Flexible Spending Account. NOTE: Certain changes to an individual’s Medicaid coverage also create a HIPAA special enrollment right. Election changes based upon HIPAA special enrollment rights are described above. (c) Change in Cost. NOTE: Although the Plan Administrator will be aware of an increase or decrease in the cost of many Optional Benefits, you will need to notify the Plan Administrator of any changes to the cost of benefits under the Dependent Care Flexible Spending Account. NOTE: This exception does not allow changes to your election under the Health Flexible Spending Account and the Limited Scope Health Flexible Spending Account. Furthermore, this exception does not apply to the Dependent Care Flexible Spending Account if the dependent care provider is your relative. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 9 (1) Automatic Increase or Decrease for Insignificant Cost Changes. If the cost of coverage increases or decreases during a Plan Year by an insignificant amount, then your election to pay the cost of such coverage through the Cafeteria Plan shall be automatically increased or decreased to reflect such change in the cost. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether increases or decreases in costs are "insignificant" based upon all the surrounding facts and circumstances (including, but not limited to, the dollar amount or percentage of the cost change). (2) Significant Cost Increases. If the Plan Administrator determines that the cost of coverage significantly increases during a Plan Year, you may either: (i) increase your election to pay the additional cost, (ii) enroll in another benefit package option providing similar coverage and change your election (if necessary) to pay the cost of that option through the Cafeteria Plan, or (iii) cancel the underlying coverage and revoke your election to pay the cost of that coverage through the Cafeteria Plan if no other benefit package option providing similar coverage is available. For example, if the cost of one option under the Group Medical Plan significantly increases during the Plan Year, you may increase your election to pay the increased cost or enroll in another option available under the Group Medical Plan and change your election to correspond to the new cost of Group Medical Plan coverage. If there is only one Group Medical Plan option, you may increase your election to pay the increased cost of that option or cancel Group Medical Plan coverage and revoke your election to pay for that coverage through the Cafeteria Plan. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a cost increase is significant and what constitutes "similar coverage" based upon all the surrounding facts and circumstances. (3) Significant Cost Decrease. If the Plan Administrator determines that the cost of coverage significantly decreases during a Plan Year: (i) you may enroll in the coverage and make or change your election to pay the cost of such coverage through the Cafeteria Plan; or (ii) if you are already enrolled in the underlying coverage and are paying the cost of such coverage through the Cafeteria Plan, the Plan Administrator will automatically decrease your election to pay the cost of such coverage in accordance with the cost decrease. For purposes of this rule, a change in cost allowing an election change can result from action taken by you (e.g., switching between full-time and part-time employment) or your Employer (e.g., changing the amount of Employer contribution toward the cost of coverage). (d) Change in Coverage. NOTE: This exception does not allow changes to your election under the Health Flexible Spending Account and the Limited Scope Health Flexible Spending Account. (1) Significant Curtailment. If the Plan Administrator determines your coverage, or the coverage of your spouse or dependent, is significantly curtailed during a Plan Year, you may enroll in another benefit package option providing similar coverage and make a corresponding election change to pay for that new coverage through the Cafeteria Plan. Coverage is "significantly curtailed" only if there is an overall reduction in coverage provided to participants under the plan so as to constitute reduced coverage to all participants in general (e.g., a significant increase in the deductible, copays, or out-of-pocket maximum applicable under © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 10 the plan). The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a curtailment is "significa nt," and whether a benefit package option constitutes "similar coverage" based upon all the surrounding facts and circumstances. (2) Loss of Coverage. If the Plan Administrator determines that your coverage, or the coverage of your spouse or dependent, is lost during a Plan Year, you may: (i) enroll in another option providing similar coverage and make a corresponding election change to pay for that new coverage through the Cafeteria Plan, or (ii) if no other option providing similar coverage is available, cancel the underlying coverage and revoke your election to pay the cost of such coverage through this Cafeteria Plan. Coverage is deemed "lost" only if there is a complete loss of coverage (e.g., the benefit plan option is eliminated or an annual or lifetime maximum is reached) or other fundamental loss of coverage (e.g., a substantial decrease in the health care providers available under the option or a reduction in benefits for a specific type of medical condition with respect to which you or your spouse or dependent is currently receiving treatment . The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether a “loss" has occurred, and whether a benefit package option constitutes "similar coverage" based upon all the surrounding facts and circumstances. Application to Dependent Care Flexible Spending Account. This rule allows you to change your election under the Dependent Care Flexible Spending Account to reflect changes regarding your dependent care provider, including: (1) the termination of one provider and the hiring of another provider, and (2) the termination of a provider because a relative becom es available to care for your child at no cost. You will need to notify the Plan Administrator of any such change in coverage under the Dependent Care Flexible Spending Account. (3) Addition or Improvement of an Optional Benefit. If during a Plan Year, a new plan or plan option is offered, or if coverage under an existing plan or option is significantly improved, you may enroll in the new or improved coverage and make or change your election to pay the cost of such coverage through the Cafeteria Plan. The Plan Administrator (in its sole discretion) will decide, in accordance with prevailing IRS guidance, whether an Optional Benefit has been “significantly improved” based upon all the surrounding facts and circumstances. (4) Change Under Another Employer-Sponsored Plan. You may make an election change that is on account of and corresponds with a change made under another employer-sponsored plan (including a plan of the Employer or a plan of another employer) if: (i) the other plan permits its participants to make an election change that would be permitted under the prevailing IRS guidance, or (ii) the Plan Year of this Cafeteria Plan is different from the plan year under the other plan. For example, if your spouse drops your coverage during open enrollment under his or her employer’s group medical plan and you enroll in the Employer’s Group Medical Plan, you may make or change your election to pay for such coverage through the Cafeteria Plan. (5) Loss of Governmental or Educational Coverage. If you add coverage under an Employer-sponsored group health plan (e.g., the Group Medical Plan or Group Dental Plan) for yourself or your spouse or dependent because such individual has lost coverage under any health coverage sponsored by a governmental or educational institution (including, but not limited to, the following: a state © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 11 children’s health insurance program (“SCHIP”), a medical care program of an Indian Tribal government, the Indian Health Service, or a tribal organization; a state health benefits risk pool; or a foreign government health plan ), you may make or change your election to pay the cost of such coverage under the Cafeteria Plan. NOTE: Certain changes to an individual’s coverage under a state children’s health insurance program (“SCHIP”) also create a HIPAA special enrollment right. Election changes based upon HIPAA special enrollment rights are described above. (6) Enrollment in Marketplace Coverage. (A) If you have made an election to pay for Group Medical Plan coverage, you may revoke that election if the following conditions are satisfied: (i) You either (1) are eligible to enroll in a qualified health plan through a public insurance exchange (the “Marketplace”) via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (2) seek to enroll in a qualified health plan through the Marketplace during the Marketplace’s annual open enrollment period; (ii) You cancel coverage under the Group Medical Plan in accordance with the requirements of that plan; and (iii) You, and any related individuals who were also enrolled in the Group Medical Plan, have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will be effective no later than the day immediately following the last day for which coverage under the Group Medical Plan was effective (i.e., there is no break in coverage). The Plan Administrator may rely on your reasonable representation that the requirements of this paragraph (iii) are met. (B) If you have made an election to pay for Group Medical Plan coverage, you may reduce that election if the following conditions are satisfied: (i) Your spouse and/or dependents either (1) are eligible to enroll in a qualified health plan through the Marketplace via a special enrollment period (as provided in any guidance issued by the Department of Health and Human Services or any other applicable guidance), or (2) seek to enroll in a qualified health plan through the Marketplace during the Marketplace’s annual open enrollment period; (ii) You cancel coverage under the Group Medical Plan for such spouse and/or dependents in accordance with the requirements of that plan; and (iii) Such spouse and/or dependents have enrolled in or intend to enroll in a qualified health plan through the Marketplace that will © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 12 be effective no later than the day immediately following the last day for which the coverage under the Group Medical Plan was effective (i.e., there is no break in coverage). The Plan Administrator may rely on your reasonable representation that the requirements of this paragraph (iii) are met. (e) Reduction in Hours Without Loss of Eligibility. If you have made an election to pay for Group Medical Plan coverage, you may revoke that election if the following conditions are satisfied: (1) You have been in an employment status under which you were reasonably expected to average at least thirty (30) hours of service per week; (2) You have experienced a change in employment status such that you will reasonably be expected to average less than thirty (30) hours of service per week after the change but nevertheless will remain eligible for the Group Medical Plan; (3) You cancel coverage under the Group Medical Plan in accordance with the requirements of that plan; and (4) You, and any related individuals who were also enrolled in the Group Medical Plan, have enrolled or intend to enroll in other medical coverage that provides minimum essential coverage and that will be effective no later than the first day of the second month following the month in which coverage under the Group Medical Plan ends. The Plan Administrator may rely on your reasonable representation that the requirements of this paragraph (4) are met. (f) Family and Medical Leave Act. If you take a leave governed by the Family and Medical Leave Act of 1993 (“FMLA”), you may revoke or change an election as may be provided for under the FMLA and the Employer’s FMLA policy required thereunder, provided the Employer is subject to FMLA. (g) Special Rule for HSA Contribution Feature . You may change your election with respect to the HSA Contribution Feature prospectively on at least a monthly basis. You may also revoke your election with respect to the HSA Contribution Feature prospectively if you become ineligible to make or have made HSA contributions under the HSA Contribution Feature. (h) Other. The Plan Administrator shall have the discretion to allow a change to , or termination of, an election to the extent such change or termination is the result of any other situation informally recognized by the IRS as providing an exception to the general rule that elections are irrevocable (e.g., corrections of mistakes, failure to satisfy underwriting). If the Plan Administrator determines before or during any Plan Year the Cafeteria Plan or an Optional Benefit may fail to satisfy any nondiscrimination requirement imposed by the Internal Revenue Code or other applicable law, the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to further compliance with such requirements or limitation. Such action may include, without limitation, a modification of your election downward with or without your consent. (i) Procedure for Requesting a Change. If a change in election is allowed under the foregoing rules, you must typically inform the Plan Administrator of your new election within thirty (30) days of the occurrence of the event allowing the change. Your election © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 13 change must be on account of and consistent with the status change that has occurred. In general, that means the event must result in a change in coverage that changes the cost. Subject to the provisions of the underlying group health plan, an election made to pay the cost of medical coverage for a newborn or newly adopted dependent child pursuant to a HIPAA special enrollment right may be retroactive for up to thirty (30) days , provided it applies to compensation not yet currently available. All other new elections shall be effective prospectively immediately following the date the Participant files the new election with the Plan Administrator. Elections made pursuant to this Section shall be effective for the balance of the Plan Year in which the election is made unless a subsequent event (described above) allows a further election change. 1.9 Who holds the funds I have set aside under the Cafeteria Plan? Your salary reduction contributions are held as part of the Employer’s general assets until they are used to pay for your benefits. There is no separate trust. 1.10 What if I terminate my employment during the Plan Year? If your employment with the Employer terminates during the Plan Year, your active participation with this Cafeteria Plan ceases and your elections are terminated. You will not be able to make any more contributions under this Cafeteria Plan. You may, however, be entitled to continuation coverage with respect to the underlying benefit plan. See the discussions of continuation coverage later in this summary for additional information. If you are rehired after thirty (30) days following a termination of employment and again become a Participant, you will have two “periods of coverage” – that period prior to the termination of employment and that period following the re-employment. Expenses incurred prior to the termination of employment shall be subject to the election in effect upon termination. Upon re-employment, you shall have an opportunity to make a new election and expenses incurred after re -employment shall be subject to the election made upon re-employment. If you are rehired within thirty (30) days following a termination o f employment, your election in effect prior to the termination of employment will be reinstated upon re -employment. 1.11 Will I have any administrative costs under the Cafeteria Plan? No. The entire cost of administering the Cafeteria Plan is paid by the Employer, from Plan forfeitures, or a combination of both. 1.12 How long will the Cafeteria Plan remain in effect? Although the Employer expects to maintain the Cafeteria Plan (including each of the Optional Benefits) indefinitely, it has the right to amend or terminate the Cafeteria Plan in whole or in part at any time. It is also possible that future changes in state or federal tax laws may require that the Cafeteria Plan be amended or terminated accordingly. You will be informed if any changes are made to the Cafeteria Plan. 1.13 Are my benefits taxable? Because the Cafeteria Plan is intended to meet certain requirements of the federal tax laws, many of the benefits you receive under the Cafeteria Plan will not be currently taxable to you. However, neither the Employer nor the Plan Administrator can guarantee the tax treatment of benefits with respect to any Participant, as individual circumstances may produce differing results. If you are uncertain, you sh ould consult your own tax adviser. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 14 You should realize that any benefits your receive through the Cafeteria Plan (e.g., premium payments, medical expense reimbursements) cannot be claimed as a medical expense deduction on your income tax return. However, unless your medical expenses exceed seven and one-half percent (7.5%) of your adjusted gross income, you are not permitted to use the deduction anyway. Any reimbursements made with pre-tax dollars for dependent care expenses affect your ability to claim the dependent care credit. This is explained further in the description of the Dependent Care Flexible Spending Account later in this summary. If you receive a cash payment of any of the Employer contribution, the cash payment will be taxable to you. See Article XIV for additional information. Note: If the Plan Administrator determines before or during any Plan Year the Cafeteria Plan may fail to satisfy any nondiscrimination requirement imposed by the Internal Revenue Code, the Plan Administrator may take such action as the Plan Administrator deems appropriate, under rules uniformly applicable to similarly situated Participants, to further compliance with such requirements or limitation. Such action may include, without limitation, a re-characterization within the Plan Year of benefits provided under the Cafeteria Plan as taxable income, with or without consent of the affected Participants. 1.14 What is the impact on my Social Security benefits? Participating in the Cafeteria Plan will reduce the amount of your taxable compensation. Accordingly, your Social Security benefits, which are based upon your taxable compensation, may be affected at your retirement. However, the tax savings you obtain through participation in the Cafeteria Plan often will offset any reduction in your future Social Security benefits. 1.15 What contributions are made to the Cafeteria Plan? (a) Employer Contribution. The Employer may make a fixed dollar contribution per Plan Year, or portion of a Plan Year (e.g., month, pay period), per Participant. The amount of the Employer contribution may change from year to year as announced by the Employer prior to the Plan Year start. The Employer may designate different amounts for different groups of Eligible Employees. The Employer contribution must be used as follows: Flex Credit amounts for the specific Plan Year are indicated in the City of Orono Intranet, linked in the document named “Flexible Spending Plan Credits.” Employees can apply any remaining Flex Credits after enrolling in Group Medical or waiving Group Medical, towards group Dental, FSA, LPFSA, DCAP and or taken as cash. The portion of the Employer contribution not used to pay for benefits shall be paid in taxable compensation. No Employer contribution shall be credited to any Employee during a period of leave of absence, whether authorized or unauthorized, unless it is a paid leave of absence or is required by the Family Medical Leave Act (“FMLA”) or other applicable law. Employees who are not eligible for participation on the first day of the Plan Year shall have their annual Employer contribution pro-rated by multiplying the annual available Employer contribution by a fraction, the numerator of which is the number of months the Employee is eligible for participation for the Plan Year, the denominator which is twelve. (b) Salary Reduction Contributions. To the extent the cost of an Optional Benefit exceeds the Employer contribution (if any), you may elect in accordance with the election © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 15 procedures described in Section 1.6 to receive your full compensation in cash, or to ha ve a portion of such compensation applied by the Employer toward your share of the cost of Optional Benefits. If so elected, your compensation will be reduced, and an amount equal to the reduction will be allocated by the Employer to the Optional Benefits you have designated. Your compensation shall be reduced by pro-rata amounts of your total salary reduction election. Salary reduction is done on a pre-tax basis before any withholdings have been made. The frequency of salary reduction contributions shall be only two payroll periods per month. Notwithstanding the forgoing, if participation in an Optional Benefit extends to the last day of the month in which your employment terminates, if necessary, additional salary reduction contributions shall be taken from your final paycheck to pay for the coverage provided during the period of time following the date on whic h your employment terminates. (c) Salary Deduction Contributions. Sometimes the Internal Revenue Code or your Employer does not allow payment with pre-tax dollars. Payments which may be made with after-tax dollars may be paid through a salary deduction agreement. A salary deduction agreement provides for a payroll deduction to be made throughout a Plan Year out of your compensation after taxes and withholdings have been made. 1.16 What if coverage is provided to someone other than your spouse and tax dependents? If you participate in an Optional Benefit that covers a dependent who is not your “spouse” or “tax dependent,” the entire cost of coverage for Optional Benefits for which you are responsible shall be paid pre-tax through this Cafeteria Plan and the fair market value of the coverage for that Dependent shall be imputed as income to you as the coverage is provided. This provision applies regardless of whether the cost of coverage is paid by salary reduction or allocation of available Employer contributions, if any. For purposes of this Cafeteria Plan, “spouse” means a person to whom you are legally married in accordance with applicable state law. For purposes of this Cafeteria Plan, “tax dependent” generally includes an individual who satisfies the requirements of paragraph (a), (b), or (c) below: (a) an individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (2) will not attain age 27 during the relevant calendar year. (b) An individual who: (1) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (2) has the same principal place of abode as you for at least one-half of the relevant year; (3) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (4) did not provide over half of his/her own support during the relevant year; © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 16 (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (6) is younger than you (unless he/she is permanently and totally disabled); and (7) does not file a joint tax return with his or her spouse. (c) An individual who: (1) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent’s ancestor), stepparent, brother or sister’s son or daughter, parent’s brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in- law, brother-in-law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; (2) has received more than one-half of his/her support from you during the relevant year; (3) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (a) above with respect to any person); and (4) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. NOTE: The definition “tax dependent” is different than the definition applicable under the Internal Revenue Code for purposes of identifying who you may claim as an exemption on your federal income tax return and is different than the definition of “qualifying individual” that applies under the Dependent Care Flexible Spending Account. Additional special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. 1.17 How are claims determined? NOTE: This claims determination procedure applies only with respect to issues related to the Cafeteria Plan (e.g., the ability to pay for benefits on a pre-tax basis and the election of Optional Benefits) and claims for reimbursement under the Dependent Care Flexible Spending Account and Health Flexible Spending Account, Limited Scope Health Flexible Spending Account. Claims for other benefits (e.g., claims under the major medical and dental coverages) are handled through the claims determination procedures in those separate plans or policies. (a) Claim Submission. Unless a separate procedure is provided with respect to an Optional Benefit, a claim for benefits must be made in writing and submitted to the Claims Administrator. Please refer to the sections of this summary describing each Optional Benefit for additional information. (b) Benefits Denials. The Claims Administrator will decide your claim within a reasonable time not longer than thirty (30) days after it is received. This time period may be extended for an additional fifteen (15) days for matters beyond the control of the Claims Administrator, including when a claim is incomplete. You will receive written notice of any extension, indicating the reasons for the extension and the date by which a decision is expected to be made. If your claim is incomplete, and the Claims Administrator notifies you of that fact, the time period for deciding your claim will be suspended from the date the notice is provided through the date on which you respond or by which you are supposed to respond. You will be given at least forty-five (45) days in which to respond. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 17 The Claims Administrator may secure independent medical or other advice and require such other evidence as it deems necessary to decide your claim. If the Claims Administrator denies your claim, in whole or in part, you will be furnished with a written notice of adverse benefit determination setting forth: (1) the specific reason or reasons for the denial; (2) reference to the specific Plan provision on which the denial is based; (3) a description of any additional material or information necessary for you to complete your claim and an explanation of why such material or information is necessary; and (4) appropriate information as to the steps to be taken if you wish to appeal the Claims Administrator’s determination, including your right to submit written comments and have them considered, and your right to review (on request and at no charge) relevant documents and other information. (c) Appealing a Denial. If your claim is denied in whole or in part, you may appeal to the Plan Administrator for a review of the denied claim. Your appeal must be made in writing within one hundred eighty (180) days of the Plan Administrator’s initial notice of adverse benefit determination or you will lose your right to appeal your denial. If you do not appeal on time, you will also lose your right to file suit in court, as you will have failed to exhaust your internal administrative appeal rights, which is generally a prerequisite to bringing suit. (d) Decision upon Appeal. The Plan Administrator will review and decide your appeal within a reasonable time not longer than sixty (60) days after it is submitted and will notify you of its decision in writing. The individual who decides your appeal will not be the same individual who decided your initial claim denial and will not be that individual’s subordinate. The Plan Administrator may secure independent medical or other advice and require such other evidence as it deems necessary to decide your appeal, except that any medical expert consulted in connection with your appeal will be different from any expert consulted in connection with your initial claim. (The identity of a medical expert consulted in connection with your appeal will be provided.) If the decision on appeal affirms the initial denial of your claim, you will be furnished with a notice of adverse benefit determination on review setting forth: (1) the specific reason(s) for the denial; (2) the specific Plan provision(s) on which the decision is based; (3) a statement of your right to review (on request and at no charge) relevant documents and other information; if the Plan Administrator relied on “internal rule, guideline, protocol, or other similar criterion” in making the decision, a description of the specific rule, guideline, protocol, or other similar criterion or a statement that such a rule, guideline, protocol, or other similar criterion was relied on and that a copy of such rule, guideline, protocol, or other similar criterion will be provided free of charge to you upon request. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 18 1.18 How are insurance refunds handled? Any refund provided to the Employer by an insurance company that has issued an insurance contract for a component of the Cafeteria Plan will be allocated as provided herein. The refund will constitute Plan assets only to the extent required by applicable law. 1.19 Who has authority to interpret the Plan? To the fullest extent permitted under applicable law, the Plan Administrator and any other Plan fiduciary acting in its fiduciary capacity shall have the authority and discretion to interpret and apply Plan terms. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 19 PART II. GROUP MEDICAL BENEFITS 2.1 What benefits are provided? An important feature of the Cafeteria Plan is the opportunity it provides you to pay your share of the cost of medical coverage on a pre-tax basis. The medical coverage is provided through your Employer and is referred to herein as the “Group Medical Plan.” Your share of the cost for that coverage is paid with the allocation of Employer contributions (if any) and pre-tax dollars through salary reduction under this portion of the Cafeteria Plan. The Group Medical Plan is described in separate materials which have been provided to you either directly by the carrier (the insurance company or HMO) or by your Employer. Those descriptive materials are incorporated into this summary description by reference. If you have not been provided this information, you should contact the Plan Administrator. The benefits under the Group Medical Plan are provided in accordance with the applicable Group Medical Plan documents. The Group Medical Plan is subject to privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA ”). 2.2 How do I become a Participant in this portion of the Cafeteria Plan? To participate in this portion of the Cafeteria Plan, you must first enroll in the Group Medical Plan. You may select coverage under the Group Medical Plan for just yourself, or you may select coverage for yourself and others who are eligible for coverage under the terms of the Group Medical Plan. Please refer to the contract or policy governing the Group Medical Plan for informa tion regarding who is eligible for coverage under that plan and how to enroll in that plan. If you have enrolled in the Group Medical Plan, then you may participate in this portion of the Cafeteria Plan if you satisfy the general eligibility requirements for the Cafeteria Plan described in Section 1.4. If you satisfy those requirements, you will automatically become a Participant in this portion of the Cafeteria Plan for purposes of paying your share of the cost of Group Medical Plan coverage unless you elect not to do so. 2.3 How is my cost of group medical coverage paid? If you participate in this portion of the Cafeteria Plan, your cost of coverage under the Group Medical Plan is generally paid by allocation of any available Employer contribution and, to the extent the Employer contribution is insufficient, with pre-tax dollars through salary reduction. NOTE: You must be a Participant in the Cafeteria Plan for your portion of the premiums to be paid pre-tax. If you pay the cost of Group Medical Plan coverage through this portion of the Cafeteria Plan and you have enrolled an individual who is not your spouse or “tax dependent” (as those terms are defined in Section 1.16), then the taxation of that individual’s coverage will be handled as described in Section 1.16. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 20 2.4 What if I am no longer eligible? If you cease to be eligible for coverage under the Group Medical Plan, your coverage under that Plan will terminate in accordance with the terms and conditions of th at Plan. In most cases, if you lose coverage under the Group Medical Plan, your participation in this portion of the Cafeteria Plan will cease as well, subject to the change in election rules described in Section 1.8. If you cease to be eligible to participate in this Cafeteria Plan, your ability to pay for coverage under the Group Medical Plan on a pre-tax basis through this portion of the Cafeteria Plan stops. 2.5 Can coverage be continued? If you cease to be eligible for coverage under the Group Medical Plan, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA”), the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"), and applicable continuation requirements under state law. These continuation rights are described later in this summary. 2.6 What if I am subject to a medical child support order? The Group Medical Plan recognizes child support orders regarding the provision of medical coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998 to the extent required by law. If a child is enrolled in the Group Medical Plan pursuant to a child support order, you will be able to pay the cost of that coverage through this portion of the Cafeteria Plan, provided you are eligible to participate as described above. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 21 PART III. GROUP DENTAL BENEFITS 3.1 What benefits are provided? An important feature of the Cafeteria Plan is the opportunity it provides to pay your share of the cost of dental coverage on a pre-tax basis. The dental coverage is provided through your Employer and is referred to herein as the “Group Dental Plan.” Your share of the cost for that coverage is paid with the allocation of Employer contributions and pre-tax dollars through salary reduction under this portion of the Cafeteria Plan. The Group Dental Plan is described in separate materials which have been provided to you either directly by the carrier (the insurance company or DMO) or by your Employer. Those descriptive materials are incorporated into this summary description by reference. If you have not been provided this information, you should contact the Plan Administrator. The benefits under the Group Dental Plan are provided in accordance with the applicable Group Dental Plan documents. The Group Dental Plan is subject to the privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). 3.2 How do I become a Participant? To participate in this portion of the Cafeteria Plan, you must first enroll in the Group Dental Plan. You may select coverage under the Group Dental Plan for just yourself, or you may select coverage for yourself and others who are eligible for coverage under the terms of the Group Dental Plan. Please refer to the contract or policy governing the Group Dental Plan for information regarding who is eligible for coverage under that plan and how to enroll in that plan. If you have enrolled in the Group Dental Plan, then you may participate in this portion of the Cafeteria Plan if you satisfy the general eligibility requirements for the Cafeteria Plan described in Section 1.4. If you satisfy those requirements, you will automatically become a Participant in this portion of the Cafeteria Plan for purposes of paying your share of the cost of Group Dental Plan coverage unless you elect not to do so. 3.3 How is my cost of group dental coverage paid? If you participate in this portion of the Cafeteria Plan, your cost of coverage under the Group Dental Plan is generally paid by allocation of any available Employer contribution and, to the extent the Employer contribution is insufficient, with pre-tax dollars through salary reduction. NOTE: You must be a Participant in the Cafeteria Plan for your portion of the premiums to be paid pre-tax. If you pay the cost of Group Dental Plan coverage through this portion of the Cafeteria Plan and you have enrolled an individual who is not your spouse or “tax dependent” (as those terms are defined in Section 1.16), then the taxation of that individual’s coverage will be handled as described in Section 1.16. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 22 3.4 What if I am no longer eligible? If you cease to be eligible for coverage under the Group Dental Plan, your coverage under that Plan will terminate in accordance with the terms and conditions of that Plan. I n most cases, if you lose coverage under the Group Dental Plan, your participation in this portion of the Cafeteria Plan will cease as well, subject to the change in election rules described in Section 1.8. If you cease to be eligible to participate in this Cafeteria Plan, your ability to pay for coverage under the Group Dental Plan on a pre-tax basis through this portion of the Cafeteria Plan stops. 3.5 Can coverage be continued? If you cease to be eligible for coverage under the Group Dental Plan, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA”), the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"), and applicable continuation requirements under state law. These continuation rights are described later in this summary. 3.6 What if I am subject to a medical child support order? The Group Dental Plan recognizes child support orders regarding the provision of medical coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998 to the extent required by law. If a child is enrolled in the Group Dental Plan pursuant to a chi ld support order, you will be able to pay the cost of that coverage through this portion of the Cafeteria Plan, provided you are eligible to participate as described above. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 23 PART IV. DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT 4.1 What benefits are provided? The Plan permits you to elect to receive reimbursement for some or all of your work related dependent care expenses under the Dependent Care Flexible Spending Account ("Dependent Care FSA"). Under the Dependent Care FSA, you provide a source of pre-tax dollars by entering into a salary reduction arrangement with your Employer. You may also use any available Employer contributions. Those pre-tax dollars will be used to reimburse you for your eligible expenses. You save Social Security and income taxes on the amount of your salary reduction for dependent care expenses. NOTE: Participation in the Dependent Care FSA will impact your ability to receive the dependent care tax credit with respect to your federal income taxes. Additional information is provided below regarding this tax credit. 4.2 How do I become a Participant in the Dependent Care FSA? To become a Participant in the Dependent Care FSA, you must first become a Participant in the Cafeteria Plan. You must also satisfy the eligibility requirements for the Dependent Care FSA. The Dependent Care FSA’s eligibility requirements are the same as the eligibility requirements for the Cafeteria Plan as described in Section 1.4. If you satisfy those requirements, you become a Participant in the Dependent Care FSA by electing benefits under the Dependent Care FSA during your initial or subsequent annual enrollment periods. 4.3 What is my account? If you elect benefits under the Dependent Care FSA, an account will be established in your name to keep a record of the benefits to which you are entitled. When you complete the election form, you specify the amount of benefits you wish to receive. These benefits may be funded by allocation of any available Employer contribution and, to the extent the Employer contribution is insufficient, with pre-tax dollars through salary reduction contributions. A pro-rated portion of your election will be credited to your account according to the schedule described in Section 1.14. The amount that is available in your account at any particular time will be whatever has been credited to such account less any reimbursements. The account is a bookkeeping account only. The Employer pays benefits under the Dependent Care FSA from its general assets. There is no trust. 4.4 What are the maximum benefits I may receive? The maximum amount of benefits you may receive under the Dependent Care FSA is $5,000 per calendar year if you: (a) are married and file a joint return; (b) are married, but you furnish more than one-half the cost of maintaining those dependents for whom you are eligible to receive tax-free reimbursements under the Dependent Care FSA, your spouse maintains a separate residence for the last six (6) months of the calendar year, and you file a separate tax return; or (c) are single, or a head of household for tax purposes. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 24 This maximum is reduced if any of the following situations exist: (a) if you are married and reside together with your spouse, but file separate tax returns, the maximum is reduced to $2,500 (and only one parent may submit claims for reimbursement under the Dependent Care FSA); or (b) if you or your spouse have earned income less than $5,000 per tax year, the maximum is reduced to the lesser of your earned income or your spouse's earned income. Note: The Dependent Care FSA Plan’s maximum described above is also the maximum amount of employer-provided dependent care benefits that are excludable from income. If you are married, the maximum tax exclusion applies on a combined or aggregate basis. Accordingly, if your spouse has a dependent care program available through his or her employer, the maximum annual tax exclusion will apply to the combined benefits received by your spouse under his/her employer’s program plus the benefits you receive under this Dependent Care FSA Plan. It is your responsibility to monitor your combined maximum benefits and to report any benefits in excess of the maximum on your income tax return. NOTE: If your spouse is a student or is incapable of caring for himself or herself , in general, you spouse will be deemed to have earned income of not less than $250 per month if you have one Qualifying Individual or $500 per month you have two or more Qualifying Individuals. 4.5 Who is a “Qualifying Individual” for whom I can submit claims for reimbursement? NOTE: The rules are not the same as the tax deduction or exemption rules. It is your responsibility to determine whether you can request reimbursement for expenses incurred with respect to a particular individual. As discussed below, special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. General Rule. Subject to the two special rules described below, y ou may be reimbursed for Eligible Expenses incurred with respect to any “Qualifying Individual.” A Qualifying Individual is a person described in paragraph (a), (b), (c), (d) or (e) below. (a) Your “child” who: (1) is under age thirteen (13); (2) has the same principal place of abode as you for at least one-half of the year; (3) does not provide over half of his/her own support during the year; and (4) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico (b) Your “child” who: (1) is mentally or physically unable to care for himself or herself; (2) has the same principal place of abode as you for at least one-half of the year; (3) does not provide over half of his/her own support during the year; © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 25 (4) has not attained age nineteen (19) during the year (age twenty-four (24) if a full- time student) or is permanently and totally disabled; (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (6) is younger than you (unless he/she is permanently and totally disabled); and (7) does not file a joint tax return with his or her spouse. (c) Your “child” who: (1) is mentally or physically unable to care for himself or herself, (2) has the same principal place of abode as you for at least one-half of the year, (3) has received more than one-half of his/her support from you during the relevant year, (4) is not any person’s “qualifying child” (as that term is defined under Section 152 of the Code), and (5) is a citizen, national, or resident of the United States, or a resid ent of Canada or Mexico. (d) Your “relative” who: (1) is mentally or physically unable to care for himself or herself, (2) has the same principal place of abode as you for at least one-half of the year, (3) has received more than one-half of his/her support from you during the relevant year, (4) is not any person’s “qualifying child” (as that term is defined under Section 152 of the Code), and (5) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. (e) Your “spouse,” if your spouse is physically or mentally incapacitated and has the same principal place of abode as you for at least one-half of the year. “Child” generally includes your son, daughter, stepson, stepdaughter, eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any such person. “Relative” generally includes parent (or a parent’s ancestor), stepparent, parent’s brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law or an individual who (although not related to you) has the same principal place of abode as you and is a member of your household. “Spouse” means an individual to whom you are legally married under applicable state law. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 26 4.6 What if two people claim a child as a Qualifying Individual? With the exception of two parents that file income taxes jointly, only one person is entitled to treat the child as a Qualifying Individual. Where multiple people are involved, there are two special rules to determine which person is entitled to treat the child as a Qualifying Individual. (a) Divorced or Separated Parents, or Parents Living Apart. Important Note: In this situation, only one person is entitled to treat the child as a Qualified Individual for purposes of the Dependent Care FSA. If a child’s parents are divorced, legally separated, separated pursuant to a written agreement, or live apart at all times during the last six (6) months of the calendar year, a special rule applies if: (i) the child is under age 13 or is mentally or phys ically unable to care for himself or herself; (ii) the child receives more than 50% of his or her support from the parents (in aggregate); and (iii) the child resides with the parents (in aggregate) for more than 50% of the year. In such situations, the child is the Qualifying Individual of the custodial parent even if the custodial parent has released the right to claim the child as a dependent. The custodial parent is generally the parent with whom the child resides for the greater number of nights during the calendar year or, if the child resides with both parents for an equal number of nights, the parent with the higher adjusted gross income for the year. (b) Other Situations. If the special rule described above regarding divorce, etc. does not apply, other special tie-breaker rules of may apply. If an individual is a Qualifying Individual (under paragraphs (a) or (b) of the definition provided above) with respect to more than one person, then: (1) if both persons are the individual’s parents and they f ile separate federal income tax returns, then the child is the Qualifying Individual of the parent with whom the child resides for the longest period of time during the calendar year (or, if child resides with both parents for the same amount of time during the year, the parent with the highest adjusted gross income for the year). However, if that parent (i.e., the custodial parent or the parent with the highest adjusted gross income) does not claim the child as a qualifying child (as defined in Section 152 of the Internal Revenue Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of t he other parent (i.e., the non-custodial parent or the parent with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual for purposes of the Dependent Care FSA. (2) if one person is the individual’s parent and the other is not, the child is the Qualifying Individual of the parent. However, if the parent does not claim the child as a qualifying child (as defined in Section 152 of the Internal Revenue Code) for any purpose (i.e., a dependent care expense reimbursement program, the earned income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the non-parent). This is the one person that is entitled to treat the child as a Qualifying Individual for purposes of the Dependent Care FSA. (3) if neither person is the individual’s parent, the child is the Qualifying Individual of the person with the highest adjusted gross income for the year in quest ion. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 27 However, if that person does not claim the child as a qualifying child (as defined in Section 152 of the Internal Revenue Code) for any purpose (i.e., a dependent care expense reimbursement program, the Earned Income credit, the dependency deduction, the child tax credit, and the dependent care credit), then the child is the Qualifying Individual of the other person (i.e., the person with the lowest adjusted gross income). This is the one person that is entitled to treat the child as a Qualifying Individual for purposes of the Dependent Care FSA. Important: If you enroll for dependent care benefits, it will be assumed that you are the one person entitled to treat the child as a Qualifying Individual for purposes of reimbursement under the Dependent Care FSA. 4.7 What is an "Eligible Expense"? (a) General Rule—Covered. An "Eligible Expense" generally means expenses for the care of a Qualifying Individual incurred by you (or your spouse) to enable you (and your spouse) to be gainfully employed. Eligible Expenses generally include: (1) day care expenses; (2) the cost of nursery school, preschool, or similar programs below the level of kindergarten; (3) the cost of after-school care (including care for Qualifying Individuals in kindergarten and beyond); (4) the cost of day camp, including specialty day camp (but not overnight camp); (5) the cost of transportation provided by a care provider; (6) the cost of meals incidental to and inseparable from care; (7) employment taxes paid on behalf of a care provider; (8) the cost of room and board provided to a care provider (e.g., a live in nanny); (9) certain indirect expenses, such as application and agency fees, if they must be paid to obtain the care and care is actually provided; and (10) placement or “hold the spot” fees provided that they must be paid to obtain the care (not Eligible Expenses unless and until care is actually provided by the provider to whom such fees are paid). (b) General Rule—Not Covered. Expenses incurred that do not enable you to be gainfully employed are generally not “eligible” including, but not limited to, expenses incurred while on vacation, sick leave, or any other type of situation where you (and your spouse) are not at work or actively looking for work (i.e., gainfully employed). Your spouse, if any, is deemed to be gainfully employed if he/she is: (1) a full time student, or (2) mentally or physically incapable of self-care and resides with you for more than one-half of the calendar year. (c) Daily Allocation. Usually, expenses must be allocated on a daily basis so that expenses incurred on a day you (or your spouse) were not at work may not be reimbursed. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 28 Special Rule. If you pay for care on at least a weekly basis, without deduction for days on which care is not provided, you are not required to allocate expenses for short, temporary absences from work, such as vacations and sick days. You are also not requir ed to allocate expenses on a daily basis if you (or your spouse) work on a part-time basis and you pay for care on at least a weekly basis without deduction for days on which care is not provided. (d) Who and Where Rules. Expenses that would otherwise be “Eligible Expenses” cannot be reimbursed if they are paid to: (1) an individual who is your child under the age of nineteen (19) at the end of the calendar year; (2) an individual you (or your spouse) claim as a dependent on your tax return; (3) an individual who was your spouse at any time during the calendar year; or (4) a parent of a Qualifying Individual who is your child under age thirteen (13). Expenses that would otherwise be “Eligible Expenses” for services provid ed outside of your home may be reimbursed only if the care is for a Qualifying Individual who is: (1) your (or your spouse’s) “child” under the age of thirteen (13); or (2) is another Qualifying Individual who regularly spends at least eight (8) hours per day in your home. 4.8 How do I receive reimbursements under the Dependent Care FSA? (a) Periodic Reimbursements. When you incur an expense that is eligible for reimbursement, you submit a claim to the Claims Administrator on a claim form that will be supplied to you. The claim form may be submitted via email, facsimile, mail, or the Claims Administrator’s website. The claim form will typically set forth: (1) the amount, date and nature of the expense ; (2) the name of the person or entity to which the expense was pai d; (3) your statement that the expense has not been reimbursed, and you will not seek reimbursement for the expense, from any other source; and (4) such other information as the Plan Administrator may require. You may also be required to submit copies of bills or receipts from the provider(s) to support your claim. If there are enough dollars credited to your account, you will be reimbursed for your Eligible Expenses according to the schedule established by the Plan Administrator. Claim Deadline. You may submit claims for reimbursement of Eligible Expenses incurred during the Plan Year for ninety (90) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may be filed is referred to as the “claims run-out period.” (b) Electronic Payment Card. The electronic payment card allows you to pay for Eligible Expenses at the time that you incur the expense. The electronic payment card works as follows: (1) You must make an election to use the card. In order to be eligible for the electronic payment card, you must agree to abide by the terms and conditions of the electronic payment card program as set forth herein and in the electronic payment cardholder agreement (the “Cardholder Agreement”), including agreeing © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 29 to any fees applicable to participate in the program, limitations as to card usage, the Plan’s right to withhold and offset ineligible claims, etc. You must agree to abide by the terms of the program each Plan Year. A Cardholder Agre ement will be provided to you. The card will be turned off effective the first day of each Plan Year if you do not affirmatively agree to abide by the terms of the program for the new Plan Year. The Cardholder Agreement is part of the terms and condition s of your Plan and this summary. (2) The balance of the card is limited. The balance of the card is limited to the balance of your account. (3) The card will be turned off when employment or coverage terminates. The card will be turned off when you terminate employment or coverage under the Plan. (4) You must certify proper use of the card. As specified in the Cardholder Agreement, you certify during the applicable Plan Year that the amounts in your account will only be used for Eligible Expenses and that you have not been reimbursed for the expense and that you will not seek reimbursement for the expense from any other source. Failure to abide by this certification will result in termination of card use privileges. (5) Expenses must be substantiated. To ensure that expenses for which the card is used are Eligible Expenses, the following procedures must be followed: (A) At the beginning of each Plan Year or, if later, upon beginning participation, you must pay the initial Eligible Expense to the dependent care provider and submit a paper claim to the Plan (as described above) for such expense. (B) Upon substantiation by the Claims Administrator of the initial Eligible Expense, the Plan will make available through the electronic payment card an amount equal to the lesser of: (i) the amount of the approved claim, or (ii) the balance of your account as of that date. (C) The electronic payment card may then be used to pay for subsequently incurred Eligible Expenses. (D) The amount available through the electronic payment card may be increased only as additional dependent care expenses are incurred and substantiated via submission of a paper claim, except as provided in paragraph (E) below. In no case will the amount available through the electronic payment card exceed the contributions to your account for the Plan Year to date minus the amount of expenses previously reimbursed during such Plan Year (whether such reimbursement was made in cash or by crediting the electronic payment card). (E) Dependent care expenses may be automatically substantiated without submission of a paper claim only as provided in this paragraph (E). If (i) an electronic payment card transaction collects information that matches information for a previously approved paper claim with respect to the dependent care provider, and (ii) the amount of the electronic payment card transaction is equal to or less than the previously approved paper © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 30 claim, then the claim paid via the electronic payment card is substantiated without further review. In such instances, the balance of the electronic payment card may be increased with respect to the automatically substantiated claim once the expense paid through the electronic payment card has been incurred. Example: If you use an electronic payment card to pay a day care provider on the first day of the week for the care to be provided during that week, and the claim is automatically substantiated as provided above, the balance of the electronic payment card may be increased with respect to such claim at the end of the week. 4.9 What limits apply to reimbursements under the Dependent Care FSA? You cannot be reimbursed for any expenses above your available account balance. If your claim was for an amount that was more than your current account balance, the excess part of the claim will be carried over into following months, to be paid as your balance becomes adequate. You also cannot be reimbursed for any expenses that arise before the effective date of the Dependent Care FSA, for any expenses that arise before you become a Participant in the Dependent Care FSA, or for any expenses incurred after the close of the Plan Year. Please note that it is not necessary that you have actually paid an amount for that expense to be eligible for reimbursement. You only must have incurred the expense and not have been reimbursed or paid from another source. An expense is "incurred" when the service which gives rise to the expense has been provided, not when you are billed or when you pay the expense. 4.10 Will I be taxed on the Dependent Care FSA benefits I receive? You will not normally be taxed on benefits under the Dependent Care FSA. However to qualify for tax-free treatment, you will be required to file IRS Form 2441 or a similar form with a list of name s and taxpayer identification numbers of any persons who provided you with dependent care services during the calendar year for which you claimed a tax-free reimbursement. 4.11 If I participate in the Dependent Care FSA, will I still be able to claim the household and dependent care tax credit on my federal income tax return? You may choose to participate in the Dependent Care FSA and receive credit on your federal income tax return too. However, the tax credit and the account cannot be used for the same expenses. In addition, the amount of the household and dependent care tax credit is reduced dollar for dollar by the reimbursement you receive from your account. In certain cases, it may be more beneficial for you to claim a tax credit for your dependent care expenses rather than pay for those expenses through the account. You may want to consult your tax advisor regarding the best options under the applicable rules. 4.12 What is the dependent care tax credit? The dependent care tax credit is an allowance for a percentage of your annual eligible dependent care expenses as a credit against your federal income tax. In determining what the tax credit would be, you may take into account only $3,000 of such expenses for one dependent, or $6,000 for two or more dependents. Depending on your adjusted gross income, the percentage could be as much as 35% of your qualifying expenses (to a maximum credit amount of $1,050 for one dependent or $2,100 for two or more © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 31 dependents) to a minimum of 20% of such expenses (producing a maximum credit of $600 for one dependent or $1,200 for two or more dependents.) The maximum 35% rate must be reduced by 1% (b ut not below 20%) for each $2,000 portion (or any fraction of $2,000) of your adjusted gross incomes over $15,000. 4.13 When would it be better for me to use the tax credit? In general, if your income tax bracket is 15% or less, it will be more advantageous for you to forego participation in the Dependent Care FSA, pay the expenses with after-tax dollars, and claim the dependent care tax credits. However, you should analyze your own situation carefully to determine which method is right for you. The actual dete rmination of the preferable method for treating benefit payments depends on a number of factors such as one’s tax filing status (e.g., married, single, head of household), number of dependents, etc. Each Participant will have to determine his or her tax po sition individually in order to make the decisions between taxable and tax -free benefits. If you are uncertain about whether to participate in this Dependent Care FSA or take the dependent care credit, you should consult your tax advisor. Please refer to Exhibit B for an example of how choosing between participating in the Dependent Care FSA and taking the household and dependent care tax credit will impact your disposable income. 4.14 What if I am no longer eligible? If your employment terminates or you otherwise cease to be eligible for coverage under the Dependent Care FSA, you may not make any further contributions to your account. However, you may continue to submit claims for reimbursement of Eligible Expenses incurred while you were a Participant until the expiration of the claims run out period. 4.15 What if I receive benefits in error? If a reimbursement is made by the Dependent Care FSA in excess of the amount to which you are entitled under the Dependent Care FSA, the Dependent Care FSA has the right to recover such overpayment. Repayment of an overpayment is a condition of participation in the Cafeteria Plan. 4.16 What if the dependent care expenses I incur during the Plan Year are less than the annual benefit I have elected? Any amounts remaining in your account attributable to a particular Plan Year shall be forfeited following the claims run-out period described in Section 3.6. You will not be entitled to receive any direct or indirect payment of any amount that represents the difference between the actual dependent care expenses you have incurred, on the one hand, and the annual benefit you have elected and paid for, on the other. If you do not use it, you lose it. 4.17 What reporting will I receive? The amounts reimbursed under this Dependent Care FSA for each calendar year will be reported on your W-2. If the actual amount paid is not known by the deadline for providing the W -2 (e.g., because of the claims run-out period), the Employer may report a reasonable estimate of the reimbursements that will be paid under the Dependent Care FSA for the year. A reasonable estimate may be the amount of benefits you elected under the Dependent Care FSA for the year. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 32 4.18 Is the Dependent Care FSA Plan governed by ERISA? No. The Dependent Care FSA Plan is not subject to ERISA. The Statement of ERISA Rights section of this summary does not apply to the Dependent Care FSA Plan. 4.19 Is the Dependent Care FSA Plan subject to COBRA? No. The Dependent Care FSA Plan is not subject to COBRA. 4.20 Is the Dependent Care FSA Plan subject to HIPAA? No. The Dependent Care FSA Plan is not a group health plan, and, therefore, not subject to HIPAA Privacy, HIPAA Security, or HIPAA Special Enrollment. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 33 PART V. HEALTH FLEXIBLE SPENDING ACCOUNT 5.1 What benefits are provided? The Plan permits you to elect to receive reimbursement for some or all of your uninsured medical and dental expenses under the Health Flexible Spending Account ("Health FSA"). Under the Health FSA, you provide a source of pre-tax dollars by entering into a salary reduction agreement with your Employer. You may also use any available Employer contributions. Those pre-tax dollars will be used to reimburse you for your Eligible Expenses. You save Social Security and income taxes on the amount of your salary reduction for medical expenses. The coverage provided through the Health FSA is subject to the privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). The Health FSA is intended to be an excepted benefit under the HIPAA portability ru les. Accordingly, neither the HIPAA portability rules nor the mandates of the Patient Protection and Affordable Care Act, as amended, including the preventive care mandate, apply to the Health FSA. 5.2 How do I become a Participant? To become a Participant in the Health FSA, you must first become a Participant in the Cafeteria Plan. You must also satisfy the eligibility requirements for the Health FSA. The Health FSA’s eligibility requirements are the same as the eligibility requirements for the Cafeteria Plan as described in Section 1.4. If you satisfy those requirements, you become a Participant in the Health FSA by electing benefits under the Health FSA during your initial or subsequent annual enrollment periods. NOTE: Participation in this Health FSA will make you ineligible to participate in the HSA Contribution Feature, and will make you and any of your dependents covered by the Health FSA ineligible to make or receive contributions to a health savings account. 5.3 What is my account? If you elect benefits under the Health FSA, an account will be established in your name to keep a record of the benefits to which you are entitled. When you complete the election form, you specify the amount of benefits you wish to receive. These benefits may be funded by allocation of any available Employer contribution and, to the extent the Employer contribution is insufficient, with pre-tax dollars through salary reduction contributions. The full amount of your election under the Health FSA will be available at any time during the Plan Year, reduced by the amount of prior reimbursements under the Health FSA received during the Plan Year. The account is a bookkeeping account only. Benefits under the Health FSA are paid from the Employer’s general assets. There is no trust. 5.4 What are the maximum reimbursements I may receive? The maximum amount of medical expense reimbursements is the IRS maximum per Plan Year. To receive the full maximum, you must include any Employer contribution allocated to the Health FSA. For a short Plan Year, the maximum is unchanged for the number of pay periods remaining in the Plan Year. If you enter the plan mid-year, this maximum amount is unchnaged for the number of pay periods remaining in the Plan Year. 5.5 What is an "Eligible Expense"? © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 34 (a) Generally. An “Eligible Expense,” in most situations, means any item for which you could have claimed a medical expense deduction on an itemized federal income tax return and for which you have not otherwise been reimbursed from hea lth coverage, or some other source. Eligible Expenses include expenses incurred by you and your “spouse” and “dependents.” For purposes of this Health FSA, “spouse” means a person to whom you are legally married in accordance with applicable state law. For purposes of this Health FSA, “dependent” generally includes an individual who satisfies the requirements of paragraph (1), (2), or (3) below: (1) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (ii) will not attain age 27 during the relevant calendar year. (2) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (ii) has the same principal place of abode as you for at least one-half of the relevant year; (iii) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (iv) did not provide over half of his/her own support during the relevant year; (v) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; (vi) is younger than you (unless he/she is permanently and totally disabled); and (vii) does not file a joint tax return with his or her spouse. (3) An individual who: (i) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent’s ancestor), stepparent, brother or sister’s son or daughter, parent’s brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; (ii) has received more than one-half of his/her support from you during the relevant year; © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 35 (iii) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (1) above with respect to any person); and (iv) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. NOTE: The definition “dependent” is different than the definition applicable under the Internal Revenue Code for purposes of identifying who you may claim as an exemption on your federal income tax return. Furthermore, an individual eligible for dependent coverage under the Group Medical Plan is not necessarily a “dependent” for purposes of the Health FSA. Additional special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. (b) Rules for over-the-counter items. Eligible Expense includes certain over-the-counter items that constitute medical care even though a tax deduction is not available. Over-the- counter drugs and medicines incurred on or after January 1, 2020, no longer require a prescription to be an Eligible Expense. In addition, Eligible Expense includes expenses for the following menstrual care products incurred on or after January 1, 2020: tampons, pads, liners, cups, sponges, or similar products used by individuals with respect to menstruation or other genital-tract secretions. (c) Exceptions. Despite the general rule stated above, Eligible Expense does not include premiums for qualified long term care coverage or premiums for any group or individual health plan. IMPORTANT: Please review Exhibit A—Eligible Medical Care Expenses to help determine what is an Eligible Expense. You are also encouraged to consult your personal tax advisor or IRS Publication 502, "Medical and Dental Expenses" for further guidance as to what is or is not an Eligible Expense. CAUTION: Publication 502 addresses medical care expenses a person may deduct o n his or her income taxes. Many, but not all¸ expenses that are tax deductible are also reimbursable under the Health FSA. 5.6 How do I receive my reimbursements under the Health FSA? (a) Periodic Reimbursements. When you incur an expense that is eligible for reimbursement, you submit a claim to the Claims Administrator on a claim form that will be supplied to you. The claim form may be submitted via email, facsimile, mail, or the Claims Administrator’s website. The claim form will typically set forth: (1) the amount, date and nature of the expense ; (2) the name of the person or entity to which the expense was paid ; (3) your statement that the expense has not been reimbursed, and you will not seek reimbursement for the expense, from any other source; and (4) such other information as the Plan Administrator may require, including copies of bills or receipts from the provider(s) to support your claim. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 36 If there are enough dollars credited to your Health FSA, you will be reimbursed for your Eligible Expenses according to the schedule established by the Plan Administrator. Claim Deadline. You may submit claims for reimbursement of Eligible Expenses incurred during the Plan Year for ninety (90) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may be filed is referred to as the “claims run-out period.” Grace Period. You may submit claims for reimbursement of Eligible Expenses incurred after the Plan Year for up to sixty (60) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may incurred is referred to as the “grace period.” (b) Electronic Payment Card Claims. The electronic payment card allows you to pay for Eligible Expenses at the time that you incur the expense. The electronic payment card works as follows: (1) You must make an election to use the card. In order to be eligible for the electronic payment card, you must agree to abide by the terms and conditions of the electronic payment card program as set forth herein and in the electronic payment cardholder agreement (the “Cardholder Agreement”), including agreeing to any fees applicable to participate in the program, limitations as to card usage, the Plan’s right to withhold and offset ineligible claims, etc. You must agree to abide by the terms of the program each Plan Year. A Cardholder Agreement will be provided to you. The card will be turned off effective the first day of each Plan Year if you do not affirmatively agree to abide by the terms of the program for the new Plan Year. The Cardholder Agreement is part of the terms and conditions of your Plan and this Summary Plan Description. (2) The balance of the card is limited. The balance of the card is limited to the balance of your account. (3) The card will be turned off when coverage terminates. The card will be turned off when your coverage under the Health FSA terminates. (4) You must certify proper use of the card. As specified in the Cardholder Agreement, you certify during the applicable Plan Year that the amounts in your account will only be used for Eligible Expenses (i.e., medical care expenses incurred by you, your spouse, and your tax dependents), that you have not been reimbursed for the expense and that you will not seek reimbursement for the expense from any other source, and that you will obtain and retain a third party statement from the health care provider (e.g., receipt, invoice, et c.) each time you swipe the card. Failure to abide by this certification will result in termination of card use privileges. (5) Reimbursement under the card is limited to certain places where you purchase health care related items. Use of the card is limited to merchants who: (i) have health care related merchant category codes other than the drug store or pharmacies merchant category code; (ii) have the drug store or pharmacies merchant category code and with respect to whom 90% of the store’s gross receipts during the prior taxable year consisted of items that qualify as expenses for medical care under Section 213(d) of the Code (a “90% pharmacy”); or (iii) participate in an inventory information approval system developed by the © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 37 card provider that verifies, at the time of purchase, that the goods being purchased constitute medical care. (6) You swipe the card at the health care provider like you do any other credit or debit card. When you incur an Eligible Expense at a doctor’s office or pharmacy, such as a co-payment or prescription drug expense, you swipe the card at the provider’s office much like you would a typical credit or debit card. The provider is paid for the expense up to the maximum reimbursement amount available under your account (or as otherwise limited by the program) at the time you swipe the card. Every time you swipe the card, you certify to the Plan that the expense for which payment is being made is an Eligible Expense and that you have not been reimbursed by any other source nor will you seek reimbursement from another source. (7) You must obtain and retain a receipt/third party statement each time you swipe the card. You must obtain a third party statement from the health care provider (e.g. receipt, invoice, etc.) each time you swipe the card that includes the following information: (i) The nature of the expense (e.g. what type of service or treatment was provided). If the expense is for an over the counter drug, the written statement must indicate the name of the drug; (ii) The date the expense was incurred; and (iii) The amount of the expense. Although it is not required to be submitted for all purchases, you must retain this receipt for one year following the close of the Plan Year in which the expense was incurred. Even though payment may be made under the card arrangement, a written third party statement may be required to be submitted (except as otherwise provided in the Cardholder Agreement). You will receive a letter from the Claims Administrator if a third party statement is needed. If requested, you must provide the third party statement to the Claims Administrator within 30 days (or such longer period provided in the letter from the Claims Administrator) of the request. (8) There are situations where the third party statement will not be required to be provided to the Claims Administrator. There may be situations in which you will not be required to provide the written statement to the Claims Administrator, including: (i) Co-Pay Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service- providers that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the payment matches a specific co-payment you have under one of the Employer’s group health plans for the particular service that was provided or a multiple of that co-payment of not more than five (5) times the dollar amount of the co-payment. For example, if you have a $10 co-pay for physician office visits, and the payment was made to a physician office in the amount of $10, $20, $30, $40, or $50, you will not be required to provide the third party statement to the Claims Administrator. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 38 (ii) Previously Approved Claim Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service-provides that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the expense is in the same amount, for the same duration, and at the same provider as a previously approved expense (e.g. the Claims Administrator approves a 30 count prescription with 3 refills that was purchased at ABC Pharmacy; each time the card is swiped for subsequent refills at ABC Pharmacy the receipt need not be provided to the Claims Administrator if the expense incurred is the same amount). (iii) Provider Match Program. No third party statement is required to be submitted to the Claims Administrator if the electronic claim file is accompanied by an electronic or written confirmation from the health care provider (e.g. your prescription benefits manager) that verifies the amount and nature of the expense and that the expense is an eligible expense. (iv) Inventory Information Approval System. No third party statement is required to be submitted to the Claims Administrator if the electronic payment card is used at a merchant (of any kind) that participates in an inventory information approval system developed by the card provider. Such system verifies, at the time of purchase, that the goods being purchased constitute medical care. Note: You must still obtain the third party receipt when you incur the expense and swipe the card, even if you think it will not be needed, so that you will have it in the event the Claims Administrator does request it. (9) Special rules apply to the use of the electronic payment card to purchase over-the-counter drugs and medicines other than insulin. Notwithstanding the rules described above regarding the use of the card to purchase medical care, the card may be used to purchase such over-the-counter drugs and medicines only in the following circumstances: (i) At any 90% pharmacy if the expense is substantiated after the purchase in accordance with paragraph (7) above. (ii) At drug stores, pharmacies, non-health care merchants that have pharmacies, and mail order or web-based merchants that sell prescription drugs if (A) the cardholder presents the prescription to the pharmacist; (B) the pharmacist assigns a prescription number and dispenses the over- the-counter drug or medicine in accordance with applicable law; (C) the pharmacy retains a record of the transaction, including the name on prescription, prescription number, date, and the amount of the purchase; (D) the pharmacy’s records are accessible by the employer or its agent; (E) the debit card system does not allow over-the-counter drugs or medicines without a prescription number; and (F) the expense is substantiated in accordance with the standard rules described above in paragraphs (vii) and (viii). (iii) At merchants having healthcare related merchant codes (other than merchants described in item ii above) if t he expense is substantiated in © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 39 accordance with the standard rules described above in paragraphs (vii) and (viii). Note: If the over-the-counter medicine cannot be purchased with the electronic payment card, it may still be reimbursed using the manual reimbursement procedures described in paragraph (a) above. (10) You must pay back any improperly paid claims. If you are unable to provide adequate or timely substantiation as requested by the Claims Administrator within the applicable time period, the card will be turned off and you must repay the Plan for the unsubstantiated expense. The deadline for repaying the Plan is set forth in the Cardholder Agreement. If you do not repay the Plan within the applicable time period, then the amount of the improperly paid claim may be withheld from your pay (if allowed by applicable law) and/or offset against future eligible claims under the Health FSA. If the amount of the improperly paid claim is not collected in full as described herein, the remaining unpaid amount will be treated as an indebtedness to the Employer. (11) You can use either the payment card or the paper claims approach. You have the choice as to how to submit your eligible claims. If you elect not to use the electronic payment card, you may also submit claims under the paper claims approach discussed above. Claims for which the electronic payment card has been used cannot be submitted as paper claims. (12) Your use of the payment card is not a claim. The use of an electronic payment card does not constitute a “claim” under the claims procedures. 5.7 What limits apply to reimbursements under the Health FSA? You cannot be reimbursed for any expenses above the amount of your election. You also cannot be reimbursed for any expenses that were incurred before the effective date of the Health FSA, for any expenses incurred before you become a Participant in the Health FSA, or for any expenses incurred after you terminate employment or otherwise cease to be eligible for coverage under the Health FSA, unless coverage is continued. Please note that it is not necessary that you have actually paid an amount for that expense to be eligible for reimbursement. You only must have incurred the expense and not have been reimbursed or paid from another source. An expense i s "incurred" when the service which gives rise to the expense has been provided, not when you are billed or when you pay the expense. Special Rule: A special rule applies to expenses for orthodontia care. Such expenses may be reimbursed before the orthodontia care has been provided if you have actually paid the healthcare provider in advance in order to receive the services (e.g., an upfront payment required to receive services). 5.8 What is the Grace Period? “Grace Period” means the period beginning on January 1 and ending sixty (60) days later each Plan Year. Claims incurred during the Grace Period will be considered to have been incurred during both the preceding Plan Year and the current Plan Year. For example, a claim incurred on February 1, 2023 will be deemed to have been incurred during both the Plan Year running from January 1 through December 31, 2022, and the Plan Year running from January 1 through December 31, 2023. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 40 Claims incurred during the Grace Period will be first allocated to and re imbursed from your account for the preceding Plan Year until such account is exhausted. Thereafter, any such claims will be allocated to and reimbursed from your account for the current Plan Year. Claims incurred during the Grace Period will be allocated based upon the date the claim is received. Once a claim is allocated to an account, no changes, modifications, or adjustments will be allowed. In addition, no adjustment to your election for the current Plan Year may be made based upon the amount of cla ims incurred during the Grace Period that are reimbursed from the prior Plan Year’s account. NOTE: A claim incurred during the preceding Plan Year and submitted during the claims run -out period will be processed subsequent to a previously submitted claim incurred during the Grace Period, even if your account from the preceding Plan Year is exhausted by reimbursement of the claim incurred during the Grace Period. 5.9 What if I am no longer eligible? If your employment terminates, or you otherwise cease to be eligible for coverage under the Health FSA, your benefits under the Health FSA stop. You may not make any further contributions to your account, and you may not submit claims for reimbursement of expenses incurred after you terminated employment or otherwise ceased to be eligible for coverage. You may, however, continue to submit claims for expenses incurred before you terminated employment or otherwise ceased to be eligible for coverage until the expiration of the claims run out period following the end of the Plan Year described above. NOTE: This rule may differ from the rule applicable to the Dependent Care FSA. Please refer to the prior part of this summary for the rules that apply to the Dependent Care FSA. 5.10 Can coverage be continued? If your employment terminates or you otherwise cease to be eligible for the Health FSA, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA”) and the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). These continuation rights are described later in this summary. 5.11 Can I carryover my account to the next Plan Year? No. Any amounts remaining in your account attributable to a particular Plan Year shall be forfeited following the claims run-out period. You will not be entitled to receive any direct or indirect payment of any amount that represents the difference between the actual Eligible Expenses you have incurred, on the one hand, and the annual benefit you have elected and paid for, on the other. If you do not use it, you lose it. 5.12 What if I receive benefits in error? If a payment for benefits is made by the Health FSA in excess of the benefit to which you are entitled under the Health FSA, the Health FSA has the right to recover such overpayment from the payee. Repayment of an overpayment is a condition of participation in the Cafeteria Plan. 5.13 What if I am subject to a child support order? The Health FSA shall recognizes child support orders regarding the provision of medical coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998, to the extent required by law. If you are involved in a divorce or child custody matter, you or your legal counsel should contact the Plan Administrator. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 41 PART VI. HSA CONTRIBUTION FEATURE 6.1 What benefits are provided? The Cafeteria Plan permits you to elect to make contributions to a health savings account (“HSA”) under the HSA Contribution Feature. Under the HSA Contribution Feature, you provide a source of pre-tax dollars by entering into a salary reduction arrangement with your Employer. Those pre-tax dollars and the Employer contribution, if any, will be contributed to your HSA. You save Social Security and income taxes on the amount of your salary reduction for HSA contributions. Your Employer may also make contributions to your HSA. If so, your Employer will provide additional information about the amount and timing of those contributions. 6.2 Am I eligible and how do I become a Participant? To become a Participant in the HSA Contribution Feature, you must first become a Participant in the Cafeteria Plan. You must also satisfy the eligibility requirements for the HSA Contribution Feature. The HSA Contribution Feature’s eligibility requirements are, in general, the same as the eligibility requirements for the Cafeteria Plan as described in Section 1.4. In addition, you must meet certain other requirements in order to participate in the HSA Contribution Feature. To be eligible, you must: (a) be covered by the Employer’s qualifying high deductible health plan [and] (b) not have any health coverage through the Employer other than coverage under the Employer’s qualifying high deductible health plan , “Permitted Insurance,” and/or “Permitted Coverage”; [and] (c) certify to the Plan Administrator that you are eligible to make HSA contributions at the time of your initial election under the HSA Contribution Feature and periodically thereafter . If you satisfy those requirements, you become a Participant in the HSA Contribution Feature by electing benefits under the HSA Contribution Feature during your initial or subsequent annual enrollment periods. 6.3 What is Permitted Insurance and Permitted Coverage? “Permitted Insurance” is: (a) insurance in which substantially all of the coverage relates to liabilities incurred under workers’ compensation laws, tort liabilities, liabilities related to ownership or use of property, or similar liabilities as specified by the IRS; (b) insurance for specified disease or illness (e.g., cancer insurance); or (c) insurance that pays a fixed amount per day (or other period) of hospitalization (e.g., hospital indemnity insurance). “Permitted Coverage” is coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care. Permitted coverage includes some medical reimbursement accounts and health reimbursement arrangements (HRAs), such as limited scope medical reimbursement accounts and HRAs (i.e., the Limited Scope Health FSA provided through this Cafeteria Plan), HRAs for which the payment or reimbursement of medical expenses (except expenses for preventive © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 42 care, dental care, vision care, or long -term care premiums) is suspended, post-deductible medical reimbursement accounts and HRAs, and retirement HRAs. It also includes wellness programs and employee assistance programs that do not provide significant benefits in the nature of non -preventive medical care or treatment. 6.4 What is my HSA? Your HSA is a health savings account (as defined under the Internal Revenue Code) established by you with a third-party trustee/custodian (e.g., bank or insurance company) that is authorized to be the trustee of HSAs. Your Employer does not establish or sponsor your HSA. Furthermore, your Employer does not own your HSA; it is owned by you. However, for administrative convenience, your Employer choose the MEDSURETY, LLC and their trustee Wex Health to which it will forward contributions. You may invest the funds in your HSA as allowed by the trustee/custodian of the account. Your Employer has no control of or responsibility for the investment of your HSA. 6.5 What are the limits on the amount of contributions? The maximum contributions you may make through this HSA Contribution Feature shall be determined in accordance with the following rules: (a) Impact of Employer Contributions. The applicable limit on contributions, as determined in accordance with the following rules, shall be reduced by the amount of contributions made by the Employer to your HSA. (b) General Limit. During a taxable year, contributions to the HSA may not exceed the statutory indexed amount applicable under Code § 223. For the plan year, those amounts are set by the IRS if you have self-only coverage under the HDHP or if you have family HDHP coverage. (c) Catch Up Contributions. An additional “catch-up” amount (determined on a monthly basis) can be contributed if you attain age 55 before the close of the taxable year. (d) Pro-rated Limit if Not Eligible on December 1st. If you cease to satisfy the eligibility requirements described above prior to December 1st of any calendar year, your contribution limit for that year shall be determined by multiplying 1/12 of the applicable limit describe in paragraphs (a) and (b) by the number of months for which you satisfied the eligibility requirements described above (as of the first day of the month). Note: Your Employer is not be required to take an corrective action in the event the amount of your HSA contributions made prior to the date on which you cease to satisfy the eligibility requirements described above exceed this pro-rated limit. (e) Special Rule if Eligible on December 1st. If you become eligible to make contributions under this HSA Contribution Feature (as provided above) during the taxable year and you are eligible on December 1st of such year, you are deemed to have been eligible for each month in such taxable year and may make HSA contributions up to the full annual limit. This special rule applies to all contributions made during the applicable taxable year, including contributions made prior to or after December 1st. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 43 Example: If you become eligible to make HSA contributions on July 1st and you remain eligible through December 1st, you may begin making contributions to your HSA through this Plan on July 1st at a rate pursuant to which the full annual contribution will have been made by the end of the taxable year. Caution: The fact that you are participating in the HSA Contribution Feature does not necessarily mean you are eligible to contribute to an HSA. Other requirements apply. If you are ineligible for HSA contributions for reasons unknown to your Employer, your contributions under this HSA Contribution Feature may exceed the amount of contributions you are allowed to make to an HSA. You are responsible for determining whether you are eligible for HSA contributions and the limit on your contributions for any given year. Please contact your personal tax advisor for additional information. 6.6 What happens if my contributions exceed the contribution limit? If the contributions to your HSA exceed the applicable maximum contribution limit for a year, the excess contributions typically will be included in your income and an excise tax will be imposed upon them. You will also be taxed on any earnings earned on the excess amounts. However, you can avoid the excess tax if you take a distribution of the excess contributions (and the net income attributable to the excess contribution) before the last day (including extensions) for filing your federal income tax ret urn. 6.7 What are the tax consequences of the HSA Contribution Feature? The contributions made under this HSA Contribution Feature will not be included in your gross income, unless they exceed the applicable maximum contribution limit as discussed above. 6.8 What are the rules regarding distributions from my HSA? Your Employer has no control over or involvement with distributions made from your HSA. Your Employer does not substantiate expenses for which such distributions are made. Information regarding the procedure for obtaining distributions and the consequences of taking distributions is available from the trustee/custodian of your HSA. 6.9 When does my participation end? Participation in the HSA Contribution Feature ends upon the earlier of the date your part icipation in Plan ceases or the date you no longer satisfy the eligibility requirements described above. However, you need not be a participant in the HSA Contribution Feature (or be employed by the Employer) in order to obtain distributions from your HSA. In addition, you may make contributions to your HSA outside this Cafeteria Plan, provided you are eligible to do so under IRS rules, after you have left employment with the Employer or have ceased to be a participant in the Cafeteria Plan. NOTE: This HSA Contribution Feature is not a group health plan for purposes of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (COBRA), the Family and Medical Leave Act (FMLA), and the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). COBRA, FMLA, and USERRA do not apply to this HSA Contribution Feature. However, COBRA, FMLA, and USERRA may apply to the Qualifying High Deductible Health Plan. 6.10 Can the contributions made to my HSA be forfeited? No, once the contributions have been deposited in your HSA, you will have a nonforfeitable interest in the funds. You will be free to request a distribution of the funds or to move them to another provider of HSAs, to the extent allowed by law. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 44 6.11 What are the reporting requirements? Your Employer is responsible for reporting contributions made to your HSA through this HSA Contribution Feature on your Form W-2. You are also responsible for reporting contributions to your HSA, and for reporting distributions from your HSA, on appropriate forms available from the IRS. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 45 PART VII. LIMITED SCOPE HEALTH FLEXIBLE SPENDING ACCOUNT 7.1 What benefits are provided? The Cafeteria Plan permits you to elect to receive reimbursement for some or all of your uninsured medical and dental expenses under the Limited Scope Health Flexible Spending Account ("Limited Scope Health FSA"). Under the Limited Scope Health FSA, you provide a source of pre-tax dollars by entering into a salary reduction agreement with your Employer. You may also use any availabl e Employer contributions. Those pre-tax dollars will be used to reimburse you for your Eligible Expenses. You save Social Security and income taxes on the amount of your salary reduction for medical expenses. The coverage provided through the Limited Scope Health FSA is subject to the privacy and security provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). The Limited Scope Health FSA is intended to be an excepted benefit under the HIPAA portability rules. Accordingly, neither the HIPAA portability rules nor the preventative care mandate of the Patient Protection and Affordable Care Act, as amended, apply to the Limited Scope Health FSA. 7.2 How do I become a Participant? To become a Participant in the Limited Scope Health FSA, you must first become a Participant in the Cafeteria Plan. You must also satisfy the eligibility requirements for the Limited Scope Health FSA. The Limited Scope Health FSA’s eligibility requirements are the same as the eligibility requirements for the Cafeteria Plan as described in Section 1.4. If you satisfy those requirements, y ou become a Participant in the Limited Scope Health FSA by electing benefits under the Limited Scope Health FSA during your initial or subsequent annual enrollment periods. NOTE: Participation in this Limited Scope Health FSA will not make you ineligible to participate in the HSA Contribution Feature, and will not make you and any of your dependents covered by the Limited Scope Health FSA ineligible to make or receive contributions to a health savings account. 7.3 What is my limited scope medical expense account? If you elect benefits under the Limited Scope Health FSA, an account will be established in your name to keep a record of the benefits to which you are entitled. When you complete the election form, you specify the amount of benefits you wish to receive. These benefits may be funded by allocation of any available Employer contribution and, to the extent the Employer contribution is insufficient, with pre-tax dollars through salary reduction contributions. The full amount of your election under the Limited Scope Health FSA will be available at any time during the Plan Year, reduced by the amount of prior reimbursements under the Limited Scope Health FSA received during the Plan Year. The Limited Scope account is a bookkeeping account only. Benefits under the Limited Scope Health FSA are paid from the Employer’s general assets. There is no trust. 7.4 What are the maximum reimbursements I may receive? The maximum amount of medical expense reimbursements is the IRS maximum per Plan Year. The minimum election is $500 per participant per Plan Year. To receive the full maximum, you must also include any Employer contribution allocated to the Limited Scope Health FSA . For a short Plan Year, the maximum is unchanged for the number of pay periods remaining in the Plan Year. If you enter the plan © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 46 mid-year, this maximum amount will be unchanged for the number of pay periods remaining in the Plan Year. 7.5 What is an "Eligible Expense"? (a) Generally. An “Eligible Expense,” in most situations, means an expense; (1) for which you could have claimed a dental or vision expense deduction on an itemized federal income tax return; (2) for which you have not otherwise been reimbursed from dental or vision coverage, or some other source ; and (3) that is either: (i) incurred during the applicable Plan Year, but after the applicable “minimum annual deductible” has been satisfied, for any type of dental or vision care; or (ii) incurred at any time during the app licable Plan Year for dental or vision care. Eligible Expenses include expenses incurred by you and your “spouse” and “dependents.” “Minimum annual deductible” means the applicable minimum annual deductible for a high deductible health plan under Section 223(c)(2)(A)(i) of the Internal Revenue Code. This amount typically changes from year to year. If you have either a Spouse or Dependents during the Plan Year, the minimum annual deductible will be the minimum deductible for family coverage. If you have no Spouse or Dependents during the Plan Year, the minimum annual deductible will be the minimum deductible for single coverage. For purposes of determining whether the minimum annual deductible has been satisfied, only expenses that count toward the deductible under high deductible medical plan will be taken into account. For purposes of this Limited Scope Health FSA, “spouse” means a person to whom you are legally married in accordance with applicable state law. For purposes of this Limited Scope Health FSA, “dependent” generally includes an individual who satisfies the requirements of paragraph (1), (2), or (3) below: (1) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption); and (ii) will not attain age 27 during the relevant calendar year. (2) An individual who: (i) is your child (son, daughter, stepson, stepdaughter, adopted child, eligible foster child, or child placed for adoption), brother, sister, stepbrother, or stepsister, or a descendant of any such person; (ii) has the same principal place of abode as you for at least one -half of the relevant year; (iii) will not attain age 19 (or age 24 if a full time student) during the relevant year or is permanently and totally disabled; (iv) did not provide over half of his/her own support during the relevant year; (v) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico; © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 47 (vi) is younger than you (unless he/she is permanently and totally disabled); and (vii) does not file a joint tax return with his or her spouse. (3) An individual who: (i) is your child (or a descendant of a child), brother, sister, stepbrother, or stepsister, parent (or a parent’s ancestor), stepparent, brother or sister’s son or daughter, parent’s brother or sister, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law or, if not such a relative, an individual who has the same principal place of abode as you and is a member of your household; (ii) has received more than one-half of his/her support from you during the relevant year; (iii) is not your qualifying child or the qualifying child of anyone else (i.e., does not satisfy the requirements of paragraph (1) above with respect to any person); and (iv) is a citizen, national, or resident of the United States, or a resident of Canada or Mexico. NOTE: The definition “dependent” is different than the definition applicable under the Internal Revenue Code for purposes of identifying who you may claim as an exemption on your federal income tax return. Furthermore, an individual eligible for dependent coverage under the Group Medical Plan is not necessarily a “dependent” for purposes of the Limited Scope Health FSA. Additional special rules apply in some cases. For additional information, please contact the Plan Administrator or your tax advisor. (b) Rules for over-the-counter items. Eligible Expense includes certain over-the-counter items that constitute medical care even though a tax deduction is not available (to the extent they otherwise satisfy the definition of Eligible E xpense). Over-the-counter drugs and medicines incurred on or after January 1, 2020, no longer require a prescription to be an Eligible Expense. (c) Exceptions. Despite the general rule stated above, Eligible Expense does not include premiums for any group or individual health plan or long term care coverage. IMPORTANT: Please review the “Dental & Orthodontic Care” and “Vision Care” sections of Exhibit A—Eligible Medical Care Expenses. You are also encouraged to consult your personal tax advisor or IRS Publication 502, "Medical and Dental Expenses” for further guidance as to what is or is not an Eligible Expense. CAUTION: Publication 502 addresses medical care expenses a person may deduct on his or her income taxes. Many, but not all¸ dental and vision care expenses that are tax deductible are also reimbursable under the Limited Scope Health FSA. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 48 7.6 How do I receive my reimbursements under the Limited Scope Health FSA? (a) Periodic Reimbursements. When you incur an expense that is eligible for reimbursement, you submit a claim to the Claims Administrator on a claim form that will be supplied to you. The claim form may be submitted via email, facsimile, mail, or the Claims Administrator’s website. The claim form will typically set forth: (1) the amount, date and nature of the expense, (2) the name of the person or entity to which the expense was paid, (3) your statement that the expense has not been reimbursed, and you will not seek reimbursement for the expense, from any other source, and (4) such other information as the Plan Administrator may require, including copies of bills or receipts from the provider(s) to support your claim. If there are enough dollars credited to your Limited Scope Health FSA, you will be reimbursed for your Eligible Expenses according to the schedule established by the Plan Administrator. Claims Deadline. You may submit claims for reimbursement of Eligible Expenses incurred during the Plan Year for ninety (90) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may be filed is referred to as the “claims run-out period.” Grace Period. You may submit claims for reimbursement of Eligible Expenses incurred after the Plan Year for up to sixty (60) days following the end of that Plan Year. This period following the end of the Plan Year during which claims for reimbursement may incurred is referred to as the “grace period.” (b) Electronic Payment Card Claims. The electronic payment card allows you to pay for Eligible Expenses at the time that you incur the expense. The electronic payment car d works as follows: (1) You must make an election to use the card. In order to be eligible for the electronic payment card, you must agree to abide by the terms and conditions of the electronic payment card program as set forth herein and in the electronic payment cardholder agreement (the “Cardholder Agreement”), including agreeing to any fees applicable to participate in the program, limitations as to card usage, the Plan’s right to withhold and offset ineligible claims, etc. You must agree to abide by the terms of the program each Plan Year. A Cardholder Agreement will be provided to you. The card will be turned off effective the first day of each Plan Year if you do not affirmatively agree to abide by the terms of the program for the new Plan Year. The Cardholder Agreement is part of the terms and conditions of your Plan and this Summary Plan Description. (2) The balance of the card is limited. The balance of the card is limited to the balance of your account. (3) The card will be turned off when coverage terminates. The card will be turned off when your coverage under the Limited Scope Health FSA terminates. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 49 (4) You must certify proper use of the card. As specified in the Cardholder Agreement, you certify during the applicable Plan Year that the amounts in your account will only be used for Eligible Expenses (i.e., medical care expenses incurred by you, your spouse, and your tax dependents), that you have not been reimbursed for the expense and that you will not seek reimbursement for the expense from any other source, and that you will obtain and retain a third party statement from the health care provider (e.g., receipt, invoice, etc.) each time you swipe the card. Failure to abide by this certification will result in termination of card use privileges. (5) Reimbursement under the card is limited to certain places where you purchase health care related items. Use of the card is limited to merchants who: (i) have health care related merchant category codes other than the drug store or pharmacies merchant category code; (ii) have the drug store or pharmacies merchant category code and with respect to whom 90% of the store’s gross receipts during the prior taxable year consisted of items that qualify as expenses for medical care under Section 213(d) of the Code (a “90% pharmacy”); or (iii) participate in an inventory information approval system developed by the card provider that verifies, at the time of purchase, that the goods being purchased constitute medical care. (6) You swipe the card at the health care provider like you do any other credit or debit card. When you incur an Eligible Expense at a doctor’s office or pharmacy, such as a co-payment or prescription drug expense, you swipe the card at the provider’s office much like you would a typical credit or debit card . The provider is paid for the expense up to the maximum reimbursement amount available under your Limited Scope account (or as otherwise limited by the program) at the time you swipe the card. Every time you swipe the card, you certify to the Plan that the expense for which payment is being made is an Eligible Expense and that you have not been reimbursed by any other source nor will you seek reimbursement from another source. (7) You must obtain and retain a receipt/third party statement each time you swipe the card. You must obtain a third party statement from the health care provider (e.g. receipt, invoice, etc.) each time you swipe the card that includes the following information: (i) The nature of the expense (e.g. what type of service or treatment was provided). If the expense is for an over the counter drug, the written statement must indicate the name of the drug; (ii) The date the expense was incurred; and (iii) The amount of the expense. Although it is not required to be submitted for all purchases, you must retain this receipt for one year following the close of the Plan Year in which the expense was incurred. Even though payment may be made under the card arrangement, a written third party statement may be required to be submitted (except as otherwise provided in the Cardholder Agreement). You will receive a letter from the Claims Administrator if a third party statement is needed. If requested, you must provide the third party statement to the Claims Administrator within 30 days (or such longer period provided in the letter from the Claims Administrator) of the request. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 50 (8) There are situations where the third party statement will not be required to be provided to the Claims Administrator. There may be situations in which you will not be required to provide the written statement to the Claims Administrator, including: (i) Co-Pay Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service- providers that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the payment matches a specific co-payment you have under any of the Employer’s group health plans for the particular service that was provided or a multiple of that co-payment of not more than five (5) times the dollar amount of the co-payment. For example, if you have a $10 co-pay for physician office visits, and the payment was made to a physician office in the amount of $10, $20, $30, $40, or $50, you will not be required to provide the third party statement to the Claims Administrator. (ii) Previously Approved Claim Match. No written statement is required if the electronic payment card is used at medical care providers (i.e., merchants or service-provides that have health care related merchant category codes such as physicians, pharmacies, dentists, vision care offices, and hospitals) and the expense is in the same amount, for the same duration, and at the same provider as a previously approved expense (e.g. the Claims Administrator approves a 30 count prescription with 3 refills that was purchased at ABC Pharmacy; each time the card is swiped for subsequent refills at ABC Pharmacy the receipt need not be provided to the Claims Administrator if the expense incurred is the same amount). (iii) Provider Match Program. No third party statement is required to be submitted to the Claims Administrator if the electronic claim file is accompanied by an electronic or written confirmation from the health care provider (e.g. your prescription benefits manager) that verifies the nature and amount of the expenses and that the expense is an eligible expense. (iv) Inventory Information Approval System. No third party statement is required to be submitted to the Claims Administrator if the electronic payment card is used at a merchant (of any kind) that participates in an inventory information approval system developed by the card provider. Such system verifies, at the time of purchase, that the goods being purchased constitute medical care. Note: You must still obtain the third party receipt when you incur the expense and swipe the card, even if you think it will not be needed, so that you will have it in the event the Claims Administrator does request it. (9) Special rules apply to the use of the electronic payment card to purchase over-the-counter drugs and medicines other than insulin. Notwithstanding the rules described above regarding the use of the card to purchase medical care, the card may be used to purchase such over-the-counter drugs and medicines only in the following circumstances: © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 51 (i) At any 90% pharmacy if the expense is substantiated after the purchase in accordance with paragraph (7) above. (ii) At drug stores, pharmacies, non-health care merchants that have pharmacies, and mail order or web-based merchants that sell prescription drugs if (A) the cardholder presents the prescription to the pharmacist; (B) the pharmacist assigns a prescription number and dispenses the over- the-counter drug or medicine in accordance with applicable law; (C) the pharmacy retains a record of the transaction, including the name on prescription, prescription number, date, and the amount of the purchase; (D) the pharmacy’s records are accessible by the employer or its agent; (E) the debit card system does not allow over-the-counter drugs or medicines without a prescription number; and (F) the expense is substantiated in accordance with the standard rules described above in paragraphs (vii) and (viii). (iii) At merchants having healthcare related merchant codes (other than merchants described in item ii above) if the expense is substantiated in accordance with the standard rules described above in paragraphs (vii) and (viii). Note: If the over-the-counter medicine cannot be purchased with the electronic payment card, it may still be reimbursed using the ma nual reimbursement procedures described in paragraph (a) above. (10) You must pay back any improperly paid claims. If you are unable to provide adequate or timely substantiation as requested by the Claims Administrator within the applicable time period, the card will be turned off and you must repay the Plan for the unsubstantiated expense. The deadline for repaying the Plan is set forth in the Cardholder Agreement. If you do not repay the Plan within the applicable time period, then the amount of the improperly paid claim may be withheld from your pay (if allowed by applicable law) and/or offset against future eligible claims under the Health FSA. If the amount of the improperly paid claim is not collected in full as described herein, the remaining unpaid amount will be treated as an indebtedness to the Employer. (11) You can use either the payment card or the paper claims approach. You have the choice as to how to submit your eligible claims. If you elect not to use the electronic payment card, you may also submit claims under the paper claims approach discussed above. Claims for which the electronic payment card has been used cannot be submitted as paper claims. (12) Your use of the payment card is not a claim. The use of an electronic payment card does not constitute a “claim” under the claims procedures. 7.7 What limits apply to reimbursements under the Limited Scope Health FSA? You cannot be reimbursed for any expenses above the amount of your election. You also cannot be reimbursed for any expenses that were incurred before the effective date of the Limited Scope Health FSA, for any expenses incurred before you become a Participa nt in the Limited Scope Health FSA, or for any expenses incurred after you terminate employment or otherwise cease to be eligible for coverage under the Limited Scope Health FSA, unless coverage is continued. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 52 Please note that it is not necessary that you have actually paid an amount for that expense to be eligible for reimbursement. You only must have incurred the expense and not have been reimbursed or paid from another source. An expense is "incurred" when the service which gives rise to the expense has been provided, not when you are billed or when you pay the expense. Special Rule: A special rule applies to expenses for orthodontia care. Such expenses may be reimbursed before the orthodontia care has been provided if you have actually paid the healt hcare provider in advance in order to receive the services (e.g., an upfront payment required to receive services). 7.8 What is the Grace Period? “Grace Period” means the period beginning on January 1 and ending on March 15 each Plan Year. Claims incurred during the Grace Period will be considered to have been incurred during both the preceding Plan Year and the current Plan Year. For example, a claim incurred on March 1, 20 18 will be deemed to have been incurred during both the Plan Year running from January 1 through December 31, 2017, and the Plan Year running from January 1 through December 31, 2018. Claims incurred during the Grace Period will be first allocated to and reimbursed from your Limited Scope account for the preceding Plan Year until such account is exhausted. Thereafter, any such claims will be allocated to and reimbursed from your Limited Scope account for the current Plan Year. Claims incurred during the Grace Period will be allocated based upon the date the claim is received. Once a cl aim is allocated to an account, no changes, modifications, or adjustments will be allowed. In addition, no adjustment to your election for the current Plan Year may be made based upon the amount of claims incurred during the Grace Period that are reimbursed from the prior Plan Year’s account. NOTE: A claim incurred during the preceding Plan Year and submitted during the claims run -out period will be processed subsequent to a previously submitted claim incurred during the Grace Period, even if your Limited Scope account from the preceding Plan Year is exhausted by reimbursement of the claim incurred during the Grace Period. 7.9 What if I am no longer eligible? If your employment terminates, or you otherwise cease to be eligible for coverage under the Limited Scope Health FSA, your benefits under the Limited Scope Health FSA stop. You may not make any further contributions to your Limited Scope account, and you may not submit claims for reimbursement of expenses incurred after you terminated employment or otherwise ceased to be eligible for coverage. You may, however, continue to submit claims for expenses incurred before you terminated employment or otherwise ceased to be eligible for coverage until the expiration of the claims run out period following the end of the Plan Year described in Section 4.5. NOTE: This rule may differ from the rule applicable to the Dependent Care FSA. Please refer to the part of this summary describing the Dependent Care FSA for the rules that apply to the Dependent Care FSA. 7.10 Can coverage be continued? If your employment terminates or you otherwise cease to be eligible for the Limited Scope Health FSA, you and any others who receive their coverage through you may be able to continue that coverage. Continuation coverage is available in accordance with the Consolidated Omnibu s Budget Reconciliation Act of 1985 ("COBRA”) and the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"). These continuation rights are described later in this summary. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 53 7.11 Can I carryover my Limited Scope account to the next Plan Year? No. Any amounts remaining in your Limited Scope account attributable to a particular Plan Year shall be forfeited following the claims run-out period described in Section 4.5. You will not be entitled to receive any direct or indirect payment of any amount that represents the difference between the actual dependent care expenses you have incurred, on the one hand, and the annual benefit you have elected and paid for, on the other. If you do not use it, you lose it. 7.12 What if I receive benefits in error? If a payment for benefits is made by the Limited Scope Health FSA in excess of the benefit to which you are entitled under the Limited Scope Health FSA, the Limited Scope Health FSA has the right to recover such overpayment from the payee. Repayment of an overpayment is a condition of participation in the Cafeteria Plan. 7.13 What if I am subject to a child support order? The Limited Scope Health FSA shall recognizes child support orders regarding the provision of medical coverage for a child, including orders under the Child Support Performance and Incentive Act of 1998, to the extent required by law. If you are involved in a divorce or child custody matter, you or your legal counsel should contact the Plan Administrator. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 54 PART VIII. CASH PAYMENT 8.1 What benefits are provided? The Plan permits you to receive a cash payment of all or a portion of the available Employer contribution not allocated for the purchase of other benefits under the Cafeteria Plan. 8.2 How do I become a Participant? To become a Participant in this portion of the Cafeteria Plan, you must first become a Participant in the Cafeteria Plan. If you satisfy those requirements, you become a Participant in this portion of the Cafeteria Plan by waiving coverage under the Group Medical Plan or enrolling in the Group Medical Plan with coverage for Employee Only, Employee Plus Children or Employee Plus Spouse. If you enroll in Employee Plus Family Group Medical you will cease to be eligible for cash payments under this portion of the Plan. To waive coverage under the Group Medical Plan, you must complete and submit a “waiver of coverage” form available from the Plan Administrator. 8.3 What amount of cash may I receive? Employees waiving Group Medical: receive $180.16 monthly. Employees selecting Employee Only Medical: receive $180.16 monthly. Employee selecting Employee Plus Children Medical: You may receive $333.13 monthly Employee selecting Employee Plus Spouse: receive up to $47.99 monthly Employee selecting Employee Plus Family: receive no cash payment. 8.4 When is the cash payment made? The cash payment will be pro-rated and made in substantially equal installments each month. The payments will be made by a separate check or incorporated into the Participant's regular paycheck. All cash payments constitute taxable income and are subject to withholding to the extent required by law. 8.5 What if I am no longer eligible? If your employment terminates, or you otherwise ceas e to be eligible to participate in the Cafeteria Plan, the cash payments cease. Only Participants are eligible to receive a cash payment. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 55 PART X. CONTINUATION COVERAGE 10.1 What are my continuation rights under COBRA? The Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA”) requires most employers with twenty (20) or more employees to offer employees and their families (spouse and/or dependent children) the opportunity to pay for a temporary extension of hea lth coverage (called "continuation coverage") at group rates in certain instances where health coverage under employer sponsored group health plan(s) would otherwise end. There is no requirement that a person be insurable to elect continuation coverage. However, a person who continues coverage may have to pay all of the premium for the continuation coverage. The Group Medical Plan, Group Dental Plan, Health Flexible Spending Account, and Limited Scope Health Flexible Spending Account shall be operated consistent with COBRA. Please refer to the Employer’s COBRA policies and procedures contained in a separate document and is incorporated by reference into this summary. This document is available to you upon request, at no charge. 10.2 What special COBRA rules apply to the Health FSA and Limited Scope Health FSA? Modified COBRA continuation coverage rules apply to the Health FSA and Limited Scope Health FSA. Continuation coverage is generally available on the same terms and conditions that apply to the group health plans. There are, however, several differences. For example, the beginning date of the continuation coverage is earlier. If elected, continuation coverage begins on the date of the qualifying event . Furthermore, the maximum duration of the continuation coverage is much shorter. If the account is “underspent” at the time of the loss, the maximum duration of COBRA is through the end of the Plan Year in which the loss takes place. If the account is “overspent” at the time of the loss, there is no requ irement that COBRA be offered. Underspent. An account is UNDERSPENT when the remaining annual limit (elected annual limit minus expenses reimbursed as of date of COBRA qualifying event) is greater than the maximum COBRA premium (sum of monthly contributi ons for the rest of the plan year plus 2%) that can be charged for the rest of the plan year. Overspent. An account is OVERSPENT when the remaining annual limit (elected annual limit minus expenses reimbursed as of date of COBRA qualifying event) is less than the maximum COBRA premium (sum of monthly contributions for the rest of the plan year plus 2%) that can be charged for the rest of the plan year. 10.3 What are my continuation rights under USERRA? If you are called to active duty in the uniformed services, you may elect to continue coverage for you and your eligible dependents under USERRA for a period of up to 24 months. You and your eligible dependents qualify for this extension if you are called into active or reserve duty, whether voluntary or involuntary, in the Armed Forces, the Army National Guard, the Air National Guard, full -time National Guard duty (under a federal, not a state, call-up), the commissioned corps of the Public Health Services and any other category of persons designated by the President of the United States. This continuation right is similar to, and runs concurrent with, your continuation right under COBRA (if any). The Group Medical Plan, Group Dental Plan, Health Flexible Spending Account, and Limited Scope Health Flexible Spending Account shall be operated consistent with USERRA and pursuant to USERRA policies and procedures contained in a separate document and is incorporated by reference into this Cafeteria Plan. This document is available to you upon request, at no charge. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 56 10.4 What are my continuation and/or conversion rights for group health plan coverage under state law? Some, but not all, states require continuation and/or conversion of group health insurance (including medical, dental, and vision insurance) upon certain events. If provided under applicable state law, your continuation and/or conversion rights, and the r ights of those who are covered through you, are described in the separate materials that have been provided to you either directly by the carrier (the insurance company) or by your Employer. If you have not been provided this information, you should contact the Plan Administrator. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 57 PART XI. FAMILY AND MEDICAL LEAVE ACT The Family and Medical Leave Act of 1993 (“FMLA”) imposes certain obligations on employers with fifty (50) or more employees. This Cafeteria Plan shall be administered in a manner consistent with the FMLA and the Employer’s FMLA Policy required thereunder. You will be provided with a complete explanation of FMLA rights and responsibilities. In the event you are entitled and elect to continue coverage under the Plan during an FMLA leave, such coverage shall terminate if your FMLA leave expires and you do not return to work. NOTE: You should contact your Employer regarding any FMLA questions. The Claims Administrator does not have authority to make these decisions. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 58 PART XII. ADMINISTRATIVE INFORMATION Plan: Plan Name: City of Orono Cafeteria Plan Plan Type: Section 125 Cafeteria Plan Employer, Plan Administrator, and Agent for Service of Legal Process: Name: City of Orono Address: 2750 Kelley Parkway City, State Zip: Orono, MN 55356 Phone/Fax Number: 952-249-4600 / 952-249-4611 EIN: 41-6008585 Contact Person: Ronald Olson rolson@ci.orono.mn.us Claims Administrator: Name: MEDSURETY, LLC Address: 18001 Hwy 7 City, State Zip: Minnetonka, MN 55345 Phone/Fax Number: 952-303-5700 / 952-856-2656 PLAN NAME PLAN TYPE City of Orono Cafeteria Plan City of Orono Group Medical Plan City of Orono Group Dental Plan Section 125 Cafeteria Plan Health and Accident Health and Accident City of Orono Dependent Care Flexible Spending Account Dependent Care Assistance Plan City of Orono Health Flexible Spending Account Health and Accident City of Orono Limited Scope Health Flexible Spending Account City of Orono HSA Health and Accident Health Savings Account Contribution Feature This Plan does not have a trust; therefore, there are no trustees. © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 59 EXHIBIT A Eligible Medical Care Expenses Health FSA. Medical and dental expenses that qualify as expenses for medical care under I nternal Revenue Service rules generally qualify as Eligible Expenses for reimbursement under the Health FSA. Those may take the form of co-pays, deductibles, and medical expenses not covered by other insurance. Often expenses that qualify for deductions under IRS rules are Eligible Expenses, but in some instances expenses that are deductible will not be reimbursable and expenses that are not deductible will be reimbursable. Some specific examples are identified below. The following is not an exhaustive list and there are other expenses that are eligible if they satisfy the IRS rules. Limited Scope Health FSA. Only a limited number of the following expenses are Eligible Expenses for reimbursement under the Limited Scope Health FSA. The expenses must be for dental and vision care. Dental care expenses are primarily listed under the “Dental & Orthodontic Care” section. Vision care expenses are primarily listed under the “Vision Care” section. Dental & Orthodontic Care Allowable expenses: • Dental treatment • Artificial teeth/dentures • Braces, orthodontic devices Expenses specifically disallowed by the IRS or courts: • Teeth whitening • Toothbrushes and toothpaste, even if special type is recommended by dentist Therapy Treatments Allowable expenses: • X-ray treatments • Treatment for alcoholism or drug dependency • Legal sterilization • Acupuncture • Vaccinations • Hair transplant to treat specific medical conditions • Physical therapy (as a medical treatment) • Fee to use swimming pool for exercises prescribed by physician to alleviate specific medical condition such as rheumatoid arthritis • Speech therapy • Smoking cessation programs and drugs to alleviate nicotine withdrawal Expenses specifically disallowed by the IRS or courts: • Physical treatments unrelated to a specific health problem (e.g., massage for general well being) • Any illegal treatment • Cosmetic surgery • Treatment for baldness (unless it is for a specific medical condition and not for cosmetic purposes) • Electrolysis (unless it is for a specific medical condition and not for cosmetic purposes) Fees/Services Allowable expenses: • Physician’s fees and hospital services • Nursing services for care of a specific medical ailment • Cost of a nurse’s room and board if paid by the taxpayer where nurse’s services qualify • Social Security tax paid with respect to wages of a nurse where nurse’s services qualify • Services of chiropractors • Christian Science practitioner fees • Diagnostic tests Expenses specifically disallowed by the IRS or courts: • Payments to domestic help, companion, babysitter, chauffeur, etc. who primarily render services of a non-medical nature • Nursemaids or practical nurses who render general care for healthy infants • Fees for exercise, athletic, or health club membership when there is no specific health reason for needing membership • Marriage counseling provided by clergyman Hearing Expenses Allowable expenses: • Hearing aids and hearing aid batteries • Hearing aid repair • Special telephone equipment © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 60 Medicine and Drugs Allowable expenses: • Medicine and drugs that require a prescription • Insulin • Over the counter medicine and drugs when used to alleviate or treat personal injuries or sickness (including antacids, antihistamines, aspirin/pain relievers, bandages, cold medicines, acne medicine, etc.) Expenses specifically disallowed by the IRS or courts: • Medicine and drugs for personal, general health, or cosmetic purposes • Dietary supplements if for general health Medical Equipment Allowable expenses: • Blood sugar test kits • Wheelchair or autoette (cost of operating/maintaining) • Crutches (purchased or rented) • Special mattress & plywood boards prescribed to alleviate arthritis • Oxygen equipment and oxygen used to relieve breathing problems that result from a medical condition • Artificial limbs • Support hose (if medically necessary) • Wigs (where necessary to mental health of individual who loses hair because of disease) • Excess cost of orthopedic shoes over cost of ordinary shoes • Breast pumps for nursing mothers Expenses specifically disallowed by the IRS or courts: • Wigs, when not medically necessary for mental health • Vacuum cleaner purchased by an individual with dust allergy • Mechanical exercise device not specifically prescribed by physician Physicals Allowable expenses: • Physicals and other well visits • Immunizations Expenses specifically disallowed by the IRS or courts: • Physicals for employment purposes Vision Care Allowable expenses: • Optometrist’s or ophthalmologist’s fees • Eyeglasses and prescription sunglasses • Insurance for replacement of lost or damaged contact lenses • Contact lens and contact lens solutions • Laser eye surgery Assistance for the Handicapped Allowable expenses: • Cost of guide for a blind person • Cost of note-taker for a deaf child in school • Cost of Braille books and magazines in excess of cost of regular editions • Seeing eye dog (cost of buying, training and maintaining) • Household visual alert system for deaf person • Excess costs of specifically equipping automobile for handicapped person over cost of ordinary automobile; device for lifting handicapped person into automobile • Special devices, such as tape recorder and typewriter, for a blind person © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 61 Psychiatric Care Allowable expenses: • Services of psychotherapists, psychiatrists and psychologists Expenses specifically disallowed by the IRS or courts: • Psychoanalysis undertaken to satisfy curriculum requirements of a student Miscellaneous Charges Allowable expenses: • X-rays • Expenses for services connected with donating an organ • Excess cost of medically prescribed diet • The cost of a medically prescribed weight loss program • Breast reconstructive surgery following mastectomy as part of treatment for cancer • Contraceptives • Fertility treatments • Medical records charges • Bandages • Lactation supplies for nursing mothers • Cost of transportation primarily for and essential to medical care (e.g., the expense of traveling to and from a medical service provider) • Menstrual care products, which include tampons, pads, liners, cups, sponges, or similar products used by individuals with respect to menstruation or other genital-tract secretions Expenses specifically disallowed by the IRS or courts: • Expenses of divorce when doctor or psychiatrist recommends divorce • Cost of toiletries, cosmetics, and sundry items (e.g., soap, toothbrushes) • Cost of special foods taken as a substitute for regular diet, when the special diet is not medically necessary or taxpayer cannot show cost in excess of cost of a normal diet • Maternity clothes • Diaper service • Distilled water purchased to avoid drinking fluoridated county water supply • Installation of power steering in automobile • Pajamas purchased to wear in hospital • Mobile telephone used for personal calls as well as calls to physician • Union dues for sick benefits for members • Contributions to state disability funds • Auto insurance providing medical coverage for all persons injured in or by the taxpayer’s automobile, where amounts allocable to taxpayer and dependent is not stated separately • Long-term care services • Funeral expenses Insurance Allowable expenses: • None Expenses specifically disallowed by the IRS or courts: • Health insurance premiums (including individual and non-employer sponsored coverage and continuation premiums) • Long term care insurance premiums © Hitesman & Wold, P.A. 2019 Cafeteria Plan Summary Description (3-11) 62 E X H I B I T B DEPENDENT CARE FSA v. Claiming Dependent Care Tax Credit EXAMPLE – MARRIED EMPLOYEE WITH TWO CHILDREN EARNING $48,000 DEPENDENT CARE FSA CLAIMING DEPENDENT CARE TAX CREDIT 1. W-2 Gross Wages (both spouses combined) $48,000.00 $48,000.00 2. DEPENDENT CARE FSA Salary Reductions -$5,000.00 $0.00 3. W-2 Gross Wages $43,000.00 $48,000.00 4. Standard Deduction -$11,400.00 -$11,400.00 5. Exemptions (4 individuals x $3,650) -$14,600.00 -$14,600.00 6. Taxable Income (line 3 minus lines 4 and 5) $17,000.00 $22,000.00 Calculation of Disposable Income 7. W-2 Gross Wages $43,000.00 $48,000.00 8. Out-of-Pocket Dependent Care Expenses Not Reimbursed by DEPENDENT CARE FSA $0.00 -$5,000.00 9. FICA Tax (calculated separately on each spouse's share of the wages) -$3,290.00 -$3,672.00 10. Federal Income Tax (line 6 @ tax schedule) -$1,713.00 -$2,463.00 11. Non-Refundable Dependent Care Tax Credit $0.00 $1,000.00 12. Non-Refundable Child Tax Credit $1,713.00 $1,463.00 13. Refundable Earned Income Tax Credit $500.00 $0.00 14. Refundable Additional Child Tax Credit $287.00 $537.00 15. Refundable Making Work Pay Credit $800.00 $800.00 15. Disposable Income (line 7 minus lines 8-10 plus lines 11-14) $41,297.00 $40,665.00 Caution: This is just an illustration of how a comparison should be done and how many factors are involved. Each person’s situation is different. You are encouraged to consult your personal tax adviser or IRS Publication 503, “Child and Dependent Care Expenses” for further guidance. AGENDA ITEM Prepared By: J. Lemons Reviewed By: A. Carlson Approved By: 1. Purpose. The purpose of this action item is seek approval to hire a full-time maintenance employee within the Parks Department and to begin the process of recruiting the new employee. The position is a full-time Parks Maintenance Worker. 2. Background. The Parks Department will be implementing a pesticide program for the parks and golf course in 2023. An additional employee would ensure that park maintenance could continue uninterrupted while the pesticide program is running. The Parks Department has also taken on the additional responsibility of facilities management for the City of Orono. The HR Committee has been briefed on the proposal and have supported the additional position. 3. Recruitment. The Parks Maintenance Worker position is critical to meet maintenance needs of the parks system, trails, and outdoor public spaces. The selection process for the vacant position will involve advertising the position, application screening, an interview panel, and reference checking. Upon completion of the process, a candidate will be presented to the council for consideration for appointment. 4. Position Description. The position description details a wide range of tasks to maintain the city parks, trails, natural/open space, grounds, playground equipment, and lake access points. The position will be a Grade 7 position in the Orono Employee Compensation Plan. 5. Timeline. The timeline for the process is as follows: When What 11 October 2022 Advertise Position 25 October 2022 Review Applications 1 November 2022 Interviews 14 November 2022 Council Approval/Appointment 28 November 2022 New Employees First Day 6. Funding. The position was vetted by the City Human Resources committee and budgeted for in the 2023 Parks Operating Budget. For November and December 2022, we plan to use uncommitted seasonal worker salary funds. COUNCIL ACTION REQUESTED Motion to approve the initiation of the recruitment process. Item No.: 7 Date: October 10, 2022 Item Description: Approval to Begin Recruiting Process Full Time Parks Maintenance Worker Presenter: Joshua Lemons Parks and Golf Superintendent Agenda Section: Consent Agenda AGENDA ITEM Prepared By: LLO Reviewed By: A.Carlson Approved By: 1. Purpose. This application is regarding side yard and street yard setback variances in order to construct an attached garage. 2. MN§15.99 Application Deadline. The application was received on August 16, 2022 and considered to be complete on August 16, 2022. Therefore the 60-Day review period expires on October 17, 2022. 3. Background/ Summary. The applicants are requesting a variance from the 30-foot street yard setback in order to construct a two car garage addition to the home. The garage addition is proposed to be set back approximately 15 feet from the street property line (Elmwood Ave), where a 30-foot setback is required. A walkway is also proposed to be constructed with decking material 5.9’ from the side lot line where a 7.5’ setback is required. The existing detached garage currently encroaches 2 feet into the right- of-way, outside the property boundary; the existing side walkway encroaches 4’ into the side yard setback. The proposed project improves the street and side yard setback from the existing conditions. 4. Planning Commission Vote and Comment. On September 19, 2022, the Planning Commission held a public hearing. Following the public hearing the Planning Commission voted 7 to 0 on a motion to approve the requested variances as applied. 5. Public Comment. The applicant submitted letters of support from the abutting neighbors, Exhibit D. 6. Staff Recommendation. Staff recommends approval. COUNCIL ACTION REQUESTED Motion to adopt Resolution No. 7296. Exhibits A. Draft Resolution No. 7296 B. Proposed Plans C. Draft PC Minutes 09/19/2022 D. Public Comment E. PC Staff Report 09/19/2022 References PC Exhibits 09/19/2022 A. Application and Narrative B. Practical Difficulties Documentation Form C. Existing & Proposed Survey/Site Plan D. Proposed Plans and Elevations E. Submitted Hardcover Calculations F. Neighbor Letters of support. G. Site Photos H. Plat Map and Mailing List Item No.: 8 Date: October 10, 2022 Item Description: LA22-000045 – Addilay Homes o/b/o Robert Hannah, 1153 Elmwood Avenue, Variance – Resolution No. 7296 Presenter: Laura Oakden Community Development Director Agenda Section: Consent Agenda AGENDA ITEM Prepared By: LLO Reviewed By: A.Carlson Approved By: I. Wetland NOD J. Septic Compliance & As-Built Site Plan K. Property Owners List L. Plat Map CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7296 1 A RESOLUTION APPROVING VARIANCES FROM MUNICIPAL ZONING CODE SECTION 78-330 FILE NO. LA22-000045 WHEREAS, on August 16, 2022, Addilay Homes, (hereinafter the “Applicants”), applied for a variance from the City Code for the property addressed 1153 Elmwood Avenue and legally described as: Lots 8 and 19, “Skarp and Lindquist’s Fernhill, Lake Minnetonka”, Hennepin County, Minnesota (hereinafter the “Property”); WHEREAS, the Applicants have made application to the City of Orono for a variance to Orono Municipal Zoning Code Section 78-330 to allow construction of an attached garage addition 15 feet from the rear property line where a 30 foot setback is required; and WHEREAS, the Applicants have made application to the City of Orono for a variance to Orono Municipal Zoning Code Section 78-330 to allow construction of a deck walkway 5.9 feet from the side property line where a 7.5 foot setback is required; and WHEREAS, on September 19, 2022, after published and mailed notice in accordance with Minnesota Statutes and the City Code, the Planning Commission held a public hearing, at which time all persons desiring to be heard concerning this application were given the opportunity to speak thereon; and WHEREAS, on September 19, 2022, the Planning Commission recommended approval of the variance; and WHEREAS, on October 10, 2022, the City Council reviewed the application and the recommendations of the Planning Commission and City staff; and NOW, THEREFORE, BE IT RESOLVED that the City Council of Orono, Minnesota hereby approves the requested variances as described above based on one or more of the following findings of fact concerning the Property: FINDINGS OF FACT: 1. This application was reviewed as Zoning File #LA22-000045. The analysis contained within staff memos and the exhibits attached to the aforesaid memos, all minutes from CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7296 2 the above mentioned meetings, and any and all other materials distributed at these meetings are hereby incorporated by reference. 2. The Property is located in the LR-1B Zoning District. 3. The Property contains 0.37 acres in area and has a defined lot width of 51 feet. 4. Applicants have applied for the following variances: a. Rear and Side Yard Setback Variances 5. In considering this application for variance, the Council has considered the advice and recommendation of the Planning Commission and the effect of the proposed variances upon the health, safety and welfare of the community, existing and anticipated traffic conditions, light and air, danger of fire, risk to the public safety, and the effect on values of property in the surrounding area. ANALYSIS: 1. “Variances shall only be permitted when they are in harmony with the general purposes and intent of the ordinance . . . .” The proposed variances are in harmony with the purpose of the Ordinance. The small lot includes difficulties in its small size and width, and is challenged by Elmwood Avenue which runs through the Property. 2. “Variances shall only be permitted . . . when the variances are consistent with the comprehensive plan.” The proposed variances to use the Property for a single family dwelling with an attached garage and a deck are consistent with the comprehensive plan. 3. “Variances may be granted when the applicant for the variance establishes that there are practical difficulties in complying with the zoning ordinance. ‘Practical difficulties,’ as used in connection with the granting of a variance, means that: a. The property owner in question proposes to use the property in a reasonable manner, however, the proposed use is not permitted by the official controls. The proposed project including garage and deck additions on a substandard lot within the street and side yard setback appears to be reasonable due to the existing conditions of the home and the limited building envelope of the Property. b. The plight of the landowner is due to circumstances unique to his property not created by the landowner. The substandard lot area, width, location of the roadway bisecting the Property within the LR-1B zoning district prevent a residential footprint consistent with the CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7296 3 district. The applicant has designed the proposed addition to use the limited building envelope available on the Property; and c. The variance, if granted, will not alter the essential character of the locality.” The variances are requested in order to permit additions to the existing home designed to fit the character of the neighborhood. The proposed project will improve the character of the area by removing an existing building improvement from the roadway. 4. “Economic considerations alone do not constitute practical difficulties.” Economic considerations have not been a factor in the variance approval determination. 5. “Practical difficulties also include but are not limited to inadequate access to direct sunlight for solar energy systems. Variances shall be granted for earth-sheltered construction as defined in Minn. Stat. § 216C.06, subd. 2, when in harmony with Orono City Code Chapter 78.” This condition is not applicable. 6. “The board or the council may not permit as a variance any use that is not permitted under Orono City Code Chapter 78 for property in the zone where the affected person's land is located.” This condition is not applicable, as residential building improvements are allowed in the LR-1B District. 7. “The board or council may permit as a variance the temporary use of a one-family dwelling as a two-family dwelling.” This condition is not applicable. 8. “The special conditions applying to the structure or land in question are peculiar to such property or immediately adjoining property.” The Property’s substandard size and orientation with respect to Elmwood Avenue, and the adjacent properties create difficulties which also apply to many of the properties in the same neighborhood. 9. “The conditions do not apply generally to other land or structures in the district in which the land is located.” The Property’s substandard size and orientation with respect to the Elmwood Avenue create difficulties which also apply to many of the properties in the same neighborhood. However the existing home location is unique to the Property. 10. “The granting of the application is necessary for the preservation and enjoyment of a substantial property right of the applicant.” Granting setback variances are necessary for the preservation of the property rights of the owners. 11. “The granting of the proposed variance will not in any way impair health, safety, comfort or morals, or in any other respect be contrary to the intent of this chapter.” Granting the CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7296 4 requested side and street setback variances in this unique situation is not contrary to the intent of the zoning chapter. 12. “The granting of such variance will not merely serve as a convenience to the applicant, but is necessary to alleviate demonstrable difficulty.” The variances for street and side yard setback are necessary, and do not merely serve as a convenience to the applicant as the property has considerable practical difficulties affecting development CONCLUSIONS, ORDER AND CONDITIONS: Based upon one or more of the above findings, the Orono City Council hereby grants variances to Orono Municipal Zoning Code Section 78-330 to allow construction of an attached garage addition 15 feet from the rear property line where a 30 foot setback is required and a deck walkway 5.9 feet from the side property line where 7.5 feet is required, subject to the following conditions: 1. Council approval is based on the entire record, above Findings. 2. The approved project shall conform to the attached site plan and building plans submitted by the Applicants and annotated by City staff (hereinafter the “Plans”), attached to this Resolution as Exhibits A 3. Any amendments to the Plans which are not in conformity with City codes may require further Planning Commission and City Council review. 4. Authorities granted by this resolution run with the Property not with the Applicants, but are permissive only and must be exercised by obtaining a building permit for the new construction and commencing construction of said project. A building permit must be obtained within one year of the date of Council approval, or the variance will expire on that date (October 10, 2023). 5. Violation of or non-compliance with any of the terms and conditions of this resolution may result in the termination of any authority granted herein. ADOPTED by the Orono City Council on this 10th day of October, 2022. ATTEST: CITY OF ORONO: _______________________________ ________________________________ Anna Carlson, City Clerk Dennis Walsh, Mayor 5' - 1 1 3 / 4 " 12 6 4' - 8 " 3' - 2 " 1' - 2 " EXISTING DETACHED GARAGE REPLACED WITH NEW GARAGE AND CONNECTING ADDITIONEXISTING HOUSE 1 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1/4" = 1'-0" SOUTH (LEFT) ELEVATION NOTE: THESE PLANS WERE PREPARED FOR THIS RESIDENCE AS A MINIMUM SERVICE OF LINESCAPES ARCHITECTURAL SERVICES. THEY ARE NOT REPRESENTED TO BE COMPLETE DRAWINGS & SPECIFICATIONS. THE CONTRACTOR MUST VERIFY ALL DIMENSIONS & CONDITIONS. LINESCAPES DOES NOT ACCEPT ANY RESPONSIBILITY FOR OMISSIONS OR ERRORS CONTAINED HEREIN, AND THEREFORE NO LIABILITY FOR BUILDING FAILURES OR FAULTY CONSTRUCTION WILL BE ASSUMED. ALL STRUCTURAL MEMBERS ARE ENGINEERED BY SUPPLIER. REFER TO STRUCTURAL DRAWINGS FOR SIZING AND SPACING. ALL DIMENSIONS, CONDITIONS & SPECIFICATIONS ARE SUBJECT TO FIELD VERIFICATION. ALL ITEMS ARE TO BE BUILT PER CODE REQUIREMENTS. SOME CHANGES MAY BE NECESSARY. 1/4" = 1'-0" NORTH (RIGHT) ELEVATION 1/4" = 1'-0" EAST (FRONT) ELEVATION UP 6' - 3 " 35'-6" (NEW ADDITION) 16 ' - 9 " 89'-2" 26'-6"7'-2 1/8"9'-0" UNEXCAV. UNEXCAV. EXERCISE W.I.C. BEDROOM OFFICE 5' - 0 " 28 ' - 0 " 23 ' - 0 " 9'-0"6'-2"19'-4" 35'-6" (NEW ADDITION) 1'-0"3'-0"7'-6" 3'-6"6"3'-6" 3'-6"“  “    3' - 4 " 4' - 8 " 9' - 1 " 8' - 0 " 6' - 3 " 4 6 53'-8" (EXISTING) 2 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1/4" = 1'-0" WEST (REAR) ELEVATION 1/4" = 1'-0" LOWER (LAKESIDE WALKOUT) FLOOR PLAN DN 26'-0" 32'-6" (NEW ADDITION) 5' - 0 " 28 ' - 0 " 23 ' - 0 " 11 ' - 3 " 11 ' - 9 " 89'-2" 32'-6" (NEW ADDITION) 25'-9" (EXISTING) 1'-5 1/2"16'-5"7'-10 1/2" 6'-6" 25'-9" (EXISTING) DN DN 6'-6"26'-0" 12'-4 1/2"3'-4 1/2"10'-0" 5'-10"10"5'-8"5'-8"10"1'-4"5'-8"10" 1' - 4 " 3' - 8 " 8" 5' - 0 " 3' - 8 " 8"8" 8" 12'-9"13'-3" 5' - 4 " 7' - 1 0 1 / 2 " 9' - 9 1 / 2 " 28 ' - 0 " (E X I S T I N G ) 13 ' - 2 1 / 2 " 14 ' - 9 1 / 2 " 10'-4 1/2"2'-4 1/2"3'-0"4'-0"4'-10 1/2"7'-1 1/2" 4' - 2 " 5' - 0 " 3'-8"5'-0" 1' - 6 1 / 2 " 8' - 6 " 3'-6" OWNERS BATH OWNERSHALL OWNERS SUITE OWNERS W.I.C. MUD. W.I.C. FOYER GARAGE 4 6 3'-0" (EXISTING CANT) 6'-10" 1" DN 1R DN 1R UP DN UP 9'-0"26'-6" 53'-8" (EXISTING) 35'-6" (NEW) 5' - 0 " 28 ' - 0 " 23 ' - 0 " UP BEDROOM BEDROOM BEDROOM RETREAT DINING KITCHEN W.I.P. PWDR.LNDRY UNEXCAV. (EXISTING) 8'-6"4'-0"2'-4 1/2"3'-7 1/2"7'-6"6"1'-10"5'-0"2'-2" 9'-0"11'-7 1/2"12'-6"2'-4 1/2" 13 ' - 2 1 / 2 " 5' - 1 1 1 / 2 " 3' - 1 0 " 7'-2" 4'-4"4'-8"8'-4" 11'-7 1/2"7'-8 1/2" 9'-0"18'-9 1/2"3'-0"3'-6"6"3'-6"6'-7"5'-6" 7'-8"4'-0"10"18'-3 1/2" 5' - 1 1 " 3' - 1 0 1 / 2 " 13 ' - 2 1 / 2 " 6' - 0 " 3' - 1 0 1 / 2 " 3' - 8 1 / 2 " 3' - 6 " 5' - 1 0 1 / 2 " 5' - 0 1 / 2 " 4' - 3 1 / 2 " 5' - 4 1 / 2 " 4' - 2 " 5' - 0 " 1' - 3 " 3' - 6 " 4' - 9 " 13 ' - 7 " 4 6 LOUNGE LIVING 3 1/4" = 1'-0" UPPER (STREET LEVEL) FLOOR PLAN 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1/4" = 1'-0" MAIN FLOOR PLAN FOYER 4 4 3 4         “ MA T C H E X I S T I N G   “          “ 14 E Q . ( 7 . 6 5 " ) R I S E R S          o 14 E Q . ( 7 . 6 5 " ) R I S E R S OWNERS BATH OWNERSHALL 32'-6" (NEW ADDITION) 25'-9" (EXISTING) 30'-11" (EXISTING) 35'-6" (NEW ADDITION) EXISTING LNDRY RETREATW.I.P.PWDR.KITCHENLOUNGE 2 EXERCISE 4 14 " 6154 S.F.8833 S.F.1411 S.F. 132 S.F. 8833 S.F. MAIN LOT X 25% = 2208 6154 S.F. OUT LOT X 25% = 1538 EXISTING = 1411 HOUSE + 132 PATIO + 576 GARAGE = 2119 ROUGH PROPOSAL = 1411 + 132 + 838 NEW ADD. + 487 NEW DRIVE + 152 NEW WALK = 302014987 S.F. TOTAL LOT X 25% = 3746 ,6o2)/27 487 S.F. 838 S.F. 152 S.F.2' - 0 " 1'-0" 2' - 0 " 2'-0"4 4 4 3 4 6 2' - 0 " 3'-0" 5' - 0 " 2' - 0 " 4 3 4 4 1'-0" 4 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1" = 40'-0" PRELIMINARY SITE PLAN 1/8" = 1'-0" ROOF PLAN 4 5 TYPICAL SILL DETAIL 1/2" = 1'-0" 2 4 VERIFY WITH PLANS RAKE DETAIL 1/2" = 1'-0" 3 4 TYPICAL LEDGER DETAIL 1/2" = 1'-0" 1 4 4 6 1/4" = 1'-0" SECTION TYPICAL WALL & CORNICE 1/2" = 1'-0" SEE ROOF PLAN 4 4 5' - 1 1 3 / 4 " 12 6 4' - 8 " 3' - 2 " 1' - 2 " EXISTING DETACHED GARAGE REPLACED WITH NEW GARAGE AND CONNECTING ADDITIONEXISTING HOUSE 1 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1/4" = 1'-0" SOUTH (LEFT) ELEVATION NOTE: THESE PLANS WERE PREPARED FOR THIS RESIDENCE AS A MINIMUM SERVICE OF LINESCAPES ARCHITECTURAL SERVICES. THEY ARE NOT REPRESENTED TO BE COMPLETE DRAWINGS & SPECIFICATIONS. THE CONTRACTOR MUST VERIFY ALL DIMENSIONS & CONDITIONS. LINESCAPES DOES NOT ACCEPT ANY RESPONSIBILITY FOR OMISSIONS OR ERRORS CONTAINED HEREIN, AND THEREFORE NO LIABILITY FOR BUILDING FAILURES OR FAULTY CONSTRUCTION WILL BE ASSUMED. ALL STRUCTURAL MEMBERS ARE ENGINEERED BY SUPPLIER. REFER TO STRUCTURAL DRAWINGS FOR SIZING AND SPACING. ALL DIMENSIONS, CONDITIONS & SPECIFICATIONS ARE SUBJECT TO FIELD VERIFICATION. ALL ITEMS ARE TO BE BUILT PER CODE REQUIREMENTS. SOME CHANGES MAY BE NECESSARY. 1/4" = 1'-0" NORTH (RIGHT) ELEVATION 1/4" = 1'-0" EAST (FRONT) ELEVATION UP 6' - 3 " 35'-6" (NEW ADDITION) 16 ' - 9 " 89'-2" 26'-6"7'-2 1/8"9'-0" UNEXCAV. UNEXCAV. EXERCISE W.I.C. BEDROOM OFFICE 5' - 0 " 28 ' - 0 " 23 ' - 0 " 9'-0"6'-2"19'-4" 35'-6" (NEW ADDITION) 1'-0"3'-0"7'-6" 3'-6"6"3'-6" 3'-6"“  “    3' - 4 " 4' - 8 " 9' - 1 " 8' - 0 " 6' - 3 " 4 6 53'-8" (EXISTING) 2 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1/4" = 1'-0" WEST (REAR) ELEVATION 1/4" = 1'-0" LOWER (LAKESIDE WALKOUT) FLOOR PLAN DN 26'-0" 32'-6" (NEW ADDITION) 5' - 0 " 28 ' - 0 " 23 ' - 0 " 11 ' - 3 " 11 ' - 9 " 89'-2" 32'-6" (NEW ADDITION) 25'-9" (EXISTING) 1'-5 1/2"16'-5"7'-10 1/2" 6'-6" 25'-9" (EXISTING) DN DN 6'-6"26'-0" 12'-4 1/2"3'-4 1/2"10'-0" 5'-10"10"5'-8"5'-8"10"1'-4"5'-8"10" 1' - 4 " 3' - 8 " 8" 5' - 0 " 3' - 8 " 8"8" 8" 12'-9"13'-3" 5' - 4 " 7' - 1 0 1 / 2 " 9' - 9 1 / 2 " 28 ' - 0 " (E X I S T I N G ) 13 ' - 2 1 / 2 " 14 ' - 9 1 / 2 " 10'-4 1/2"2'-4 1/2"3'-0"4'-0"4'-10 1/2"7'-1 1/2" 4' - 2 " 5' - 0 " 3'-8"5'-0" 1' - 6 1 / 2 " 8' - 6 " 3'-6" OWNERS BATH OWNERSHALL OWNERS SUITE OWNERS W.I.C. MUD. W.I.C. FOYER GARAGE 4 6 3'-0" (EXISTING CANT) 6'-10" 1" DN 1R DN 1R UP DN UP 9'-0"26'-6" 53'-8" (EXISTING) 35'-6" (NEW) 5' - 0 " 28 ' - 0 " 23 ' - 0 " UP BEDROOM BEDROOM BEDROOM RETREAT DINING KITCHEN W.I.P. PWDR.LNDRY UNEXCAV. (EXISTING) 8'-6"4'-0"2'-4 1/2"3'-7 1/2"7'-6"6"1'-10"5'-0"2'-2" 9'-0"11'-7 1/2"12'-6"2'-4 1/2" 13 ' - 2 1 / 2 " 5' - 1 1 1 / 2 " 3' - 1 0 " 7'-2" 4'-4"4'-8"8'-4" 11'-7 1/2"7'-8 1/2" 9'-0"18'-9 1/2"3'-0"3'-6"6"3'-6"6'-7"5'-6" 7'-8"4'-0"10"18'-3 1/2" 5' - 1 1 " 3' - 1 0 1 / 2 " 13 ' - 2 1 / 2 " 6' - 0 " 3' - 1 0 1 / 2 " 3' - 8 1 / 2 " 3' - 6 " 5' - 1 0 1 / 2 " 5' - 0 1 / 2 " 4' - 3 1 / 2 " 5' - 4 1 / 2 " 4' - 2 " 5' - 0 " 1' - 3 " 3' - 6 " 4' - 9 " 13 ' - 7 " 4 6 LOUNGE LIVING 3 1/4" = 1'-0" UPPER (STREET LEVEL) FLOOR PLAN 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1/4" = 1'-0" MAIN FLOOR PLAN FOYER 4 4 3 4         “ MA T C H E X I S T I N G   “          “ 14 E Q . ( 7 . 6 5 " ) R I S E R S          o 14 E Q . ( 7 . 6 5 " ) R I S E R S OWNERS BATH OWNERSHALL 32'-6" (NEW ADDITION) 25'-9" (EXISTING) 30'-11" (EXISTING) 35'-6" (NEW ADDITION) EXISTING LNDRY RETREATW.I.P.PWDR.KITCHENLOUNGE 2 EXERCISE 4 14 " 6154 S.F.8833 S.F.1411 S.F. 132 S.F. 8833 S.F. MAIN LOT X 25% = 2208 6154 S.F. OUT LOT X 25% = 1538 EXISTING = 1411 HOUSE + 132 PATIO + 576 GARAGE = 2119 ROUGH PROPOSAL = 1411 + 132 + 838 NEW ADD. + 487 NEW DRIVE + 152 NEW WALK = 302014987 S.F. TOTAL LOT X 25% = 3746 ,6o2)/27 487 S.F. 838 S.F. 152 S.F.2' - 0 " 1'-0" 2' - 0 " 2'-0"4 4 4 3 4 6 2' - 0 " 3'-0" 5' - 0 " 2' - 0 " 4 3 4 4 1'-0" 4 952-942-6891 EL L E S T A D 11 5 3 E L M W O O D A V E - O R O N O M N 1" = 40'-0" PRELIMINARY SITE PLAN 1/8" = 1'-0" ROOF PLAN 4 5 TYPICAL SILL DETAIL 1/2" = 1'-0" 2 4 VERIFY WITH PLANS RAKE DETAIL 1/2" = 1'-0" 3 4 TYPICAL LEDGER DETAIL 1/2" = 1'-0" 1 4 4 6 1/4" = 1'-0" SECTION TYPICAL WALL & CORNICE 1/2" = 1'-0" SEE ROOF PLAN 4 4 MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ 3. LA22-000045 ADDILAY HOMES & REMODELING, LLC - SCOTT JOHNSON, 1153 ELMWOOD AVENUE, REQUESTS SIDE YARD AND STREET YARD SETBACK VARIANCES FOR A HOME ADDITION. (STAFF: LAURA OAKDEN) Scott Johnson, Applicant, was present. Staff presented a summary packet of information. Oakden noted the Applicant is requesting a street and sideyard variance for a new garage. The property currently has a detached garage that encroaches in to the right of way and a deck along the side of the accessory building connecting to the main door of the home. The Applicant is proposing to remove the existing garage and build a new garage that is attached to the existing house. The new garage addition will create a new front door to the home and will connect to the existing sidewalk along the south side of the home. The new improvements will create a 15 foot sideyard setback where 30 is required but existing conditions of the garage encroaching into the right-of- way is an improvement. Staff finds the practical difficulty standards are met. The property is substandard as it pertains to size and width. While the home meets the setbacks for the zoning district there is no conforming building envelope to allow a garage within reasonable proximity to the home. The property is unique due to the right‐of‐way which crosses through the parcel limiting the building envelope. The proposed project will improve the existing conditions of the setbacks today to the street and sideyard, the engineer has reviewed and noted the proposal appears to remove any encroachments to City right-of-way. The Applicant submitted letters of support from abutting neighbors, and Oakden received quite a few phone calls from neighbors interested in the project but did not submit concerns. Staff recommends approval of the project as proposed. Scott Johnson, 4130 St. Marks Drive, Minnetonka, is here to answer any questions noting it helps the situation for the neighbors and reduces the garage from the right-of-way. Chair McCutcheon opened the public hearing at 7:23 p.m. Chair McCutcheon closed the public hearing at 7:23 p.m. McCutcheon noted the Applicant seems to understand the building envelope and the garage is within that. He does not think it is egregious and in Minnesota an attached garage makes a lot of sense. Kirchner agrees and noted the significant benefit in removing the existing detached garage out of the right-of-way and away from public utilities as noted by Staff. That is a significant improvement to the benefit of the City and surrounding neighbors when those utilities need to be serviced. Kraemer agreed it is a win-win-win for the neighbors, homeowner, and City. Ressler agreed they are improving the position and showing something reasonable. He is in support. Kirchner moved, Ressler seconded, to approve LA22-000045, 1153 Elmwood Avenue. VOTE: Ayes: 7, Nays 0. Date Application Received:  August 16, 2022  Date Application Considered Complete: August 16, 2022  60‐Day Review Period Expires:   October 17, 2022      To:  Chair McCutcheon and Planning Commission Members    Adam Edwards, City Administrator    From:  Laura Oakden, Community Development Director    Date:  September 19, 2022    Subject: #LA22‐000045, Addilay Homes o/b/o Robert Hannah, 1153 Elmwood Ave,  Variance,  Public Hearing      Background  The property currently has a detached garage that encroaches in to the right of way and a deck  along the side of the accessory building connecting to the main door of the home.  The applicant  is proposing to remove the existing garage and build a new garage that is attached to the  existing house.  The new garage addition will create a new front door to the home and will  connect to the existing sidewalk along the south side of the home.  Due to the grading and  elevation of the home, the new deck is proposed to connect to the existing sidewalk on the  south side of the house.      Practical Difficulties Analysis   Applicant Submittal Information: The applicant has identified the  substandard property, the unique configuration of the right of way bisecting the parcel, and the  setbacks of the existing home as practical difficulties supporting the requested variances.  Additionally, they have provided supporting documentation regarding Practical Difficulties  attached as Exhibit B, and should be asked for additional testimony regarding the application.     Planning Staff Practical Difficulty Analysis:  Regarding practical difficulty, Staff finds the practical  difficulty standards are met.  The property is substandard as it pertains to size and width.  While  the home meeting the setbacks for the zoning district there is no conforming building envelope  to allow a garage within reasonable proximity to the home. The property is unique due to the  right‐of‐way which crosses through the parcel limiting the building envelope.     LOT ANALYSIS WORKSHEET  Section 78‐330 – Setbacks:    DISTRICT LR‐1B Required Existing  Proposed  Rear/ Street 30’  The existing garage encroaches  2’ into ROW, outside of property  boundary  Home with  attached  garage 15’  North Side 7.5’ 9.5’ No Change  Application Summary:  The applicant is requesting street and side yard setback variances.   Staff Recommendation:  Planning Department Staff recommends approval.  LA22-000045 September 19, 2022 Page 2 of 5 South Side 7.5’ Existing House‐ 9.5’  Existing Deck‐ 4’  Addition ‐9.4’  Deck‐ 5.9’  Lakeshore 75’ 92’ No Change  Average Lakeshore Met/ No Change    Driveway Setback   A 15 foot driveway apron is required for front end loading garages.  The existing garage used  the right of way for a driveway apron as there is no space available for parking within the  property boundaries.  The proposed project meets the 15 foot driveway apron requirement.     Section 78‐330 – Lot Area/Width:  DISTRICT LR‐1B Lot Area Lot Width  Required 43,560 s.f.  (1 acres) 140’  Actual 16,292 s.f.  (0.37 acres) 51’    Section 78‐1403 – Structural Building Coverage:  Total Lot Area Total Structural Coverage  16,292 s.f.  (0.37 acres) Allowed:    3,258 s.f.  (20%)  Existing:   2,171 s.f. (13%)  Proposed:  2,698 s.f. (16.5%)    Section 78‐1680 Hardcover Calculations:  Stormwater  Overlay District   Tier  Total Area in  Zone  Allowed  Hardcover  Existing  Hardcover  Proposed  Hardcover  Tier 1 16,292 s.f. 4,073 s.f.  (25 %)  3,144 s.f.   (19.2%)  3,488 s.f.   (21.4%)      Applicable Regulations:   Side and Street Setback Variances (78‐330)   The applicant is requesting variances from the street 30‐foot setback and 7.5‐foot side setback  in order to construct a garage addition and deck walkway in line with the exiting home. The  property is substandard to lot area and lot width creating a limited building envelope with the  existing garage. The substandard width allows for a 7.5‐foot side yard setback. The existing  garage is set 2 feet into the ROW beyond the property boundaries and has an existing deck  located 4 feet from the side property boundary.  The proposed addition will improve the street  and side setback from the existing conditions.     Governing Regulation: Variance (Section 78‐123)   In reviewing applications for variance, the Planning Commission shall consider the effect of the  proposed variance upon the health, safety and welfare of the community, existing and  anticipated traffic conditions, light and air, danger of fire, risk to the public safety, and the effect  on values of property in the surrounding area. The Planning Commission shall consider  recommending approval for variances from the literal provisions of the Zoning Code in instances  where their strict enforcement would cause practical difficulties because of circumstances unique  to the individual property under consideration, and shall recommend approval only when it is  LA22-000045 September 19, 2022 Page 3 of 5 demonstrated that such actions will be in keeping with the spirit and intent of the Orono Zoning  Code. Economic considerations alone do not constitute practical difficulties.  Practical difficulties  also include but are not limited to inadequate access to direct sunlight for solar energy systems.  Variances shall be granted for earth‐sheltered construction as defined in Minn. Stat. §216C.06,  subd. 14, when in harmony with this chapter.  The board or the council may not permit as a  variance any use that is not permitted under this chapter for property in the zone where the  affected person's land is located. The board or council may permit as a variance the temporary  use of a one‐family dwelling as a two‐family dwelling.    According to MN §462.357 Subd. 6(2) variances shall only be permitted when:  1. The variance is in harmony with the general intent and purpose of the Ordinance. The  proposed variances are in harmony with the purpose of the Ordinance. The small lot  includes difficulties in its small size and width, and challenged by Elmwood Road which  runs through the property.   2. The variance is consistent with the comprehensive plan. The proposed variances to use  the property for a single family dwelling with an attached garage and a deck are  consistent with the comprehensive plan.  3. The applicant establishes that there are practical difficulties.  a. The property owner proposes to use the property in a reasonable manner not  permitted by the official controls;  The proposed project for a garage and deck  addition on a substandard lot within the street and side yard setback appears   to be reasonable due to the existing conditions of the home and the limited  building envelope of the parcel.   b. There are circumstances unique to the property not created by the landowner;   The substandard lot area, width, location of the roadway bisecting the property  within the LR‐1B zoning district prevent a residential footprint consistent with  the district. The applicant has designed the proposed addition to use the limited  building envelope available on the property. and   c. The variance will not alter the essential character of the locality.  The variance  are requested in order to permit an addition to the existing home designed to  fit the character of the neighborhood.  The proposed project will improve the  character of the area by removing an existing improvement from the roadway.   Additionally City Code 78‐123 provides additional parameters within which a variance may be  granted as follows:   4. Economic considerations alone do not constitute practical difficulties. Economic  considerations have not been a factor in the variance approval determination.  5. Practical difficulties also include but are not limited to inadequate access to direct sunlight  for solar energy systems. Variances shall be granted for earth‐sheltered construction as  defined in Minn. Stat. § 216C.06, subd. 17, when in harmony with Orono City Code  Chapter 78. This condition is not applicable.  6. The board or the council may not permit as a variance any use that is not permitted under  Orono City Code Chapter 78 for property in the zone where the affected person's land is  located. This condition is not applicable, as single family home with a garage is an  allowed use in the LR‐1B District.  7. The board or council may permit as a variance the temporary use of a one‐family dwelling  as a two‐family dwelling. This condition is not applicable.  8. The special conditions applying to the structure or land in question are peculiar to such  property or immediately adjoining property. The property’s substandard size and  LA22-000045 September 19, 2022 Page 4 of 5 orientation with respect to Elmwood Road, and adjacent properties creates difficulties  which also apply to many of the properties in the same neighborhood.  9. The conditions do not apply generally to other land or structures in the district in which  the land is located. The property’s substandard size and orientation with respect to the  Elmwood Road creates difficulties which also apply to many of the properties in the  same neighborhood. However the existing home location is unique to this property.  10. The granting of the application is necessary for the preservation and enjoyment of a  substantial property right of the applicant. Granting setback variances are necessary for  the preservation of the property rights of the applicant.  11. The granting of the proposed variance will not in any way impair health, safety, comfort  or morals, or in any other respect be contrary to the intent of this chapter. Granting the  requested side and street setback variances in this unique situation is not contrary to  the intent of the zoning chapter.   12. The granting of such variance will not merely serve as a convenience to the applicant, but  is necessary to alleviate demonstrable difficulty. The variances for street and side yard  setback are necessary, and do not merely serve as a convenience to the applicant as the  property has considerable practical difficulties affecting development.      The Commission may recommend or Council may impose conditions in granting of variances.  Any conditions imposed must be directly related to and must bear a rough proportionality to the  impact created by the variance. No variance shall be granted or changed beyond the use  permitted in this chapter in the district where such land is located.     Engineer Comments:  1. The proposal appears to remove and encroachment from the City ROW which is a  benefit to the City.  2. The proposal moves the structure further way from Sanitary Lift station #20 which is a  benefit to the City.   3. Demolition of the existing structure and construction of the new will require  coordination with the Public works department to prevent damage to the nearby  sanitary sewer system.     Public Comments  The applicant submitted letters of support from the abutting neighbors on the north and south of  the property, attached as Exhibit F.      Issues for Consideration  1. Does the Planning Commission find that that the property owner proposes to use the  property in a  reasonable manner which is not permitted by an official control?  2. Does the Planning Commission find that the variance(s), if granted, will not alter the  essential character of the neighborhood?   3. Does the Commission find it necessary to impose conditions in order to mitigate the  impacts created by the granting of the requested variance(s)?  4. Are there any other issues or concerns with this application?    Planning Staff Recommendation  Planning Staff recommends approval of the side and street setback variance.     LA22-000045 September 19, 2022 Page 5 of 5 List of Exhibits  Exhibit A. Application and Narrative  Exhibit B. Practical Difficulties Documentation Form  Exhibit C. Existing & Proposed Survey/Site Plan  Exhibit D. Proposed Plans and Elevations  Exhibit E. Submitted Hardcover Calculations  Exhibit F. Neighbor Letters of support.  Exhibit G. Site Photos  Exhibit H. Plat Map and Mailing List      AGENDA ITEM Prepared By: mcc Reviewed By:LLO Approved By: 1. Purpose. This application is regarding a guest house conditional use permit. 2. MN§15.99 Application Deadline. The application was received and was considered to be complete on August 17, 2022. Therefore the 60-Day review period expires on October 16, 2022. 3. Background/ Summary. The applicant wishes to construct a new 971 square foot accessory building which will function as a guest house. The property is 4.6 acres in area within the LR-1A zoning district where 2.0 acres is the minimum size. A conditional use permit (CUP) is required for the guest house use. A minimum of 4.0 acres is required for a guest house use in this district. 4. Planning Commission Vote and Comment. On September 19, 2022, the Planning Commission held a public hearing. Following the public hearing the Planning Commission voted 7 to 0 on a motion to approve the requested conditional use permit subject to property owner’s agreement to the filing of a covenant in the title of the property assuring that the guest house will not be used for a home occupation unless specifically approved by the city or if allowed by Code; and will not be rented, or leased under any circumstances. Staff recommends an additional condition of approval that the existing septic system be upgraded appropriately to serve the additional bedrooms in the guest house. 5. Public Comment. No comments from the neighbors were received. 6. Staff Recommendation. Staff recommends approval. COUNCIL ACTION REQUESTED Motion to adopt Resolution No. 7297. Exhibits A. Draft Resolution No. 7297 B. Proposed Plans C. Draft PC Minutes 09/19/2022 D. PC Staff Report 09/19/2022 References PC Exhibits 09/19/2022 A. Application B. Existing Survey C. Proposed Site Plan, Plans, and Elevations D. Hardcover Calculations E. Aerial View F. Septic Information G. Property Owners List H. Plat Map Item No.: 9 Date: October 10, 2022 Item Description: LA22-000046 – Eskuche Design o/b/o Marcel Smits 3345 Fox Street, Guest House CUP – Resolution No. 7297 Presenter: Melanie Curtis Planner Agenda Section: Consent Agenda CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7297 1 A RESOLUTION APPROVING A CONDITIONAL USE PERMIT PURSUANT TO MUNICIPAL ZONING CODE SECTION 78-303 FILE NO. LA22-000046 WHEREAS, on August 17, 2022, Eskuche Design (“Applicants]”), applied for a conditional use permit (hereinafter the “CUP”) pursuant to the City Code for the property addressed 3345 Fox Street and legally described as: Lot 2, Block 1, Fullerton Estates, Hennepin County, Minnesota (hereinafter the “Property”); WHEREAS, the Applicants have made application to the City of Orono for a CUP pursuant to Orono Municipal Zoning Code Section 78-303 to allow a guest house use; and WHEREAS, on September 19, 2022, after published and mailed notice in accordance with Minnesota Statutes and the City Code, the Planning Commission held a public hearing, at which time all persons desiring to be heard concerning this application were given the opportunity to speak thereon; and WHEREAS, on September 19, 2022, the Planning Commission recommended approval of the CUP for guest house use; and WHEREAS, on October 10, 2022, the City Council reviewed the application and the recommendations of the Planning Commission and City staff; and NOW, THEREFORE, BE IT RESOLVED that the City Council of Orono, Minnesota hereby approves the requested CUP for guest house use as described above based on one or more of the following findings of fact concerning the Property: FINDINGS OF FACT: 1. This application was reviewed as Zoning File #LA22-000046. The analysis contained within staff memos and the exhibits attached to the aforesaid memos, all minutes from the above mentioned meetings, and any and all other materials distributed at these meetings are hereby incorporated by reference. 2. The Property is located in the LR-1A One Family Lakeshore Residential Zoning District. CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7297 2 3. The Property contains 4.6 acres in area where 4.0 acres is required for a guest house CUP. 4. Applicant has applied for the following: a. Conditional Use Permit for guest house use 5. In considering this application for a guest house CUP, the Council has considered the advice and recommendation of the Planning Commission and the effect of the proposed CUP upon the health, safety and welfare of the community, existing and anticipated traffic conditions, light and air, danger of fire, risk to the public safety, and the effect on values of property in the surrounding area. CONDITIONAL USE PERMIT ANALYSIS: The Council finds find that the proposed use at the proposed location is or will be: 1) Consistent with the community management plan; The proposed use is residential in nature and residential uses are consistent with the CMP guiding for this Property. 2) Compliant with the zoning code, including any conditions imposed on specific uses as required by article V, division 3 of the City Code; The proposed accessory building improvements including the guest house use are compliant with the zoning ordinance. 3) Adequately served by police, fire, roads, and stormwater management; The proposed use will be adequately served by existing services and facilities. 4) Provided with an adequate water supply and sewage disposal system; The Property is served by private septic and a private well. The Applicant is aware that the septic system must be upsized at the time of building permit. They have provided plans for upsizing the system. This criterion is met. 5) Not expected to generate excessive demand for public services at public cost; This criterion is met. 6) Compatible with the surrounding area as the area is used both presently and as it is planned to be used in the future; The proposed guest house is residential in character and its use is expected to be compatible with the surrounding area. 7) Consistent with the character of the surrounding area, unless a change of character is called for in the community management plan; The guest house is residential in CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7297 3 visual character and is expected to be compatible with the principal building on the property and the surrounding area. 8) Compatible with the character of buildings and site improvements in the surrounding area, unless a change of character is called for in the community management plan; The architectural styling of the guest house will be residential-looking in character and consistent with that of the principal building on the Property. 9) Not expected to substantially impair the use and enjoyment of the property in the area or have a materially adverse impact on the property values in the area when compared to the impairment or impact of generally permitted uses; The proposed use is not expected to have any adverse impacts. No information has been presented to indicate such. 10) Provided with screening and buffering adequate to mitigate undesirable views and activities likely to disturb surrounding uses; The views of the guest house from the neighbors will be screened by existing vegetation and the physical separation. In the opinion of staff, additional screening or buffering is not necessary. 11) Not create a nuisance which generates smoke, noise, glare, vibration, odors, fumes, dust, electrical interference, general unsightliness, or other means; The proposed guest house use is not expected to cause any of these undesirable impacts. 12) Not cause excessive non-residential traffic on residential streets, parking needs that cause a demonstrable inconvenience to adjoining properties, traffic congestion, or unsafe access; It is anticipated that the proposed use will not generate any of these undesirable issues. 13) Designed to take into account the natural, scenic, and historic features of the area and to minimize environmental impact; The guest house is designed to conform to the residence on the property, and will not have a negative environmental impact. 14) All exterior lighting shall be so directed so as not to cast glare toward or onto the public right-of-way or neighboring residential uses or districts; Applicant is hereby advised of this requirement; and 15) Not detrimental to the public health, public safety, or general welfare. This criterion is met. CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7297 4 16) The Council finds the following additional criteria are met: a. Regarding the guest house CUP, the lot is at least two times the minimum lot area required by this section; and b. The guest house is for the sole use of the occupants of the principle dwelling, including their domestic employees and nonpaying guests. c. The council finds that the proposed use of the pool cabana with a shower will not be detrimental to the residential character of the neighborhood. d. The council finds that the plumbing fixtures proposed in the cabana are in keeping with the applicants’ intended use of the accessory building. e. The property owner agrees to the filing of a covenant in the title of the property regarding the guest house use. 17) Additionally, the CUPs shall remain in effect as long as the conditions imposed by the City Council are observed, but nothing in this section shall prevent the city from enacting or amending official controls to change the status of conditional uses. CONCLUSIONS, ORDER AND CONDITIONS: Based upon one or more of the above findings, the Orono City Council hereby grants a variance to Orono Municipal Zoning Code Section 78-303 to allow a guest house use, subject to the following conditions: 1. Council approval is based on the entire record, above Findings. 2. The undersigned property owners agree to the filing of a covenant in the title of the property providing that the accessory building will not be: a. Used for a home occupation unless specifically approved by the city or if allowed by this Code. b. Used as a dwelling unless a guest house conditional use permit is obtained. c. Rented, leased or otherwise provided for use as a dwelling under any circumstances. 3. Authorities granted by this resolution run with the Property not with the Applicants, but are permissive only and must be exercised by obtaining a building permit for the new construction and commencing construction of said project. A building permit must be CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7297 5 obtained within one year of the date of Council approval, or the variance will expire on that date (October 10, 2023). 4. Violation of or non-compliance with any of the terms and conditions of this resolution may result in the termination of any authority granted herein. ADOPTED by the Orono City Council on this 10th day of October, 2022. ATTEST: CITY OF ORONO: _______________________________ ________________________________ Anna Carlson, City Clerk Dennis Walsh, Mayor CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7297 6 SF Real Estate LLC A Minnesota Limited Liability Company By its member manager: SF Real Estate Company PTE LTD A Republic of Singapore Corporation By:___________________________ Marcellinus H.M. Smits Its: Chief Executive Officer STATE OF MINNESOTA ) ) ss. COUNTY OF HENNEPIN ) This instrument was acknowledged before me this _______ day of ________________, 20___, by Marcellinus H.M. Smits, the Chief Executive Officer of SF Real Estate Company PTE LTD, a Republic of Singapore Corporation, the Member Manager of SF Real Estate LLC, a Minnesota limited liability company, on behalf of the company. ____________________________________ Notary Public MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ 4. LA22-000046 ESKUCHE DESIGN, 3345 FOX STREET, REQUESTS A CONDITIONAL USE PERMIT FOR A GUEST HOUSE USE. (STAFF: MELANIE CURTIS) Peter Eskuche, Applicant, was present. Staff presented a summary packet of information. Curtis noted The Applicant wishes to construct a new, 971 square foot accessory building which will function as a guest house and the property meets size qualification to support a guesthouse which will be four bedrooms and the septic system on the property will need to be upsized to support. It will be in a conforming location and will meet all regulations including height. The City has not received any public comments and Staff recommends approval conditioned upon the property owner’s agreement for the filing of a covenant in the title of the property assuring that the guesthouse will not be used for a home occupation, will not be rented or leased under any circumstances, and recommendation of an additional condition of approval that the septic system be upgraded appropriately. Staff recommends approval. Mr. Eskuche noted it is a completely conforming and permitted use and he is available for any questions. Chair McCutcheon opened the public hearing at 7:28 p.m. Chair McCutcheon closed the public hearing at 7:28 p.m. Ressler noted a Conditional Use Permit (CUP) has governing rules and regulations that must be met with a permit which are the protections the City has. Ressler moved, Libby seconded, to approve LA22-000046, 3345 Fox Street, Conditional Use Permit as applied. VOTE: Ayes: 7, Nays 0. Date Application Received: 08/17/2022 Date Application Considered as Complete: 08/17/2022 60-Day Review Period Extension Expires: 10/16/2022 To: Chair McCutcheon and Planning Commission Members Adam Edwards, City Administrator From: Melanie Curtis, Planner mcc Date: 19 September 2022 Subject: #LA22-000043, Eskuche Design o/b/o Marcel Smits 3345 Fox Street Guest House CUP Public Hearing Background The applicant wishes to construct a new, 971 square foot accessory building which will function as a guest house. The property is 4.6 acres in area within the LR-1A zoning district where 2.0 acres is the minimum size. A conditional use permit (CUP) is required for the guest house use. A minimum of 4.0 acres is required for a guest house use in this district. Applicable Regulations: Guest House CUP (Section 78-303) The applicant is proposing to construct a new, four-bedroom guest house on the property. A guest house uses requires a conditional use permit. The guest house will be in a conforming location and meet all applicable zoning regulations. Applicable Regulation: Conditional Use Permit (Section 78-916) The Planning Commission may recommend and the Council may grant a Conditional Use Permit (CUP) as the use permit was applied for or in modified form. On the basis of the application and the evidence submitted, the city must find that the proposed use at the proposed location is or will be: 1) Consistent with the community management plan; The proposed use is residential in nature and residential uses are consistent with the CMP guiding for this property. 2) Compliant with the zoning code, including any conditions imposed on specific uses as required by article V, division 3 of the City Code; The proposed accessory building improvements including the guest house use are compliant with the zoning ordinance. 3) Adequately served by police, fire, roads, and stormwater management; The proposed use will be adequately served by existing services and facilities. 4) Provided with an adequate water supply and sewage disposal system; The property is served by private septic and a private well. The applicant is aware that the septic system must be upsized at the time of building permit. They have provided plans for upsizing the system. This criterion is met. Application Summary: The applicant is requesting a guest house conditional use permit. Staff Recommendation: Planning Department Staff recommends approval. FILE # LA22-000024 21 June 2022 Page 2 of 3 5) Not expected to generate excessive demand for public services at public cost; This criterion is met. 6) Compatible with the surrounding area as the area is used both presently and as it is planned to be used in the future; The proposed guest house is residential in character and its use is expected to be compatible with the surrounding area. 7) Consistent with the character of the surrounding area, unless a change of character is called for in the community management plan; The guest house is residential in visual character and is expected to be compatible with the principal building on the property and the surrounding area. 8) Compatible with the character of buildings and site improvements in the surrounding area, unless a change of character is called for in the community management plan; The architectural styling of the guest house will be residential-looking in character and consistent with that of the principal building on the Property. 9) Not expected to substantially impair the use and enjoyment of the property in the area or have a materially adverse impact on the property values in the area when compared to the impairment or impact of generally permitted uses; The proposed use is not expected to have any adverse impacts. No information has been presented to indicate such. 10) Provided with screening and buffering adequate to mitigate undesirable views and activities likely to disturb surrounding uses; The views of the guest house from the neighbors will be screened by existing vegetation and the physical separation. In the opinion of staff, additional screening or buffering is not necessary. 11) Not create a nuisance which generates smoke, noise, glare, vibration, odors, fumes, dust, electrical interference, general unsightliness, or other means; The proposed guest house use is not expected to cause any of these undesirable impacts. 12) Not cause excessive non-residential traffic on residential streets, parking needs that cause a demonstrable inconvenience to adjoining properties, traffic congestion, or unsafe access; It is anticipated that the proposed use will not generate any of these undesirable issues. 13) Designed to take into account the natural, scenic, and historic features of the area and to minimize environmental impact; The guest house is designed to conform to the residence on the property, and will not have a negative environmental impact. 14) All exterior lighting shall be so directed so as not to cast glare toward or onto the public right-of- way or neighboring residential uses or districts; Applicant is hereby advised of this requirement; and 15) Not detrimental to the public health, public safety, or general welfare. This criterion is met. The CUPs may be granted subject to such conditions as the Council may prescribe. Further approval shall be granted only when the following criteria are met: 1. Regarding the guest house CUP, the lot is at least two times the minimum lot area required by this section; and 2. The guest house is for the sole use of the occupants of the principle dwelling, including their domestic employees and nonpaying guests. 3. The council finds that the proposed use of the pool cabana with a shower will not be detrimental to the residential character of the neighborhood. 4. The council finds that the plumbing fixtures proposed in the cabana are in keeping with the applicants’ intended use of the accessory building. 5. The property owner agrees to the filing of a covenant in the title of the property providing that the accessory buildings will not be: FILE # LA22-000024 21 June 2022 Page 3 of 3 a. Used for a home occupation unless specifically approved by the city or if allowed by this Code. b. Used as a dwelling unless a guest house conditional use permit is obtained. c. Rented, leased or otherwise provided for use as a dwelling under any circumstances. Additionally, the CUPs shall remain in effect as long as the conditions imposed by the City Council are observed, but nothing in this section shall prevent the city from enacting or amending official controls to change the status of conditional uses. Public Comments To date, no public comments have been received. Issues for Consideration 1. Does the Planning Commission find that that the property owner proposes to use the property in a reasonable manner as allowed by the Zoning Code? 2. Does the Planning Commission find that the approval, if granted, will not alter the essential character of the neighborhood? 3. Are there any other issues or concerns with this application? Planning Staff Recommendation Staff recommends approval conditioned upon the property owner’s agreement to the filing of a covenant in the title of the property assuring that the guest house will not be used for a home occupation unless specifically approved by the city or if allowed by Code; and will not be rented, or leased under any circumstances. Staff recommends an additional condition of approval that the existing septic system be upgraded appropriately to serve the additional bedrooms in the guest house. Further, Orono’s Septic Manager recommends adding the following conditions: 1. Because the existing design is over three years old, prior to submittal of the septic permit, the designer should reexamine the design to assure the conditions have not changed; and 2. The applicant should provide a septic compliance inspection report with the design demonstrating that the system they are expanding currently meets compliance. List of Exhibits Exhibit A. Application Exhibit B. Existing Survey Exhibit C. Proposed Site Plan, Plans, and Elevations Exhibit D. Hardcover Calculations Exhibit E. Aerial View Exhibit F. Septic Information Exhibit G. Property Owners List Exhibit H. Plat Map AGENDA ITEM Prepared By: mcc Reviewed By: LLO Approved By: 1. Purpose. This application is regarding a front yard setback variance in order to construct an attached garage. 2. MN§15.99 Application Deadline. The application was received on August 15, 2022 and considered to be complete on August 25, 2022. Therefore the 60-Day review period expires on October 24, 2022. 3. Background/ Summary. The applicants are requesting a variance from the 50-foot front yard setback in order to construct a 648 square foot attached garage addition to the home. The garage addition is proposed to be set back approximately 35 feet from the front property line (Gander Road), where a 50- foot setback is required. An existing detached garage located 22 feet from the Gander Road property line will be removed. 4. Planning Commission Vote and Comment. On September 19, 2022, the Planning Commission held a public hearing. Following the public hearing the Planning Commission voted 7 to 0 on a motion to approve the requested variance as applied. 5. Public Comment. Comments from the neighbors were received and are attached as Exhibit D. 6. Staff Recommendation. Staff recommends approval. COUNCIL ACTION REQUESTED Motion to adopt Resolution No. 7298. Exhibits A. Draft Resolution No. 7298 B. Proposed Plans C. Draft PC Minutes 09/19/2022 D. Public Comment E. PC Staff Report 09/19/2022 References PC Exhibits 09/19/2022 A. Application B. Practical Difficulties Documentation Form C. Proposed Survey/Site Plan D. Proposed Plans and Elevations E. Site Photos (Applicant) F. Aerial & Street View Photos (Staff) G. Public Comment H. Wetland NOD I. Septic Compliance & As-Built Site Plan J. Property Owners List K. Plat Map Item No.: 10 Date: October 10, 2022 Item Description: LA22-000043 – John and Sanja deGarmo, 2675 Fox Street, Variance – Resolution No. 7298 Presenter: Melanie Curtis Planner Agenda Section: Consent Agenda CITY OF ORONO RESOLUTION OF THE CITY COUNCIL No. 7298 1 A RESOLUTION APPROVING A VARIANCE FROM MUNICIPAL ZONING CODE SECTION 78-420 FILE NO. LA22 -000043 WHEREAS, on August 15, 2022, John deGarmo and Sanja deGarmo, a married couple, (hereinafter the “Applicants”), applied for a variance from the City Code for the property addressed 2675 Fox Street and legally described as: That part of the Southeast Quarter described as follows: Beginning at a point in the West line of said Southeast Quarter distant 796.125 feet (48¼ rods) North of the Southeast corner of said Southeast Quarter; thence East 940.5 feet (57 rods); thence North 397.87 feet (23¾ rods); thence West 940.5 feet (57 rods); thence South 391.875 feet (23¾ rods) to the point of beginning, EXCEPT the West 389.00 feet thereof, Section 4, Township 117 North, Range 23 West of the 5th Principal Meridian, Hennepin County, Minnesota (hereinafter the “Property”); WHEREAS, the Applicants have made application to the City of Orono for a variance to Orono Municipal Zoning Code Section 78-420 to allow construction of an attached garage addition 35 feet from the front property line where a 50 foot setback is required; and WHEREAS, on September 19, 2022, after published and mailed notice in accordance with Minnesota Statutes and the City Code, the Planning Commission held a public hearing, at which time all persons desiring to be heard concerning this application were given the opportunity to speak thereon; and WHEREAS, on September 19, 2022, the Planning Commission recommended approval of the variance; and WHEREAS, on October 10, 2022, the City Council reviewed the application and the recommendations of the Planning Commission and City staff; and NOW, THEREFORE, BE IT RESOLVED that the City Council of Orono, Minnesota hereby approves the requested variance as described above based on one or more of the following findings of fact concerning the Property: FINDINGS OF FACT: 1. This application was reviewed as Zoning File #LA22-000043. The analysis contained within staff memos and the exhibits attached to the aforesaid memos, all minutes from CITY OF ORONO RESOLUTION OF THE CITY COUNCIL No. 7298 2 the above mentioned meetings, and any and all other materials distributed at these meetings are hereby incorporated by reference. 2. The Property is located in the RR-1B One Family Rural Residential Zoning District. 3. The Property contains 4.47 acres in area and has a defined lot width of 391 feet. 4. Applicants have applied for the following variance: a. Front Yard Setback Variance 5. In considering this application for variance, the Council has considered the advice and recommendation of the Planning Commission and the effect of the proposed variance upon the health, safety and welfare of the community, existing and anticipated traffic conditions, light and air, danger of fire, risk to the public safety, and the effect on values of property in the surrounding area. ANALYSIS: 1. “Variances shall only be permitted when they are in harmony with the general purposes and intent of the ordinance . . . .” The proposed 35 foot setback for the home addition on the Gander Road frontage is in keeping with the character of the neighborhood as it functions as a side street. The Property has a limited buildable area due to the large wetland. The requested variance is in harmony with the ordinance. 2. “Variances shall only be permitted . . . when the variances are consistent with the comprehensive plan.” The scale and type of variance proposed to construct an attached garage within the front setback does not impact adjacent properties, will be screened by vegetation, and is consistent with the comprehensive plan. 3. “Variances may be granted when the applicant for the variance establishes that there are practical difficulties in complying with the zoning ordinance. ‘Practical difficulties,’ as used in connection with the granting of a variance, means that: a. The property owner in question proposes to use the property in a reasonable manner, however, the proposed use is not permitted by the official controls. The request to permit a garage addition within the required front setback appears to be reasonable as the Property’s reduced buildable area and orientation with respect to the wetland create difficulties. b. The plight of the landowner is due to circumstances unique to his property not created by the landowner. CITY OF ORONO RESOLUTION OF THE CITY COUNCIL No. 7298 3 The home’s location and orientation with respect to the wetland and Gander Road are not the result of the homeowner’s actions. Further the septic system location further impacts the opportunity for a conforming building envelope; and c. The variance, if granted, will not alter the essential character of the locality.” The home addition with a 35 foot setback from the Gander Road property line will be an improved setback from the existing detached garage and the addition will be screened by existing vegetation. The project will not alter the character of the area. 4. “Economic considerations alone do not constitute practical difficulties.” Economic considerations have not been a factor in the variance approval determination. 5. “Practical difficulties also include but are not limited to inadequate access to direct sunlight for solar energy systems. Variances shall be granted for earth-sheltered construction as defined in Minn. Stat. § 216C.06, subd. 2, when in harmony with Orono City Code Chapter 78.” This condition is not applicable. 6. “The board or the council may not permit as a variance any use that is not permitted under Orono City Code Chapter 78 for property in the zone where the affected person's land is located.” This condition is not applicable, as residential building improvements are allowed in the RR-1B District. 7. “The board or council may permit as a variance the temporary use of a one-family dwelling as a two-family dwelling.” This condition is not applicable. 8. “The special conditions applying to the structure or land in question are peculiar to such property or immediately adjoining property.” The Property’s substandard buildable area, wetland impacts, septic system location, and existing conditions create difficulties which are particular to the Property. The proposed setback is not out of character. 9. “The conditions do not apply generally to other land or structures in the district in which the land is located.” While many adjacent properties are impacted by wetlands, the Property’s substandard buildable area, wetland impacts, septic system location, and existing conditions create difficulties which are particular to the Property. 10. “The granting of the application is necessary for the preservation and enjoyment of a substantial property right of the applicant.” Staff finds that granting the requested variance preserves a substantial property right of the homeowners. CITY OF ORONO RESOLUTION OF THE CITY COUNCIL No. 7298 4 11. “The granting of the proposed variance will not in any way impair health, safety, comfort or morals, or in any other respect be contrary to the intent of this chapter.” Staff finds this criterion is met. 12. “The granting of such variance will not merely serve as a convenience to the applicant, but is necessary to alleviate demonstrable difficulty.” The granting the requested variance will alleviate difficulties due to the Property’s substandard buildable area, wetland impacts, septic system location, and existing conditions. CONCLUSIONS, ORDER AND CONDITIONS: Based upon one or more of the above findings, the Orono City Council hereby grants a variance to Orono Municipal Zoning Code Section 78-420 to allow construction of an attached garage addition 35 feet from the front property line where a 50 foot setback is required, subject to the following conditions: 1. Council approval is based on the entire record, above Findings. 2. The approved project shall conform to the attached site plan and building plans submitted by the Applicants and annotated by City staff (hereinafter the “Plans”), attached to this Resolution as Exhibits A & B. 3. Any amendments to the Plans which are not in conformity with City codes may require further Planning Commission and City Council review. 4. Authorities granted by this resolution run with the Property not with the Applicants, but are permissive only and must be exercised by obtaining a building permit for the new construction and commencing construction of said project. A building permit must be obtained within one year of the date of Council approval, or the variance will expire on that date (October 10, 2023). 5. Violation of or non-compliance with any of the terms and conditions of this resolution may result in the termination of any authority granted herein. ADOPTED by the Orono City Council on this 10th day of October, 2022. ATTEST: CITY OF ORONO: _______________________________ ________________________________ Anna Carlson, City Clerk Dennis Walsh, Mayor SHEET INDEX 1 SITE PLAN 2 EXISTING LOWER LEVEL PLAN 3 EXISTING MAIN LEVEL PLAN Quigley Architects © Q U I G L E Y A R C H I T E C T S 2 0 2 0 A N Y U N A U T H O R I Z E D U S E O F T H E S E D R A W I N G S I S I N V I O L A T I O N O F F E D E R A L C O P Y R I G H T L A W S . C O N C E P T S D E S I G N SHEET SIZE: 24 x 36 28SHEET NO: SANJA & JOHN 2675 FOX ST, ORONO,MN 2622 West Lake St, Minneapolis, MN 55416. 612-501-6495 DEC 2021 CONCEPTS DW P R O P E R T Y L I N E W E T L A N D B O U N D A R Y 2 7 ' - 0 " 10'-9"24'-0" 3 8 ' - 1 1 / 4 " 3 5 ' - 2 1 / 4 " 1 1 ' - 0 " 1 1 8 . 2 5 s q f t 6 4 7 . 6 5 s q f t N E W G G E N E W E N T R Y I r r I r r f ' I F = - 71 I I I I I I I I I : r I LI I 1 I f~ ti ' r ~f ~i J z. t " - ,~ ' l ~! ~' 1 : 1 ff f ~z . r i ,· , ~? f 3 ., , Sl l (I I I I I ' I t 'I f t t .c . l 1 i II II II 0 f L =: : : l : ; = t - r - T T , I ,. f 1 1 I U 11 I r : : • I I fJ [ M : ~ ' r n : r -1 II II t } 1 i "I t I i II \ z. II 1- f r , i l ,_ I I I I L _ _ _ ! f l iJ l ~ - - - I lj D i l 1 \ . J ,, 1 , 1 I I , ~ " 1 1 d : 0 4 + - n - ~ t l , A . 4 , , 1 6 , . , , ~ r ~ " ' - ' " " ~ 9 1 1 \ " I ' t 1 f ' l < 7 l : I ' ! J . " ' " " " ' - , , 1 . t ; , L ' n ~ ~ ~ c , . . . . . . . . . - t ? ~ f J . . , ; , f " o t 7 4 l < • M . 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SHEET SIZE: 11 x 17 DEC, 2021 Concept Drawings 1SHEET NO: DW EXS'T GARAGE EXS'T HOUSE PROPERTY LINE 435.35' PR O P E R T Y L I N E DRIVE WETLAND BOUNDARY SCALE: 1/64" = 1'-0" 13 SITE PLAN "GIS" 1 SHEET INDEX 1 SITE PLAN 2 EXISTING LOWER LEVEL 3 EXISTING MAIN LEVEL 4 EXISTING ELEVATIONS 5 EXISTING EXTERIOR VIEWS De Garmo Residence 2675 FOX ST, ORONO,MN 2622 West lake st, Minneapolis, MN 55416. office: 612-692-8850 Quigley Architects © Q U I G L E Y A R C H I T E C T S 2 0 2 1 AN Y U N A U T H O R I Z E D U S E O F T H E S E D R A W I N G S I S I N VI O L A T I O N O F F E D E R A L C O P Y R I G H T L A W S . SHEET SIZE: 11 x 17 DEC, 2021 Concept Drawings 2SHEET NO: REC ROOMBEDROOM CLOSET BATH STORAGE LAUNDRY MECH RE F 17 ' - 0 " 4 1 / 2 " 8' - 1 1 3 / 4 " 7'-7 1/4"4 1/2"10'-2 1/2"4 1/2"7'-5 1/4"4 1/2"3'-1" CLGN 8'-0 3/4" SOFFIT 6'-10"SOFFIT 6'-10" ELEC. PANEL CLGN 8'-1 3/8" CLGN 8'-2"CLGN 7'-6 1/2" SLIDER SH E L V E S SH E L V E S SLIDER CPT CPT CPT TILE TILE UP PROJECT NORTHSCALE: 1/4" = 1'-0" 13 EXISITNG L0WER LEVEL PLAN 2 SHEET INDEX 1 SITE PLAN 2 EXISTING LOWER LEVEL 3 EXISTING MAIN LEVEL 4 EXISTING ELEVATIONS 5 EXISTING EXTERIOR VIEWS De Garmo Residence 2675 FOX ST, ORONO,MN 2622 West lake st, Minneapolis, MN 55416. office: 612-692-8850 Quigley Architects © Q U I G L E Y A R C H I T E C T S 2 0 2 1 AN Y U N A U T H O R I Z E D U S E O F T H E S E D R A W I N G S I S I N VI O L A T I O N O F F E D E R A L C O P Y R I G H T L A W S . SHEET SIZE: 11 x 17 DEC, 2021 Concept Drawings 3SHEET NO: DW BEDROOM 2 BEDROOM 1 BATH 1 CPT CPT TILE ENTRY KITCHEN MUDROOM LIVING ROOM CPT H/WOOD H/WOOD TILE DECK DECK UP DOWN UP PROJECT NORTHSCALE: 1/4" = 1'-0" 13 EXISTING MAIN LEVEL PLAN 3 SHEET INDEX 1 SITE PLAN 2 EXISTING LOWER LEVEL 3 EXISTING MAIN LEVEL 4 EXISTING ELEVATIONS 5 EXISTING EXTERIOR VIEWS De Garmo Residence 2675 FOX ST, ORONO,MN 2622 West lake st, Minneapolis, MN 55416. office: 612-692-8850 Quigley Architects © Q U I G L E Y A R C H I T E C T S 2 0 2 1 AN Y U N A U T H O R I Z E D U S E O F T H E S E D R A W I N G S I S I N VI O L A T I O N O F F E D E R A L C O P Y R I G H T L A W S . SHEET SIZE: 11 x 17 DEC, 2021 Concept Drawings 4SHEET NO: SCALE: 1/8" = 1'-0" 1 NORTH ELEVATION 4 SCALE: 1/8" = 1'-0" 7 SOUTH ELEVATION 4 SCALE: 1/8" = 1'-0" 9 EAST ELEVATION 4 SCALE: 1/8" = 1'-0" 13 WEST ELEVATION 4 SHEET INDEX 1 SITE PLAN 2 EXISTING LOWER LEVEL 3 EXISTING MAIN LEVEL 4 EXISTING ELEVATIONS 5 EXISTING EXTERIOR VIEWS De Garmo Residence 2675 FOX ST, ORONO,MN 2622 West lake st, Minneapolis, MN 55416. office: 612-692-8850 Quigley Architects © Q U I G L E Y A R C H I T E C T S 2 0 2 1 AN Y U N A U T H O R I Z E D U S E O F T H E S E D R A W I N G S I S I N VI O L A T I O N O F F E D E R A L C O P Y R I G H T L A W S . SHEET SIZE: 11 x 17 DEC, 2021 Concept Drawings 5SHEET NO: 5 NORTH 5 7 SOUTH 5 13 WEST 5 15 EAST 5 MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ 2. LA22-000043 SANJA DEGARMO, 2675 FOX STREET, REQUESTS A FRONT YARD SETBACK VARIANCE IN ORDER TO CONSTRUCT A GARAGE ADDITION TO THE EXISTING HOME. (STAFF: MELANIE CURTIS) Sanja DeGarmo, Applicant, was present. Staff gave a summary presentation of information. Curtis stated the subject property is on the corner of Fox Street and Gander Road. The property’s narrower frontage is on Gander Road, making Gander Road by definition the “front” for setback purposes. The majority of the property is encumbered by a large wetland, resulting in a relative small buildable area on the 4.4 acre property. The Applicants are requesting variance from the required 50-foot front yard setback in order to construct a 648 square foot attached garage addition to the home. The existing 887 square foot detached garage will be removed. The garage addition is proposed to be set back approximately 35 feet from the front property line, where a 50- foot setback is required. The existing detached garage is located 22 feet from the front property line. The Applicant has identified the wetland encroachment, and the location of the existing improvements as practical difficulties supporting the requested variance. Additionally, they have provided supporting documentation provided in the packet. Staff finds the practical difficulty criteria has been met. The 4.4 acre property contains approximately 3.5 acres of wetland. The majority of the remaining dry land exists within the RR-1B building setbacks. The septic system location on the south side of the home further limits building opportunities in a conforming location. One comment from the public was received in support; Staff recommends approval of the variance as requested. Sanja DeGarmo, Applicant, noted there is really no other place to put an attached garage, noting they would be decreasing hardscape and it would be a simple two-car garage. The Watershed District does not require any permitting or approval. Chair McCutcheon opened the public hearing at 7:16 p.m. Chair McCutcheon closed the public hearing at 7:16 p.m. McCutcheon thinks the Applicant did due diligence with what they had and they do not have a lot. The practical difficulty is understood and it is a sensible ask. Kraemer echoed McCutcheon noting it is a textbook example of practical difficulty, Staff did a great job, it is a nice design and set up and it is a yes for him. Ressler agreed, without disrupting wetlands there is not a reasonable place to put it, and they are improving current situations to mitigate that practical difficulty. He is prepared to support a motion. Bollis moved, Kraemer seconded, to approve LA22-000043, 2675 Fox Street, Variance. VOTE: Ayes: 7, Nays 0. Re: Proposed Garage Addition From:Meredith Weir | meredith.gallick@gmail.com Wednesday, Aug 24, 5:51 PM To:Sanja deGarmo | sanja.degarmo@gmail.com Cc:Ferg | Fergus.weir@gmail.com, John deGarmo | jdegarmo58@gmail.com Looks lovely Sanja! Happy to support. From: M Sanja deGarmo | sanja.degarmo@gmail.com Wednesday, Aug 24, 4:50 PM Hi Fergus and Meredith, As you know, we are planning on remodeling our house and would like to build an attached garage and tear down the existing one. Because Gander is considered our Front/Lot, the setback requirement is 50’ and we need a variance to build it since it would sit between 35' - 38’ off of Gander, or 12’ - 15’ over the setback requirement. Attached are the site plan and drawings for the proposed garage addition so you can get an idea of what we would like to do. As you can see from the elevations, all of the siding and windows will be new. I have also attached an idea for landscaping that shows the new driveway and plantings along Gander. The application will be reviewed first at the Planning Council meeting on September 19th then at the City Council meeting on October 10th. You should receive a notice from the city between now and September 19th about the application for a variance. I hope you feel, as we do, that a new attached garage would be a huge improvement over the existing one. Any good word from our neighbors is sure to help us get the variance approved. I am happy to answer any questions you have. Please don’t hesitate to call, text or email me. Thank you and we are so happy to be your new neighbors, Sanja Date Application Received: 08/15/2022 Date Application Considered as Complete: 08/25/2022 60-Day Review Period Expires: 10/24/2022 To: Chair McCutcheon and Planning Commission Members Adam Edwards, City Administrator From: Melanie Curtis, Planner mcc Date: 19 September 2022 Subject: #LA22-000043, John and Sanja deGarmo, 2675 Fox Street, Variance Public Hearing Background The subject property is on the corner of Fox Street and Gander Road. The property’s narrower frontage is on Gander Road, making Gander Road by definition the “front” for setback purposes. The majority of the property is encumbered by a large wetland, resulting in a relative small buildable area on the 4.4 acre property. The applicants are requesting variance from the required 50-foot front yard setback in order to construct a 648 square foot attached garage addition to the home. The existing 887 square foot detached garage will be removed. The garage addition is proposed to be set back approximately 35 feet from the front property line, where a 50-foot setback is required. The existing detached garage is located 22 feet from the front property line. Practical Difficulties Analysis Applicant Submittal Information: The applicant has identified the wetland encroachment, and the location of the existing improvements as practical difficulties supporting the requested variance. Additionally, they have provided supporting documentation regarding Practical Difficulties attached as Exhibit B, and should be asked for additional testimony regarding the application. Planning Staff Practical Difficulty Analysis: Regarding practical difficulty, Staff finds the practical difficulty criteria has been met. The 4.4 acre property contains approximately 3.5 acres of wetland. The majority of the remaining dry land exists within the RR-1B building setbacks. The septic system location on the south side of the home further limits building opportunities in a conforming location. Application Summary: The applicants are requesting a front yard setback variance in order to construct an attached garage. Staff Recommendation: Planning Department Staff recommends approval. FILE #LA22-000043 19 Sept 2022 Page 2 of 4 LOT ANALYSIS WORKSHEET Section 78-420 – Setbacks: RR-1B DISTRICT Required Existing Proposed Front (Gander) 50’ Home 61.9’ Garage Addition 35’ Rear 50’ +400’ +400’ North Side Street (Fox) 30’ ±175’ ±186’ South Side 30’ +160’ +160’ Wetland 25’ or MCWD buffer House ±50’ Garage Addition ±85’ Section 78-420 – Lot Area/Width: RR-1B DISTRICT Lot Area Lot Width Required 87,120 s.f. (2.0 acres) 200’ Actual 194,571 s.f. (4.47 acres) ±415’ Applicable Regulations: Front Yard Setback Variance (Section 78-420) The applicant is proposing to construction an addition to the home within the front yard setback. The required principal building setback is 50-feet; the existing home is situated 61 feet from the front lot line. A variance to permit a 35 foot setback for the addition is requested. Governing Regulation: Variance (Section 78-123) In reviewing applications for variance, the Planning Commission shall consider the effect of the proposed variance upon the health, safety and welfare of the community, existing and anticipated traffic conditions, light and air, danger of fire, risk to the public safety, and the effect on values of property in the surrounding area. The Planning Commission shall consider recommending approval for variances from the literal provisions of the Zoning Code in instances where their strict enforcement would cause practical difficulties because of circumstances unique to the individual property under consideration, and shall recommend approval only when it is demonstrated that such actions will be in keeping with the spirit and intent of the Orono Zoning Code. Economic considerations alone do not constitute practical difficulties. Practical difficulties also include but are not limited to inadequate access to direct sunlight for solar energy systems. Variances shall be granted for earth-sheltered construction as defined in Minn. Stat. §216C.06, subd. 14, when in harmony with this chapter. The board or the council may not permit as a variance any use that is not permitted under this chapter for property in the zone where the affected person's land is located. The board or council may permit as a variance the temporary use of a one-family dwelling as a two-family dwelling. According to MN §462.357 Subd. 6(2) variances shall only be permitted when: 1. The variance is in harmony with the general intent and purpose of the Ordinance. The proposed 35 foot setback for the home addition on the Gander Road frontage is in keeping with the character of the neighborhood as it functions as a side street. The property has a limited buildable area due to the large wetland. The requested variance is in harmony with the ordinance. FILE #LA22-000043 19 Sept 2022 Page 3 of 4 2. The variance is consistent with the comprehensive plan. The scale and type of variance proposed to construct an attached garage within the front setback does not impact adjacent properties, will be screened by vegetation, and is consistent with the comprehensive plan. 3. The applicant establishes that there are practical difficulties. a. The property owner proposes to use the property in a reasonable manner not permitted by the official controls; The request to permit a garage addition within the required front setback appears to be reasonable as the property’s reduced buildable area and orientation with respect to the wetland creates difficulties. b. There are circumstances unique to the property not created by the landowner; The home’s location and orientation with respect to the wetland and Gander Road are not the result of the homeowner’s actions. Further the septic system location eliminates the opportunity for a conforming building envelope ; and c. The variance will not alter the essential character of the locality. The home addition with a 35 foot setback from the Gander Road property line will be an improved setback from the existing detached garage and will be screened by existing vegetation. The project will not alter the character of the area. Additionally City Code 78-123 provides additional parameters within which a variance may be granted as follows: 4. Economic considerations alone do not constitute practical difficulties. Economic considerations have not been a factor in the variance approval determination. 5. Practical difficulties also include but are not limited to inadequate access to direct sunlight for solar energy systems. Variances shall be granted for earth-sheltered construction as defined in Minn. Stat. § 216C.06, subd. 17, when in harmony with Orono City Code Chapter 78. This condition is not applicable. 6. The board or the council may not permit as a variance any use that is not permitted under Orono City Code Chapter 78 for property in the zone where the affected person's land is located. This condition is not applicable, as residential building improvements are allowed in the RR-1B District. 7. The board or council may permit as a variance the temporary use of a one-family dwelling as a two-family dwelling. This condition is not applicable. 8. The special conditions applying to the structure or land in question are peculiar to such property or immediately adjoining property. The property’s substandard buildable area, wetland impacts, septic system location, and existing conditions create difficulties which are particular to the property. The proposed setback is not out of character. 9. The conditions do not apply generally to other land or structures in the district in which the land is located. While many of the adjacent properties are impacted by wetlands, the property’s substandard buildable area, wetland impacts, septic system location, and existing conditions create difficulties which are particular to the property. 10. The granting of the application is necessary for the preservation and enjoyment of a substantial property right of the applicant. Staff finds that granting the requested variance preserves a substantial property right of the homeowners. 11. The granting of the proposed variance will not in any way impair health, safety, comfort or morals, or in any other respect be contrary to the intent of this chapter. Staff finds this criterion is met. FILE #LA22-000043 19 Sept 2022 Page 4 of 4 12. The granting of such variance will not merely serve as a convenience to the applicant, but is necessary to alleviate demonstrable difficulty. The granting the requested variance will alleviate difficulties due to the property’s substandard buildable area, wetland impacts, septic system location, and existing conditions. The Commission may recommend or Council may impose conditions in granting of variances. Any conditions imposed must be directly related to and must bear a rough proportionality to the impact created by the variance. No variance shall be granted or changed beyond the use permitted in this chapter in the district where such land is located. Public Comments Public comments have been received and are attached as Exhibit G. Issues for Consideration 1. Does the Planning Commission find that that the property owner proposes to use the property in a reasonable manner which is not permitted by an official control? 2. Does the Planning Commission find that the variance(s), if granted, will not alter the essential character of the neighborhood? 3. Does the Commission find it necessary to impose conditions in order to mitigate the impacts created by the granting of the requested variance(s)? 4. Are there any other issues or concerns with this application? Planning Staff Recommendation Planning Staff recommends approval of the setback variance as requested. List of Exhibits Exhibit A. Application Exhibit B. Practical Difficulties Documentation Form Exhibit C. Proposed Survey/Site Plan Exhibit D. Proposed Plans and Elevations Exhibit E. Site Photos (Applicant) Exhibit F. Aerial & Street View Photos (Staff) Exhibit G. Public Comment Exhibit H. Wetland NOD Exhibit I. Septic Compliance & As-Built Site Plan Exhibit J. Property Owners List Exhibit K. Plat Map AGENDA ITEM Prepared By: Reviewed By: A. Carlson Approved By: 1. Purpose. The purpose of this action item is to award the construction contract for the New Public Works facility Project. 2. Background. In May of 2021 the city began a design process for a new Public Works Facility at 365 Old Crystal Bay Road. Design work was completed in April and the project put out for Bid. In April Bids came in high so Council rejected them and directed a re-scoping of the project. The project was put out for bid in August. Sealed bids were opened on September 15th. At the September 26th meeting a resident raised a concern about the low bidder. Council delayed approval and directed staff to provide resolution for the award which is provided at Exhibit A. 3. Scope of Work. The project consists of the construction of a new public works facility with associated site work. 4. Cost. The city received six bids. The Bid Summary is at Exhibit B and Letter of Recommendation at Exhibit D. The low bid for was for $16,067,000.00 from Ebert Construction. In addition with the award of the project the city will need to complete the purchase of the required wetland banking credits of $94,655.88 (Purchase agreement at Exhibit D). 5. Funding. Construction will be funded by the Facilities Fund. The wetland credit purchase will be funded by the Stormwater Fund 6. Architect and Staff Recommendation. Our Architect, Oertel, has reviewed the bid submission and recommends award to Ebert. (See exhibit E). Further, staff and Oertel reviewed the material provided by the concerned resident and conducted research into the low bidder, Ebert Construction. We could not find sufficient cause for the city to reject the low bid. Ebert also provided letters of reference on similar recent projects. Exhibit F. COUNCIL ACTION REQUESTED Move to Approve Resolution No. 7299 and to award the construction of the new public works facility to Ebert Construction for a fee of $16,067,000.00 and authorized the purchase of wetland credits at $94,655.88. Exhibits A. Award Resolution B. Bid Tab C. Wetlands Credit Purchase order. D. Letter of Recommendation from Oertel E. Letters of Recommendation for Ebert References A. Orono PW Bid Package Item No.: 11 Date: October 10, 2022 Item Description: Public Works Facility (21-039) – Award – Resolution No. 7299 Presenter: Adam T. Edwards, P.E. City Engineer Agenda Section: Consent Agenda CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7299 RESOLUTION AWARDING A CONTRACT FOR THE CONSTRUCTION OF A NEW PUBLIC WORKS FACILITY WHEREAS, pursuant to an advertisement for bids for the New Public Works Facility Project bids were received, opened and tabulated according to State law, and the following bids were received complying with the advertisement: WHEREAS, it appears that Ebert Construction is the lowest responsible bidder, complying with the minimum qualifications; and; WHEREAS, the Project Architect and City Engineer recommend awarding the project to Ebert Construction; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ORONO, MINNESOTA: 1. That the Mayor and City Administrator are authorized and directed to execute contract with Ebert Construction for the New Public Works Facility Contract according to the plans and specifications in the amount of $16,067,000.00. ADOPTED this _______ day of ________________, ____, by the City Council of the City of Orono. CITY OF ORONO By: _______________________________ Its Mayor ATTEST: ______________________________ Its City Clerk CITY OF ORONO RESOLUTION OF THE CITY COUNCIL NO. 7299 Exhibit B: Bid Tab Purchase Agreement for Wetland Banking Credits Page 11 Orono Public Works Facility ǀ 0V1.125044 PURCHASE AGREEMENT FOR WETLAND BANKING CREDITS THIS AGREEMENT is made this 11th of March between Patricia Preiner – MPJWR, LLC (Seller) and Adam Edwards – City of Orono (Buyer). 1. Seller agrees to sell to Buyer, and Buyer agrees to buy from Seller, the wetland banking credits (Credits) listed below: 2. Seller represents and warrants as follows: a) The Credits are deposited in an account in the Minnesota Wetland Bank administered by the Minnesota Board of Water and Soil Resources (BWSR) pursuant to Minn. Rules Chapter 8420.0700-.0755. b) Seller owns the Credits and has the right to sell the Credits to Buyer. 3. Buyer will purchase from the Seller a total of 0.82 wetland credits at a rate of $115,434 per credit. The Buyer will pay the Seller a total of $94,655.88 for the Credits. The Buyer will execute a check made out for this amount, payable to MPJWR, LLC, at the time that the permit application is approved by the LGU. Credits to be Sold Credit Subgroup Wetland Type/Plant Community Type Cost per Credit Credit Amounts Purchase Amount B Type 7/Coniferous Swamp $115,434 0.82 $54,484.85 TOTAL: 0.82 $94,655.88 Per Credit Withdrawal Fee by BSA Enter the Withdrawal Fee for the BSA of the account: BSA 1 $520 BSA 6 $1,083 (Withdrawal Fee x total credits) BSA 2 $371 BSA 7 $1,992 $1992 Withdrawal Fee: $1,633.44 BSA 3 $725 BSA 8 $2,577 Easement Stewardship Fee: (Easement Stewardship fee x total credits) BSA 4 $1,412 BSA 9 $2,628 $302 per credit Stewardship Fee: $247.64 BSA 5 $685 BSA 10 $3,099 Total Fees: $1,881.08 BWSR fee policy: http://www.bwsr.state.mn.us/wetlands/wetlandbanking/fee_and_sales_data/Wetland_Banking_Fee_Policy_Effective_June1_2017.pdf 16 Mar 22 Mr. Adam Edwards, As you know, we experienced a good level of interest from bidders on this project. The QuestCDN plan holders list included (10) Prime Bidders and the project received (6) bids on bid day. The bid spread was relatively tight at $1,278,000. More importantly, the bottom two bidders were within $267,000 of each other. This bid spread, coupled with the total number of bids received, is a strong indicator that the low bidder was competitive, and that the true marketplace value was around $16,500,000 The apparent low base bid for your project has been identified as Ebert Construction. Their base bid was $16,067,000. Ebert has 54 years of experience, 85 full-time employees, and approximate annual sales of $100 million. They are located in Loretto, MN. The contractor has provided us with their Responsible Contractor form per Minnesota Statute 16C.285, subdivision 3. Oertel Architects has completed several similar projects with Ebert, ranging in size and scope, over the last several years including the recently completed Hugo Public Works. I have had an opportunity to discuss the project and bid conditions with Randy Pavey at Ebert. He has given me every indication that they have reviewed their base bid and alternates and are comfortable with their bid numbers, Performance and Payment Bonds, as well as the insurance requirements. If the council chooses to authorize an award, Ebert has stated that they will be able to provide a formal schedule of values. After some discussion and appropriate review and diligence within the given time frame, I think we have an engaged contractor who understands the project type and is ready to begin work. I see no reason not to proceed with the apparent low bidder should the City move forward with the project. Thank You, Thomas Stromsodt Oertel Architects Tuesday, September 20th, 2022 To: Adam Edwards, P.E., City Administrator/City Engineer City of Orono RE: Public Works Facility Bids Attachments: Bid Tab Results Contractor Add. #1-#3 Bid Bond Verification of Compliance Base Bid Unit Price #1 per cubic yard BCI Construction $16,630,000 $98.86 Donlar Construction $17,345,000 $40.00 Ebert Construction $16,067,000 $39.00 Jorgenson Construction $16,778,000 $45.00 Rochon $16,334,000 $50.00 Stahl Construction $16,595,000 $35.00 ORONO PUBLIC WORKS BID TABULATION- 09-15-2022 AGENDA ITEM Prepared By: J. Lemons Reviewed By: A.Carlson Approved By: 1. Purpose. Approval to use contingency funds to pay for the fireworks display at the annual Orono Tree Lighting Event. 2. Background. The fireworks display at the Orono Tree Lighting Event has typically been paid for through donations raised by the Holiday Events committee. The fireworks display in 2021 was partially subsidized through the contingency fund. The committee has not been able to secure the donations necessary to pay for the fireworks display this year. The Holiday Events committee would like to proceed with the fireworks display and requested the use of the contingency fund to cover the cost of the display. 3. Funding. The fireworks display is set at $10,000. The contingency fund currently has enough to cover the entire expense of the fireworks display. COUNCIL ACTION REQUESTED Motion to approve use of contingency funds to pay for the fireworks display at the Orono Tree Lighting Event. Item No.: 12 Date: October 10, 2022 Item Description: Tree Lighting Event Funding Presenter: Joshua Lemons Parks and Golf Superintendent Agenda Section: Consent Agenda AGENDA ITEM Prepared By: A. Carlson Reviewed By: A. Carlson Approved By: 1. Purpose. State Senator David Osmek will provide a legislative update to the council. Item No.: 13 Date: October 10, 2022 Item Description: State Senator David Osmek Presenter: State Senator David Osmek Agenda Section: Presentation AGENDA ITEM Prepared By: Reviewed By: A.Carlson Approved By: 1. Purpose. Mr. Richie Anderson will provide an update on LMCD activities to date. Item No.: 14 Date: October 11, 2022 Item Description: LMCD Representative Update Presenter: Richie Anderson, LMCD Representative from Orono Agenda Section: Presentation AGENDA ITEM Prepared By: mcc Reviewed By: LLO Approved By: 1. Purpose. This application is regarding average lakeshore setback, side setback, and hardcover variances as part of additions to the existing home including structural changes to the roof and building, and a new lakeside deck. 2. MN§15.99 Application Deadline. The application was received on June 22, 2022 and considered to be complete on August 21st. The 60-Day review period has been extended and expires on December 19, 2022. 3. Background/ Summary. The applicant has requested variances to conduct changes to the roof orientation from a hip roof to gable within the side yard setback, as well as within the average lakeshore setback. They are proposing a first floor lakeside deck within the average lakeshore setback which exceeds the 42-inch height allowance within the setback. To support this plan, a hardcover variance is requested to permit 26.48% hardcover. They have recently applied for an administrative building permit (RPS22-000126; PC Exhibit J) to construct a garage addition to the rear of the home, meeting the setbacks. The existing detached garage will be removed. The garage addition project reflects changes to the property which bring the existing hardcover level to a conforming level; from 31.1% to 25%. 4. Planning Commission Vote and Comment. On September 19, the Planning Commission held a public hearing and received public comment. During the discussion the Commission offered a great deal of feedback to the applicant. Following the public hearing the Commission voted 7-0 to deny the application as applied. The Planning Commission’s draft minutes are attached as Exhibit D. 5. Public Comment. Comments from the neighbors were received and are attached as Exhibit F. 6. Staff Recommendation. Staff recommends denial of the application as submitted. COUNCIL ACTION REQUESTED Direct staff to draft a resolution reflecting Council’s decision for adoption at the October 24th meeting. Exhibits A. Proposed Survey B. Proposed Plans C. Supplemental Plan Information provided at the PC Meeting D. Draft PC Minutes 09/19/2022 E. PC Staff Report 09/19/2022 F. Public Comment References PC Exhibits 09/19/2022 A. Application & Narrative B. Practical Difficulties Documentation Form Item No.: 15 Date: October 10, 2022 Item Description: LA22-000036 – Scott Gates o/b/o Lisa Thostenson, 2815 Casco Point Road, Variances Presenter: Melanie Curtis Planner Agenda Section: Community Development Report AGENDA ITEM Prepared By: mcc Reviewed By: LLO Approved By: C. Existing Survey/Hardcover D. Proposed Survey/Site Plan E. Staff Annotated Survey F. Proposed Plans and Elevations G. Staff Annotated Plans H. Proposed Hardcover Calculations I. Aerial Photos J. Building Permit Packet RPS22-000126 K. Public Comment L. Property Owners List M. Plat Map MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ 1. LA22-000036 SCOTT GATES, 2815 CASCO POINT ROAD, REQUESTS HARDCOVER, AVERAGE LAKESHORE SETBACK, AND SIDE YARD SETBACK VARIANCES TO PERMIT A LAKESIDE DECK AND ROOF CHANGES. (STAFF: MELANIE CURTIS) Scott Gates, on behalf of the Applicant, was present. Staff gave a summary presentation of the item. Curtis stated the owners purchased the property in April 2022 and have planned improvements to the home. They have recently applied for a permit to construct a garage addition to the rear of the home, meeting the setbacks. The garage addition project reflects changes to the site which bring the existing hardcover level down from 31.1% to a conforming 25%. Regarding practical difficulty, Staff finds there are difficulties in the location of the existing home which may support the variances for the change in the rooflines. Staff may be able to support he average lakeshore setback variance for the change in the lakeside roof mass as long as the change does not adversely impact views of the lake from the neighboring homes. The average lakeshore setback request pertaining to the new deck cannot be supported. As proposed, the elevated deck and railing appear to impact the lake views for the adjacent neighbor(s). A grade-level deck or on-grade patio (≤ 42 inches from existing grade) can be constructed in the same location. Regarding the requested hardcover variance, the application for building permit demonstrates that a level of 25% hardcover is achievable and therefore staff does not find practical difficulty supporting a hardcover variance. The existing home is located between 4.8 – 7.5 feet from the west side lot line. The changes proposed to the roof structure from a hip roof on the street and lake sides to gable ends will also increase the mass of the home encroaching within the average lakeshore setback. Curtis spoke about public comments noting most of the comments do not overly support the project. Based on the plans Staff was unable to fully evaluate the existing and proposed massing increases/changes to the roof. Staff recommends the Applicant redesign the plans to limit or eliminate variances. Regarding the variances requested to permit the new lakeside deck Staff finds that the project should be adjusted to accommodate the additional hardcover to stay within 25%. Planning Staff recommends denial of the average lakeshore setback variance and hardcover variance relating to the deck. Curtis stated the Applicant has the option of reducing the hardcover and installing a grade level patio without variances. The side yard setback variance involving the roof expansion may be reasonable if the encroachments do not further limit the light, air, and open space of the neighbors to the west. If the Commission identifies practical difficulties which support the roof changes in the side yard area, the new encroachments should be limited to the roof and any additional new impacts, such as roof overhangs and the possible new shed roof over kitchen window, should be denied. The average lakeshore setback variance to change the hip configuration to a gable thereby increasing the mass of the roof within the setback significantly is not supported by practical difficulty. Staff recommends denial. Scott Gates, 545 Second St. #295, Excelsior, noted it is not terribly complicated and the owners wanted to get the remodel underway prior to the variance being heard. He noted they scaled down the hardcover significantly and if these changes are not acceptable, they will go ahead and build what has been submitted for the building permit. He walked the Commissioners through the project and spoke about the overhang, encroachments, setbacks, a bay window, and neighbor comments. Mr. Gates showed proposed plans on screen and shared about the various views, roof pitch, and massing. Ressler asked about practical difficulty on the project. Mr. Gates replied the practical difficulty is the location of the home. The setback is similar to the neighboring house, with 2813 set back considerably more, with 2821, 2825, and 2827 at about 79-80 feet MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ and this property is at around 120 feet. The house next door is what creates the issues regarding average lakeshore setback (ALS). The practical difficulty of the deck is that there is nowhere else to put it. Ressler clarified they could put in a patio. Curtis noted they could do it on grade or a patio. Mr. Gates spoke about what is intended to be an at-grade deck, and they could do the 10x16 provided they meet hardcover or get a variance and the other is to have a lakeside deck with access to the family living space. Kirchner clarified Mr. Gates is saying the practical difficulty is that it is a convenience to have a deck or the desire for the owners to have a deck. Mr. Gates replied in the negative noting he is saying there is not another place to put it that has access to the lake view. Because this is considerably farther back than the 75 foot minimum lakeshore setback that, coupled with the ALS being further back due to the offset of the house next door are both practical difficulties that make this the only choice. Kirchner asked what structural purpose the new roof serves that then provides additional massing. Mr. Gates replied the existing roof needs replacement and once they start replacing it makes sense to go to something cleaner and simpler without all the angles to the roof. He thinks it is also a design consideration in trying to fit into the neighborhood, make something that looks good by mixing the gable with the hip. Ressler spoke about practical difficulty. He stated the location of the house is something the owner knew when they purchased it and every zone has different requirements and guidelines. The existing house is affording some opportunities in like-kind, but exceeding is historically where the Planning Commission has very rarely (especially in these districts) allowed encroaching on lakeshore setbacks because those modest encroachments become a hindrance for the enjoyment of the neighboring homes. This creates a problem because it creates precedent for Applicants in the future which is why the Commission has had to take a very hard line. He noted one can have a home without a deck, that is not a practical difficulty. The Commissioners want to help get this through but without practical difficulty they are not in a position to support. Mr. Gates noted they could build a much bigger house if they knock the existing down but they did not want to do that. It may not be a direct practical difficulty but does factor into the equation. He spoke about options for the back of the home where there is not the ability to put a deck somewhere else. He does not think it is unfair to ask for a small variance to build the deck. He finished walking the Commissioners through the plans on screen. Kirchner clarified the Commissioners are required by State Statute to fall back to the practical difficulties. He is struggling to find practical difficulties in this case. Chair McCutcheon opened the public hearing at 6:42 p.m. MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Patty Saiki, 2874 Casco Point Road, does not see gutters or drainage shown and that is one of the critical points. She noted living with a narrow sideyard regarding the fire department they would need hook-and- ladder. All insurance companies watch the fire departments and rates will go up if the City does not manage widths between houses. She is just giving the Commissioners a heads-up. Charles Price, 2813 Casco Point Road, shared that he lives to the west of the subject property. Mr. Price strongly objects to one of the pictures Mr. Gates showed that it will not affect his view of the lake but would now be filled with elevated deck, sofas, couches, umbrellas, grills, and the Mr. Price would be very uncomfortable if the City allowed a deck in that space. He noted the property owners who will suffer the water runoff from these proposed variances are at great risk of accelerated erosion on their bluffs as well as an increased risk of their bluff sliding down into the lake as so many nearby bluffs have already done, including his at 2813. The shoreline of the subject property and nearby properties have a risk profile that is much worse than most on Lake Minnetonka, primarily due to the high elevation above the lake (his property is 42 feet above the water) and the soil makeup is a loose mix of clay and sandy loam that can be easily eroded by running water. Many properties nearby have experienced severe erosion and severe slippage into the lake with huge expense and loss of yard size. If there ever was a case to minimize hardcover, this is the case. Mr. Price noted this property already has a patio of about 120 square feet which has been adequate for multiple families over decades. The Applicant wants to add another 360 square feet of deck very near Mr. Price’s home and yard in a prohibited way. It is safe to assume the Applicants will not go through all of this to have a 480 square foot deck to quietly sit and read a book; it is expected that it will be fully furnished with all of the previously mentioned things, and a sound system. Mr. Price’s yard could feel like they are living next to a loud bar or a night club. All of this illegal development will be between the Price’s home and their view of the lake, and every person on the deck will be able to look directly into his living room day and night from only 22 feet away. He stated there are rules and laws in place which, if followed, will make all of this unnecessary. Simply put the Applicant bought a lot which cannot be made to fulfill their wishes. This lot is only 12, 217 square feet and the average width is less than 55 feet. The Applicant should either purchase a lot more appropriate for what they desire or they should meet current rules and laws that protect the property owners, Lake Minnetonka, and the environment. Several years ago Mr. Price attempted to move a detached garage and attach it against his house and was told by the Planning Commission that he should come back when his plan included getting hardcover down to 25%. Wes Byrne, 2817 Casco Point Road, is on the east side of the property. He noted the extra hardcover is a concern as has already been brought up with respect to extra stormwater and the danger to the bluff in having another landslide there. With the contours of the land, the water moves towards Mr. Byrne’s property and will end up going down into the stairs that go down to his lakeshore. He has retaining walls helping but he is not really pleased at that potential. The plan is to remove the landscape border between properties which is acting as a retaining wall and preventing water from that corner from going directly down to his property and the hillside. This is his primary concern. Carol Price, 2813 Casco Point Road, is on the east side, and spoke about the topology of the area noting there is a high west side and all of the land slopes eastward and downward. Every subsequent property has a decrease in elevation, so neighbors affect every other neighbor. They are also on a bluff and they must protect the bluff. The hardcover limit is extremely important as they are fighting all the time to limit the water that is going down the bluff and going sideways across neighbors. The wooden timbers are part of controlling that water. She noted her lot is generally five feet higher than the existing home at 2815 Casco Point Road. Ms. Price stated the proposed deck is very large and would definitely obscure the view of the lake from her property; this would also affect property value. She thinks the patio/deck needs to be MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ appropriate for the lot. The change from a hip roof to a gable roof will significantly affect the drainage on each side of the property. Ms. Price’s property is very close, the gable roof will overhang, there are no gutters listed, or accounting for any drainage. They want to take away the wood timbers to the side and she noted her property is bumping up against those wood timbers. Any drainage would exacerbate that problem of her property falling into the Applicant’s. She spoke about the garage noting it would now be a massive structure that would impede sunlight, airflow, and drainage. She commends the new homeowner for trying to build on the existing footprint, but would request that they meet the existing footprint and not add any more hardcover, add more to the overhangs, or the massive structure. Chair McCutcheon closed the public hearing at 6:53 p.m. Kirchner believes they failed to identify practical difficulties. Regarding the sideyard setback, he does not see practical difficulty for the roof, for the ALS and not having another place to put a deck is also not a practical difficulty, and regarding hardcover he does not see a practical difficulty established to go over on hardcover allowance. He would vote denial on all variance requests. Ressler echoed Mr. Kirchner’s remarks. He added the Commissioners want to make things work for homeowners but find themselves in a situation where they must meet the guidelines, rules, and regulations in place for the City. They have made amendments to those rules and regulations to be more favorable for applications such as these than in the last 40 years. If they do not change the rules, one must provide proper practical difficulty for going outside those rules or they open up a can of worms with precedence. Ressler does not think practical difficulties have been met but that does not mean they are not reasonable, they just do not meet the City’s guidelines. The Commissioners must abide by the rules that are in place right now. Ms. Saiki made a good point regarding water and drainage, and he is sure anyone involved in these plans will have to sign off on any drainage plans to make sure it meets the requirements. Ressler would also not recommend as applied. Peterson noted one person spoke positively and everyone else, including Staff spoke negatively. He agrees with denial. McCutcheon noted the reduction of hardcover is always a plus and if one wants to move a structure (the garage) the end result needs to reduce hardcover. He asked if the garage has been demolished yet. Mr. Gates replied in the negative. Curtis clarified that is a part of the building permit and they have already demonstrated they can do that without variances. Ressler noted it does play into the hardcover and exceeding hardcover becomes a variance. He does not see that the Applicant is meeting requirements to exceed hardcover. McCutcheon asked about the rock bed at the front and asked about hardcover regarding a deck or patio. Curtis clarified they could turn that landscaped area into an on-grade patio or grade level deck. Mr. Gates spoke about hardcover and noted they are reducing hardcover significantly from 31% to 26%. The wooden borders are in pretty bad shape and while they are removing those, they will replace with boulders that serve the same purpose. Regarding the 26% hardcover, the belief is reducing and improving MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ the situation is part of the purpose of a variance; they are improving the situation not making it worse. They are not increasing runoff of the house, not increasing the physical footprint, and reducing hardcover. the guidance that would be helpful is regarding the portion at-grade behind the existing patio, would the Commissioners be amenable to doing it at-grade with a slight hardcover variance slightly above the 25%? McCutcheon noted it is hard to say without seeing something. Ressler thinks if they are currently at 31% hardcover and are proposing less at-grade, an improvement of the situation is always what the City Council is looking for. He cannot guarantee the City Council would be in support but Ressler would certainly look at it more favorably. Bollis thinks the issue is that the Applicant has already demonstrate they can go down to the 25% so it is hard to wrap their heads around a practical difficulty that now they need another 1%. This is just his view of it. Mr. Gates spoke about drainage noting he spoke with the owner at 2817 and indicated they would work with the owner to try and improve the grading. As Mr. Gates understands it, the owner was selling the property and was not interested at that time. Regarding 2813, there is a patio on the corner of their house that encroaches past the ASL, and he is sure that is grandfathered in, but noted it is a little frustrating when someone comes and speaks against something when they have the same issue. Mr. Gates believes they may even have some setbacks on the other side of their property. Bollis asked if Mr. Gates sees drainage getting better with the gabled roof and if they can control the runoff. Mr. Gates noted they control the runoff because they only have sides. In theory, they are increasing the runoff to the sides slightly but with gutters on the gable ends and landscaping, they can better help that. It is easier on their side to get it to the street. He spoke about elevations of the surrounding properties noting all of the neighboring water comes down on to this site and flows into the backyard. He noted they could, especially with 2817, work with all of these properties and help that situation. Bollis stated the City has approved some in the ALS with the neighboring house being extremely setback and he remembers those being hundreds of feet setback. He asked if that is accurate. Curtis replied they have granted ALS variances and she thinks the way the City Council looks at these is from a straight Code standpoint in looking at what the setback line is, what encroachments are being proposed, and whether they are supported by the affected neighbors. She noted they have had all kinds of different orientations of homes affecting the ALS. Ressler thinks the feedback for the Applicant is to know where this goes with the City Council. Showing the hardcover, even though it is in excess of what is applied for, is still an improvement of what they now have. In talking about odds, he thinks they have better odds of having that entertained. He noted the ALS is historically very restrictive, but rather than tabling he thinks they should rule on what the Commissioners have so it continues forward to the City Council rather than coming back to the Commission. Ressler moved, Kirchner seconded, to deny LA22-000036, 2815 Casco Point Road, Variances as applied, for the reasons provided in comments. VOTE: Ayes: 7, Nays 0. MINUTES OF THE ORONO PLANNING COMMISSION Monday, September 19, 2022 6:00 o’clock p.m. _____________________________________________________________________________________ Libby asked to speak about the Orono citizens who came to speak up for what they thought was right. He is not taking sides on this but he was involved in the 2040 Comprehensive Plan and can say that Orono has a nicely articulated bluff ordinance that the public may want to look up. Many of the issues and questions discussed today are articulated in that rule of law which the Commissioners are guided by. Date Application Received: 06/22/2022 Date Application Considered as Complete: 08/21/2022 60-Day Review Period Expires: 10/20/2022 To: Chair McCutcheon and Planning Commission Members Adam Edwards, City Administrator From: Melanie Curtis, Planner mcc Date: 19 September 2022 Subject: #LA22-000036, Scott Gates o/b/o Lisa Thostenson, 2815 Casco Point Road, Variances Public Hearing Background The owners purchased the property in April 2022 and have planned improvements to the home. They have recently applied for an administrative building permit (RPS22-000126; Exhibit J) to construct a garage addition to the rear of the home, meeting the setbacks; the existing detached garage will be removed. The garage addition project reflects changes to the site which bring the existing hardcover level down from 31.1% to 25%. The current variance application reflects changes to the roof orientation from a hip roof to gable within the side yard setback, as well as within the average lakeshore setback. They are proposing a first floor lakeside deck within the average lakeshore setback which exceeds the 42-inch height allowance within the setback. To support this plan, a hardcover variance is requested to permit 26.48% hardcover. Practical Difficulties Analysis Applicant Submittal Information: The applicant has identified the existing conditions as practical difficulties supporting the requested variance(s). Additionally, they have provided supporting documentation regarding Practical Difficulties attached as Exhibit B, and should be asked for additional testimony regarding the application. Planning Staff Practical Difficulty Analysis: Regarding practical difficulty, Staff finds there are difficulties in the location of the existing home which may support the variances for the change in the rooflines. Staff may be able to support he average lakeshore setback variance for the change in the lakeside roof mass as long as the change does not adversely impact views of the lake from the neighboring homes. The average lakeshore setback request pertaining to the new deck cannot be supported. As proposed, the elevated deck and railing appear to impact the lake views for the adjacent neighbor(s). A grade-level deck or on-grade patio (≤ 42 inches from existing grade) can be constructed in the same location. Application Summary: The applicant is requesting variances for side yard setback, average lakeshore setback, and hardcover in excess of 25%. Staff Recommendation: Planning Department Staff recommends partial approval. FILE # LA22-000036 19 September 2022 Page 2 of 6 Regarding the requested hardcover variance, the application for building permit demonstrates that a level of 25% hardcover is achievable and therefore staff does not find practical difficulty supporting a hardcover variance. LOT ANALYSIS WORKSHEET Section 78-350 & 78-1279 – Setbacks: LR-1C DISTRICT Required Existing Proposed Rear 30’ 78’ (including garage addition) 78’ West Side 7.5’ 4.8’ 4.8’ East Side 7.5’ 10.5’ 10.5’ Lakeshore 75’ House: 119’ Patio: 118’ House: No Change New Deck: 103’ Average Lakeshore The existing home encroaches approximately 6.5 feet into the average lakeshore setback. The proposed deck will extend 18 feet lakeward of the average lakeshore setback line on the west side and approximately 15.5 feet on the east side. Section 78-350 – Lot Area/Width: LR-1C DISTRICT Lot Area Lot Width Required 21,780 s.f. (0.5acres) 100’ Actual 14,926 s.f. (0.34 acre) 56’@ 75’ / 56’ @ OHWL Section 78-1403 – Structural Building Coverage: Total Lot Area Total Structural Coverage 14,926 s.f. (0.34 acre) Allowed: 2,985 s.f. (20%) Existing: 2,324 s.f. (15.5%)* Proposed: 2,324 s.f. (15.5%) *According to Permit RAS22-000126 Section 78-1680 and 78-1700 – Hardcover Calculations: The existing condition prior to the to-be-issued building permit RPS22-000126 is 4,4,650 square feet or 31.1% hardcover. The applicant is providing over 1,000 square feet of hardcover removals to reach a conforming level of 25% for permit issuance. Stormwater Overlay District Tier Total Area in Zone Allowed Hardcover Existing Hardcover* Proposed Hardcover Tier 1 14,926 s.f. 3,731.5 s.f. (25 %) 3,730 s.f. (24.99%) 3,953 s.f. (26.48%) *According to Permit RAS22-000126 FILE # LA22-000036 19 September 2022 Page 3 of 6 Applicable Regulations: Side Setback Variance (Section 78-350) The existing home is located between 4.8 – 7.5 feet from the west side lot line. The required side setback for this property is 7.5 feet. Due to the nature of the design, the proposed changes to the roof structure from a hip roof on the street and lake sides to gable ends will increase the mass on each end within the substandard side yard setback. A 2 foot overhang is permitted as long as the building meets the required setback. It appears there may be additional massing impacts proposed in the side yard area on the west side of the home (increased roof overhang, new shed roof over the kitchen window) however, the plans do not clearly identify the existing conditions for comparison. Average Lakeshore Setback Variance (Section 78-1279) The aforementioned changes proposed to the roof structure from a hip roof on the street and lake sides to gable ends will also increase the mass of the home encroaching within the average lakeshore setback. Improvements within the average lakeshore setback are permitted with a maximum height of 42-inches above existing grade. The proposed deck extends from the first floor and will be situated approximately ±6 feet above grade (the walking surface is 3.9 feet above grade on the west side plus a minimum of a 36” railing). Approximately 19 feet of the deck’s total width is elevated above the lower level walkout on the east side and is shown to be approximately 8.2 feet above grade (plus 36-inch railing). The deck is shown to encroach into the average lakeshore setback between 18 feet on the west side and 15.5 feet on the east side. Hardcover Variance (Section 78-1700) As noted above, the applicant is showing over 1,000 square feet of hardcover removals to reach a conforming level of 25% for their building permit issuance. Their variance request reflects an additional 223 square feet of hardcover to be added resulting in 26.48% hardcover. Governing Regulation: Variance (Section 78-123) In reviewing applications for variance, the Planning Commission shall consider the effect of the proposed variance upon the health, safety and welfare of the community, existing and anticipated traffic conditions, light and air, danger of fire, risk to the public safety, and the effect on values of property in the surrounding area. The Planning Commission shall consider recommending approval for variances from the literal provisions of the Zoning Code in instances where their strict enforcement would cause practical difficulties because of circumstances unique to the individual property under consideration, and shall recommend approval only when it is demonstrated that such actions will be in keeping with the spirit and intent of the Orono Zoning Code. Economic considerations alone do not constitute practical difficulties. Practical difficulties also include but are not limited to inadequate access to direct sunlight for solar energy systems. Variances shall be granted for earth-sheltered construction as defined in Minn. Stat. §216C.06, subd. 14, when in harmony with this chapter. The board or the council may not permit as a variance any use that is not permitted under this chapter for property in the zone where the affected person's land is located. The board or council may permit as a variance the temporary use of a one-family dwelling as a two-family dwelling. According to MN §462.357 Subd. 6(2) variances shall only be permitted when: 1. The variance is in harmony with the general intent and purpose of the Ordinance. The applicant is proposing to make improvements to the home on a residentially zoned property which is FILE # LA22-000036 19 September 2022 Page 4 of 6 consistent with the intent of the ordinance. The hardcover level proposed is not consistent with the hardcover regulations. 2. The variance is consistent with the comprehensive plan. The variances resulting in improvements to a home in a residential zone are consistent with the Comprehensive Plan. However, the proposed encroachments lakeward of the average lakeshore setback line and the hardcover level proposed are not consistent with the comprehensive plan. 3. The applicant establishes that there are practical difficulties. a. The property owner proposes to use the property in a reasonable manner not permitted by the official controls; The applicant is proposing to use the property in a manner consistent with the LR-1C district. Reasonable use of the property is afforded with the residential building on the property and the permitted improvement of the addition. The structural changes proposed within the average lakeshore setback resulting from the new gable roof may not be reasonable as it will increase the mass of the home/roof which may impact neighbors’ views of the lake. The deck and the required railings proposed within the average lakeshore setback also limit the views of the lake from adjacent properties, and is not reasonable. b. There are circumstances unique to the property not created by the landowner; The location of the existing home on the property is the limiting factor and was not constructed by the current owner; and c. The variance will not alter the essential character of the locality. The variance to permit an increase in hardcover over 25% as well as the overall massing volume of the home within the side yard and average lakeshore setbacks has the potential to alter the character of the neighborhood. Additionally City Code 78-123 provides additional parameters within which a variance may be granted as follows: 4. Economic considerations alone do not constitute practical difficulties. Economic considerations have not been a factor in the variance approval determination. 5. Practical difficulties also include but are not limited to inadequate access to direct sunlight for solar energy systems. Variances shall be granted for earth-sheltered construction as defined in Minn. Stat. § 216C.06, subd. 17, when in harmony with Orono City Code Chapter 78. This condition is not applicable. 6. The board or the council may not permit as a variance any use that is not permitted under Orono City Code Chapter 78 for property in the zone where the affected person's land is located. This condition is not applicable, as residential improvements are an allowed use in the LR-1C District. However the hardcover level and encroachments into the average lakeshore setback are not permitted within the ordinance. 7. The board or council may permit as a variance the temporary use of a one-family dwelling as a two- family dwelling. This condition is not applicable. 8. The special conditions applying to the structure or land in question are peculiar to such property or immediately adjoining property. There are a number of properties on Casco Point which are situated nearly in line with neighboring homes similarly to the subject property. The conditions applying to this property are not unique to the property. 9. The conditions do not apply generally to other land or structures in the district in which the land is located. The existing condition of the nonconforming home location on this property is not specific to the property. The setback variance requested would be out of character and would limit the light, air, and open space for the adjacent neighbors. 10. The granting of the application is necessary for the preservation and enjoyment of a substantial property right of the applicant. The applicant states the project is necessary for the preservation of FILE # LA22-000036 19 September 2022 Page 5 of 6 the owners’ property right. Staff finds there are alternative opportunities to expand the living space of the home which would be more reasonable and would not require a setback variance. 11. The granting of the proposed variance will not in any way impair health, safety, comfort or morals, or in any other respect be contrary to the intent of this chapter. The proposed hardcover level and setback encroachments requested are not supported by practical difficulty and may be contrary to the intent of the zoning chapter. 12. The granting of such variance will not merely serve as a convenience to the applicant, but is necessary to alleviate demonstrable difficulty. The proposed massing encroachment of the roof reorientation within the substandard side yard setback and within the average lakeshore setback over the existing footprint serves as a convenience to the applicant as they have reasonable use of the property with the single family home. There are alternate methods of constructing the additions without such a severe encroachment. Further, a grade-level patio is permitted within the average lakeshore setback, the applicant’s choice to propose a deck resulting in more mass within the setback is a convenience. With the applicant’s building permit plan they have achieved a conforming hardcover level. Adjustments can be made to the scale/size of the addition to accommodate new outdoor living space/hardcover. The Commission may recommend or Council may impose conditions in granting of variances. Any conditions imposed must be directly related to and must bear a rough proportionality to the impact created by the variance. No variance shall be granted or changed beyond the use permitted in this chapter in the district where such land is located. Public Comments Comments from the public have been received and are attached as Exhibit K. Most of the comments received do not support the project. Issues for Consideration 1. Does the Planning Commission find that that the property owner proposes to use the property in a reasonable manner which is not permitted by an official control? 2. Does the Planning Commission find that the variance(s), if granted, will not alter the essential character of the neighborhood? 3. Does the Commission find it necessary to impose conditions in order to mitigate the impacts created by the granting of the requested variance(s)? 4. Are there any other issues or concerns with this application? Planning Staff Recommendation The applicant’s plans do not show the existing home structure to compare the massing increases/changes. Staff requested an overlay plan for comparison, which was not submitted. Therefore staff is unable to fully evaluate the potential impacts. Staff recommends the applicant redesign the plans to limit or eliminate variances. Regarding the variances requested to permit the new lakeside deck resulting in 26.48% hardcover where 25% is allowed, the proposed garage addition (for RAS22-000126) should be adjusted to accommodate the additional hardcover requested. Planning Staff recommends denial of the average lakeshore setback variance and hardcover variance relating to the deck. The applicant has the option of reducing the hardcover and installing a grade- level patio without variances. The side yard setback variance involving the roof expansion may be reasonable if the encroachments do not FILE # LA22-000036 19 September 2022 Page 6 of 6 further limit the light, air, and open space of the neighbors to the west. If the Commission identifies practical difficulties which support the roof changes in the side yard area, the new encroachments should be limited to the roof and any additional new impacts, such as roof overhangs and the possible new shed roof over kitchen window, should be denied. The average lakeshore setback variance to change the hip configuration to a gable thereby increasing the mass of the roof within the setback significantly is not supported by practical difficulty. Staff recommends denial. List of Exhibits Exhibit A. Application & Narrative Exhibit B. Practical Difficulties Documentation Form Exhibit C. Existing Survey/Hardcover Exhibit D. Proposed Survey/Site Plan Exhibit E. Staff Annotated Survey Exhibit F. Proposed Plans and Elevations Exhibit G. Staff Annotated Plans Exhibit H. Proposed Hardcover Calculations Exhibit I. Aerial Photos Exhibit J. Building Permit Packet RPS22-000126 Exhibit K. Public Comment Exhibit L. Property Owners List Exhibit M. Plat Map Melanie Curtis September 15, 2022 Planner - City Of Orono 2750 Kelley Parkway Orono, MN 55356 Charles and Carol Price 2813 Casco Point Rd Wayzata, MN 55391 Regarding:  Proposed House Drawings for Thostensen Residence at 2015 Casco Point Rd., VARIANCE SET, Dated 8/17/2022, Sheets 1-15.  Certificate of Survey for Lisa Thostenson, dated 5/18/2022  Hardcover Calculation Worksheet, dated 8/15/2022  Hardcover Calculation Worksheet -Alternate, dated 8/15/2022  Practical Difficulties Analysis, Updated-August 16, 2022  Variance Application Narrative, Updated August 16, 2022 Dear Ms. Curtis, We have reviewed the documents listed above and we hereby provide this assessment. House Modifications We hereby request that no new encroachments are permitted on the west side of the subject propert y in which the existing house is currently into the 7.5 feet side set back requirement. It appears that the kitchen bay window has been enlarged with a corresponding larger roof overhang than currently exists. Additionally, it appears that the roof overhang has been enlarged over the side bump out that is structurally part of the existing house footprint. We are opposed to the proposed new gable roof over the existing house that encroaches further into the 7.5 feet side setback. We request that any proposed new roof line will not encroach any further into the 7.5 foot side setback. The side setback rules allow for light, air, and open space between adjacent homes that is necessary for the enjoyment and safety of our property. New Lakeside Deck The proposed deck on the lake side of the house will create a severe hardship for us and our propert y. Instead of our current unimpeded lake view, our view will be blocked by this elevated deck, and everything placed on it which the applicants describe as an "outdoor living space/deck". There are many reasons why this deck should not be approved: it is illegal per the city building codes, setback requirements, and lakeshore hardcover requirements, and it does not fit into the well-established ambiance of the neighborhood. The deck and the things on it would block our view of the lake for a large portion of our view, it would destroy the quiet enjoyment of our home and yard, and the lights and glare would be irritating inside our home. It can be assumed that such an "outdoor living space/deck" would be equipped with sofas, chairs, tables, grills, lights, sound, umbrellas, etc. This large outdoor living space may lead to loud noise from the large number of people this deck can accommodate. Even worse, any people on the deck will be able to look directly into our living room which has a wall of glass facing the lake and a large window facing across the applicants' yard to the lake view. This deck and everything on it will be constantly in our view and will obscure our lake view. It can also be foreseen that there will be lighting added to this deck which will create light and glare directly into our living room through our wall of glass on our lakeside windows and our side windows that face this propert y. We and our neighbors have always enjoyed and valued the quiet enjoyment of our lakeside properties and yards without irritating sound or glaring light, but this proposed "outdoor living space/deck" will destroy said quiet enjoyment by day and quiet dark skies by night. It is clear that this proposed deck solves no "hardship" for the applicants, but it creates a huge hardship for us and our neighbors. We love our house and the environment here at our Orono lakeside property. We don't want to leave our home, but the thought of living with this illegal "outdoor living space/deck" is unfathomable compared to our current backyard ambiance. We generally keep our windows open most all summer long and we don't want to hear our neighbor's sound system, or a deck full of loud partiers. This property already has a substantial patio that has served previous owners well…..there is no hardship that requires any expansion of the existing outdoor living space. Approving this "outdoor living space/deck" will adversely affect our comfort, safety and health. There is no demonstrable difficulty that makes this deck variance necessary nor should this deck be allowed to violate the hardcover and lake shore setback rules. The applicants' wish for this deck is clearl y just a convenience for the applicants. The conditions on this lot are not at all unusual in a hilly topography that was laid out and developed long ago. The plight of the landowner is directly caused by their wish for a deck in a prohibited area, having nothing to do with the circumstances of the propert y or any practical difficulties. Any variance for a deck would make a major change to the locality, and such decks have consistently not been allowed in the past. Several years ago, we attempted to have our detached garage attached to our house but after the design phase and surveys, we were told by the City of Orono to "come back and talk to us when your plans include getting your hard cover down to 25%." Our next door neighbor had the same experience. Properties nearby have had such decks refused and no homes nearby have such decks. Approving this variance would be groundbreaking in this locality. We have noticed that the proposed deck drawings do not show any stairway from the deck to the ground level for access to the back yard and lake. If a deck stairway is added, the most likely place would be close to our propert y since the deck is above the grade the least, and the stairs would further impede our lake view. This stairway is not included in the hardcover calculations. We hereby ask the City of Orono to deny the average lakeshore setback and hardcover variances for this proposed deck. New Garage Addition While we understand a 3-car garage is desirable over a 2-car garage, we do not believe the 3- car garage on such a small width lot conforms to the character of the neighborhood. The house view from the street is essentially a three-car garage. We request that a variance shall only be granted if the overall proposed garage, house plans, and deck plans strictly meet and adhere to all city codes, structural coverage and massing standards, the hardcover requirements, and the side setback requirements. Regarding the narrative dated August 16, 2022 The minimum existing side setback to our property is 4.8', not 6.9' as stated. Several comments that a wire rope or glass panels will "further help preserve views" is not applicable considering the large scale of this deck, all the supporting structures, side supports, and deck elevation from ground level. The deck will spoil our view along with all of the furniture, grills, fire pit tables, umbrellas and people on the deck that will be only 22 feet from our lakeside windows and directly between us and our view of Lake Minnetonka. The hardcover calculations spreadsheet dated 8-15-2022 indicates that the "wood landscape border" will be removed; however this is a retaining border wall that is necessary due to the 5' elevation difference between our two lots. These wooden timbers straddle the property line and the survey spikes are placed in the center of these timbers. The wood border is only half on the 2815 property, so there would only be a minimal hardcover reduction if these timbers were removed. We would find it acceptable for the subject property owners to replace the wood landscape border/timber retaining wall with something more aesthetically pleasing to them, so long as it continues to perform the needed retaining wall function and we approve the plan in writing before work on this border starts. However, taking credit for a hardcover reduction is not applicable in this case. The building codes and hardcover requirements have been put in place for the safety and well being of all citizens in Orono, as well as for the health and preservation of the surrounding land and Lake Minnetonka. We request that the Orono Planners and City Council maintain the ethics and adherence to existing laws and codes and reject the variances requested by the applicant. We would appreciate if the Planners and City Council stand firm and require that the new homeowner provide plans for house modifications that adhere to all city codes, structural coverage and massing standards, the hardcover requirements, and the side setback requirements. Sincerely, Charles Price Carol Price To the City of Orono, As the owner of the property located at 2817 Casco Point Road, I am writing you in regards to the application for variances proposed for the adjacent property at 2815 Casco Point Road. I have spoken with the new owner of the subject property, Lisa Thostenson, who sent me some dimensionless drawings of the building plans. At that time, I expressed support for removing the old two-car garage located next to the street. Upon further investigation into the specifics of the application for variances, I have a concern with the requested Hardcover variance relative to the average setback from the lake. Stormwater management is particularly important for us and for our area neighbors located on a 25-foot-high bluff overlooking Lake Minnetonka. I have found that the deeper soil structure here in this area contains layers of clay. The clay reduces the speed at which stormwater can diffuse down through the soil and away from the surface. This leads to flooding of our basements and more importantly, has likely contributed to several catastrophic landslides of our bluff over the last 35 years. These slides destroy structures, docks and boats located near the shoreline as they permanently reshape the bluff. The requested hardcover variance is of particular concern because the proposed property modifications increase the hardcover located toward the bluff. The planned outdoor living space located along the lakeside edge of the house is only 60 feet back from the bluff. It would tend to focus more stormwater toward the bluff and toward my property, which is at a lower elevation. The extent of this focusing effect would be specific to the particular design of this outdoor living space, which is not completely clear in the drawings I have viewed. The elevation contours in the land survey indicate no attempt to prevent stormwater from flowing into my property. In fact, the survey indicates the intention to remove the “Wood Landscape Border” at the southeast edge between our properties. These railroad ties currently form a retaining wall that channels stormwater to a drain located at that corner where the water is piped down to the shoreline. I would request that the outdoor living space design, as well as the yard elevation contours be modified in such a way as to minimize the potential for any added stormwater to flow toward the bluff or onto my property. I would appreciate your consideration of this concern. Wesley C. Byrne Owner of 2817 Casco Point Road From:Margaret Martin To:Melanie Curtis Subject:Requested setback and hardcover variance 2815 Casco pt rd Date:Tuesday, July 12, 2022 7:28:34 AM Good morning, I am a nearby neighbor at 2821 Casco. I do hope to attend the meeting this coming Monday… but am voicing concern particularly on the request for variance for hard cover on the proposed remodel project. History has shown potential issues with water run off and significant damage to property that can occur. In The last few years… several lake properties have had lakeside landscaping structures fail….costly to the health of the lake and the owners. As well, my property and others are “downhill” from the proposed project at 2815… and likely recipients of excessive run off if hardcover variances continue to be granted. It appears the neighborhood will have many “projects” coming down the pike with turnover of properties…I hope the planning commission and home owners can be mindful of the land use rules that are in place in the lake communities. Margaret martin… 2821 Casco Sent from my iPad From:Margaret Martin To:Melanie Curtis Subject:Re: Requested setback and hardcover variance 2815 Casco pt rd Date:Friday, September 16, 2022 8:15:55 AM Good morning Melanie, Happy Friday.. Know you wanted comments earlier, but I just spoke with a friend who is a civil engineer.. geo-tech.. and offered additional questions/ concerns re 2815 proposal.. thought it important to share “ more professional verbiage” for my same concern. He questioned: how are the home owners addressing stormwater concerns associated with the increased footprint and reduced setback….as this directly affects all properties downslope. We also hear comments from Casco neighbors…living throughout the neighborhood questioning the change in the look of the neighborhood…. Feeling high density… over building that is being allowed. Help us all understand why variances are now continually allowed? Hardcover and set back rules.. guidelines….were put into place to protect the look and feel of the neighborhood as well as the health of the lake and neighbors properties. Seems current mantra is to approve these overbuilding requests. Appreciate you work in keeping everything organized!! Will attend on Monday M Sent from my iPad > On Jul 12, 2022, at 7:28 AM, Margaret Martin <marg2821@yahoo.com> wrote: > > Good morning, > I am a nearby neighbor at 2821 Casco. I do hope to attend the meeting this coming Monday… but am voicing concern particularly on the request for variance for hard cover on the proposed remodel project. History has shown potential issues with water run off and significant damage to property that can occur. In The last few years… several lake properties have had lakeside landscaping structures fail….costly to the health of the lake and the owners. > As well, my property and others are “downhill” from the proposed project at 2815… and likely recipients of excessive run off if hardcover variances continue to be granted. > > It appears the neighborhood will have many “projects” coming down the pike with turnover of properties…I hope the planning commission and home owners can be mindful of the land use rules that are in place in the lake communities. > > Margaret martin… 2821 Casco > Sent from my iPad From:T To:Melanie Curtis Subject:2815 Casco point road, Orono, MN. 55391Date:Thursday, September 1, 2022 3:07:08 PM Hello Melanie, Based on the condition of the house and garage at this location, it would seem that both buildings need to be demolished and replaced with new construction. It appears the focus of the proposed building project is on a larger, new garage with living space above. Adding a sun deck to this existing house in addition to some cosmetics updates doesn’t seem appropriate or in line with other projects in the neighborhood. Thank you. Theresa Norsted2811 Casco Point Road952/210-2310 Sent from my iPad From:Penny Saiki To:Melanie Curtis Subject:2815 Casco Point Road Date:Sunday, September 4, 2022 1:42:24 AM Hi, Melanie, I was able to see the plans for the redesign. These comments are submitted as a heads up to save drainage problems at this house as well as to the other houses, I noticed that the water management of the roof drainage needs detailing because of the existing boulder retaining wall indicating a drop to the land around 2817, the lower level entrance at this house, the drainage of 2813 towards 2815 and the slope of the land across the property as well as towards the lake. CONSIDERATIONS The side setbacks are narrow. The boulder retaining wall of 2815 is retaining the land of 2815 against a drop to the land along the entire side of 2817. The existing drainage of 2813 is straight away towards 2815, and the timbers are proposed to be removed. Now that the roof is a gable, the roof drainage is towards both sides of the house towards the neighboring properties. The roof overhangs are not dimensioned, but they look to be about 2 ft. There are no gutters indicated, but they would add another 4", so the setback overhead will extend over the foundation setbacks and be about 3.9-5.9 ft towards the property line at 2813, and 8.2 ft towards the property line at 2817. The downspouts will probably be 6”, so considerable water will be entering the land someplace along the foundation and then exiting extensions whether between the houses and to the street side on the 2813 side and to the back on the 2817 side to avoid loading the retaining wall protecting 2817. There is very little space on 2815 to manage downspout water with grading towards 2813, but grade needs to slope away from 2815 and yet meet the existing grade between the houses, Suggest locating the downspouts now in design, and do the contour and grading design to manage the water from the downspouts with consideration to the 2815 walkout level and the areas between the houses. Ordinance typically requires matching the existing contour lines at the property lines. Penny Saiki psaiki@icloud.com From:Yorks, Patricia E To:Melanie Curtis Subject:Comments RE:2815 Casco Point Road Date:Sunday, September 18, 2022 6:17:12 PM Hi Melanie: I am submitting some input on the many requests the new owner of 2815 Casco Point Road have submitted. We have been residents on Casco Point Road for over 53 years. We have seen many iterations of remodeling and building new. My career of real estate has also allowed me many experiences through my clients, who have wanted to remodel, build or whatever. My experience is that most Orono residents have worked very diligently to abide by city codes. I think it is human nature that many people think their circumstances are unique and special and therefore they need to be given special permission to go outside the city codes and regulations. It appears that the new owner of 2815 Casco Point Road wants special consideration and be an exception in almost every direction. With all these requests, it appears that perhaps, they should have purchased a different home to begin with. Most Buyers go to the city prior to purchasing, to talk with the planning staff to see what is possible and then make their plans accordingly. They design their home to meet setbacks, and codes. In addition, the neighbors in this neighborhood for the most part have discussed their plans personally with each other and perhaps not always concluding in agreement, but certainly have thought about the other neighbors considerations and the impact on them prior to going to city planning and asking for approval at the city. It appears most of the neighbors in this targeted area have been quite upset by the new owners of 2815 thinking that for the most they are an exception to the city codes and rules we have all abided by for years. Their plans look lovely, I express concern that in viewing the plans very little consideration has been given to codes and to neighbors’ concerns. Our personal example: 1. We wanted to rebuild our home. We wanted to add on various rooms to the house but those plans did not fit with the 75’ lake setback, or the side setbacks so we had Stubbs moving lift the home up and move it backwards and to the side so that we could do our desired plan with the square footage needed and abide by city codes. 2. We have never been able to have an attached garage, because of the city’s hardcover restriction. 3. We have never been able to have a deck in the middle of our incline to enjoy the lake because of the 0 hardcover allowed in the 75’ zone from the 929’ lake elelvation. 4. We have no place to sit at our lakeshore due to our steep incline like 2815 has, because we are not allowed a deck or any sitting area at the edge of the lake because of hardcover. 5. We struggle each year as the dock guys try to find enough room to store our dock and lift each winter. 6. The house to the West was built in the mid 1940’s and is built 30” from our property line and in addition, we have huge trees in our setback area, this does not afford us to have any machinery come to our lakeside yard to trim trees, to install or repair a retaining wall on our steep incline to the lake. We have to ask permission from our neighbor to the east to have machinery come across his yard to access ours. These are just a few of the compromises we have had to live with and I know our immediate neighbors live with similar compromises as we all try to abide by the city, LMCD, DNR , Minnehaha Watershed codes to keep the greatest resource we all enjoy, Lake Minnetonka healthy and vibrant. We have put our selfish desires aside to enjoy the wonderful quality of life the lake brings us. If the city has decided that the powers that make the rules for our codes have changed, we are totally in, we would love to have better access to the lake, an attached garage, a deck in the middle of our 45 degree incline next to the lake and a sitting area at the lake. Patty Yorks AGENDA ITEM Prepared By: LLO Reviewed By: A.Carlson Approved By: 1. Purpose. To consider an amendment to the zoning code that removes the height limit based on the principal building for accessory buildings within the Rural Residential Districts (RR-1A and RR-1B). 2. Background. Recently, the City denied a variance (LA22-000029) to permit construction of a pole building with a peak height of 17 feet where the home on the property had a peak height of 16 feet. The planning commission and city council reviewed this application and identified this as a potential conflict between the rural district uses and urban standards. They directed staff to draft a text amendment to address accessory building height limitations in the rural districts. Currently, the City Code limits maximum building height for accessory buildings to 30 feet (defined height) in each zoning district and states further that accessory buildings may not exceed height of principal building on the property. This restricts the accessory building height to the height of the house. This regulation is a challenge on properties with one-story ranch or rambler style homes. This is particularly challenging within the rural districts where outbuildings and barns are desired. The height limitations on accessory buildings in all other residential zoning districts would not change. Accessory buildings in all districts would still be required to meet all application zoning regulations including setbacks, hardcover, and sizing. 3. Planning Commission Vote and Comment. On September 19, 2022, the Planning Commission held a public hearing. Following the public hearing, the Planning Commission voted 7-0 on a motion to approve the ordinance as drafted. 4. Public Comment. No comments have been received. 5. Staff Recommendation. Staff recommends the Council adopt the ordinance as drafted. COUNCIL ACTION REQUESTED Motion to adopt the Ordinance No. 278, Third Series. Exhibits A. Draft Ordinance B. PC Staff report C. PC Minutes Draft Item No.: 16 Date: October 10, 2022 Item Description: LA22-000048 – City of Orono Text Amendment Related to Accessory Building Height in the RR-1A and RR-1B Districts – Ordinance 278, Third Series Presenter: Laura Oakden Community Development Director Agenda Section: Community Development Report 221719v1 ORDINANCE NO. 278, THIRD SERIES CITY OF ORONO HENNEPIN COUNTY, MINNESOTA AN ORDINANCE AMENDING THE CODE OF ORDINANCES PERTAINING TO ACCESSORY BUILDING HEIGHT IN THE RURAL DISTRICTS THE CITY COUNCIL OF ORONO ORDAINS: SECTION 1. Sec. 78-395 shall be amended by removing the strikethrough text to read as follows: Section 78-395. RR-1A district – Area, height, lot width, setback and yard requirements a) The following minimum requirements shall be observed: Dimensional Requirements: Lot Area (Minimum): 5.0 acre. Lot Width (Minimum): 300 feet. Height: Maximum 30 feet defined height; accessory buildings may not exceed height of principal building. Setbacks: Street/Front (feet) Interior Side (feet) Side Street (feet) Rear/Street (feet) OHWL* (feet) Wetland (feet) Principal Building 100 50 100 100 75/100/150 + ALS 25 or MCWD buffer Accessory Building (AB) <1,000 sf 100 20 100 20 75/100/150 + ALS 25 or MCWD buffer Oversize Accessory Building (OAB) >1,000 sf 100 50 100 100 75/100/150 + ALS 25 or MCWD buffer Accessory Structures (AS) 50 20 50 20 75/100/150 + ALS 25 or MCWD buffer *OHWL setback is determined by the classification of the lake as defined in section 78-1217 and the applied minimum setback from the OHWL as outlined in section 78-1279. SECTION 2. Sec. 78-420 shall be amended by removing the strikethrough text to read as follows: Section 78-420. RR-1B district – Area, height, lot width, setback and yard requirements (a) The following minimum requirements shall be observed: Council Exhibit A LA22-000048 221719v1 Dimensional Requirements: Lot Area (Minimum): 2.0 acre. Lot Width (Minimum): 200 feet. Height: Maximum 30 feet defined height; accessory buildings may not exceed height of principal building. Setbacks: Street/Front (feet) Interior Side (feet) Side Street (feet) Rear/Street (feet) OHWL* (feet) Wetland (feet) Principal Building 50 30 30 50 75/100/150 + ALS 25 or MCWD buffer Accessory Building (AB) <1,000 sf 50 15 30 15 75/100/150 + ALS 25 or MCWD buffer Oversize Accessory Building (OAB) >1,000 sf 50 30 30 50 75/100/150 + ALS 25 or MCWD buffer Accessory Structures (AS) 25 15 15 15 75/100/150 + ALS 25 or MCWD buffer *OHWL setback is determined by the classification of the lake as defined in section 78-1217 and the applied minimum setback from the OHWL as outlined in section 78-1279. SECTION 3. Chapter 78-567 shall be amended by adding the underlined text to read as follows: Sec. 78-1434. Building size restrictions. (3) Any OAB shall be subject to the following conditions: a. Principal building setbacks must be met. Further, no OAB shall be nearer the front lot line than the front line of the principal building on the property. b. The maximum height for such accessory building shall be 30 feet or the defined height of the principal residence building on the property, whichever is less. 1. Exception: Within the RR-1A and RR-1B districts the OAB may exceed the height of the principal building, and is limited to a maximum of 30 feet defined height. SECTION 4. EFFECTIVE DATE: This ordinance shall take effect immediately upon its passage and publication. ADOPTED this _____ day of _____, 2022 on a vote of __ ayes and __ nays by the City Council of Orono, Minnesota. ATTEST: ______________________________ _____________________________ Anna Carlson, City Clerk Dennis Walsh, Mayor Ordinance published in The Laker Pioneer newspaper the week of ________, 2022. To: Chair McCutcheon and Planning Commission Members Adam Edwards, City Administrator From: Laura Oakden, Community Development Director Date: September 19, 2022 Subject: #LA22-000048, City of Orono Text Amendment related to Accessory Building Height, Public Hearing Background Currently the City Code limits maximum building height for accessory buildings to 30 feet defined height in each zoning district and states further that accessory buildings may not exceed height of principal building on the property. This restricts the accessory building height to the height of the house. This regulation is a challenge on properties with one-story ranch or rambler style homes. This is particularly challenging within the rural districts where outbuildings and barns are desired. Recently, the City denied a land use application (LA22-000029), in which a variance was requested to permit construction of a pole building with a peak height of 17 feet where the house had a peak height of 16 feet. The planning commission and city council reviewed this application and identified this as a potential conflict between the rural district uses and urban standards. They directed staff to draft a text amendment to address maximum accessory building height limitations in the rural districts. The height limitations on accessory buildings in the other residential zoning districts would not change. Accessory buildings in all districts would still be required to meet all application zoning regulations including setbacks, hardcover, and sizing. Public Comments To date, no public comments have been received. Issues for Consideration 1. Are there any issues or concerns with this proposal? Planning Staff Recommendation Planning Staff recommends approval of the amendment as drafted. List of Exhibits Exhibit A. Draft Ordinance Application Summary: The City of Orono is proposing an ordinance amendment which will modify the maximum permitted building height for accessory buildings in the Rural Residential Districts (RR-1A and RR-1B) to 30 feet. Staff Recommendation: Planning Department Staff recommends approval of the amendment as written. 5. LA22-000048 TEXT AMENDMENT RELATED TO MAXIMUM ACCESSORY BUILDING HEIGHT WITHIN RR-1A AND RR-1B RURAL ZONING DISTRICTS. (STAFF: LAURA OAKDEN) Staff presented a summary packet of information. Oakden stated Staff is proposing a text amendment to accessory building height, specifically in the rural RR1A and RR1B districts. Currently the City Code limits maximum building height for accessory buildings to 30 feet defined height in each zoning district and states further that accessory buildings may not exceed height of principal building on the property. This becomes a challenge for properties in rural districts with ranch/rambler homes where it is very common to want a pole-barn or barn-type outbuilding. This Code limits that availability to the rural district. From a previous application earlier in the summer where the City saw a variance, a text amendment was discussed by the Planning Commission and the City Council. Staff recommends approval as drafted. Chair McCutcheon opened the public hearing at 7:33 p.m. Chair McCutcheon closed the public hearing at 7:33 p.m. Kraemer moved, Peterson seconded, to approve LA22-000048 Text Amendment Related to Maximum Accessory Building Height within Rr-1A and Rr-1B Rural Zoning Districts. VOTE: Ayes: 7, Nays 0. Prepared By: Reviewed By: A.Carlson Approved By: 1. Purpose. The purpose of this action item is to establish a new Fire Chief positon, gain council approval of the job description and authorize recruitment for the position. 2. Background. The City of Orono currently receives fire and rescue services from the Long Lake Fire Department (LLFD). The City of Orono has formally notified the City of Long Lake that we will not be extending that contract agreement beyond its current expiration date of December 31, 2025. While the city remains hopeful that a negotiated solution can be achieved with the City of Long Lake, the city must ensure it is prepared to stand up a fire department from scratch to be able to provide fire protection services to the community. At the September 12th, 2022 meeting the Council appointed Council Member Victoria Seals, Council Member Richard F. Crosby II and Mr. Eddie Rice to a consultant search committee to look at hiring a consultant or hiring a Fire chief to guide the city in developing a department. The Consultant Search Committee informed staff that the city would create and recruit for a Fire Chief Position. Staff prepared a draft job description, completed a position scoring exercise and prepared a timeline to complete the recruitment. 3. Position Description. A position description is attached at Exhibit B. The draft position description was scored using the Hay Method and placed into the city’s compensation table. The compensation below is based on the draft 2023 compensation for Grade 15. Position Score Grade Compensation Range Fire Chief 560 15 (518-647) $97,898.40 - $120,117 4. Recruitment. The selection process for the vacant position will involve advertising the position, application screening, interview panels and reference checking. The fire consultant search committee will be included as one of the interview panels. Upon completion of the process a candidate will be presented to the council for consideration for appointment. 5. Timeline. The timeline for the process is as follows: When What When What 17-31 Oct 22 Advertise Position 21-25 Nov 22 Negotiation, Reference Checks and Background Investigation 1 Nov 22 Review Applications 28 Nov 22 Council Approval/Appointment 7-18 Nov 22 Interviews (2 Rounds) NLT 1 Jan 2023 New Employees First Day 6. Funding. The fire chief position was not included in the preliminary 2023 operating budget. The budget will need to be revised prior to final adoption in December. 7. HR/ORG Committee Review. The Committee has not yet reviewed this proposal. COUNCIL ACTION REQUESTED Move to approve the Fire Chief Position Description and Grade and authorize staff to initiate the recruitment process. Exhibits A. Draft Position Description Item No.: 17 Date: October 10, 2022 Item Description: Fire Chief Position and Recruitment Approval Presenter: Adam T. Edwards City Administrator/City Engineer Agenda Section: City Administrator The City of Orono is an Equal Opportunity Employer CITY OF ORONO Position Title: Fire Chief Document Date: October10, 2022 Department: Fire Department Accountable to: City Administrator FLSA Status: Exempt Nature of Work This position provides leadership in the Fire Department and is responsible for managing all Fire Department operations including: twenty-four hour fire suppression, rescue, and EMS operations; fire training; fire prevention and public education; and fire inspections and investigations. Provide effective coordination of services with appropriate State and local fire organizations. s and code enforcement, fire prevention and investigation programs and trainings. Supervision Received and Exercised Work is performed independently with guidance and direction from the City Administrator. This position supervises Fire Department staff. The position serves as the liaison to the City Council any contract cities the department provides services for. Examples of Work Essential functions listed below are intended as illustrations of the various types of work that may be performed. The omission of specific statements of duties does not exclude them if the work is similar, related or a logical assignment to the position. • Plans, coordinates, supervises, and evaluates fire, rescue, and EMS operations, including fire ground safety, inspections and code enforcement, fire prevention and investigation programs and trainings. • Provides leadership and direction to employees in the Fire department within the scope of City employment rules and standards; has overall responsibility for employment decisions including hiring, disciplinary action, performance review and termination. Trains employees in firefighting and rescue procedures. • Responds to emergencies, directing activities at the scene, as needed. • Serves as the City of Orono's Emergency Management Director. Promotes and provides collaborative relationships with other City departments (i.e. Police, Building Inspectors), and surrounding municipalities, counties and state agencies for coordination of emergency response and protection plans as well as disaster readiness. Assures NFPA and OSHA compliance. The City of Orono is an Equal Opportunity Employer • Oversee, direct and maintain the safety programs for the City. The Safety Coordinator is responsible for advising all departments within the city to minimize safety risks, provide training and implementation of safety standards, while developing and enforcing OSHA policies and regulations. • Addresses residential and commercial property owners' questions and concerns with fire safety and risk management. • Oversees fire prevention and investigation programs, gathering notes from scene and witnesses; communicates with insurance companies and/or local, state and federal agencies; serves as expert witness in court proceedings. • Work with City staff to provide input on the development of recommendations to the City Administrator to meet future staffing, equipment, facilities and technology needs. Oversee the proper maintenance and efficient use of current equipment, facilities & technology. • Oversee the formulation of department policies, goals and objectives in alignment with City Council outcomes. Work with the City Administrator, the Management Team and other staff to determine goals and priorities. Stay abreast of City needs and encourage input/ideas from all personnel. • Develop and maintain an effective, well-trained staff. Work with employees to plan staffing needs and participate in the selection of personnel. Direct proper training and the supervision of all employees to provide flexibility, broaden expertise and provide overall growth and career development. • Oversee Fire Prevention efforts. Develops and executes the development of fire inspection programs, community fire education programs, fire investigation and fire code enforcement. • Oversee Fire training programs and establishes minimum training standards and safety practices. • Maintain effective measurement systems for Fire response in accordance with City goals. Report measures on impacts of operational changes. • Respond to major alarms and directs operations at the scene of larger fires. • Direct and oversee department public information activities. Develop positive relations with community groups, residents, businesses, City staff and other governmental entities. • Perform research functions as needed or as assigned. Review and analyze information on fire operations, fire-related laws, regulations, and developments. Compile data and develop recommendations as appropriate for long-term departmental objectives. • Review performance of employees as a basis for providing on-going feedback and complete employee performance evaluations in conformity with City guidelines. • Attends staff, community, committee and council meetings as necessary. • Develop an annual budget covering all functions of the Fire Department, and monitor expenditures to ensure compliance with the budget. Assure effective and efficient use of budgeted funds, personnel, materials, facilities and time. Manages department budgets and assists in the preparation of the City’s capital improvement plan, the strategic staffing plan, and annual City budget. • Perform other duties and responsibilities as apparent or assigned. Required Knowledge, Skills and Abilities Knowledge: • Administration and Management — Knowledge of business and management principles involved in strategic planning, resource allocation, human resources modeling, leadership technique, production methods, and coordination of people and resources. • Personnel and Human Resources — Knowledge of principles and procedures for personnel recruitment, selection, training, compensation and benefits, labor relations and negotiation, and personnel information systems. • Customer and Personal Service — Knowledge of principles and processes for providing customer and personal services. This includes customer needs assessment, meeting quality standards for services, and evaluation of customer satisfaction. • English Language — Knowledge of the structure and content of the English language including the meaning and spelling of words, rules of composition, and grammar. The City of Orono is an Equal Opportunity Employer • Fire and Emergency Services- Fire training instructor experience, Knowledge and proficiency with all applicable state and local fire codes and ordinances, along with Incident Command and Hazardous Materials; Applicable federal, state and local laws, codes, ordinances and standards. Skills: • Judgment and Decision Making — Consider the relative costs and benefits of potential actions to choose the most appropriate one. • Complex Problem Solving — Identify complex problems and reviewing related information to develop and evaluate options and implement solutions. • Critical Thinking — Use logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems. • Speaking — Talk to others to convey information effectively. • Coordination — Adjust actions in relation to others' actions. Abilities: • Oral Comprehension — Able to listen to and understand information and ideas presented through spoken words and sentences. • Oral Expression — Able to communicate information and ideas in speaking so others will understand. • Written Comprehension — Able to read and understand information and ideas presented in writing. • Deductive Reasoning — Able to apply general rules to specific problems to produce answers that make sense. • Speech Clarity — Able to speak clearly so others can understand you. Minimum Requirements • Bachelor's Degree in Fire Science Technology, Public or Business Administration with at least five years of paid-on-call fire department experience including increasing responsibility, OR Associate's Degree with seven years of increasingly responsible fire experience • At least 5 years supervisory/managerial experience • MN State certified Firefighter I and II, Hazardous Materials Operations and EMT-B • Currently certified in NIMS 100, 200, 700 and 800. • Must pass required background, psychological and related-aptitude test as well as physical standards for employees of the fire department • Live or be willing to relocate to within a 30 minute (approximate) drive to Orono Fire Station • Valid Minnesota driver’s license. Desirable Qualifications • Experience in establishing new fire department. • 5 years of Fire Marshal Experience • 10+ year’s supervisory experience in emergency services. Physical Demands and Working Environment • Climb, pull, lift and move objects • Drive a command vehicle at high speed with lights/siren to emergency site • Ability to sit/stand at computer for varying periods of time in an Office environment • Exposure to all weather types and extreme temperatures • Exposure to smoke, fumes, heat, chemicals, solvents, oils and pathogens • Heights and enclosed spaces The City of Orono is an Equal Opportunity Employer Supplemental Information and Requirements. The City of Orono currently partners with the City of Long Lake for Fire Service. The agreement covering this arrangement ends on December 31st, 2025. From time of hire until that date this position will be responsible for the following: 1. Fire Needs analysis. Including. A. A review of background information, including the following: (1) Community and service area population and demographics (2) Residential, commercial, industrial, and institutional property uses within the community (3) Policies, agreements, and Department operating guidelines that impact staffing and LLFD practices (4) Mutual aid agreements (5) Call volumes, statistics, and trends (6) Facilities, equipment, and operational practices (7) Review of response time, including by time of day and day of week (8) Review of current operations (9) Review of current organizational structure (10) Review of budgets and funding methods (11) Current department staffing, turnover, and succession planning (12) Past organizational structure and hiring processes B. Analysis of medical and emergency response services provided by other external service providers, including ambulance and medical service responders. 2. Development of a organizational structure to support the community’s needs including: A. Staffing. B. Equipping. C. Facility needs 3. Lead the standup of the fire department. Recruitment and Procurement of percent and equipment necessary for the fire department to assume its duties on January 1st 2026. A. Completion of State Fire marshal requirements for standing up a new Fire department B. Preparation of equipment specifications for procurement C. Developing / updating position descriptions for personnel recruitment D. Development of Policies, agreements, and Department operating guidelines E. Establishment of a pension program