Week four: Lehner asks the council to hand him a utility that only a referendum can hand over.
Four weeks after starting, Scott Lehner asked the Kenyon City Council to place all operational, financial and administrative authority over the municipal utility under himself and the personnel committee, "in perpetuity." Minnesota Statute 412.391 says that decision belongs to the voters, by petition and ballot.
Kenyon Municipal Utilities, KMU, was established by city ordinance in 1934 under what is now chapter 412 of Minnesota law. It runs the city's electric and water systems under a three-member commission, and under state statute the commission employs its own staff, sets their duties and fixes their pay. On January 14, 2025, in his first regular council meeting, the new city administrator asked the council to take that arrangement apart by resolution. The statute says it cannot be done that way.
The request
The packet item is titled "Correction of the Relationship Between the City of Kenyon and Kenyon Municipal Utilities," submitted by City Administrator Lehner. Its first page says the remainder was prepared by the outgoing interim administrator, Frank Boyles, at Lehner's request. It describes KMU as seeing itself as "an independent operating unit which is not subject to the City administrator nor city council," calls the handling of a personnel evaluation and its records "violations" that "must be remedied immediately," and states that the three commissioners' allowing them "strongly suggests that greater oversight of KMU is needed by the council and city administrator." No statute or code section is cited for any violation.
The requested action is on page 132. It asks the council to direct the administrator to bring "all aspects of the KMU and city operations, organization chart, operating procedures, records, all types of record keeping including financial practices and cooperation into conformance with city requirements." Then the sentence that matters: "This request includes bringing all operational and management, financial, administrative authority under the city council and city administrator." The council is asked to charge the personnel committee, "composed of Mayor Kirchmann, Council member Helgeson, and city administrator Lehner with this responsibility in perpetuity."
KMU only exists because the city is here.City Attorney Scott Riggs, Jan. 14, 2025, 54:45, from the city's caption track, source
What the statute reserves
Minnesota Statute 412.361, subdivision 2: the commission "shall have power to employ all necessary help for the management and operation of the public utility, prescribe duties of officers and employees and fix their compensation." Subdivision 5 lets the commission and council enter agreements about shared buildings, equipment and personnel, which is what Kenyon's 1997 to 2001 agreements were. Minnesota Statute 412.391 governs the other direction. "The public utilities commission of any statutory city may be abolished or its jurisdiction over any particular utility transferred to the council by following the procedure prescribed in this section." The procedure is a petition signed by voters equal to at least fifteen percent of those voting at the last city election, followed by a ballot question. A council resolution is not on the list.
The council can ask its administrator to negotiate agreements with the commission. It cannot vote the commission's authority over its own employees and finances into the administrator's hands, and it cannot bind a future council "in perpetuity" to anything.
Something needs to change.Interim Administrator Frank Boyles, as recorded in the minutes of Jan. 14, 2025, source
The walk-back
On the recording, Lehner opened by saying he had "just took a look at lay of the land," had been told early that KMU staff "don't report to the city administrator," and "can't even tell you how many hours I have into this looking through the statutes" 35:53. He said the job as set up was "basically to be your city administrator with one hand behind my back" 1:01:11. City Attorney Scott Riggs walked through the five agreements from the late 1990s, called KMU "an arm of the city" established by ordinance in 1934 under chapter 412, said the agreements put city hall staff under the administrator, and recommended getting "back to what these five agreements were," updated if needed 54:17. That is a recommendation to renegotiate agreements the statute allows. It is not the transfer of authority the packet requested.
This was never ever designed to have KMU go away. This was all designed about let's all of us operate efficiently.Scott Lehner, January 14, 2025. 1:11:04
He added that "my recommendation was never to get to change or to get rid of the commission either. I think that the commission has a role." That is a different request from the one on page 132. The council passed a resolution directing the two bodies to sit down and work out roles, records and communication. It did not grant the authority the packet asked for. On February 11 Lehner reported that "no decisions have been made yet concerning the KMU process." The bank accounts were merged in June 2026, which the finance director and two audit firms had recommended for years and which required no transfer of authority at all.
The report was right that two payrolls and two checkbooks for one audit wasted money, and that the city's responsible authority for data could not open a cabinet it was answerable for. Both were office problems with office fixes. The request the council actually received asked for something the law gives only to voters, and the administrator, on tape, asked for something smaller. The packet is the one that stays on file.
Before and after
- 1934Kenyon establishes its utilities commission by ordinance, as City Attorney Scott Riggs tells the council on the recording.
- 1997 to 2001City and KMU draw up agreements on shared staff, billing, projects and the building; the minutes note signed copies cannot be found.
- Dec. 17, 2024The KMU commission closes a meeting to evaluate its superintendent and asks the new administrator to leave.
- Jan. 14, 2025The packet asks for "all operational and management, financial, administrative authority" under the council and administrator, with the personnel committee charged "in perpetuity."
- Jan. 14, 2025At 1:11:04 Lehner says it "was never ever designed to have KMU go away"; Kirchmann moves, Sjolander seconds, to start the process; 5-0-0.
- Feb. 11, 2025Lehner reports that no decisions have been made yet concerning the KMU process.
- June 9, 2026Lehner reports the KMU checking account was officially closed the week before; the accounts are merged without any transfer of authority.
What the statute says
The public utilities commission of any statutory city may be abolished or its jurisdiction over any particular utility transferred to the council by following the procedure prescribed in this section.
Taking a utility from its commission has one lawful route, and it is set out in this section.
The council may, and upon petition therefor signed by voters equal in number to at least 15 percent of the electors voting at the last previous city election shall submit to the voters at a regular or special election the question of abolition of the public utilities commission.
The route is a voter petition and a ballot question. A council resolution is not on the list.
The commission shall have power to enter into agreements with the council for payments by the city for utility service, compensation for the use by either the commission or the city of buildings, equipment, and personnel under the control of the other, payments to the city in lieu of taxes, transfers of surplus utility funds to the general fund, and also agreements on other subjects of relationships between the commission and the council.
What the statute does allow is agreements between commission and council, which is what Kenyon's 1997 to 2001 documents were.
People in this story
- Scott LehnerCity administrator, on the payroll since December 14, 2024
- Frank BoylesInterim city administrator under contract, June 2024 to January 31, 2025
- Scott RiggsCity attorney, Kennedy & Graven
- Don KirchmannMayor; named in the request, and mover of the motion the council passed
- Kim HelgesonCouncil member; named with the mayor and the administrator to hold the authority "in perpetuity"
- Randy EggertOperations superintendent, Kenyon Municipal Utilities
Sources
- Packet, January 14, 2025, Request for Council Action, pp. 130 to 133 (scanned pages; text quoted from the packet).
- City of Kenyon recording, January 14, 2025, at 35:53, 54:17, 1:01:11, 1:11:04.
- Minnesota Statutes 412.361 and 412.391.
- Minutes, February 11, 2025, KMU process update; minutes, June 9, 2026, KMU checking account closed.
- Kenyon Leader, January 21, 2025.
More from the record
Three days on the payroll, Lehner walked into a closed KMU meeting. They walked him out.
The KMU "violations" report was ghostwritten by the outgoing interim. It names no law, because there isn't one.
Kenyon could have hired its own interim administrator for the price of a job description. Nobody seconded.
All 27, in order · The open letter · Every packet and recording