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Minutes of the Grand Forks City Council/Finance-Development
Standby Committee Wednesday, January 27, 2010 - 4:30 p.m.

The Finance/Development Standby Committee met on Wednesday, January 27, 2010 at 4:30 p.m. in Room A-101 in City Hall with Chairman Christensen presiding. Present at roll call: Christensen, Glassheim, McNamara, Gershman.

Also present were Saroj Jerath, Rick Duquette, Greg Hoover, Meredith Richards, Mel Carsen, Al Grasser, Patrick Dame.

2. Letter of request from Grand Forks Airport Authority.
A letter from the Airport Authority that the FAA has requested a teamed commitment between the City and the Airport Authority for funding of the reconstruction of Airport Drive from Highway 2 to the UND turnoff. Two options were presented: #1: that the Airport Authority and the City each share 50% of the cost of the local share of $165,000 and that the City provide a low interest loan to the Authority for the Authority share; and #2 The City provide a low interest loan to the Airport Authority for the entire $165,000.

Christensen stated his issue is that this is a separate tax collecting entity, and difficult when taking money from one taxing entity for another taxing entity, granting is okay but knows they have the capacity to pay it back because its $4.50 per passenger and found money they didn't have before, they sold their bonds without that revenue source, they increased their revenue because they have more money coming from the University of North Dakota, and no reason to give them a grant because they have the authority to pay it. That it seems that we won't violate any principals for lending money but the issue of that and assumes to lend them the money at favorable rates with 10 year loan.

Gershman asked for explanation of FAA request. Mr. Dame stated that based on the conversations they have had with FAA, they are looking for a team participation, and are looking for somewhat of a nominal pledge by the entities involved. The FAA is saying that they are paying about $32 million over 3 years into Grand Forks, are paying local contractors, business people and all local work that is being done, and that they would like to see the City participate in funding the project, and that was their preference - that there is a lot of economic development that has been generated within the city of Grand Forks - and if this project holds through, they are looking in the neighborhood of $32 million.

Christensen stated that he would suggest that if the County gives you a grant, the City will give you a grant, that if there is a loan by the County, they will also consider loan - and as far as our source of revenue to the extent that we give you a grant, will take it out of our sales tax revenue that we allocate for infrastructure.

Glassheim moved that we recommend to the council that we match the County's grant, not to exceed $50,000, and loan remainder at favorable interest rates for 10 years. McNamara seconded the motion. Motion carried.

1. Redevelopment of civic auditorium parking lot.
Meredith Richards reported that when they met last week that MetroPlains proposal for redevelopment of the civic parking lot included request of $335,000 in HOME funds, that City has the money available to fund it over 2 years, but that would have an effect on the City's American Dream, Home Buyers Assistance Program and committee wanted to discuss what the impact would be before making a recommendation. The memo gives a couple options and background information on how they spent HOME funds as well as affordable in-fill program, and also assistance level for the program. She stated they will be getting about $255,000/year for projects paid from HOME funds. Option #1 shows that they could fully fund MetroPlains over 2 years and impact for that approach on our existing programs would be that Affordable In-Fill Programs would basically be put on hold for couple years, and American Dream Program principal buy-down program would cease to exist but funding cap would be dropped to $5,000 per household and at that level would fund about 35 families a year which is a reasonable number and is the lowest level of assistance we provide.

Hoover recommended Option #1 MetroPlains - Richards stated as opposed to Option #2 it makes the program continuous - the federal interest buydown vs. repaying we are continuing the infill not just these particular lots, but concentrating on 15th and Belmont, have money from the Knight Foundation to do some others - and only have a few of these left and these are the harder ones to do - staff is running at capacity and more difficult to stop at down payment. Re. infill lots in the near Northside, Richards stated if look under affordable infill programs - great program and wouldn't be hurt at all by not funding it for year or two. Christensen stated that if go with Option #1 won't discontinue our infill program, will go with lots for sale and still have this money to work on the 35 households. It was stated that in the past have tried to recover the minimum costs of $2,000 - and we just recover minimal costs and we don't pledge any subsidy to the program.

Hoover presented info. re. old Rental Rehab Program - these are monies that started out from the old Rental Rehab Program, because that close out it doesn't have the federal restrictions attached to it, and showed some of the things that have taken out of this and some of the things remaining, shown that $375,000 and what impact has on the balance, and if take that out still have close to million. He stated that in the future will want to be doing something kiddy-corner from City Hall, perhaps buying up all the properties there except for the historic structure, and redeveloping that - and hate to lose flexibility we have in this program to do that.

Christensen asked if could re-allocate some of the CDBG money in 2011 - that have $150,000 in HOME money and if could use that to keep our in-fill program going. It was noted that CDBG is obligated for 20 years, and CDBG is not a good fit for new construction, HOME works very well for this construction for Affordable Housing.

McNamara asked that if the housing market for whatever reason goes boom in the next 24 months, is there any other place that we would source revenue at the upper end of your statistics,
Hoover stated that the Housing Finance Authority does have down payment closing costs assistance program but not used in Grand Forks.

Glassheim stated it is market rate and targeted to low income - the tax abatement loan has $176,000 in the pro forma and 100% for 5 years and would like to have the City recover some of that from the very beginning, go at 80% all the way across and at least recover some amount - 20% of $170,000 is 34 that they lost and if not going to take the $375,000 out of your unrestricted amount, maybe could take 35 more and add it into their loan or something like that so that they have enough to deal with - gap between what they are asking for and what he wants to give them on the tax abatement.

Mel Carsen, city assessor, stated his understanding is they would be using a TIF exemption and the TIF exemption is limited by eligible costs, the eligible costs will only fund maybe 70% of a 5 year exemption, but hasn't worked out all the numbers.


Glassheim stated the construction is roughly $3.3 million - it was noted that the business exemption we're giving is only for buying the dirt - that the TIF is on the value of the property - just the land . Carsen stated that the TIF exemption is for anything over and above the current value, and eligible costs limit the amount of the exemption - the total amount of the exemption cannot exceed the eligible costs. It was noted that eligible costs are half million dollars - Carsen stated they get an exemption and save tax money over 5 year period and then they get a loan and pay for it with tax savings. Glassheim stated that he wants to give them 80% of the amount so they can get a loan for 20% less than they thought.

Christensen stated that this is in a renaissance zone area and if that has a separate property tax abatement - Carsen stated it does - but can't do both - the policy for a commercial building in a Ren Zone is 50% exemption for the building the first year, 40% the second, 30% the third, 20% the fourth and 10% the 5th - and that is our standard policy for Ren Zone. Richards stated that they have requested a TIF and have not requested a Ren Zone project, the TIF would be more valuable to them as you can only have one or the other; and if the City wanted denied them a TIF on whatever basis, they could then request a Ren.Zone. She stated their request for a TIF is a 5-year full exemption, with a Ren.Zone, the maximum they can get is a 5-year 50% exemption for first year, 40% the second, etc. and is worth less.

Gershman asked if the School District leases the parking lot, term of the lease. Hoover stated they pay nothing on it and prior agreement was leasing the upper two levels of the Central Ramp, and has not had discussions with School adm. Gershman stated he had talked to Bill Hutchison, and he is doing an inventory of the spaces with two floors, the Alerus lot, and if they lose this lot, they are out of compliance with our ordinance for parking - that he will get the inventory and maybe the two floors will handle the whole thing.

Hoover stated that they will work with Mel and developers, figure out from their standpoint, and knowing that we are not going to give them a 100% 5 year and figure out what the gap is, etc. Richards stated they will be back next Wednesday

Alice Fontaine
City Clerk
1/29/10