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Minutes of the Grand Forks City Council/Finance-Development
Committee - Wednesday, September 1, 2010 - 5:00 p.m. _______________

A special session of the Finance/Development Committee met on Wednesday, September 1, 2010 at 5:00 p.m. in the council chambers in City Hall with Council Member Christensen presiding. Present at roll call: Christensen, Glassheim, Sande.

Also present were. Greg Hoover, Meredith Richards, Saroj Jerath.

1. Redevelopment of City-owned lot at 1815 N. Third Street.
Chair Christensen stated the meeting had been called by the committee to address concerns after receiving letter dated August 6 from the Aarvigs that there were some irregularities in the process of requesting proposals for purchase of the property. He noted that the Aarvigs were present, Mr. Bures whose proposal was reviewed and accepted by staff and Urban Development Comm. and was to be sent to city council, and the Spicers.

Sande stated that after several discussions on this matter after the finance/development committee meeting on Monday between the Aarvigs, the Bures and the Spicers on this process of the proposals, that it seemed there were valid concerns about the process that was taken to get to the result of the Bures' proposal being accepted by our committee and forwarded to the city council. He explained that because of concerns that had been raised that the matter should be brought back to committee to make sure that all interested parties have the ability to state their concerns, and to review the committee's decision prior to its going to council.
He stated that he too has had some concerns about the process the City has been using to sell the infill lots; that at the last committee meeting he made it known that he had some issues with 3 proposals that he had turned in to the City that were all rejected, although he felt that they were valid and met the requirements and/or required criteria set forth by Housing and Urban Development, were rejected from what he thought were very ambiguous reasons, that he is slightly jaded by the process but when others start having similar issues wants to make sure that everyone has the opportunity to be heard.

Matt Aarvig, 1708 N. 4th Street, stated they weren't debating whose house is better but have questions about the process, some of the things that were stated that with front-facing garage and that almost every house in the area has front facing garage, two houses with garages that face the alley and have been added recently, and that when these are cited as factors determining the result and that is not the case of the neighborhood; that they did everything they could and last proposal rejected because it didn't fit the neighborhood.

Jennifer Spicer, 1807 N. 3rd Street, stated that she and her husband had some interest in the lot prior to the original deadline, received packet from Urban Dev. and during spring decided to submit proposal and contacted people who were on the committee as she had an old packet and was told that everything was the same, no deadline and continued process and getting financial backing, etc. That she found out at a Riverside function (on July 23) that the lot had been decided upon that particular day and was upset because she didn't know there was a deadline but had she known there was a deadline they would have definitely been ready to meet that deadline as in the very last stages of the process, that the next morning she contacted both Urban Dev. and an employee and explained, and assumed that if something would have changed, they would have been notified.

Sande stated there are several potential issues with the process, there were some questions about the Bures' financing and that they had a contingent offer which didn't meet the original requirements but believes the final requirement is for the lot only and asked for confirmation. Meredith Richards, Urban Dev., stated that the financing component is one of the standard review criteria and important factor in rating the proposals and did in response to their lengthy letter that was submitted as part of the Bures' proposal contacted their lender during the review committee meeting and lender gave assurances that their financing was good.

Christensen stated as looking at the RFP, second page, item 3, budget information, apparently didn't have a letter of credit from the Bures. Richards stated they did have a pre-approval letter from the lender that was very lengthy and detailed and that was the phone call that was made during the review committee meeting. Christensen stated it says "as discussed earlier, this construction loan is contingent on the successful sale and closing of your current home, 28 Conklin Avenue", and there is a contingency. Richard stated that the loan officer explained they had the capacity to purchase the lot immediately, construction financing would be based on an executed purchase agreement for the sale of the home - and that in her opinion their financing was very solid, was good enough for the committee. She stated that the original letter from the Aarvig's didn't list the dollar amount, but said they were pre-approved. Glassheim stated that both parties made sure the financing was in place. But letter says please accept this letter as approval from the bank to do a construction loan on the property he is purchasing, no equivocation, they will do it. Richards stated there was no dollar amount. Christensen stated they have told you what they are going to build, how much they are going to pay; Richards stated that is correct, this has been if we get a blank pre-approval letter, we verify the dollar amount and that was done in this case.

Sande stated several things lead him to be concerned, that Spicers have many e-mail contacts and phone contacts with Housing and Urban Development expressing their interest, and then weren't allowed to respond. Christensen stated that Mr. O'Neill is in charge of the program and he is the person you are to contact per the RFP, the ad in the newspaper stated that proposals are due no later than noon July 15, 2010, and RFP says same thing. Richards stated that she was the one who told Ms. Spicer there was no deadline, and at that time there was no deadline; that the proposal was issued originally in late 2009 and in response to the Aarvig's submittal of a proposal that was rejected by the review comm., the RFP was reissued in June with a July deadline. She stated there was a winter advertisement and a summer advertisement, which were published 3 times in the newspaper; that she spoke to Ms. Spicer and apologized that she was not notified of this change, and takes full responsibility. Christensen stated that was oversight and to the extent it is an apology, is accepted.

Sande stated that the whole process needs to be scrutinized in further detail but perhaps not here, that distribution of packets, notification of parties, deadlines, required info, and finds the dollar values that they asked for and the estimated value of completed project is completely ambiguous number because can put any number on the paper and get a better proposal, because there is no required appraisal from the bank, thinks ambiguous and gives someone opportunity of getting the lot. In the past there have been other things that he would take issue with, i.e., such as selling lots at discount without offering similar discounts and selling groups of lots to builders that haven't provided house plans for those lots and these are issues that should be addressed, but where we are today, not sure of the best process to go through because we have two proposals that are already public information and that the Spicer's didn't get the opportunity when in his opinion they should have had the opportunity to provide their proposal; that the Bures' did follow the process and may have somewhat of an advantage because Ms. Bures works in the office and know what deadlines were and how things were going to proceed, and with the exception of the financing being iffy, it doesn't appear that they faltered on the process or that there was any intentional impropriety on anyone's part.
Tom Bures, 28 Conklin Avenue, stated he wants what is best for the neighborhood, and what fits in there, that is why they went through and evaluated what they thought would be the best look and feel for that location, and if need to re-list this, then re-list it. His only frustration is that they followed the process and that his wife does work there (U.D.) however, he was one that looked on TV and followed what happened, and that if the committee decides they need to re-list it, they will accept that.

Christensen stated there was an issue and question as to whether or not there was any impropriety because you wife happens to work in the same department, have resolved that and there is no impropriety because it was disclosed and was dealt with. He stated we have bids from Bures and Aarvig's but don't know Spicer's bid yet, stated not sure what to do as would have to have a whole separate process/review. Mr. Bures stated their frustration is the timeline, not going to be able to break ground this year, that they have actually listed their house for sale which they didn't want to do until it went through - thought it would move forward and would be able to break ground and with the hurdles don't think will be able to break ground. Christensen stated it was also his understanding that at this point you have the ability to just buy the lot.

Mr. Aarvig stated that after talking with his wife, if the Spicers were able to submit their plan, and take the subjectivity out of it and as long as their plans are okay, to have a lottery.

Ms. Spicer stated she and her husband would appreciate the opportunity to present their proposal, at the last council meeting there was a lot of discussion about process and that things need to be done right, doesn't agree to continue with wrong process; their proposal is ready to be submitted.

Glassheim reviewed the process. that in 25 years of going through bid disputes, once a bid is revealed, don't go back and rebid because everybody knows - not a proper closed bid process and seems the decision we made before is the correct one and ought to stick with it.

Mr. Bures stated that he doesn't agree with a lottery - that it needs to be decided with a bit more architectural thought, etc. and let committee decide.

After further discussion Sande stated he would recommend that our committee look at the process with Housing and Urban Development and try to redefine the process or at least scrutinize it and would agree with your recommendation that we move forward with the Bures' proposal, and appreciates and thanks everyone for coming in to give us some information.

Sande stated he would recommend that it go on city council agenda for Monday night. Motion carried.

ADJOURN

The meeting adjourned at 5:45 p.m.

Alice Fontaine, City Clerk