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	FINANCE/DEVELOPMENT COMMITTEE Monday, June 28, 2010 - - 5:30 p.m. - - Council Chambers Present: Christensen, Glassheim, Sande, Gershman Christensen called meeting to order at 5:40 p.m. He welcomed new Councilman Sande to the Committee. 1. Comprehensive Annual Financial Report(CAFR) of the City of Grand Forks, ND for the year ended December 31, 2009 and the Independent Auditor’s Report. Joe Martin, Brady Martz & Associates, stated that their firm conducted the audit of the City and was here to review the financial report with the Committee, and that they have also prepared a Management Report for the City and a separate Management Report for the Alerus Center which he will also review with the Committee. He encouraged the Council Members to review the Management Discussion and Analysis Section of the CAFR as it is a good overview of the activities of the City for the past year and the outlook for the upcoming years. Martin stated that the auditor’s opinion of the statements is included in the report and is an unqualified opinion. He continued to explain the information that can be found in each section of the CAFR. Martin reviewed the Management Letter for the City of Grand Forks. He stated that management has agreed to implement changes to address all observations. Martin reviewed the Management Report for the Alerus Center and that there was a separate scope of work that was agreed upon and is included in your report. Management of the Alerus Center has also agreed to corrections to address all observations noted. Gershman pointed out that for all observations management has addressed them and has agreed that they will abide by those recommendations. Christensen requested that copies of the Alerus policies be provided to the City. Christensen noted that some of these were brought to light due to audit and some from Task Force and would also like to receive something from Venueworks that states that they also agree to adhere to these recommendations. Roger Swanson, Executive Director, Alerus Center, replied that believes that the new contract with Venueworks does include this. Martin reviewed the Alerus Center financial statements and how they combine with the City’s financial report and that as part of the process capital and operating funds roll together for financial statement reporting purposes of the City. He explained that this is why there is a difference between the operating only statements that are received monthly versus the amounts reported in the CAFR. He also reviewed how the hospitality tax is presented in each of the statements. Martin pointed out that the management fee reimbursement which will be paid by Venueworks has already been included in the books of the Alerus Center and explained how it will be presented as the payments come in. Jerath stated that after the lump sum payment the remainder will be paid over 54 months. Christensen reiterated that the fee will not show up in the statements, as it is already reflected as a receivable so when paid will increase cash and reduce receivable. Glassheim asked what the line item for self promoted events settlement was used for. Martin stated that is the fees that have to be paid out to the promoters that bring in the events and is reported as separate line item since it is a substantial amount. Glassheim clarified that the due to other funds is the due to City amount. Martin stated that it is. Christensen referred to page 58 in the CAFR where the amount is also clearly noted. Gershman noted that is a cumulative amount from inception of Alerus Center. Committee moved the CAFR to City Council for review. 2. Alerus Center Budget Dwight Thompson, Alerus Commission Member, stated that the Commission is reviewing the 2011 budget and continuing to refine it and will be making further adjustments prior to it coming forward to the City Council. He continued that the Concert / Event fund will be one area that will the Commission will be requesting further discussion with the Council and that one part of the discussion would be to request to utilize the Venuworks management fee reimbursement to assist that fund. Christensen stated that he met with representative of Commission and staff on Friday, and discussion included that he would like to see this come back to the Finance Development Committee before the budget finalized. Swanson, one area lacking in the Center is public events in the arena and would like to find a way to fund those. He continued that he would like to work with City on events and economic impact and process to use in bringing those forward. Christensen suggested that any proposal should be submitted to Duquette and Jerath and then come to us at next Committee meeting for review and see to what extent the City can assist. He noted that there is a placeholder in the 2010 of $250,000 and has not been used yet and would like to see the protocol and procedure developed this year so know how we’ll be moving forward in future years. Christensen suggested that there should be a member of the Finance Development Committee involved in any smaller group that is put together to look at potential events, or if large event and commitment needed then maybe bring to full Council and would be able to go into executive session for discussion. Christensen stated that Council realizes that the information related to events would need to be considered proprietary and that negotiations are time sensitive and believe that we can put a process in place that can meet those needs. He commented that is encouraging to hear the there is a desire to look at the event scope and what will work best in our market and like to see them roll that out and see what happens. The group discussed that the funds are currently set aside in the economic development fund and that the hope is that in working with the Alerus Center can assist them on building the concert fund, which is undercapitalized now and the City is sharing in the responsibility to work with management to make the Center successful. Swanson responded that they are looking at some opportunities at this time for 2010 events and will be bringing those to Council soon. 3. Assessment district project #4657.1 – Johnson’s 4^th Sanitary Sewer District #388.1 for newly annexed property in the future assessment district (Properties are Lots A, B, and C, Blk. 1, Johnson’s 4^th Addn.) Jerath, stated that this project has already been completed and at the time of the project there was a future assessment area and are now looking to assess the newly annexed property in this district. Motion by Glassheim, second by Sande, to recommend approval of the assessment. Aye: All. Motion Carried. 4. Assessment district project #4660.2 – Johnson’s 4^th Addition Paving (11^th Ave. S. S. 40^th Street, 15^th Ave. S.), Dist. #522.2 for newly annexed property in the future assessment district (property is portion of Lot C, Blk 1, McEnroe’s 2^nd Resubdivision). Jerath, stated that this project is the same as previous and has already been completed and at the time of the project there was a future assessment area and are now looking to assess the newly annexed property in this district. Emily Fossen, Senior Accountant, this is newly annexed to the City for garage for commercial apartment development project and normally the developer is made aware of these outstanding assessments when they ask to come into the City. Motion by Glassheim, second by Sande, to recommend approval of the assessment. Aye: All. Motion Carried. 5. Special Assessment for Corporate Center Parking Ramp Construction, Project #4796.2, District #11. Fossen explained that there is still $197,151 yet to be assessed on this project that needs to be completed this year. She and Jerath gave a brief review of the history of the project and that at the time of construction there are concern over amount of the assessments to downtown properties in the district so the City agreed to pay a portion with intent to assess at a later time to thereby lessen the immediate burden to the downtown businesses. Fossen explained that there are a couple of options which have been provided in the packet to Committee – assessing remaining balance over the remaining life of the bond (9 years) or creating a new bond with either a 15 year or 20 year time. The group discussed that the annual payment amount is less if the term is extended, however the amount of interest paid over the full term is larger. Gershman commented that there is a feeling from the businesses that they are not getting the benefit from the ramp and many are concerned with the amount of their annual costs so would prefer the lower annual payment. The group discussed that there are 357 spaces in the ramp and that 236 of those spaces are rented, which means that without the ramp those cars would all be on street somewhere in the downtown and there would be less space for business parking. Gershman suggested that perhaps need to engage the downtown merchants again and review the issue with them and see if they have any better suggestions, but that the issue must be resolved, not tabled as has been the case in the past. Jerath commented that the assessments need to be certified in September so will need to have resolution with enough time to make proper notifications. Fossen stated that she could generate letters and invite them to the next meeting for discussion if that is the wish of the committee. The group discussed that in addition to the construction assessment that the property owners receive there is also an operating and maintenance fee that is charged to the businesses quarterly, many of which are tenants, not the property owner. The assessment for construction is assessed to the property itself and paid by the property owner. Christensen suggested that perhaps we look to see if there is a way to set it up so the owner of the property would get both and then could pay and set their rents to cover both. Glassheim pointed out that the o&m fee is different dependent on what type of business is in the space and may be hard for them to include when they make their lease. Christensen suggested that perhaps it is time to look at the way we assess the o&m and that there are other areas such as the Target area that all businesses pay a portion for that lot and included in the lease. He continued that the system was set up many years ago and the nature of downtown business has changed and needs to be redefined to better fit the nature of the new downtown. He added that the costs of operations have never adequately been covered under the current system which has led to some of the issues we now have and are using City funds to cover. Gershman agreed that is an antiquated system and is too difficult to monitor what business is in a location, now when a building is constructed they are just told how many spaces they must provide for parking and doesn’t matter who may come in next all based on the initial construction. Glassheim commented that there will be feedback from businesses if they are paying the same as someone else and generating less cars then they may close or move out of the downtown and need to keep that in mind. The group discussed that this item is only discussion of the debt service and the other issues may need more discussion. Gershman replied that people will come in and request that the other issue be factored into the discussion. He requested that information on the o&m also be provided so that the Committee can see if the decrease in one could cover the increase in the other. Christensen stated that it would be good to know the total costs for the building when making the decision on the items. The group noted that this item is also on the agenda for the Service Safety Committee for tomorrow’s meeting and then will be discussed by the full Council on Tuesday, July 6. The group reviewed the various financing spreadsheets and effect on the annual payment the change in term would have. Motion by Glassheim, second by Sande, to recommend using assessment over a 20 year term at an interest rate of 5%. The group discussed the basis for the rate used in the spreadsheets. It was noted that any business could come in and pre-pay the assessment and avoid all interest, or could come in at any time over the term of the assessment and payoff the remaining balance and any accrued interest. Aye: All. Motion Carried. 6. 2011 CDBG and HOME programs Meredith Richards, Community Development Manager, stated that it is time to begin the annual process for allocation of these funds and a draft schedule is attached along with key parts of budget detailed. She stated that as explained in the staff report there is anticipation of increased revenue due to income from land sale to Simplot andLM Wind Power. The change for this year is that they are looking for only Public Service program to be a competitive process, as they have determined a list of City projects that qualify that would use up the bricks and mortar funds. Richards explained that one project that will be included is the building at 201 S. 4^th St. which is leased to Centre Inc.and will involve the fit up of the first floor to allow for expansion of their operations as well as taking care of the remaining second and third floor that we did not have funds to do this week. Gershman stated that he would like to see us use some funds, if possible, to repair the leaking windows at the Corporate Center, as this problem has been ongoing for several years and needs to be resolves. Richards stated that they would not qualify for these dollars, as the benefiting recipients are not eligible. She added that in general it is hard to use these dollars on any City building, but the tenant at the 201 S. 4^th location qualifies because of the nature of the client that they serve and since they qualify is deemed to be an eligible project. The group discussed that in looking at an expansion of the Centre, Inc. to the first floor would like to see a modification to that lease to better address the maintenance costs of the facility as we will be looking at doing when the original lease is up for renewal. Richards stated that the anticipated amount of the Centre, Inc. work would be $800,000. Richards stated that because of the change proposed in the process there would not be bricks and mortar funds for nonprofits for this year, but has had contact with the ones that regularly have utilized these funds in the past and most are looking at other types of projects for the next year and would not be greatly affected by the unavailability this year. Christensen commented related to the increased administration line item and that just because there is more funds available does not mean that this has to also increase. Richards stated that there is a cap on the amount that can be allocated to administration, but these funds can also be used to fund projects such as a citywide housing study or perhaps, for the Mission, a homeless study, so not just for city administration. Christensen encouraged that we need to make sure that any lease that is signed with Centre, Inc. needs to make sure that it meets the needs for maintenance and replacement going forward and perhaps need to look at whether we want to allocate such a large amount of funds to that one project, or if there are others that could also qualify and help out the homeowners. Richards stated that they did review projects with engineering to see projects they may have the could meet criteria for CDBG and there is are a number of projects that could meet that criteria. Christensen replied that he would like to see a shift in focus to take care of things like sidewalks in the areas where we could fund with CDBG which would affect those homeowners. Gershman suggested that perhaps give the architect a limit, maybe $500,000, and they will design a fit up that will work within that budget, and then there will be more funds available to spread Citywide where eligible. Richards stated that they could bring a list of projects to the Council for review. Christensen stated that they would like to see the list of projects and would hope that would lead to some improvements being done that would otherwise been special assessed. The group discussed that the draft schedule could be adjusted to allow this to come back to committee in two weeks for further review and still meet the overall deadline for approval. Motion by glassheim, second by sande, to hold this item for the next Finance/Development Committee meeting. 7. Renaissance Zone Program Katie Osborn, Urban Development, explained that they are looking for direction on expanding the Renaissance Zone and the marketing for it, as the last request was in 2008. She continued that they have the ability to expand by 9 blocks and that there are also some new regulations adopted by State that we can adopt which would expand it, and that there has been some discussion on where the expansion could be done, as it does not need to be directly adjacent to the existing zone. Christensen stated that he believed that we should integrate any State changes into our policy and that Hoover had suggested some areas that could be used and perhaps he can bring some recommendations on where to expand at next Committee meeting. He added that we will have to also integrate any expansion with parking concerns of the school. I This item held until next meeting, July 12, 2010. Motion by Glassheim, second by Sande to adjourn. Respectfully submitted, Sherie Lundmark Admin Spec Sr