Committee Minutes

Minutes of the Grand Forks City Council/Finance-Development
Standby Committee Wednesday, September 17, 2008 - 4:00 p.m..

The Finance/Development Standby Committee met on Wednesday, September 17, 2008 at 4:00 p.m. in Room A-101 in City Hall with Chairman Christensen presiding. Present at roll call: Christensen, Glassheim, McNamara.

Also present were Al Grasser, Meredith Richards, Peggy Kurtz, Todd Feland, John Schmisek, Saroj Jerath, Terry Bjerke, Curt Kreun, Pat Burger, Charlie Bremseth, and reps. of various organizations.

1. 2009 CDBG/HOME allocation recommendations.
Meredith Richards, Urban Development, reported the deadline for filing applications was September 4 for both the Bricks & Mortar and Public Service - that applications for Bricks & Mortar totaled just shy of $1 million with $357,000 in available funds; and Public Service applications totaled approx. $340,000 with $175,000 in available funds. The staff report lists those applications in the order received at Urban Development and gave a brief description of what project or program request was for and the dollar amount. The Citizens Advisory Committee was expanded this year to add a more social service sector representation and would fund based off the rankings, and applications had to get a 60% yes vote to go onto the ranking process, and that eliminated a few applications from both programs. Voting was done by the members of the Citizens Advisory Committee (representative from each ward appointed by council members, and members of agencies - Northeast Human Service Center, UND Social Work Dept., County Social Services, United Way, Chamber and council rep. Member Glassheim). She stated they went through the ranking process for Public Service and when eliminated those that didn't make the cut, left funding request at $252,000 for $175,000, and staff approach is to fully fund the top ranking projects. CAC recommendation was to take a tiered approach and their recommendation was that top tier get full funding, middle tier gets 75% of their request and bottom tier gets 50%, and modified CAC approach takes down to 100%, middle tier gets 60% of request and bottom tier gets 30% of request. The CAC vote was unanimous to recommend the tiered approach; and choice of committee is whether want to follow staff recommendation which is based on fully fund highest ranking or the CAC's recommendation which after cut is made that everybody should receive funding on a tiered basis. The organizations eliminated were Public Service applications: Prairie Harvest, Housing Auth., Lutheran Social Services (Healthy Family Program), CAP (Transp. Program), Habitat for Humanity and Salvation Army (Youth Program); and Bricks & Mortar aps. that did not receive ranking were Housing Auth., CVIC and Growing Together, Inc. Staff recommendation is to fully fund until run out of money.

Glassheim moved the modified CAC recommendation to fund applications on a tiered basis; Christensen seconded the motion. Motion carried.

Kreun joined meeting.

M.Richards reviewed Bricks & Mortar programs and that the main difference from prior years is that staff was recommending that a program delivery line item for program delivery percentage be added to each grant award and that is based on recognition that as program shrinks our admin. dollars don't go as far as they used to and this is a legitimate HUD sanctioned approach, what they have done is that after the CAC ranked the projects, and ran out of funding part way through the Shelter for Homeless, and if take approach that you fully fund the top ranking projects and continue until run out of money to make a total to that $337,000
McNamara joined meeting.

She stated if you look at the staff recommendation and the CAC concurred with it and were not interested in making funding recommendations from the top down - and staff plugs in the dollar amount and that the highest ranking proposals were Affordable Housing Rental Rehab. Program, $100,000; roof replacement for Antenna Club at $15,000; ADA Accessible entrance at YMCA Family Center at $12,500; Habitat for Humanity to acquire building sites, $20,000; and Shelter for Homeless requested $220,000 ($20,000 for fire doors, $150,000 for fire sprinkler system and $70,000 for dorm expansion), and if fund the fire safety item only to the amount of $170,000, then with program delivery it works out in terms of expending available funds. The Bricks & Mortar projects did not make yes/no cut were applications from Prairie Harvest, Housing Authority, CVIC and Going Together, Inc.

She reported that Primrose Apartment project is an existing apartment which is low income housing tax credit project, and is an arm of Grand Forks Homes and is putting together an acquisition and rehab package - preservation of an affordable housing project and would insure when the 15-year period of affordability from initial construction is ended, this would continue to make it affordable for the next 15 years. There funding request is $100,000 of a multi-million dollar project and this would go to fill some of the gaps, they do have tax credits and commercial financing and staff recommendation is that HOME funds be used for their request. Christensen questioned inclusion of this project when can get it through bank loans or generated from income and exclusion of other projects. Richards stated their application provides a lot more information than the brief summary and can get that information to the committee.

McNamara questioned that those who have other alternatives and those who don't and if that entered into the criteria. Richards stated that each applicant made a presentation and the committee did not state priorities or rank projects on criteria - that Public Service aps. leaning toward emergency assistance programs - same with Bricks & Mortar, no focus on any item but tied with Antenna Club (roof replacement) for ranking with the committee.

Christensen asked if the Habitat for Humanity acquisition of building sites, how many lots for the $20,000. Richards stated they want to have those funds available as they participate in the city's infill program and have money to put in their proposal to purchase lots or have to start purchasing lots on the open market. Min. bid for infill program is only $1,000 but proposals are approved on the basis of more than min. bid; Habitat was awarded one lot through that program this year; in other cases developers had offered as much as $15,000 for lot when min. was $1,000,not sure what Habitat's intention is but if go on the open market might get one and through city infill program could in theory get 20 but is a competitive process. She noted that in proposal process, look at designs if compatible with architecture in older neighborhoods. She stated that in the past council has deeded property to Habitat, have seen the infill program work very well - that council set to be competitive, that if want to change that, can.

Bjerke joined meeting.

Richards stated that Habitat has its own complex calculation that they determine what the sales price is for the home buyer, and in the past Habitat has received funding through the HOME program and have basically reduced that cost to the low income home buyer; and in this case their request was for acquisition funds, but HOME dollars make more sense.

Christensen asked committee how they felt funding Primrose Apts. for $100,000 on a multi-million dollar project as opposed to using that for somebody that didn't get funding. McNamara stated he didn't feel he had enough information to make that if they have access to other funds. Kreun stated that there is still the need for low income housing or reduced rent housing to utilize all the vouchers they have in Housing Authority and this gives them the ability to utilize more of those vouchers and reach more people that have that housing need. Glassheim stated Primrose has 48 units and that they are about $400,000 or $500,000 short, they have private funding and commercial funding and can pick some of it up with internal funds, need this $100,000 to fill the gap, or another way to do it is to raise the rent.

Christensen stated we have a semi-agency, the CVIC, and are allocating $75,000/year out of the general fund of police department budget; that they want to renovate their building and are looking for $200,000 - why not this one. Glassheim stated allocation was done by ranking, and there was some concern as this was new construction for new offices and the committee preferred direct services that directly impacted people. Richards stated when they were authorized to proceed with the allocation process, they asked if there were priorities and the priority was to support the Mayor's Urban Neighborhood Initiative MUNI in the northside; part of the competitive funding and no Bricks & Mortar project in here that benefits the near northside neighborhood; that the Listen Center is located on the edge but offers services community-wide and if looking for a directive that council gave for the funding, that would be the only direction.

Christensen stated he would like to have more information about the Primrose Apts. project and would like to know more about CVIC's application, and can go with the other ones but would like to see if there is more benefit for CVIC as we are funding that directly - $75,000+ per year.

Kreun stated there aren't any profits involved in this, Grand Forks Homes/Primrose Apts. project puts that money back into the apartment portion and in turn reduces the price of the rent - that churches own Grand Forks Homes - these are located near Century School. Glassheim stated that if wanted to open it up, CVIC is one of 3 groups that were not even ranked so then all those need to be considered. McNamara stated he wouldn't reshuffle the prioritization, but concurs with Christensen in terms of seeing more about the Primrose Apts. and his preference would be if a different course of action would be better there and would take it back to committee's recommendation relative to their priorities to allocate that money.

Christensen stated they were an oversight committee and asked for recommendation on the report, if approve as recommended or approve it subject to review as to Primrose Apts. and the rankings including CVIC. The motion was moved by McNamara and seconded by Christensen to approve the Bricks and Mortar projects, with exception of Primrose Apts. project, subject to further review of the application. The motion carried.

Christensen stated he would like information that was presented on Bricks & Mortar applications and that he and McNamara would go to Urban Dev. Office to review it - wants to know what the Primrose program is about and what CVIC was looking for, and then back to the committee or go to council. Richards stated she would like to get this on the committee of the whole agenda on Monday as they have a 30-day comment period and if come to their office tomorrow, that the recommendation would be to approve the funding recommendations subject to committee review of the applications, no action taken on this until November but have to open a public comment period and have draft action plan out there for comment and on November 3 would approve the funding that is being recommended.

Richards stated that the report shows HOME Program uses originally had American Dream Program at $300,000, other Bricks & Mortar at $92,000 with a recommendation that the Primrose Apts. be fully funded so the full $100,000 plus Program Delivery could be charged out of HOME in effect shorting the American Dream Program a little bit but not concerned that would be harmful to that program. In terms of CDBG the earmarks are $200,000 for American Dream, $255,500 for HomeCents which is the northend and other low income area owner occupied housing rehab loan programs, MUNI Bricks & Mortar is infrastructure public facility money that is needed for the near northside and then look at the other Bricks & Mortar Programs that were recommended from that funding, and that with minor adjustments how they got from their preliminary budget that was authorized for allocation in July to where they are at the end of the process today.

2. Special Events Funds for 2009.
Christensen stated this is a review of the Special Events Funds for 2009, and has asked Mr. Schmisek for comments. Schmisek stated one of the concerns they have is on the election for the Riverside pool, part of the discussion prior to the election was that our share of any deficit would come from the Special Events Funds that were budgeted in Fund 2163, and what was provided and received from Mr. Hoover is about $109,000 in the 2009 budget for Special Events money, and the top are the group that seems to be funded every year. He provided a copy from Mr. Palmiscino, Park Dist., for 2009 budget - and when take his projected expenses and projected income, and take the $15,000 that the Park Dist. will put in and $10,000 from private contributions per year - shows $54,000 deficit but towards the end of the year we do start the program for submission for events money, question is, do we do that for 2009 considering the fact that we may have to fund anywhere from $30,000 to $50-60,000 deficit or do we hold that money and wait a year until we get a history of what the deficit is going to be. He stated they are expecting to not see their money and will have that issue.

He stated he had presented committee with a copy of 2163 budget and its projection, that we have a dollar amount that is available for carryover but doesn't include anywhere from the $30,000 to $50,000 or potential deficit but there is money there if you decide to do the special events and then fund the deficit for the pool out of 2163 and will simply spend down cash for awhile and won't build as fast as anticipated, need to throw options out to get some direction where you want to go; and that will they will open the discussion on both Special Events and Arts for 2009 for $109,000 allocated to them. He stated the various utilities operating revenue and by State Statute if the council decides there is sufficient revenue and cash in those funds, you can transfer up to 20% of the revenue, and report shows amounts they already do transfer into our General Fund and do a payment in lieu of taxes from each one of them, do reimbursement of General Fund wages and also maintenance and operation costs that can be allocated through the various utilities, and transfer roughly 10-11% based on a cost allocation model and if decide to transfer more money from utilities council does have that authority based on findings.

Christensen stated there is $761,000 and about $2.2 million of additional money that can be allocated from enterprise funds, and currently funding for a reserve of 25% or greater, have to look at the CAFR - and it occurred to him that there is no sense in allocating monies from Special Events to the exclusion of the Arts, as have $220,000 in both of those funds, and doesn't want to short them on their entertainment when there is sufficient revenue in the enterprise funds to cover this cost for the next 3 - 5 years; could allocate $75,000 of the $110,000 to Special Events and reserve the rest and not have the process and have $36,000, still need more - and why upset Special Events or Arts and is his position on allocating money on sales tax that goes to enhance the quality of life in this community; leave 2163 alone.

McNamara stated why not the enterprise money. Schmisek stated the enterprise funds are funded for cost of use of water - that we talk about the 25% cash balance, keep in mind that when talking about the budget - the water and wastewater funds where one company is responsible for 30% of the revenue stream - if look at the 6-year projections and start to spend that down money in the enterprise funds because of all the major projects, those are his reasons for it. He stated you have the deficit which is unknown, the money is that you have cash in here and figure out what that deficit is by going through a year and in 2163 because that is the area we use for events and spend down the cash by whatever the deficit is, and that pre-election was to use special events money but not binding as wasn't in the vote.

McNamara asked why not go with 2163. Kreun stated that if take sanitation and have operating revenue of $7.7 million and 20% of that is $1.5 million and already taking out $800,000 so have $761,000 that is left and where is that allocated to now - not taking 20% of our operating funds out of the sanitation fund now but taking 14 or 16% so if take out the full amount or take out $80,000 out of there where does that come from out of the operating revenue of $7.7. Christensen stated that the gross amount of money, but has not taken the time to analyze it because it occurred that this is $2.3 million of revenue and this revenue is generated someplace internally in the budget as being spent or allocated, but knows that if that revenue moving through and not completely spent, at 4.5% and that is what the average you have of your $42 million invested in the city, you generate $104,000/year in interest income, and that he has identified several examples - that this has to get down to is what are the reserves in any one of the general funds, what are they being increased for and what are they earmarked for.

Glassheim stated this is a real problem and the cost is greater than we anticipated but feels that our public discussion that we would take $30,000 from the Events Program, that was our word and uneasy about going back on that - wasn't on the legal ballot but that is what was told to people but taking it from bills that everybody pays, one thing we guaranteed was that it wouldn't come from property taxes and wouldn't immediately impact the individual citizens to pay for the pool. McNamara stated he remembers the ballot - an advisory vote of do you want us to do this and not saying that it wouldn't come out of property taxes. Glassheim stated to take it out of the utility funds seems odd because that would be a direct impact - assuming all those monies are going to be used for something and then either going to increase everybody's bill if come out of utility funds - and would suggest that we allocate $30,000 next year out of the Events budget for that and wait to see what the losses are and not try to decide now. Christensen stated why don't we defer on this issue until such time as see what our shortfall is - and finding the source of revenue in this $135 million budget, can come up with whatever the shortfall is then and council have to find a permanent source of funding for future shortfalls in the Riverside pool operations.
Committee directed to defer until the last quarter of 2009 to deal with shortfall.

3. Develop list of questions for November meeting on Alerus Bonds 3/4% sales tax.
Schmisek stated they put together some background information and have started drafting some questions and if have additional questions would like to add those to it for the November 18, 4:30 p.m. meeting with Brenda Krueger from Springsted and Lynn Endorf, bond counsel, and try to make everyone aware of bond covenants and Home Rule Charter and have questions available for them to prepare for. The number 1 question is re. bond covenants and Home Rule Charter and what can the 3/4% sales tax be used for. Christensen stated in his research if change Home Rule Charter would have to go to a vote of the people; that they don't have the power to change the Home Rule Charter, but do have the power to change the ordinance - ordinance had to be passed and in the bond covenants, the ordinance says that you can allocate your money collected based on the ordinance. The ordinance is based on the Home Rule Charter amendment.

Bjerke asked if could shift tax to something else, what do they have to do to do that, how much can they shift, and if do shift it, would still want this to expire the same day as the bond. Schmisek stated if could shift it, the wording would have to be on the ballot. Bjerke stated that if the Alerus wanted to finance a project for $15 million and didn't have cash on hand, could they borrow that money and make payments from the yearly cash overflow and pay that bond out of that bond (Question #6 - that if additional bond is necessary-- and covered by the original 3/4%).

Christensen stated they are talking about ending cash balances - in 2008 the ending cash balance in our fund is $2.5 million and would scroll it forward to the expiration of Mayor Brown's term and would be $12 million and if take out to 2029, it is $122 million. He stated the building has to be remodeled and just spent $600,000 and that $4.2 million they are looking for now could be spent out of the 2009 as will have the cash on hand to do it.

Christensen stated what drives this and would suggest reading the Home Rule Charter that was adopted and says - the gross retail sales tax imposed shall expire upon the termination of the bonds but the money is to be used for the construction, acquisition and/or leasing of a multi-use civic event center and related infrastructure improvements - that is in the ordinance. So the Home Rule Charter says that acquisition or leasing of the multi-use facility or related infrastructure improvements and if going to move on this, have to start talking about changing the Home Rule Charter and then how much of the 3/4%, which would still have to be dedicated for paying those bonds - and would be discussion about additional revenue to maintain the Alerus and if shift from 3/4% of a percent sales tax to half of that and what do with the other half.

Christensen stated that is another question - can the ordinance be amended to expand or more define what related infrastructure improvements are.

Bjerke stated the ballot was very clear and if go off the Alerus site - the money was for the Alerus and related infrastructure and if go off site, not what people voted on. Christensen asked if council does have the power in enacting an ordinance to define what related infrastructure is. Glassheim stated that defining related infrastructure, can we put it to other uses besides infrastructure by ordinance rather than by HRC, doesn't think we can. He also asked if we have it covered as to whether the monies beyond that needed to pay the bond covenants, can be used for anything we want or is that the same question (question #4 and is covered).

Kreun asked if we go through all this, what is our goal. Bjerke stated his goal is to take money away from the Alerus and put it into something else; can still get your money to pay your debt off and not continue to build/rehab it. Kreun stated this would be so it doesn't grow.

Adjourn

The meeting adjourned at 5:30 p.m.

Alice Fontaine
City Clerk