Council Minutes

Minutes of Grand Forks City Council/Committee of the Whole
Monday, September 14, 2009 - 5:30 p.m._________________ __

The City Council met as the Committee of the Whole on Monday, September 14, 2009 at 5:30 p.m. in the Council Chambers in City Hall with Vice President Glassheim presiding. Present at roll call were Council Members Glassheim, Christensen, Kreun - 3; absent: Council Member Bjerke, Bakken - 2.

Howard Swanson, city attorney, stated as there was not a quorum tonight the council cannot take any official action, it would be at your discretion as to whether you wanted discussion of items on the agenda, could do that as it is a publicly noticed meeting, but would not be able to pass procedural motions, items would automatically go to the agenda at your next meeting. There are some additional items that Planning and Zoning asked to be added to the agenda that would require procedural motion, but suggested that if you wanted to move forward and discuss what is on your agenda, could discuss at the end of this agenda if there were no objections by those who are present, wouldn't technically be adding it to the agenda but could discuss the items.

Mr. Swanson stated a motion to recess for whatever time you would like is available to you.

It was moved by Council Member Christensen and Kreun to recess for 10 minutes. Motion carried.

Vice President Glassheim called the meeting of the Committee of the Whole back to order with roll call as follows: Glassheim, Gershman (teleconference), Christensen, Kreun - 4. Quorum present.

Vice President Glassheim stated there were some items from Planning and Zoning that need to be added to the agenda. It was moved by Council Member Christensen that the items from Planning and Zoning be added, items 2.13 through 2.16. Council Member Kreun seconded the motion. Carried 4 votes affirmative. Vice President Glassheim stated the items would be added to the end of the agenda.

Under Mayor's announcements Vice President Glassheim stated that the City of Grand Forks was extremely busy over the weekend with much of the activity from the Britney Spears concert Saturday night at the Alerus Center, thousands of people from all over the upper Midwest and Canada were there; and also filled hotels, restaurants and retail stores throughout the city. Congratulations to the Alerus Center and its staff for a well organized, well executed entertainment.
Also this weekend nearly 400 athletes were in town to take part in the Special Olympics Tournament at Bringewatt Park on Saturday and Sunday.
Today, tomorrow and Wednesday members of the Local Firefighters Union 242 will be running their annual Fill the Boot Campaign to help raise funds for Muscular Dystrophy, they will be accepting donations from motorists at the corner of 24th Avenue South and Columbia Road from 9:00 to 11:00 a.m. and from 4:00 to 6:00 p.m.
The Grand Forks Public Health Department is offering Flu Shot Fridays, no appointment necessary and staff will take care of filing insurance claims with Blue Cross/Blue Shield.

Council Member Gershman excused.

2.1 Expansion of remodeling exemption for residential and commercial buildings (NDCC 57-02.2-03).
Mel Carsen, city assessor, reported this is an expansion of the current remodeling exemption for residential and commercial properties that is under consideration. The State law allows for a 5-year exemption but the City has limited it to a 3-year period. State law allows for an addition to be considered remodeling so this would include additions irregardless of any other remodeling, and commercial property can qualify for the remodeling exemption as soon as the building is done. The City has limited this to a 25-year age building or in some cases a 15-year old building and this new exemption would take it to brand new building. Currently it is costing the taxpayers in Grand Forks County total of about $84,000, of that about $23,000 is the City's portion, and his est. cost of implementing this entire exemption the way it is outlined would take the cost to between $46,000 and $56,000 (City portion) and to put in a percentage is about 1/3 of 1% of our total tax base. He stated he has identified all of the discretionary exemptions in the city of Grand Forks (new or expanded business, child care, new home exemptions, payment in lieu of taxes, 2 remodeling exemptions, and tax increments), each has dollar amount listed, and the total for 2009 is about 2.05% of our tax base or about 1/3 of 1%, and we are giving almost half that much under the 3-year proposal and this would be like doubling it or 2 1/2 times what we currently are giving. - it is 2% of the total valuation of city property.

Council Member Christensen asked what is the total cost in all the tax. Mr. Carsen stated $168,800 to $211.000 would be county-wide (County, Schools, Parks and City); and when the City grants an exemption to any real estate it impacts the total tax bill for that piece of property.

Mr. Carsen stated this is only for a home that would have to be 25 years old or older and applies only to the additional value. Kreun stated it does have some significant impact on the people making those decisions, and thinks these are competitive moves that we have to take as a city.

2.2 Property tax exemption for new single-family residential property, while owned by the builder and unoccupied.
Mr. Carsen stated this is a new exemption provided by the 2009 State Legislature, that it allows for any new home, irregardless of value to be exempt from taxation totally for the year in which it is built, which we already have basically, and for the two years immediate following that as long as it is owned by the builder and not occupied - it is totally discretionary exemption, City could choose to do it or not do it.

Council Member McNamara reported present.

He stated they could choose to put limits on it, could limit dollar amount, the two years to one year, etc. He stated he has checked with other cities in ND and many cities are considering it but nobody has passed it yet, and about half of them are putting dollar limits on it, limiting to $150,000 of value or one city limiting it to $75,000 of value, one considering a one year exemption rather than 2 years, that he is not in favor of exemptions very much because it reduces the tax base. The cost of doing this and in looking at 2006 figures and cost of doing this program really is not very much, applied only to single family homes, the cost for city portion is about $20,300, .13% of our tax base, small price to pay in his opinion, benefit is possibility if had more spec. homes built that are ready for occupancy earlier than having to wait for homes to be built from start to finish.

Christensen asked if the statute only allow new single family homes. that this is a great idea, some type of stimulus going on at low cost to the city and the community, and would support this; thinks it will encourage spec. building and eliminate putting in basements and capping them off and finishing it off the following year, will increase inventory. Mr. Carsen stated if home started in 2009 and would qualify under the program and is complete by February 1, 2010, make 70% assessment and is fully exempt, if it sells in June, 2010 it becomes fully taxable for the rest of the year at 70% valuation, starting in 2011 it could be exempt to the new owner for all of 2011 and 2012 as long as he owns and occupies it and keeps the taxes paid. He stated he didn't know if there was an oversight when they wrote the law but new builder law terminates at occupancy, and new home exemption that they would talk about next to the first occupancy doesn't start until the year after the year in which you occupy.

Christensen stated they didn't address in committee the pros and cons of the amount of the exemption, is the most they can grant the builder unlimited exemption for spec. home; Carsen stated it could be the full $350,000, could be a million dollars.

Council Member McNamara asked about other communities in the state. Carsen stated that no one has approved this as yet, that no one has an unlimited exemption, everybody limits to either $150,000 or lower, and the number of homes that a builder can have at any single time is capped at 5 or 10 homes; State law is maximum of 10.

Rusty Wysocki, 1625 Rider Road, owner of Rusty Wysocki Building Co., and representing the Forx Builders Assn., stated this is a new bill that was introduced this spring and sponsored in part by the ND Assn. of Builders, and is the ability for a builder to have inventory that they wouldn't have to pay property taxes on; that if have a spec. home their best interest is to sell as quickly as can and not sit on these for 1 or 2 years, but it happens, and at that point, they will be paying the taxes on the property at whatever value is, but the improvement (structure) on the property have the ability to have that tax exempt. He stated they would ask to follow the way the law is written as Grand Forks has a very limited amount of spec. houses or unsold houses on speculative basis, don't have speculative houses out there on the market - most projects are custom built - and would ask for the full two years, no limits on value of the house, and that the date allowed be January 1, 2009, as opposed to where it came out of committee of August 1, 2009.

Steve Adams, 1942 Prairie Rose Court, works for Crary Development, and they have 6 spec. homes going up in the $200,000 range, have 2 at $350,000; other builders probably in the same range. Mr. Adams stated lot price depending in which development and size of the lot - average lots $27,000 to $35,000. Christensen stated that lot isn't exempt and if went with $250,000 exemption would pretty much catch everything. Adams stated that if put cap, will see builders stop construction and not complete the house and if shut down, no tax and wait until get buyer, might be detrimental to what they are trying to accomplish. Everybody would benefit, including plumbers, electricians, lumberyards, etc.

Mr. Wysocki stated he would hope program would have a positive impact where they would have more inventory out there - doesn't know how many spec. houses there are in whatever phase, Crary looking at 6, and if in this community, have 25 to 30 houses built on spec. basis in various stages of completion, would like to see that - that Grand Forks has always been a hundred unit house community, which seems to be low to be a growing thriving community - passed out some information earlier in other areas of the state where consistently have 600 houses year - would be good if got a 5 to 10% increase every year for spec. houses.

Christensen stated in committee asked when, if passed, it should be implemented. Mr. Carsen stated they have option to go back to January 1, 2009, and from an administrative standpoint it would be better to have it implemented on the first of the year, and suggested if do that to have the same date on both of these exemptions.

Mr. Christensen stated what he is seeing and that an effective date of January 1, 2009 and unlimited exemption as to the builders and once is sold, the new owner only gets $150,000, pros would be greater inventory and more incentive for more inventory to give consumer more choice,

Mr. Carsen stated his recommendation except for new home to the first time owner, was to consider limiting that, could limit to $100,000 or $75,000, the reason for it is that the cost is about 1.25 % of our total tax base, not sure that the city council is ready for that type of a hit, but that is a decision the city council should make - that he thought that was too big a price tag. Christensen stated he respects his recommendation and opinion but believes it is very important that the amount of money that we would forego will find its way into the economy and equal itself - would give new homeowners discretionary income for short period of time - difference is only the tax of $75,000, respects recommendation but that he will support $150,000.

Mr. McNamara asked Mr. Carsen in line of his comments, if he could on an annual basis furnish us with your estimate of how it would impact our revenue - what we would give up relative to revenue in the budget. Mr. Carsen agreed to do that, that it is in the report but put it in summary format.
After further discussion Vice President Glassheim asked Mr. Carsen to provide the difference between, if we continue as now, what do we lose if you change it to the full bore. Mr. Carsen agreed to do that.

2.3 Property tax exemption for new single-family, condominium and town-house residential property after it is occupied.
Mr. Carsen reported that this exemption is for the first owner of the property and includes single family, condominiums and townhomes (not duplexes nor three or four-plexes) and is for the first two taxable years following the year in which it becomes occupied and complete.

Mr. Wysocki stated he provided information included in the packet and that through the National Assn. of Home Builders the local association can commission a study, that what he had provided was information re. Bismarck, Mandan and Ward County which includes Minot, and summary on Fargo. He stated the $75,000 goes back to 1983 but when they build new houses in 1997-1998 after the flood in Congressional First and Second areas, were in the range of $75,000 to $110,000, and 225 houses built, and now talking about $250,000, $350,000 - has increased in 9 years, and one of the reasons to look at this exemption is to keep up with an index or inflation. He stated as a summary included in the report, from the Forx Builders Assn. a document that takes into consideration the impact that housing has on a community -construction dollars, ripple effect, and on-going phase. Exemption is now at $75,000, - recognize a 5 or 6 year payback period on it, and if someone takes full exemption of $150,000 at 2%, they will get tax exemption of $3,000. He stated what he would like them to take into consideration that East Grand Forks currently has a two-year tax exemption for any new house built at any dollar amount, started number of years ago and continuing that, have a new resolution for it every year.

Mr. Carsen stated that East Grand Forks has 3 programs on new single family homes: they have a $5,000 grant for building the house, if you live in that house for 10 years, it becomes a grant, if you don't , you pay the whole amount back. Second program they have is $500.00 landscaping grant, can only buy trees and shrubs with it (does not include the planting of the trees nor the sale tax on trees); and third item is a total 100% refund for the first two years after the house is fully complete and occupied, the occupant pays the taxes and are fully refunded for the first two years, land and building, totally reimbursed for local property taxes for city, county and schools.

Mr. Wysocki stated when talking about taxes, there is one worksheet he handed out today and put on members desks - costs incurred on a project and applied to $300,000 house. He stated they are here as a Builders Assn. but looking at this as economic development, that based on information they have from NAHB who does these studies, that housing is an economic stimulator and generator and whatever they can do to stimulate that is beneficial to them. He stated he would recommend from the Forx Builders Assn. and would like the council to consider to keep this at the maximum amount of $150,000 and to back up the date to January 1, 2009, as opposed to August 1, 2009 that came out of committee.

2.4 Bids for Project No. 6506, replace electrical and lighting on12th Ave.S. (S. 48th Street to S. 52nd Street),_
Jane Williams, traffic engineer, reported the bid is for electrical lighting on 12th Ave.S.
and a portion of S. 52nd Street, at the Grand Forks Public Safety Center, the bids will be opened on September 21 and will amend the staff report and provide that to council members. This project will be funded by the Urban Development Job Development Authority.

Council Member Christensen asked if there were any other sources of funding or if they explored other sources of funding. Al Grasser, city engineer, reported they have some money in the budget that was going to do some lighting repair near the police department; however, they are going to apply for CDBG money for that next year. At first was to use that budgeted money for this lighting repair, but because this is in the Industrial Park Mr. Hoover said it would be appropriate to take that money out of Jobs Development Authority budget.

Mr. Christensen stated it occurs they could borrow the money from JDA and find another source of money and pay it back, and now out of JDA to fund public buildings - seems to be inconsistent, or you can have a transfer until find money to replace it in other funds. The City sold bonds to pay for the building and there will be some revenues generated in excess on the funding, and maybe carry it until we get some reserves out of the bond fund and transfer to pay it.

Council Member Kreun stated not a great deal of money out of the Jobs Development Authority but could discuss another funding mechanism. Mr. Grasser stated they have money in the budget to do maintenance projects and originally looked at this as a maintenance project but to stretch things in the Industrial Park, Mr. Hoover thought this might be appropriate but if want to use a different funding source, can do that. Mr. Kreun stated to go ahead with the project and if need be, can refund it in another manner.

2.5 Project Concept Report for Project No. 6405, Concrete Panel Replacement on Cherry Street (25th Ave.S. to 47th Ave.S.), Federal Project No. STM-SU-6-986(089)093.________________________________________________________
Jon Morgenroth, project engineer, pointed out to the council that there was a misprint in
the staff report in the last sentence of the first paragraph under Background, the project that it refers to should say "Sign Replacement Project" not the Cherry Street Panel Replacement Project. Both items 2.5 and 2.6 refer to stimulus projects, part of the American Recovery Reinvestment Act, signed into law 6 or 7 months ago, and these are the last two projects being proposed, the Sign Replacement Project is scheduled to be bid on October 16 and has an est. cost of $344,000 and the Cherry Street Project has a bid date of January 29, 2010 at an est. cost of $1.2 million, and that would extinguish all stimulus monies granted to the City from the stimulus bill.

Kreun stated this went through Safety/Service Committee and was recommended to utilize
the monies for these projects.

2.6 Cost Participation, Construction and Maintenance Agreement for Project No. 6420, sign replacement at controlled intersections._
Jane Williams, traffic engineer, reported this is tied into the previous project, this is the $344,000 project and bid is due in October and is the last of stimulus projects.

2.7 Change Order No. 2 for Project No. 6357, Bus Shelter Relocation.
There were no comments.
2.8 Bid specifications for portable chemical identifier, fire dept.
There were no comments.

2.9 Budget amendment and specifications for hazardous materials vehicle for regional response, fire dept.__
There were no comments.

2.10 Appointment to Pension and Insurance Committee.
There were no comments.

2.11 Public Works Department - Street Division trailer-mounted spray injected road repair machine bid.
There were no comments.

2.12 Redevelopment of city-owned lot at 1510 Belmont Road.
There were no comments.

2.13 Request from John Miskavige on behalf of EVI Columbus, LLC for final approval (fast track) of Replat of Lots 7 and 8, Block A of the Replat of all of Blocks 1, 2, 4, 5, 6 and 7, Columbia Park 26th Addn. to the city of Grand Forks, ND (loc. at 2051 and 2151 36th Ave.S.)_
There were no comments.

2.14 Request from Widseth, Smith, Nolting and Associates on behalf of Red River Valley Habitat for Humanity for final (fast track) approval of Replat of Lots 5, 6 and 7, Blk. 12, Swangler's Subdiv. to the city of Grand Forks, ND (loc. at N. 24th St. and 7th Ave.N.)
There were no comments.

2.15 Request from Widseth, Smith, Nolting and Associates on behalf of Red River Valley Habitat for Humanity for preliminary approval of an ordinance to amend the zoning map to exclude from the R-1 (Single Family Residence) Dist. and the R-4 (Multi-Family Residence) Dist. and include within the R-2 (One and Two Family Residence) Dist. all of the Replat of Lots 5, 6 and 7, Blk. 12, Swangler's Subdiv. to the city of Grand Forks, ND (loc. at N. 24th St. and 7th Ave.N.)________________
There were no comments.

2.16 Request from Grand Forks West Properties for preliminary approval of an ordinance to amend the zoning map to rezone and exclude from the Village PUD (Planned Unit Development), Concept Development Plan, Amendment No. 5 and to include within the Village PUD (Planned Unit Development), Concept Development Plan, Amendment No. 6, Lot B, Replat of Lots 17 and 20, Blk. B of the Replat of Blk. 2, Village Resubdivision No. 2, Grand Forks, ND (loc. at 4324 University Ave.)
There were no comments.

3. INFORMATION ITEMS

3.1 Portfolio Management/Summary as of August 31, 2009.
Information only.

6. MAYOR AND COUNCIL COMMENTS:
1) Council Member McNamara stated he volunteered at the Special Olympics State Soccer and Bocce Tournament, there were a lot of volunteers and lot of people including partners and families, and noted the effort of the Area 5 Special Olympics Group in Grand Forks. No program had more teams than the Grand Forks program, and very gratifying to see that kind of effort going to a great program like Special Olympics but doesn't happen without people, and wanted to say to the people of Grand Forks that they should be proud of their Special Olympics Program and support it because doing a great job.

2) Council Member Kreun stated there were many activities in the city - Chester Fritz, Special Olympics, Circus at the Alerus, two night special racing event that County put on at the racetrack, Farmers Market - lot of activities in the city this past weekend.

3) Vice President Glassheim stated he was at the Britney Spears Concert, people from all over the region and Winnipeg, etc. and was exciting to see that so many young people could have big city entertainment in a small city like Grand Forks, showed the contribution that the Alerus is making to our entire quality of life.

ADJOURN

It was moved by Council Member Kreun and seconded by Council Member Christensen that we adjourn. Carried 4 votes affirmative.

Respectfully submitted,



Saroj Jerath
City Auditor