Committee Minutes

Minutes of the Grand Forks City Council/Finance-Development
Committee - Monday, October 25, 2010 - 5:30 p.m. _______________

The Finance/Development Committee met on Monday, October 25, 2010 at 5:30 p.m. in the council chambers in City Hall with Council Member Christensen presiding. Present at roll call: Christensen, Glassheim, Sande, Gershman (ex officio).

Also present were. Meredith Richards, Greg Hoover, Saroj Jerath, Howard Swanson, John Herz, Emily Fossen, Daryl Hovland Council Member Bjerke.

1. Financial Management software update.
Saroj Jerath, city auditor, presented the matter of the financial management software which is LOGOS AS/400 applications from New World Systems, which was purchased in 1990's and because of changes in technology and developed same software in LOGOS.Net Microsoft base application in 2002, since then they have made quite a few enhancements and had thought should wait a few more years so all the bugs are out of the system. She reported they went to conference and to headquarters to look at software, they have more than 750 clients over the United States, and they are encouraging clients to go on the .Net technology because they have two developmental groups, one on AS/400 and one on LOGOS Microsoft applications - the new technology will allow for more automation for work flows, allows information on standard report to be exported to excel spreadsheet, and allows import of data from excel spreadsheet to financial and payroll suites. She noted that no enhancements are being made to the AS/400 applications. Cost of the software application is $8,000 (because of credit for old software - purchase of new system could cost as much as half a million dollars), implementation service, $147,000 (conversion of the data from the old system to the new and have about 20 years of data on the system, and training), hardware costs $36,950, and travel/costs $30,000, for total of $221,950 - $125,000 budgeted in 2011 and balance budgeted in 2012, with 50% from general fund and 50% from utility funds. Agreement with the company to make payments in two years - that conversion and testing of data will go on for approx. 4 to 5 months and when go live will be August of 2011 or later.

Sande stated that the $8,000 application software - obvious they are giving us a very generous discount, and that what he know of on-line software systems, they are sold as a service so that you can utilize the service for a year and pay a fee for a year, and that it appears that we are actually purchasing a perpetual license to the system, that making a one time payment -- that the reason they are giving us $278,000 discount is because they want us paying the annual maintenance fee, that we have been paying that fee for 20 years and they are going to maximize their dollars out of this and need to know hard numbers for what they are going to charge us for that. Jerath stated have to pay annual maintenance cost, currently paying $43,000/year and for new system annual maintenance cost will be $46,396.00 + $1600 for new application which we are adding; and that every year they will increase it by 7 to 8%. It was noted there is not a minimum number of years to use the system. Jerath noted that if do not pay the maintenance fee, they will not give any support to our system if call with a problem.

Sande stated that if we are buying the hardware and the server and they will install the server here - that we will pay $37,000 for the box and have the license for the system, and concern is why paying annual maintenance if just to be able to call them if we have a problem, that we have software here and we own it. He stated he is for putting the right technology and upgrading to new system is great idea but question the numbers - support upgrading software and if new system can reduce data entry and free up people's time and make them more productive - but concerned with $147,000 for implementation services for what they are going to do for us.
Gershman stated another alternative is to have someone in-house to learn the system - take that in-house and the amount of money talking about in perpetuity and this person is probably already here that could do some of that. Glassheim asked what have they done for the maintenance fee - Jerath stated we have so many customized programs - that if there are any problems with the system call them and they have access to our files and they make adjustments, etc. or if have any problem in the system, etc. It was noted that the older the system, the more problems have.

Christensen stated that all want them to have best tools available, but if we were to go with annual maintenance which will be increased 7%/year, maybe time has come to take that money for a year and suggest you hire someone in the IT department to do this in-house - another question if we are going to reduce the time for people inputting information and technology, asked for cost savings for City and if any reduction of position(s). Jerath stated she was unsure of what savings would be in reduction and manpower because would be very hard to convert data and amount of time used for that - that she implemented this for the AS/400 in 1990 and how much work it was for converting the data from the previous system - took 2 years for converting data into system - difficult for staff to spend that amount of time because working on old system as well as new.

Sande asked how many businesses do they have running the .Net now - about 750 clients - and that is where he question their pricing, that number migrated from old version to the new and that means they have already written all the scripts necessary to pull the data from the old system into the new system, they can pull all that data in a day and want $147,000 from us, and that is where he has an issue. He stated that it might cost us more than $147,000 to have our people enter all the data but asked if anyone has questioned that number because for them its done.

Christensen stated should get a proposal from IT of what it is gong to cost to hire 2 or 3 specialists to go on with this and get it done, and then maybe some justification for the $147,000.

Jerath stated that they can call New World Systems and they can demo it to you.

There was some discussion re. training - maybe can re-evaluate and determine that we will train one person for $x and they will come back and train everybody else. Jerath stated that is what pay trainer and that is approach they are using and probably that is what we will do - finance department employee have training and train others in the department, etc.

Glassheim asked if we can negotiate all these little pieces ourselves or whether our choice is either you take this and their system and how they bill or we go out and look for more bids for a totally new system - but we had experience at State level when you go out and get new systems its disaster waiting to happen - lose time and costs 3 times as much as thought - we have a system that works and for modest amount we can get an upgrade - but it maybe that we should go out and ask for whole new system - or if can negotiate with them - but if they are ones who have the system, they know what it costs them and know what they are selling, and not sure they will do what we want them to do.

Sande stated the reason they discounted it $278,000 - they want annual fee but in addition to that after they produce unit no. 1, unit no. 2 is free, there is no incremental cost to them so they can make that $8,000 or make it zero because there is no cost to that second user.

Gershman stated there were some good questions asked today and suggestions and perhaps Saroj could share the minutes of this meeting with the vendor that this is what the council is thinking and let them react to it.

Jerath stated that why we are going with this software is that we know the software and the applications because we started on it in 1990's and users understand the whole account structure and whole system and applications, and, and that is why not going with any other vendor, esp. our vendor has adopted this Microsoft technology and they have written these programs in .Net - and it is to our advantage to stay with this system because of the knowledge we have about the applications and the software - and easy to train users because they know the applications. She also stated this is the proposal they gave us and has talked to Bismarck, people in Duluth and Stern Co. in MN, Burleigh County who use this system.

Committee asked that this matter be brought back in 2 weeks when have additional information.

2. Application for exemption of remodeling improvements to residential buildings at various locations.
John Herz, deputy assessor, was available for questions. - Applications made by people who made improvements to their homes, homes must be 25 years or older, applications may have already been made or are in the process, assessing will review each of the properties and then determine amount of value they added from the remodeling. Several applications were reviewed. Herz stated that the amount of work being done would meet the qualifications for the exemption, the assessing department will determine the value from the remodeling and that will determine what the total value is. Sande stated that he finds that the questions we ask the general public are not reasonable because they don't understand how to answer them; and why are we asking the question - that if Mr. Carsen says this meets the criteria even though the homeowner's admission it only raises the value of the property by a certain amount, it doesn't make any sense to ask the question. Assessing will look at questions. Motion by Sande and Glassheim to move approval along with recommendation to review the form and to forward to council. Motion carried.

3. Matter of adopting findings for flood control special assessments.
Howard Swanson, city attorney, reported that last week the city council certified special assessments on Flood Control Projects 4704.6, for the third segment of the overall assessment and Project No. 4704.7, second assessment that was certified was a "catch up" assessment that picked up properties that had been added to the city limits before June of this last year. As a result of holding the public hearing there were no protests to any specific property or assessment but general protests as to the effective annexation in the future and the extra-territorial jurisdiction and has prepared findings in both of the assessments, similar to previous findings that council has adopted, and their recommendation would be to move this forward to council for the adoption of findings for both of the assessments. Motion by Glassheim and seconded by Sande to approve findings and move forward to council. Motion carried.

4. Appointments to Planning and Zoning Commission.
The matter of reappointment of Paula Lee and the appointment of Laura Jelinek to the Planning and Zoning Commission was presented. Sande stated that Tom Hagness, who was a very long standing member of Planning and Zoning and did a very good job for the city and will be missed from the Planning and Zoning Commission - and moved approval of the appointments. Glassheim seconded the motion. Carried.

5. Review and ranking process for residential lot redevelopment.
Meredith Richards, urban development, reviewed the criteria which had been previously reviewed with request for revision by the committee, and stated that changes made from first presentation, the first item which includes timeline and today's proposal has once advertised and no proposals received, its immediately first come, first served with no further advertising and no more deadlines; second item is using market value as the ranking factor and eliminated that as ranking factor if the bid parts are immaterial or the minimum bid for the lot will continue to be set by the city assessor's office. Review committee membership initially had council members Gershman and Glassheim since their wards were affected and have now added Mr. Sande because he was concerned about the process and have 3 council-person review committee plus a neighborhood resident and rep. from the Historic Preservation Commission. Another concern was the market value being put in the application, and now will have Mr. Herz look at proposals as they are submitted and will be his determination of market value that will be ranked; and the ranking sheet is attached. 5th item was proof of financial capacity and will have a standardized form that they will ask all applicants to have their lender fill out and all will have the same information - change from last time is terms of ranking, will have pass/fail and if doesn't seem to have adequate financial capacity it won't go to the Review Committee. Last item is that they will use a ranking sheet and will have a more formal process and the form has changed slightly and reflects how we have changed those items. She stated that bid will only be a ranking factor if there is a material difference in the bids and if somebody bids $100 more that really doesn't make any difference cause their proposal to be ranked higher and the other is the elimination of financial capacity as a ranking factor.

Sande asked if the proposals are reviewed and ranked anonymously, that when they review an application do they know who's name is on the application or not - Richards stated they get the packet as submitted by the applicant which includes their name, address. Sande suggested that it become anonymous but is okay with it not being anonymous, and appreciates hard work that was done and concessions made and willingness to listen to other ideas, and is okay with the process as outlined in the report.

Richards stated that when advertising a proposal they set a minimum bid which is established by Mel Carsen - for the last 3 years have only had bids that exceeded the minimum by $100 and if somebody bids $40,001 it doesn't score higher than the ranking system - if somebody bids $45,000 on a $40,000 lot that would be material and might be a competitive edge in the proposal process - immaterial excess of minimum $100, etc. would not enter into the ranking decision. It would be up to the assessing office to tell us what the value of this project will be upon completion regardless of whether they bid $40,000 or $45,000 for the lot, they will set the value of the property. There are minimum bid requirements on the city-owned lots. - that it doesn't matter if pay $40,000 or $50,000, will come into consideration when they assess the property because they will know what the property is paid for and may consider that price vs. the other lots and when they assess the value of the completed property they will include that as part of the valuation - Richards stated that they may decide that if assessing sets a price of $ 40,000 and someone pays $50,000 for the lot, does that mean its worth $50,000 or is it still a $40,000 lot - assessors office will make that call in terms of the value of the proposal. Sande stated the point is whether you are willing to spend $40,000 or $1 million it shouldn't have any effect on the overall scoring system - just means you have more money. Glassheim stated the reason it does have some effect is because one of the 3 or 4 different criteria we're trying to accomplish is in the best interests of the city and if can get $10,000 additional for the city, that's a plus; the person who bids the most for the lot doesn't necessarily get it but it is one item that you consider because its to the advantage of the city, if it doesn't fit to the neighborhood, you might turn down some money because that a second important criteria that we are trying to accomplish.

Glassheim stated that he thinks the idea of having no deadline for readvertising is a mistake, there are no bids and then the first person who walks in gets it, no formal process, that if somebody knows about it and puts a bid in before anybody else, they get it. There was some discussion relative to the deadline or competition for the bid. Christensen stated all of these lots should be posted for sale, no advertising and if you want to buy a lot, submit a minimum bid to Mr. Hoover, do the requirements and Mr. Hoover convenes the group, and then done with it.

Glassheim moved that we readvertise things that don't have another bid with a definite date.

Sande stated in an effort to compromise re. re-advertising, what would you like to see happen - Glassheim stated that if a person indicates an interest, then it should be readvertised for 30 days so that if someone else may make a competitive bid, but only if there is some interest in it - that the first advertisement and if get no interest, and then somebody says week later, etc. otherwise how know if get the best for our money or for the neighborhood.

Christensen declared that Glassheim's motion died for lack of a second.

Glassheim stated he was concerned about this becoming a really broad council sub-committee, that the council members on it should be when it is in their ward because the point of having a council member on it is to negotiate something that will be satisfactory to the people in their ward, doesn't think we want 3 council people on the committee and that people who are not in that ward and not in favor of that. Gershman stated he wasn't thinking of 3 council members but that Sande has a lot of concerns with this and he is the one that brought that up, not Mr. Sande. Richards stated it would be the ward rep., Mr. Sande who would be council rep. Sande moved for approval with the suggested change to himself as the ward city council member; Christensen seconded the motion for approval and to move forward to council; motion carried, Glassheim voted no.

6. Bids for Corporate Center HVAC repairs.
Greg Hoover, urban development, reported that in August the council approved preparation of plans and specs. and bid documents for repairs to the buildings at 401 and 402 DeMers, Corporate Center - repairs to HVAC and some water leakage problems. They went forward with the HVAC because it was simpler process, bids have been received and are $66,000 less than the estimate. The bids for the other project will come in on November 4; that at the time they made the proposal that they had asked for council permission to do an internal borrowing, and council said no. They re-evaluated our cash flow and repairs will be funded from Fund 5996 and if determine have sufficient cash flow from that to do these repairs and wouldn't need to do any internal borrowing and notified the Growth Fund Committee and EDC's Executive Board and everyone is aware going forward and at end of the year do a catch-up amendment on this. He asked for approval of the bid to Climate Control, Inc. of Fargo in the amount of $132,500, including alternatives. Completion will be 70 day from date to proceed Motion by Glassheim and Sande to move approval and forward to council; motion carried.

7. Renaissance Zone island update (Information only).
Katie Brockpahler, urban development, reported they brought options for the 3-block renaissance zone island. The committee was interested in exploring the Grand Cities Mall option that was presented, after the meeting went to the State and asked for their opinion on what they would consider 3 blocks and presented map showing the area, that they were impressed and presented copy of what State gave us - this is an update. She stated she contacted the manager of the Grand Cities Mall and she is very interested in the Ren Zone opportunities that would be available.

Gershman suggested to send information on the Renaissance Zone to all the property owners there so they understand and then contact person to see how they do this, and along with that, the Mayor should send a letter of thanks for approving this - that this is generous and great
and best we could hope for. Hoover stated they have been waiting until they get council approval and will do that kind of marketing - have had contact with a number of other people in that area and all they need at this point is concurrence that this will be the island and then begin to work on that, bring that back with the expansion next time and talk about expanding the Renaissance Zone downtown options for your consideration. Motion by Sande and Glassheim to approve, motion carried.

Adjourn

Motion by Sande and Glassheim to adjourn, carried; meeting adjourned at 6:45 p.m.

Alice Fontaine
City Clerk