Committee Minutes

Minutes of Grand Forks City Council/Growth Fund
Authority (JDA) - Monday, June 21, 2010 - 5:30 p.m.____

The city council of the city of Grand Forks sitting as the Growth Fund Authority met in the council chambers in City Hall on Monday, June 21, 2010 at the hour of 5:30 p.m. with Chairman Gershman presiding. Present at roll call were Council Members Bjerke, McNamara, Glassheim, Gershman, Christensen, Bakken, Kreun, Mayor Brown - 8; absent: none.

Chairman Gershman announced that today was Mayor Brown's birthday, and the council and audience sang Happy Birthday to Mayor Brown.

APPROVE PURCHASE/LEASE RENEWAL WITH LM WIND POWER BLADES (ND), INC.

The staff report from the director of urban development relating to LM Wind Power Blades (ND), Inc. purchase/lease renewal, with recommendation to hold a public hearing on the sale of property at 1580 South 48th Street, owned by the Grand Forks Growth Fund, a JDA to LM Wind Power Blades (ND), Inc. according to the terms contained in this staff report; approve the renewal of lease between the JDA and LM Wind Power for 124,80 square feet of space in the building owned by the JDA, at 1550 South 48th Street according to the terms contained in this staff report; and authorize appropriate JDA officials to sign necessary agreements, leases, and documents, subject to review and approval by the city attorney.

Chairman Gershman opened the public hearing.

Keith Lund, Grand Forks Regional Economic Development Corporation, reviewed background information and reviewed negotiating instructions provided to the Growth Fund Committee and JDA and has agreed to purchase the building at 1580 South 48th Street for $2,342,970 which is total of the principal balances estimated as of July 1, 2010, paying the Wells Fargo-BND Match loan in full principal balance of $1,187,999 as of July 1, 2010; and providing City/JDA with right to repurchase the building at an amount equal to sales price should the company discontinue operations in Grand Forks, ND prior to November 1, 2014; to renew the lease on the Noah's Ark building at 1550 South 48th Street4 for a 5-year period from August 1, 2009 through July 31, 2014 at a monthly payment effective August 1, 2009 that is 25% less than the extant monthly payment, with reimbursement to the company of total overpayment of lease payments made between August 1, 2009 and date when reduced payment begin, with the JDA, at its sole discretion, distributing the payment in one lump sum within 30 days of executing the renewed lease or otherwise amortized in full across the remaining months of calendar year 2010; and with language for operating and maintenance expenses consistent with an operating lease.

Council Member Bjerke raised several questions which were reviewed as follows.
Greg Hoover, director of urban development, reported that there are still some loans on that building they used to refit it that will not only pay for the debt service but will also generate approx. $1.7 million over that 5 year period to be used for operations to the building and do some other projects. This is the building where windows are being repaired.

Council Member Bjerke moved to accept the staff recommended action contingent upon LM Wind Power agreeing not to appear before the Growth Fund JDA or city council to ask for any economic assistance in any way, shape or form until the expiration of the lease of July 31, 2014.
The motion died for lack of a second.

Council Member Bakken asked how we arrived at particular numbers and what was original cost of the building. Mr. Lund reported the purchase amount of the unpaid balances on the loans for the main facility was how they arrived at those numbers; and the main facility was financed
with a $5 million Industrial Development Revenue Bond, $350,000 EDA Revolving Loan and a $500,000 CDBG loan, so $5.85 million was total construction of the main facility. There have been two expansions of the facility, first in 2002 and there was debt from the Economic Development Corporation and LM Glasfiber did provide a 100% letter of credit for the full term of that debt and they backed that loan and that they financed that. The 30,000 sq.ft. expansion in 2005 was 100% financed internally with LM Glasfiber cash or funds that they derived other than some of the Growth Funds so internally financed.

Council Member Bakken stated that we have it valued at $10 million, paid $5.8 and they are paying $2 million + for it and have been leasing it, and assume we will get some money out of the lease payment, that the long term goal when it was built was to have a revenue stream for a period of time, and there was discussion that they were going to move farther south and if this will change that. Mr. Lund stated in terms of the rent payment that LM Glasfiber had currently been paying was managed very tightly, there were few extra funds but basically a breakeven number, and in terms of discussion about moving south, still continue to have those discussion and we think there is opportunity for growth in the future and don't think this changes that at all but think this makes the interest stronger for their position for discussions and expansion in the future

Council Member Glassheim stated on behalf of the 700 workers and their families who are at LM Glasfiber wants to congratulate the EDC and other officials who have worked on this project for the past decade and helped to create these jobs - thank you.

Chairman Gershman closed the public hearing.

Council Member Christensen moved that we approve the staff's recommendation; Mayor Brown seconded the motion. Upon call for the question and upon voice vote, the motion carried 8 votes affirmative..

APPROVE SALE OF REAL PROPERTY TO JR SIMPLOT COMPANY

The staff report from the director of urban development relating to sale of real property to JR Simplot Company, with recommendation to hold a public hearing on the sale of property owned by the Grand Forks Growth Fund, a JDA as described in the Purchase Agreement; approve said Agreement and authorize appropriate JDA officials to sign necessary agreement and documents, subject to review and approval by the city attorney.

Chairman Gershman opened the public hearing, there were no comments and the hearing was closed.

It was moved by Mayor Brown and seconded by Council Member Christensen that this recommendation be approved.

Council Member Christensen reported that we are selling some land to JR Simplot who is going to put a substantial amount of money in that facility toward this purchase and expansion of their wastewater treatment facility, see an economic partner that we have had for years making a significant investment in the community.

Upon call for the question and upon voice vote, the motion carried 8 votes affirmative.

ADJOURN

It was moved by Council Member Glassheim and seconded by Council Member Bakken that we adjourn. Carried 8 votes affirmative.

Respectfully submitted,



Saroj Jerath
City Auditor