Committee Minutes

Minutes of the Grand Forks City Council/Finance-Development
Committee - Monday, November 8, 2010 - 5:30 p.m. _______________

The Finance/Development Committee met on Monday, November 8, 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: Saroj Jerath, Greg Hoover, Meredith Richards, Al Grasser, Roxanne Fiala, Candi Stjern, Emily Fossen, Rick Duquette, Tim Haake, Mel Carsen, John Warcup, Council Members Bjerke, Grandstrand, Kreun.

1. Financial Management software update.
Roxanne Fiala, IT, stated that Council Member Sande came to office and reviewed software, that he had listing of questions and went over responses to those questions. Sande stated meeting with IT department was good experience, and was pleased to hear of the status of the financial management software and comfortable moving forward with the proposal as provided; and moved approval of the recommendation; seconded by Glassheim. Motion carried.

2. Request from Grand Forks Housing Authority for exemption of special assessments on 107 properties owned by the Authority._
Saroj Jerath, city auditor, reported that she had received letter from Terry Hanson, Housing Authority, asking for exemption from special assessments for dike project and all special assessments, and noted that Mr. Hanson had left the meeting. She stated in staff report that they should make a determination whether they should be exempt properties or not.

John Warcup, assistant city attorney, reported that the request from the Housing Authority for exemption of special assessments originated from a letter from Mr. Hanson dated September 10, 2010, requesting exemption from special assessments - the statute and operative statute says properties only owned by a Housing Authority and used for low income housing can be exempt from special assessments, two figures - ownership by the Housing Authority and use for low income housing, not moderate income housing nor any other type of housing - that he provided the information re. the statutes to City staff. The actual question that this body or the city council would have to decide is whether or not certain properties are used for low income housing. There are some administrative offices that are attached to Mr. Hanson's letter of September 10, some vacant residential building lots and is not aware of anything from Mr. Hanson re. the potential uses of the property other than a letter that Mr. Hanson wrote and is included in the staff report, dated October 8, 2010 - that he can't make a determination re. use of those properties, and the city council would need to determine whether or not those certain properties are used for low income housing, and if they are, they could be exempt from special assessments.

Mr. Warcup stated that all property is generally subject to taxation and their request for exemption and the burden is always upon the property owner. He stated that Ms. Jerath has provided a list of the various projects and the properties showing special assessments which have been assessed, and it appears that Mr. Hanson in follow-up e-mail Friday of last week that he was not requesting exemption from all special assessments but only the third round of special assessments for the flood protection project.

Glassheim stated there is an inventory at the end of the letter and does divide into 4 categories and if we agree that most specials and taxes are exempt if they own and rent to low income people, shouldn't be much to see which of those qualify. Christensen suggested that Mr. Warcup and Mr. Hanson review and along with Mr. Carsen and Ms. Jerath as to what you think is exempt - and come back to committee in 2 weeks with report and recommendation..

3. Park District's request for partnership with the City of Grand Forks regarding
Health and Wellness Center Project.____ __________________
Jay Panzer, member of the Park District Board, and Cam Tweten, mgr. of Park District Central Ct. Fitness Club, stated that they are requesting on behalf of the Park District a partnership with the City that would allow the Park District to proceed with the development of the new Wellness Center, that the City would waive all appropriate City licensing and permit fees, including building permit fee, dumpster costs, sewer connection fees, storm tapping fees, etc. and to cover or pay $1 of on-site utility costs for sewer, water, storm improvements and additional on-site improvements somewhere between $1.3 and $1.5 million and ask that be bonded by the City and that the Park District would pay for the bond over the course of 25 to 30 years and in doing so would be willing to offer the City up to 5 acres of space on the north end of the land that was donated by Crary along 40th Avenue South, with the idea that construction commence before December 31, 2015, and if not by that time the Park District would have the ability to retain that property for other uses. It was noted that with the economic development of this area, this project will see a lot of opportunities for additional growth. That the 5 acres of land valued at over $1 million.

Sande stated that they had met with the Library Board, and what was their take on this - that the Library Board has been looking at sites: one by Rex on 32nd Ave.S., the old Leever's building and asked if this was something they would be pursuing or looking at other options. Susan Mickelson, member of Library Board, stated they do include the Wellness site as one of the 3 final sites and are in the process of getting final price tags on all three.
She stated this is generous offer and would make huge impact on their decision because not only would they be able to acquire the property without paying for it and could still retain their present property to sell and with the council's recent move to make that into a Renaissance Zone it actually has some value and potential for sale - that she can't speak for the Board and the Board has not discussed this but guessing that the majority of Board, Glassheim included, read about it in the paper this morning. Wendy Wendt, city librarian, stated that there are 3 sites under consideration and their priority is to hear from the community as well about what they want and where they want the library to be and what they want it to be - and that next week will be their big blitz to try to get community input about their library. Ms. Mickelson stated this is a very important part of the conversation.

Glassheim stated he was concerned about moving ahead with this at this time, that the library is trying to start a community conversation to solicit involvement of the public on a number of items - location, what you want in it, etc. but if the council by acting on this request seems to favor one site and pushing it, thinks there will be a reaction in the public and would be concerned about that. That it is a wonderful deal for the library to save $1 million on land, but if the City is willing to spend $1 million to put the library there, why wouldn't they spend $1 million to put it at Leever's or any location so that the proposals are equal - finds impact on the vote and giving priority to one location; and if sign a contract that says the land if we don't build on it reverts to the Park District, our million dollars worth of land reverts to the Park District.

Christensen stated not sure how long the community conversation will go on but the Library Board and its consultants said they didn't want library south of 32nd but that changed and added 32nd and when they located library in its current location 37.5 years ago was put on the southerly edge of town and the library we are building is not for tomorrow but for the next 20-25 years - doesn't think Leever's site is good site for the community and opposed to putting it one block south of the busiest intersection, land locked, no park, no green area, etc.; not a good location as opposed to this location and that is why he favors this location - not for today but for tomorrow. The Park District has done incredible job for raising the money for a Wellness Center - we have a partnership, can assist them by using our bonding power, selling the bonds and they will be special assessed against this location, they will pay us back to the extent that we can assist them and get some ground for our library - spending $1 million for the ground for the library as we have to buy the land anyway, plus we keep our old library building - could rehab that building which will be in the Ren Zone and when lay out to the community as to the two sites that will be considered - and that this is a much nicer setting than the north end or South Washington - want to entertain this and go through the conversation and wants community to have the issues properly phased and presented as to where they would like the library located.

Glassheim stated that we risk putting people off if they believe the city council has already made a deal to locate it in this place and that their conversation is of no consequence - if there is a community discussion, wrong way for us to decide where its going to be before the people in town have a chance to talk about its location and should not decide on this until the library announces what it has come up with.

Gershman asked if this was time sensitive - Ms. Mickelson reported they have requested information of all 3 of the finalists and the deadline for them to submit that to Director Wendy Wendt is this Wednesday - the Board will have this information from the community and from the Park District and from Leever's - and their goal is to have location decision by December 1.
Gershman stated that we don't take action that would prejudice or make people feel that they don't have a voice; that originally before this came up, Leever's site is attractive from location standpoint for today - good point about the future - and another thing is the possibility for development around the project - and in looking at the Leever's site struggling to see where there would be additional development - these types of public projects try to spur development and doesn't see the possibilities there as can see re. Park District land.

Sande stated he had several conversations with people from the Park Board and was assured that there would be no public money asked for in this project but if the Library vote doesn't go through we could be making a decision to commit a significant amount of money to the project where don't get any benefit from it - that he received 3 phone calls today from people against using public money for the project; that he likes that location for the library, good for the community, but concerned about making this sort of commitment without knowing for sure that the Park District has gone out of its way trying to find other sources of funds. He stated he sees area around Ruemmele Road as an area of significant development in the next 5 to 10 years and sees benefits of that as well - but without knowing that the public is going to support the library, there is going to be a lot of negative sentiments about putting in public funds into the infrastructure.

There was some discussion relating to purchasing the land with $1 million in CDBG program money, and putting it into infrastructure, that money is sitting there looking for a project and could make it contingent upon the vote but it was noted that they don't have the public saying this is what they want and if the library vote does not go through and citizens decide they don't want a new library

Greg Hoover, urban development, stated the $1.3 million is not CDBG money but old rental rehab money, that grant has been closed out, federal requirements no longer tied to that, and that money has been sitting in our account waiting for a project - no restrictions on that money - council decision has to be made as to where they think the best investment of that money will be.
Christensen stated that if the citizens vote for the library and is built, there will have to be sales tax that will continue until the library is paid for - that if have $1 million to buy a site for a library, whether from Leever's, the Leever's family gets the money - if we buy from the Park District, the citizens get the money; that if we don't do this, the Park District will have to levy $1 million additional special assessment throughout the community to pay for the infrastructure, that if we use the money to help another entity working on this project and that they don't have to levy $2.3 million in specials but only $1.3. Rep of the Park District stated that from day one they have set aside 1 mill to go towards this project and that they will not raise additional taxes to pay for it.

Christensen thanked them for coming to our meeting, that there is another committee meeting tomorrow night and then this will be brought to council for discussion. Gershman stated we have to get both proposals and let the community conversation go forward before we take any action whatsoever.

4. Bids for Corporate Center panel repairs.
Meredith Richards, urban development, reported that one bid had been received and was
well below original estimate. Motion by Sande and Glassheim to move approval of the bid of Climate Control, Inc. in the amount of $132,500. Motion carried.

5. Approval of the 2010-14 Consolidated Plan update, the 2011 CDBG allocation of
$1,735,000 and the 2011 HOME allocation of $346,000.______________________
Ms. Richards stated the committee received a memo after last week's council meeting to
summarize where we were, and discussion at that point was focused on couple specific applications rather than the whole process and would review the staff report. At the previous council meeting Mr. Grandstrand suggested to approve line by line what you are okay with and then focus on the items that are more contentious but seemed at the last meeting that the Consolidated Plan update was fairly non-controversial as well as the HOME allocation.

Christensen asked about the $89,000 trust. Richards reported that her e-mail sent to the committee explained what the land trust was about, the application was submitted by the Grand Forks Housing Authority with the idea of making long term affordable housing to the use of the land trust, that they are now using the Bremer Foundation grant to do the legwork to organize and look at the feasibility of the land trust, and are on target and ready to put up their shingle and acquire land next spring; funding through CDBG for the land trust would be used for land acquisition, they don't have a sale pending so don't have a particular site identified but they are looking at the Promenade area where there is substantial amount of vacant land and since there is no sale pending, they don't need x dollars or the project goes away and no minimum required amount to make the project go forward.

Christensen stated he is concerned with the project at 201 South 4th Street, first floor, for another $500,000 - that he doesn't see the need and have zero sum profit on the top two floors, and can't image putting it out for another 7 or 10 years but get it back and try to sell it. Richards stated that it is leased through 2017 and there was some discussion re. fixing up this floor and leasing the main floor for office but noted that they could not use this funding source to fit it up and lease it to anyone, have to have an eligible activity and that it is why they could use CDBG funds for Centre but could not use CDBG funds for any group that wasn't eligible. Richards stated that this is a very large request for funds and they are aware of that and absent of any other approach is the applicant did give you the deduct alternate which instead of $480,000 request would be $415,000, and not sure if that is enough to make the request palatable or not - do have people to speak to what the benefit of this project is.
Kate Kenna, director of Northeast Human Service Center, stated they work closely with Centre, their staff contracts with Centre to provide services to clients that they work with. Currently Centre has an adolescent addiction program on third floor; have two programs on second floor, one is a program for people who come and stay for about 30 to 45 days while they get addiction services at our office, people who need stability of being away from alcohol and drugs while they are in treatment. Also on the second floor have people who have severe and chronic mental illness, people who have diagnosis such as schizophrenia, bi-polar, severe depression, etc.- that they have 26 adults living there, sometimes 3 and 4 to a room, and these are people with serious needs and some of those would include having some quiet and reflective kinds of things - people who come from mental health needs sometimes are at Centre for up to a year and coming to her office daily and receive treatment - their goal is to stabilize them so that they can move out into their own apartments and their community is the other resources that are available and they prevent them from going into the state hospital or from long stays at Altru because we are a less restrictive environment close to monitored psychiatry staff and case management staff.
She stated their plan would be to move the 14 people who have mental health diagnosis to the first floor; that they wouldn't expand the number of people that they treat, that there is some sharing of staff, etc. don't have great deals of money in their budget to expand programs but have enough to expand the space and some supervision to meet the needs of people. Typically they have two people on each shift and a supervisor and generally their occupancy is full or 90%.
Richards stated that the Citizens Advisory Committee heard the presentation from Centre, Inc.
There is always a need and housing for people with mental illness is difficult in this community.

Christensen stated he has concern - trying to do something to bring downtown back at some level and because caught up with these projects - that building would be a good building for businesses and other service providers - three floors and could condominimize those floors and sell the floor to professional center adj. to the community office building and adj. to the court house - that if want to change the configuration and how the downtown looks, have to start someplace and if going down the same path you never get there.

He stated that your mission and what he believes to be our mission as far as bringing the downtown back, concerned because he has two floors where no revenue being generated and now being asked to have the first floor fixed up for x number of years, Centre pays minimal rent, and that is why spending another $235,000 to fix up the air conditioning, and that with this request have $725,000 into this building - can fix it up but when it gets fixed up, there should be no assurance that they'll be there past the term of the lease for the top two floors, and should get some rent for this so that we don't have to take and fund the next repairs for roof or the elevator, don't seem to be getting any increase in rent from anybody.

Richards stated that the lease is in effect now through 2017 and terms of the lease are that since there was no debt service the original fit-up of the second and third floors was grant funded, that the tenant pays the cost of occupying the building, the utilities and the reserve and replacement, so they are paying $6400/month, and in the application, but can't negotiate a lease on a project that hasn't happened, they proposed $1.00/sq.ft. over and above that which would mean growth fund profit of $8300/year. That through 2017 was the intension to have the leases concurrent and at that point have a high vacancy rate downtown - don't know that we would kick them out but certainly that would be option of the landlord which is the Growth Fund and this money does get the building greatly improved using CDBG funds which they would not be able to do in the vacant space if rented to for profit.

Sande stated there are stipulations on the sale of this building, can't sell it before a certain time. Richards stated they put mortgages on the building to insure that the benefit that the CDBG money provides accrues to those beneficiaries for a period of time, through 2017 would be sufficient. Christensen stated bottom line is fix this up, lease through 2017. Sande stated that Meredith is correct , this gives us the opportunity to fix up one of our buildings that is in dire need of renovation on the main floor and the lease will go until 2017 and then see or sell or whatever we're at and thinks it is the best use of funds for what we have today.

Christensen stated to move it forward and then negotiate the lease rather than just $1.00, see what can negotiate. Richards stated they will certainly have to have the lease signed and can bring it back to this committee through the Growth Fund. Gershman stated this is coming up in the council meeting tonight after we are done with this meeting.

Motion by Sande ands Glassheim to approve and refer to city council. Motion carried.

ADJOURN

It was moved by Sande and seconded by Glassheim to adjourn; motion carried.

Alice Fontaine, City Clerk