Committee Minutes

Minutes of the Grand Forks City Council/Finance-Development
Committee - Monday, September 13, 2010 - 5:30 p.m. _______________

The Finance/Development Committee met on Monday, September 13, 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.

Also present were. Greg Hoover, Meredith Richards, Jane Williams, Tim Haak, Maureen Storstad.

1. Growth Fund Committee reappointment.
The staff recommendation is to reappoint Dwight Thompson. Motion by Glassheim and Sande to concur with the recommendation. Motion carried.

2. Request by The Chamber of Commerce Military Affairs Committee.
The request is for $5,000 from the excess sales tax, and Christensen asked if anyone had information relative to the request in 2007 where it was suggested that we would continue to do this from excess sales tax. Gershman stated that at that time the Mayor suggested that it come out of sales tax. Maureen Storstad stated that in 2007 it was approved and referred to supporting it in future years and in the past the City has supported the Military Appreciation Day in the amount of $5,000 and has been paid for out of the Air Base Retention Fund as part of the $100,000 budget for each year; and if the committee would support this that would be the funding source for the $5,000. Base population is 1,300. Christensen stated that if it is $5,000 or free tickets to the game that it is Alerus tickets we are selling and some issue there and why spend the money if can give the tickets away. Storstad stated she wasn't sure what was done with the $5,000 but it had been requested and Mr. Marshall was going to be bringing forth a report re. the Air Base dollars and how used from his part. Gershman stated he believed there is a reception, food but we should have that report for Monday night. Meredith Richards, urban, stated funds used to come through the Special Events Program and was Maury Rothkopf thing and the Special Events Committee would say we support it but should go to the Mayor's Office and in 2007 it was officially directed that they would cease to spend those requests through the Special Events Program, 2163. Christensen stated at last Monday's meeting there were inquiries concerning Base Retention Funds, and that if this were approved that is where it should come from and that is where it has been coming from, and would like to see what they are going to use the money for but if just giving the money and we have the tickets anyway, and who sells tickets for the football games or what investment is on that program - just give tickets away. Gershman stated he thinks the University sells tickets and Alerus gets commission. Christensen stated this is going to be issue re. getting people to come to the games. - Times are different right now and Mayor is getting $100,000 approved and that amount is already in the 2010 budget. Committee asked why they have to apply for the funds and that the Mayor has authority over that money, and if the mayor has authority over that money it is a non-issue for us. Storstad stated that the Mayor's Office wanted the Chamber to go through finance to make you aware that they are still requesting the funds but would be no change to the budget and would be part of the $100,000 already allocated.
and that it doesn't need your approval. Glassheim stated he moves that the Mayor proceed and report to us; Sande seconded. Motion carried (Committee action only)

3. 2010-14 Consolidated Plan update and 2011 CDBG and HOME Programs.
Meredith Richards, Urban Development, presented information, looking not only at annual allocation process for 2011 CDBG and HOME Programs but also doing a 5-year Consolidated Plan update and along with that updating our Citizen Participation Plan and our Analysis of Impediments to Fair Housing.
Starting with 2011 Allocation process, that they received more requests than have funding for. Bricks and Mortar analysis - staff report includes summary of requests that were received by program type, whether public service which is operational funding or bricks and mortar which is capital improvements; that they had 8 requests for Bricks and Mortar totaling little over $1 million with $705,000 in available funds; that the Citizens Advisory Comm. listened to testimony from applicants for Bricks and Mortar or Public Service, hold public hearing and then have ranking process. The process starts with a yes -no vote and applications must be 60% yes vote and then go into next round of ranking; that 3 projects were eliminated from ranking (Listen Center for rental rehab. project; CVIC fence; and Development Homes fence and garage project). The CAC did rank applications submitted by Housing Authority on behalf of Valley Memorial Homes for elderly housing project with matching funds for a Section 202 grant and that grant has not yet been released so CAC supports the project but recommends that it if were successful in getting the main grant funding they would reapply next year.
She reviewed the projects ranked for Public Service projects, received 18 requests for almost $400,000 and have $150,000 available. CAC process eliminated 3 applications for ranking and she reviewed remaining 15 projects which were recommended.
She reviewed the 2011 CDBG Program Budget Summary. That the American Dream Program has line items in both CDBG and HOME and is first time home buyer's assistance program and that MetroPlains for redevelopment of the old civic auditorium parking lot into low income housing tax credit project. Council approved $375,000 in HOME funds over two years for project earlier this year. In terms of the 2011 process they are looking for a recommendation from this committee to forward these budget recommendations to city council

Gershman asked why the administration costs is so high and what it entails. Richards stated that administration is capped t 20% of the budget, that they went through the previous process back in July and August to see where we are today, and took about $30,000 out of our admin. and put it into projects, and that is based on the fact that they are getting a lot of unanticipated program income from the sale of LM Glasfiber and the land to Simplot, but working at doing some studies with that money and that will come to committee as an amendment process in perhaps a month or so. It is show up as a 2011 admin. item but really anticipate the program income will be recognized in 2010 and that admin will have to be expended in 2010. She stated that when they receive program income they have to allocate it to projects, and for admin have to obligate that money in the year it is received, but haven't received it yet and if want to take admin dollars through this windfall, have to be able to obligate it this year assuming we obtain that program income this year - have received the money from the Simplot sale but not yet received the money from L & M.

Gershman stated money for the studies seems quite high and thinks council would like to see breakout of the $330,000 admin use, seems high and would like to see what kind of studies because there might be other uses for the money. Richards stated it is high but gives opportunity to do some of those studies that can't be funded out of project costs - would justify why that study should be made, and if don't spend the money in the year that it is recognized, it isn't lost but becomes regular program funding for Bricks and Mortar or Public Service.

Gershman asked if we took the $1,765,000, would we be able to use that money for low interest or no interest loans to the public service, social service organizations so that we would have a revolving fund and money would come back and keep using the money. Richards stated that Public Service is capped by statute at 15% of previous years program income, current years entitlement dollars. We have a revolving loan fund for the homes in Housing Rehab Program but in terms of revolving loan fund for operational funds, but might get in trouble with that. Christensen asked if we used this money as a revenue source for LMI areas where people could borrow this money as a down payment on a home. Richards stated they can set up any number of revolving loan funds or programs that anticipate that the money going out is a loan rather than a grant, it still has to meet the national objectives and be an eligible activity.

Christensen stated on the list of 2011 CDBG Program Budget Summary - Administration is $330,000 is a placeholder but could fit into other types of programs and $235,000 for 201 S. 4th Street for HVAC repairs and another $490,000 for total of $810,000 that could be redirected in other areas. Richards stated when they got to the process of council authorizing them to proceed with the allocation process they are dealing with now, that was the compromise as there was a line item for HVAC repairs but that was funding for that was thrown into the competitive mix for bricks and mortar application. Christensen stated heard that we don't lose the money and now sees $810,000 and envisioning that there is going to be less of this money and still going to be continuing needs in the community - only have so many LMI areas and goes to the mayor's program, goes to revitalization of northend, etc. and those are things interested in, that once we get it we wont lose it. Richards stated that has always been the case if we award something to a project and if it doesn't happen, we have the ability to amend our plan and award it to another program. Christensen stated we have the ability to assist people in the LMI areas of coming up with the downpayment for a home. Richards stated we do as that is the American Dream Program and Christensen stated that we then have more and have 50 homes rather than 20 and can allocate part of that money and if don't use it, can use it for another project, because we have had good response with the American Dream Home Program and then have a source of revenue to continue to help people get into homes in those areas in this town. Richards stated and agree that as an agency we need to be looking more towards loans than grants; and that the American Dream Program which is a combination of loans and grants is that the best place to do it, doesn't know.

Sande stated that if we put the $490,000 for the first floor fit-up at 201 S. 4th Street, what are the benefits to the City. Richards stated benefits to the city area that it does allow using CDBG funds to improve a city-owned structure and benefit to the city is the low and moderate income clientele. Currently they have one floor of adolescents addiction treatment and a second floor of combined mental illness and addiction treatment for adults, this would allow them to separate that adult population onto two floors which would allow them to serve more clients but better serve both of those populations by having them separated.

Glassheim questioned the extra $1.00 per sq. ft. and if net gain for the City under the current contract. Richards stated they are asking the City to respond to the inner application for the request for funds for the fit-up, there was statement that $1.00/sq.ft. beyond the operating and maintenance they are currently paying, and stated that the term would coincide with their existing lease. Glassheim also questioned if there was a rough breakdown , or how much of the admin of $330,000, is for anticipated study, how much is salary and if other expenses. Richards stated their windfall of unexpected program income is about $700,000 from sale to Simplot and LM and 20% of that is $140,000 of admin. money, and while can use that for admin, but $140,000 is huge amount to spend on normal admin activities, and her sense is maybe less than half of that would go to studies, some of that would go to admin costs because do have to have a program to administer, and at the end of the year if anything left, loses its identity which is the unprogrammed fund and can either be reallocated as an amendment this year or put into the pot for 2012. She stated would go to salaries, heat and lights, travel but bulk is salaries.

Christensen asked what they need out of this meeting - setting public hearing? Richards stated forwarding it to council with these numbers intact and then if council views this next Monday, then officially open the public comment period with a target for adoption of the 2011 program on November 1 and for submittal to HUD by November 15.

Christensen stated he was concerned about the $810,000 plus American Dream Program, that this is a source of money to change direction so that low to moderate income areas can be served and if we can have a situation where people can borrow money to get into homes in this current economy is in favor of that - that is first and foremost - and if can help 50 people vs. people in the Centre, Inc. is providing for 201, they have provided services for a long time there, that we have to fix the building as it is city-owned but don't have to go down the road with the balance of the money and to explore other alternatives - that is what he wants to know and hope on Monday that we have better details and discussion as to what we can expect out of Administration and why we couldn’t use this money in the American Dream Project - that is what he would like as a council person in trying to make decisions on this.

Greg Hoover, director of Urban Development, suggested that would be first reading and do have a little time, and asked that if you would keep this and they will come back to the committee at the next meeting with answers and details to what requested so don't take a lot of time on the floor when don't really need to do it immediately - will have more in depth conversation at the next meeting. Committee agreed but this will go to council to set the hearing - motion by Sande and Glassheim to set the public hearing.

Glassheim stated he understand show can you give the money to help them get into houses but don't understand how you can loan them money…Christensen stated the American Dream Program have grants and loans and closing costs, and what is more important than getting people in homes and if can do that and that is what he wants to do - if can't do it ---Gershman stated that you could have a loan that would not accrue any interest for the first 5 years so they get their mortgage down a little and then starts kicking in when making more money, and those are the types of creative things that we could do with this, and have that source of money coming back to us and that is just one thought - and those are things we could do. Christensen stated with revolving fund that we can create work in perpetuity - until someone else changes it.

Glassheim stated the grant portion doesn't come back but have to figure out how you are doing that and if just giving a loan for the down payment, then adding to their burden - if they earn more, fine otherwise 4 years from now and if want the money back and they can't afford it.
Christensen stated no interest, $20,.000, and 7 years and need something coming back, and at the end of 7 years assume inflation factor of 2% and paid no interest, and owe $20,.000 and that they are going to be paying on that mortgage and work towards refinancing it, problem could be that interest rates increase but looks like this should be flat for the next 7 to 10 years - and have an opportunity o help people. Richards stated that for many years she was the day to day administrator of the American Dream Program and has been very successful but if look at the demand, they have never run out of funds given the allocations that they have given them, our $200,000/year are meeting demand and doesn't know that additional funding of that program would be as beneficial as perhaps a revolving loan fund for rehab or revolving loan fund to create affordable housing. Committee members stated it didn't matter as long as it helps LMI and can work it with that money to stay in the system.

Upon call for the question and upon vote, the motion carried.

Ms. Richards stated they could go through the other items quickly, and does have a power point on the Consolidated Plan. This is required by HUD and the time is now to adopt. She stated that once council opens the public hearing process the full document will be posted on the city website for review. Committee asked that this be posted on the website now so people have it for next Monday - Richards stated that the link is in there and have to get to it through the link in the staff report - and that they are having a 30-day comment period that won't close until council takes action on November 1. Will be posted along with the slide presentation.

2010-2014 Consolidated Plan.
Richards made a short power point presentation re. this program. She stated for the next 5 years they are anticipating very similar income projections as the last five years and proposing similar rates of extending the money, major change in this is added emphasis on the targeted approach with the northend, the mayor's urban neighborhood initiative and then there's some requirements and categories you have to address; and did short presentation of the Consolidated Plan..

She stated their recommendation is to forward all this to city council for establishing common period in the public hearing date on Monday. Christensen stated to include this in the last motion and was part of the report.

Sande asked how the Citizens Advisory Committee process the goal. Richards stated it has been 3 years since United Way managed the public service administration process and in the third year it has come back to the City, it worked very smoothly, took 3 days with 2 days of testimony to hear all the applications, do the ranking process and to come up with recommendation - followed last year's process.

Christensen stated that when get people to serve, get 3 to 5 year commitment, because first year and half learning the process.

Motion by Glassheim and Sande to adjourn, motion carried. Meeting adjourned at 6:25 p.m.

Alice Fontaine
City Clerk