Committee Minutes
FINANCE DEVELOPMENT COMMITTEE
Minutes
Monday, July 26, 2010 - - 5:30 p.m. - - Council Chambers
Present:
Christensen, Glassheim, Gershman
Absent:
Sande
Chair Christensen called the meeting to order at 5:30 p.m.
1. Grand Forks Renaissance Fund Organization
Katie Osborn, Urban Development, explained that in June they had presented information about potential expansion of the zone and are working on gathering some further information, but there is interest in establishing a Renaissance Fund Organization (RFO) to assist with development in our community and have Bruce Gjovig from Center for Innovation here to discuss with the Committee. Osborn explained the background of approval from the legislature which established the ability of cities with renaissance zones to establish RFOs. Bruce Gjovig, CEO of Center for Innovation, provided information on RFOs that have been created in other cities and their success and ways that he believes that this could benefit the City of Grand Forks both in the Renaissance Zone in the downtown and also potentially along 42
nd
Street to further help create the destination development that has been envisioned for that area and which could include a tech park development.
Osborne explained that a sample of the latest agreement for the Fargo RFO is included in the packet and could include whatever level of control Council was comfortable with. Any projects in the downtown area would still come to Council, as would approval of additional blocks to be included in the zone.
Christensen asked if there was any definition of what a block is. Osborn stated that she was not aware of a definition, but could check with the State and basically we would show state what we want to include and they would approve it and that it should look like a block on the map. The three blocks do need to be contiguous to each other, but not to the original Renaissance Zone.
Christensen commented that if we were considering including blocks on 42
nd
Street corridor, the perhaps rather than tech park development there, we may also want to consider addressing the retail leakage issue and to target jumpstarting retail in that area.
Gershman inquired if there is any liability to the City if a RFO is set up. Osborn stated that she would check with the State, but that a hold harmless could be included in the document. Gershman asked whether any development on 42
nd
would be for taxpaying entities or university type development. Gjovig explained that the area would be a prime location for an IT project due to proximity to technology at the university, but that primary intent would be to attract taxpaying development either privately owned/operated or privately leased. Gershman inquired how much space is left in the existing tech park area that was established some years ago. Tom Kenville stated that there is about 17 acres. Gershman stated that some of the area being discussed is prime real estate for a megastore and would not want to see development occur that would make that prime location develop in such a way that it would result in it become nontaxpaying.
Christensen asked how the RFO what fees would be associated for revenue for the RFO. Gjovig stated that there are rules that govern what fees can be charged and it is about $5,000 per year to manage the fund once it’s established, which also covers the cost of the annual audit. He added that there is a minimum 10 year investment and no incentive to take funds out early and that the main focus is to generate property development in a community.
The group discussed that there are a number of different projects which could qualify to use the tax credits and that some of them, such as a Brownstone II development downtown would not need oversight from a RFO. The group discussed potential benefits to establishing an RFO and if established how it could be utilized in the community, especially since it is anticipated that there will be more credits becoming available at the State level.
Staff will take comments from the Committee and continue to work on this item and bring an updated report to the next Committee meeting.
2. 401 and 402 DeMers Building Repairs.
Greg Hoover, Director of Urban Development, recapped the repair needs at the two buildings and stated that the estimated cost to correct the water leakage and HVAC problems is estimated to be $853,500. He explained that if the repairs were paid from the Growth Fund, there would be a deficit at the end of the year and is proposing that besides awarding the contract with EAPC to going forward with bids for the repairs, that a recommendation is also approved for he and the Finance Director to develop a funding plan to borrow money from another fund and repay with 3% interest. Gershman suggested that he would be more in favor of the fund paying for the repairs from their budget and then if a deal came up could look at borrowing funds.
Motion by Glassheim, second Christensen, hire EAPC and bring back exact repair figures with potential funding source to a future meeting. Aye: All. Motion Carried.
3. 2011 CDBG and HOME Programs.
Meredith Richards, Community Development Manager, recapped that in the packet is a revised schedule, proposed process of public service through a competitive process and the bricks and mortar noncompetitive, as there are eligible City projects that the funds could be used for, a list of which is included in the packet. She continued that the budget numbers have been refined since the last meeting and that the budget will come back to Committee/Council again for approval once the results of the competitive process for public service are available as well as are continuing to work on further refining the bricks and mortar project numbers.
Christensen asked if moving this forward at this time ties them to any budget number for projects included in the proposal. Richards replied that the only approval today is for the schedule and process to follow and that there will be approval of the amounts per project in September.
Gershman asked what the basis was for the project estimate for the 201 S 4
th
Street projects. Bobbi Hepper-Olson, architect, stated that the estimate is based on a floor plan design.
Christensen stated that he has a concern with investing the proposed amount in this building due to terms of current lease, as well as the restrictions placed on future use or sale of building. Hoover noted that current lease for 2
nd
& 3
rd
floor expires in 2017, but would not have same restrictions on any funds used for 1
st
floor project, which would have only a 5 year restriction which would require the payback of the block grant funds used if the building were sold prior to the 5 years. Christensen suggested that perhaps should look at condominiumizing the building and then let the buyer of the first floor area make the 1
st
floor improvements, which would also avoid the 5 year lock for this property. He noted that the City does own other buildings in the downtown area that are vacant and not sure investing more City dollars in another building is the right decision. The group discussed that there has been no interest in leasing the 1
st
floor area other than from the tenant that has the other floors and that given the nature of their business, may not be able to pay a lease amount for the 1
st
floor, that staff could meet with them and discuss what could be negotiated, but whether that would be enough to provide for long-term maintenance needs was unknown. There was agreement that if the tenant is not able to afford an adequate rent for the space it would not be feasible to proceed with the 1
st
floor fit up.
The group discussed whether it was a feasible idea to proceed with work on the building with the thought of moving it to the JDA once the leases would be completed.
Glassheim expressed that he would move this item to Council for further discussion, but personally was not in favor of having no funds available for the nonprofit sector. Gershman commented that this is almost a designation specifically to benefit one nonprofit if the decision is made to go ahead with this project.
Motion by Glassheim, second by Christensen, to recommend proceeding with the schedule as proposed, to have a competitive process for both public service and city bricks and mortar projects. Aye: All. Motion Carried.
4. Alerus Center Management Agreement.
Christensen stated that this item was referred to the Committee from the last City Council meeting for discussion purposes.
Saroj Jerath, Director of Finance, stated that on page 9 of the agreement there is a sentence included that management has the authority to move cash from the box office to the operating account if needed to meet cash flow needs of the Center. She concluded that the concern is that this is ticket money for future events, is not earned until the event is held, and should the event not be held, we would be obligated to refund the money to the ticket purchasers. She recommended that the sentence be deleted from the agreement.
Motion by Glassheim, second by Christensen, to recommend approval of the management agreement, subject to deletion of the sentence on page 9. Aye: all. Motion carried.
5. Change order and budget amendment for Project No. 6555, City Hall Carpet Replacement.
Mark Walker, Asst. City Engineer, explained that the contract for new carpet did not include the Public Information Center, Finance Department and Inspection Department, all of which have carpet that is worn. Based on the positive feedback from the rest of the project, are proposing to proceed with a change order on the project at a cost of approximately $48,000 to replace the carpet in these three areas. He added that there will be two areas left in City Hall that have not been done, the IT and Assessing Department, but that there carpet is in good condition so are not asking to look at replacement in those areas at this time. Jerath stated that the funding source for the project would be from cash carryover and the City Hall department budget.
Motion by Glassheim, second by Christensen, to recommend approval as submitted. Aye: All. Motion carried.
6. Appointment of a City Council member to the Library Board, Pension & Insurance Committee, MPO Executive Policy Board and GF County Planning Commission, new appointments to the GF Planning & Zoning Commission, GF Airport Authority.
Christensen that included in the staff report is a listing of the board appointments recommended by the Mayor.
Motion by Glassheim, second by Christensen, to recommend approval as submitted. Aye: All. Motion Carried.
Meeting adjourned at 6:45 p.m.
Respectfully submitted,
Sherie Lundmark
Admin Spec Sr