Committee Minutes

Minutes of Grand Forks City Council/Growth Fund
Authority (JDA) - Monday, April 26, 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, April 26, 2010 at the hour of 5:30 p.m. with Vice Chairman Glassheim presiding. Present at roll call were Council Members Bjerke, Glassheim, Gershman (teleconference), Christensen, Kreun, Mayor Brown - 6; absent: Council Members Bakken - 1.

HOLD PUBLIC HEARING AND APPROVE EDA RLF
LOANS TO AMERICAN DEFENSE INDUSTRIES, IDEAL
AEROSMITH, INC. AND LM WINDPOWER

The staff report from the director of Urban Development relating to American Defense Industries EDA RLF Loan, with recommendation to hold public hearing on loans to Pribula Estates, LLC and to American Defense Industries in the respective amounts and per the terms contained in the report, and approve said loans and authorize appropriate JDA officials to sign necessary agreements and documents, subject to review and approval by the city attorney.

The staff report from the director of Urban Development relating to Ideal Aerosmith, Inc. EDA RLF Loan, with recommendation to hold a public hearing on a loan to ideal Aerosmith, Inc. in the amount and per the terms contained in the report, approve said loan and authorize appropriate JDA officials to sign necessary agreement and documents, subject to review and approval by the city attorney.

The staff report from the director of Urban Development relating to LM Windpower EDA RLF Loan, with recommendation to hold a public hearing on a loan to LM Windpower in the amount and per the terms contained in the report, approve said loan and authorize appropriate JDA officials to sign necessary agreement and documents, subject to review and approval by the city attorney.

Vice Chair Glassheim opened the public hearing.

Greg Hoover, director of Urban Development, stated that unusual to bring this much to you at one time, however, over the last year the federal government, the EDA has made some significant changes in the revolving loan fund requirements that make it much more competitive. We have two parts to the JDA money, money coming in from sales tax and EDA RLF.

Keith Lund, EDC, reviewed the following projects.
American Defense Industries. prime contractor for the Department of Defense, is undertaking an expansion of 5,000 sq.ft. and purchase equipment that will allow them to move some of the storage as well as shipping, receiving into that expansion to allow them to utilize the balance of the space for production. This project has two loans and requesting the first loan is a real estate loan from EDA Revolving Loan Fund of $157,500, interest rate is 75% of New York Prime, 2.44% based on a 3 1/4% prime rate, 15-year amortization, 10 year balloon, subordinate mortgage and a personal guarantee from Mr. Pribula. The second loan is proposed at $63,000 for the equipment, at 2.44% est., 7 year amortization, first security interest in equipment also personally guaranteed by Mr. Pribula.

Ideal Aerosmith, manufacturer of inertial test systems and aircraft instrument test equipment in Grand Forks and East Grand Forks, they recently completed acquisition of 20,000 sq.ft. in Grand Forks, purchase of the building was $2 million, improvements $328,000, furnishings $342,000 and machinery equipment $90,000 for total project cost of $2.7 million. This project request is $408,000 of loan project be placed in permanent financing with EDA Revolving Loan Fund, terms are 75% of New York Prime, 2.44%, straight 7-year amortization, interest in the entire project subordinate mortgage on real estate and subordinate security interest in the furnishings and equipment, this loan will also be personally guaranteed by two principals that have more than 20% ownership in the company. This project anticipates job growth of approx. 20 jobs in the next 2 years.

LM Windpower is leading manufacturer of wind turbine blades in the world, been located in the Industrial Park since 1999 and have locations in Europe, Asia and North America, Grand Forks operation continues to be a leader in productivity standpoint, and to enhance productivity they are buying equipment and installing it in the Growth Fund owned facilities. The significant competition to capital and company implementing the $750,000 worth of equipment and company is requesting with the support of the Economic Development Corporation and Urban Development Office $500,000 EDA RLF loan to support that project, terms are 75% of New York Prime, est. at 2.44%, straight 7-year amortization and first security interest in the equipment.

Representative from all three companies were at tonight's meeting to answer any questions.

Vice Chair Glassheim closed the public hearing.

Mayor Brown moved approval of the recommendations for the three companies, Council Member Christensen seconded the motion.

Council Member Bjerke stated he wishes them the best, but disagrees with intrusion into the federal banking system and have problem with State banking system, and local level - doesn't believe it’s the role of government to be a bank. Decisions should stand on their own merit and distorts the free market system and that we have a lot less regulations than a regular bank would have - disagrees with it philosophically.

Council Member Christensen stated he respects Mr. Bjerke's opinion but that we are not acting as a bank, but engaging in a program that has been in existence for some time and is a good program. The reason these entities have received the money is because they are primary sector and qualify under our current guidelines for these funds, and are advancing the money to these firms to continue their growth.

Council Member Gershman stated he would concur with Mr. Christensen, and is proud that our city is able to provide loans for businesses that are expanding in our community, and that when looking at the national economy start seeing those trends happening in our city and is a good thing, that we have guidelines and anyone can apply if they meet those criteria, and is an equal opportunity job creation machine and very proud of it.

Council Member McNamara reported present.

Vice Chair Glassheim stated that these are loan funds which will be paid back and local banks or some companies themselves are putting up roughly 3/4's of the total amount and approx. accurate for each one and is a way to help grow the economy.

Upon call for the question and upon voice vote, the motion carried 5 votes affirmative; Council Member Bjerke voted against the motion.

ADJOURN

It was moved by Council Member Christensen and seconded by Council Member Kreun that we adjourn. Carried 6 votes affirmative.

Respectfully submitted,



Saroj Jerath
City Auditor