Committee Minutes

MINUTES/GROWTH FUND AUTHORITY
Monday, July 31, 2000 - 5:30 p.m._________

The city council of the city of Grand Forks sitting as the Growth Fund Authority met at the council chambers at City Hall on Monday, July 31, 2000 at the hour of 5:30 p.m. with Vice Chairman Brooks presiding. Present at roll call were Council Members Brooks, Bjerke, Hamerlik, Burke, Glassheim, Lunak, Christensen, Babinchak, Bakken, Martinson - 10; absent: Council Members Hoff, Gershman, Klave - 3

AUTHORIZE ENTERING INTO LEASE AGRERMENT
WITH NORIDIAN FOR 402 DEMERS AVNEUE

John O’Leary, Urban Development Office, reviewed the project and reported that Noridian was interested in renting the second and third floors of the Corporate Center at 402 DeMers, that they overly constructed the Corporate Center by about 28-29,000 sq.ft. hoping that space would be available for future primary sector tenant that would attract new jobs and industry to Grand Forks. Mark Krauseneck, Economic Dev. Corporation, and his staff have been working with this company for some time as we have and discussing various lease options for the second and third floors of Corporate Center consisting of 18,800 sq.ft. and those two floors would be remodeled using funds that were set aside as part of the original budget. He stated they were not requesting any additional allocations from the Growth Fund or City funds, the $22/sq.ft. has been negotiated will be used for tenant setup costs and those dollars are in the Corporate Center budget. Jack Brennan and Kalyn Frappier of Noridian were here to answer any questions JDA may have.

Mr. O’Leary stated they were asking the JDA to take number of steps to expedite this process and getting them into the building by November 1, that both the second and third floors are unfinished and wanted to finish off that space to suit the needs of the tenants. He stated the lease is copy of leases that were executed by other tenants in the Corporate Center, the terms and conditions were passed down from HUD and EDA and other funding sources and those are attachments to the lease; that the lease costs are $8.50/sq.ft. plus overhead costs including property taxes, that it’s a net/net lease and expect the overhead costs to be somewhere between $4/5 per sq.ft. He stated the request before JDA is to appoint a committee which would review and select an architectural firm, the project is in excess of $50,000 and an architectural firm is required by State law. The committee would also be authorized to put out bids for the project, award the bids, and asked that they consider this for two reasons: to keep the process moving so don't have to bring this body back together to award the bids, that our offer is for $22/sq.ft. and if it costs more than that, that will be part of the expense that Noridian has agreed to pick up; and committee would also be authorized to oversee the project through its construction phase.

MAYOR BROWN REPORTED PRESENT

Mr. O’Leary reported that there are now three tenants in Corporate Center, and building cash flows now because under original agreement with one of the tenants, First National, they agreed to rent some empty space in the 402 building, and was their contribution to the
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CBD and although not using the space they are paying rent; that there are three tenants in the 401 building and completely occupied. He stated the only room that will be left after Noridian moves in will room on the first floor. He also reported that all tenants are not paying the same rental fee - some of the rents depending on location within the buildings are lower/higher, but all of the rents in the 401 building are at or below the $8.50. He stated that the earlier tenants took more space are paying slightly less but the terms of leases are the same. He stated there is some option that they might take the last floor and would be pleased to rent them the entire building. He reported the request before the committee is to 1) authorize the JDA to enter into a lease agreement with Noridian, the principal of the lease has been agreed to by both parties; 2) appoint a 3-person committee to interview the architects, select and enter into agreement with architectural firm for design services and oversee construction of the project; 3) authorize the committee to put out bids for the construction, award bids (that they put out the RFP for design services last week) but can’t advertise for bids until authorized to do so.

Mark Krauseneck stated there are options, first two years the option is for 30% increase or market valuation and a subsequent two year terms, 20% increase in market rate, and market will end up determining that ultimate lease rate.

In answer to question re. amount of jobs and quality, Kalyn Frappier, Asst. Vice President for Government Programs at Noridian, stated they will use the existing work force that is here, Noridian has had quite a bit of expansion over the past several years and that is in Medicare, and have chosen to expand their operations in North Dakota and do have nationwide presence in the Medicare operation, have employed approx. 1100 people and 800 of those people are located within the State of North Dakota, that as they’ve grown they’ve looked for opportunities to bring positions back to North Dakota; in the Grand Forks area they would be looking at a graduated operation, start out with 20-30 staff initial employment with ultimate intent to go to about 100 staff members, depending on if the economic condition and the employment capability is as good as what they’ve been told and if the work force they’ve been told is available; they have experience in the Jamestown area, started operation there and in about a year have expanded operation from 20 staff to about 58 and intent to go to 75; that is their intent here as well but have not set timeframe. He stated positions are claim review operations, clerical functions (reviewing Medicare claims for utilization and those types of things), typically office staff with hopefully some medical terminology background, some office skills - with 100 people would have 10-15 in the $20-25,000 annual salary range, supervisory range of salary $35-45,000/year. He stated they are talking entry level type office staff, and would be looking at initially 30 people in the office and do an evaluation, do have a need for staff and that’s why Grand Forks area looked like fruitful opportunity for them.

There was some discussion as to whether this would be doable by November 1, Mr. O’Leary stated they believe it is, the selection committee will have to make some pre-
liminary decisions and seems trades can be in their concurrently and allowing 6-7 weeks
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for the construction time and independent of weather, no reason that the successful bidder couldn’t get in there and commit their full resources to it.

Council Member Christensen stated he had scanned the lease and would recommend that the lease as far as the option of renewal, base rent on fair market value, that no less than existing rents in case the market might go the other way; and this was agreed to; and suggested appointment of Council Members Klave, Babinchak who were on the Aurora committee and himself as member of the JDA committee to the selection committee.

Council Member Babinchak moved that we enter into the lease agreement with the amendment that it would not be less than $8.50/sq.ft. upon renewal of the lease; seconded by Council Member Lunak. Upon voice vote the motion carried 10 votes affirmative; Council Member Bjerke voted against the motion.

It was moved by Council Member Glassheim to authorize approval of an RFP for architectural firm for finishing the second and third floors of 402 DeMers Avenue; seconded by Council Member Bakken. Upon voice vote the motion carried 10 votes affirmative; Council Member Bjerke voted against the motion.

APPROVE SELECTION OF COMMITTEE AND
AUTHORIZE EMPOWERING SELECTION
COMMITTEE

It was moved by Council Member Glassheim that we authorize and empower a selection committee to be composed of Council Members Christensen, Klave and Babinchak, with committee to review the respondents to the RFP, select the architect, contractor and oversee the construction process. Council Member Martinson seconded the motion.

COUNCIL MEMBER KREUN REPORTED PRESENT

Council Member Christensen stated that if anyone else was interested in being on the committee other than himself to please say so. Mr. O’Leary stated they will work with committee to schedule times and dates.

Upon call for the question and upon voice vote, the motion carried 11 votes affirmative; Council Member Bjerke voted against the motion.

AUTHORIZE ADVERTISEMENT FOR BIDS FOR
COMPLETION OF SECOND AND THIRD FLOORS
OF 402 DEMERS AVENUE

It was moved by Council Member Hamerlik that we authorize the committee and staff to
advertise for bids for the completion of the two floors and authorize them as overseeing it
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to let the bids and authorize the selection of the bids. Council Member Bakken seconded the motion. Upon voice vote the motion carried 11 votes affirmative; Council Member Bjerke voted against the motion.

Mr. Krauseneck stated that they welcome Blue Cross and Noridian to the community and that it’s really a partnership with Altru that they would like to acknowledge too, because instrumental in this initial interest; Blue Cross’ part was a relationship they had with Altru and their relationship was developing with Blue Cross; that as they passed information back and forth about the community initially they worked carefully with Altru to help make this happen. He stated that as they worked with this client they showed the entire community in terms of potential locations, both downtown, southside, mid-quarter locations, including discussing greenfield locations, that they took a good look at the entire community and there’s really a partnership here that they are embarking on and Blue Cross has taken an increasing role in this community, with respect to the HMO venture with Altru and also of their presence downtown.

ADJOURN

It was moved by Council Member Hamerlik and seconded by Council Member Lunak that we do now adjourn. Carried 12 votes affirmative.

Respectfully submitted,



Saroj Jerath
Deputy City Auditor