Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, August 30, 1994 - 5:00 p.m.

Members present: Carpenter, Babinchak, McCabe.

1. Matter of extension of lease with New Flyer.
Mark Lambrecht reported that when the City purchased the Coca Cola building last year we became the landlord for New Flyer, that 104,000 sq.ft. building and New Flyer occupies the north 42,000 sq.ft. and we are presently renovating the south 62,000 into our public works facility. We inherited and assumed the lease Coca Cola had with New Flyer, five year lease expiring in February; and New Flyer has asked for extension in the range of 1 to 2 years, we were aware of this, and have been in contact with their local manager and asked if 1 year extension at this point would be acceptable, and they said it would. He stated he would like to extend lease one year at a time to keep pressure on for them to look at other options, they do intend to move, and their plans are to build larger facility. He stated it would be his recommendation to extend the lease for one year; that present rent is $95,000/year or $2.26 sq.ft. on an annual basis and the lease does provide for an annual increase according to the consumer price index, and that price index factor would be acceptable, and that would increase rent on the anniversary date. He recommended that they ask the city attorney to draft an extension with all lease provisions to remain in force. Moved by McCabe and Babinchak that we direct the city attorney to draft an extension to the current lease for a period of one year, with all provisions to remain in force. Motion carried.

2. Matter of bids on property located at:
a) 1310 8th Avenue North
b) Lot 4, Blk. 1, Medvue Estates 6th Resubdiv.
c) Lot 1, Blk. 1, Medvue Estates 6th Resubdiv.
Mr. Schmisek reported that bids had been opened a week ago, and that the valuation of property at 1310 8th Ave.N. by the assessors is $17,100, and we received a bid from Jim Forsberg in the amount of $9,000, and our recommendation is to deny the bid.

He reported that assessor's valuation on Lot 4, Block 1, Medvue Estates 6th Resubdivision is $16,300 and we received a bid of $14,000 from Dakota Financial, which is about 86% of the valuation set by the assessor, and recommended approval of the bid.

He reported that the assessor's valuation on Lot 1, Block 1, Medvue Estates 6th Resubdivision is $32,000 and received bid from Vern Gornowicz of $7,500 and recommendation is to deny.

He stated that he thinks that they can get better bid on a) and c), and that they do have signs placed on the property, and since advertised, it is open for anyone to come in and make offer on the properties.


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After some discussion it was moved by Babinchak and McCabe to accept the bid of Dakota Financial in the amount of $14,000 for Lot 4, Block 1, Medvue Estates 6th Resubdivision, and to reject the bids for the property at 1310 8th Avenue North and Lot 1, Block 1, Medvue Estates 6th Resubdivision. Motion carried.

3. Matter of bond issues.
Mr. Schmisek reported that his office has requested Springsted, financial advisors, to give us the numbers on several issues; one being approx. $700,000 issue for Convention & Visitors Bureau building, and are looking at setting sale date for all issues as November 7, 1994; tax increment financing sale for Acme Electric, Mr. Dornfeld and Dorsey firm are working on this; revenue bond sale of $1.744 Million for the public works facility, with split being between water and wastewater departments; about $2.415 Million of special assessment bonds, and those projects funded by special assessments - are being delayed because of Proj. 3821, Richard's West sewer work, $356,000 EDA grant, and are hoping to hear prior to holding sale.
He stated also they will be talking about possibility of TIF in Burdick's Resubdivision; and this is information at this time.

4. Matter of job description for personnel technician.
Jay Graba reported that he had sent out proposed changes, and also looking at change in job description for his position, as he will be advertising for his replacement sometime in September, so they have up-dated three positions in his department. He stated that the only change in this position (personnel technician) is in the experience requirement (re handling complaints in sexual harassment, discrimination in hiring process, family leave) and all three need to answer those questions; that other changes are in duties and have no impact on the value of the job. The change in experience would raise the job grade by one (put in same place as office assistant). Mr. Carpenter stated he had some problems: two reasons - one doesn't see that great distinction between 2 and 3 years experience in general secretarial - preferred requirements deal with personnel or business management. Mr. Carpenter stated that one thing constantly coming to council and have objections to is rising personnel costs to the City, and our only alternative is to reject job description changes that result in classification increases, and for that reason would oppose this, and not pass the buck to Civil Service. He stated that change is not significant enough to justify the change in job description and therefore necessary change in classification, and would vote no on this. Mr. Graba stated that he thinks they have to look at needs of that office, that amount of work has increased in volume and importance and need to be able keep and attract good qualified people.

Moved by Babinchak and McCabe to approve the revised job description. Motion carried; Carpenter voted against the motion.

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5. Matter of effective date of approve job descriptions.
Jay Graba reported that copies of minutes relative to request to establish effective date of April 1, 1992 for reclassification of three positions (Platting & R/W Officer, Meter Repair Technician, and Civic Auditorium Secretary II to Office Assistant) and communication had been sent to the committee. He stated that Mr. Marhula of the Civil Service Commission was present to answer any questions of the committee. He stated that they contended that changes are a result of errors in the job descriptions done in the study (experience, education, supervision exercised and supervision received, and Secretary II also error in duties and responsibilities). He stated that the policy of the Commission has been not to start any effective date of that reclassification until the job description is changed.

Bob Owens, auditorium manager, stated that the changes in the position in his department (Secretary II) should have been made in the study, and have waited for 2 1/2 years for Commission to review and make changes.

Dwight Wurzbacher reported that there was error in job description in his department, putting position back two grades, and Commission pointed out error.

Ken Vein stated that there were errors in job descriptions, errors not aware of at the time, and upon Civil Service Commission request had to be clarified, and job descriptions revised and reclassified by the Commission.

The committee asked if there would be more coming in, and Mr. Graba stated this would have an effect on two reclassifications made earlier this summer.

Moved by McCabe and Babinchak that we establish the effective date for purposes of retro-active pay to April 1, 1992. Motion carried.

6. Matter of changes in personnel officer job description.
Mr. Graba reported they have revised job description, that they will be advertising for this position, Director of Human Resource, which is presently personnel officer, did away with the safety director position, now personnel assistant, and added duties to oversee workers compensation safety function and of ADA coordinator for the City, no changes in value of the position. Moved by Babinchak and McCabe to approve changes in Human Resource Director's job description. Motion carried.

7. Matter of ordinance allowing tapping fees.
Mr. Schmisek reported this item brought up because over past year or two getting involved in projects skirting the borders of the community, and doing projects and setting up areas called

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future assessment areas. Mr. Swanson reported they have run into problem when develop along edges of city and projects can only be assessed within the city limits, and in most cases that's not enough money to fund the improvement, or someone gets benefit of the improvement without having to pay for it; the latter appears to raise more issues; one of the methods utilized in previous years were tapping fees, which were primarily limited to water and sanitary sewer. He stated that the last legislative session legislation was introduced in an attempt to widen the ability to impose fees upon the unannexed area for the development and to collect that money at a later date; the language used has the potential of limiting the application of when you can collect from outside the city limits; and have held meetings how to resolve, and he suggested to consider under Home Rule authority to adopt an ordinance which would allow us to impose "tapping fees" for sanitary sewer, storm sewer, paving and water. He stated that he anticipates that they will go back to Bismarck and try to get that legislation corrected, but prior to doing that, should exercise our own authority to adopt the ordinance. He stated ordinance hasn't been drafted. Mr. Vein supported Mr. Swanson's recommendation. There was some discussion relative to establishing formula to determine fee. The committee asked Mr. Swanson to draft an ordinance to be brought back to committee at their next meeting.

8. Matter of budget amendment.
a) Personnel Office - $4,438.16
Mr. Schmisek reviewed budget amendment to transfer $4,438.16 from 1993 pooled cash carry-over to cover 1994 budget shorted in lime item Medical. Moved by Babinchak and McCabe to approve amendment and to introduce the ordinance for first reading. Motion carried.

9. Matter of property tax exemption for St. Anne's property.
Mr. Swanson reported that he had asked the Dorsey firm if there was another method that the project could receive a full 15-year tax exemption, if that exemption was warranted, and the opinion from Mr. Endorf was yes, if the council acted to terminate the existing exemption and provided that the existing owner consents to it in writing, that all taxes and special assessments be current to date, and that there be no outstanding payments with respect to the original tax exemption, then could certify as terminated with the city auditor and county auditor and move forward in creating an entirely new urban renewal district and tax exemption. He reported that Clarence Peterson, original developer, has written a letter agreeing that the tax exemption can be terminated, and that according to the auditor's office there are no outstanding fees or expenses with respect to the original tax exemption, and assuming that taxes and special assessments are current on the St. Anne's property, the City would be in a position to terminate the existing tax exemption

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and then consider a new one. He stated that one issue he has discussed with Mr. Carsen is that valuations have virtually not changed from the existing date of February, 1990, so no increase or decrease in property; and in discussing with Mr. O'Leary is what is the need for dollars, what is figure developer is looking for and what is value of existing exemption which has 9 plus years remaining, and whether what's left on existing exemption can accommodate the needs of the developer, and if it does, there's no need for the council to do anything. However, if the developer's position is that he needs more cash in the form of an exemption than what is presently in the cards for the present one, then he could be given up to 15 years. Mr. Schmisek stated that if the committee approved the termination, that it be subject to checking of the taxes.

Mr. Schmisek stated that there is a piece of property that Mr. Peterson has a four/six-plex on and which is going to be replatted off the old tax exempt area, and asked if that would have any bearing on this. Mr. Swanson reported that he was unaware of that, that existing district includes St. Anne's building proper and the building to the side which has been virtually renovated, and that's the building which holds the value, and exemption is froze at improved value, but would receive benefit as mill levies increase. Mr. Carsen stated that the full value of the land, full value of the six-plex as redeveloped and very minor value on the old St. Anne's building, and it was noted that wouldn't impact project.

Mr. Carpenter stated they needed information from Mr. O'Leary if 9 plus years acceptable and would satisfy dollar amount developer needs, or whether they would need 15 years.

Mr. O'Leary reported they had meet last week with director of Office of Governmental Assistance, that there was time while back when Gary Stenson would have us believe that in order to get the Home money from OIA that the City was required to put $151,000 into the project; that he pointed out that even with the increment the difference between the $25,000 and what the property currently pays in taxes, which is about $6,000, the increment would be about $19,800, that's the amount City is giving up, and that according to the city attorney that we have about 10 years left on this exemption. Mr. Swanson stated that the exemption expires on February 2, 2004, and was chosen as February 2 intentionally, as February 1 is the assessment date, so they have benefit of that valuation under current mill rate until February 1, 2005, when the valuation will change to true and full value; so actually 10 years of benefit. It was noted that City would be putting in almost $200,000, and Mr. O'Leary stated his question to OIA director was if they start construction now, and completing construction sometime in the spring or summer, they would have almost 10 years of tax

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exemption on the project, and if $200,000 is significant enough contribution from the City in order for the State to qualify for the $400,000+ grant, and she said yes, it was. He advised that there is request coming from Mr. Peterson asking for the cancellation of the existing tax increment financing district and the exemption, and the recommendation from the Urban Development Committee was to deny that request. It was noted that the mill rate increases, as well as increased value in the property.

Mr. O'Leary reported that the reason the Urban Development Committee took the action that they did, was that Mr. Stenson could not justify the need for 15 year exemption for the cash flow of the project, and the Urban Development Committee didn't feel they were in a position to make determination based on the cash flow of whether those numbers were accurate or not.
He noted that if the full council decides to take a look at a full 15 year exemption, it will not be too late to change your minds and to refer to Planning and Zoning and which is on P & Z's agenda.

The committee took no action, and would allow the action of the Urban Development Committee to take place.

10. Matter of tax increment financing for Burdick's Resubdiv.
Mr. O'Leary reported that several months ago the council authorized the issuance of a tax increment financing bond for the homes they are building in Burdick's Resubdivision; the reason they had requested TIF on this project was to generate local match for future Home grants; and that it appears that they will be getting about half million dollars a year in future grants, that the first couple years didn't have to match but in future years, possibly 25-30% match on future grants. He stated they may use that to build additional homes in Burdick's, but there are other options council has, one of which is where they buy older homes in the downtown area, demolish and use Home money to build new ones to rent or sell; there are lot of options but need match for future grants. He stated it has been determined that project eligible for TIF because of leasehold interest in property, tenants sign a lease for these homes and the Housing Authority will guarantee through the lease that they will pay the taxes, so even if building empty will pay the taxes. He stated what they are requesting is authorization to issue the bonds; that Urban Development Committee approved $253,000, 15-year bond, but that amount would depend on how much that TIF will support and what final interest rates are.

Mr. Swanson stated that Mr. Carsen is going to have to give some indication as to what the leasehold value would be for each home or structure. Mr. Swanson also advused committee that approval would be subject to final approval by bond counsel.


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Moved by McCabe and Babinchak to approve issuance of up to
$253,000 of tax increment bonds for Lots 1 through 6 and Lots 15 through 20, Block 3, Burdick's Resubdivision. Motion carried.

Meeting adjourned.

John Schmisek/af
City Auditor

Dated: 8/31/94.