Committee Minutes

MINUTES/URBAN DEVELOPMENT COMMITTEE
Tuesday, March 1, 1994 - 12:00 Noon

Members present: Lien, Carpenter, Hanson.

1. Public hearings on applications for Growth Funds:
a) Agvise Laboratories, Inc.
Chairman Lien called for the public hearing on the application by Agvise Laboratories, Inc. for a loan in the amount of $120,000 to provide funding for support equipment specific laboratory equipment, and a building site; and tax increment financing of $90,000; Agvise was declared ineligible for P.A.C.E. financing by the Bank of North Dakota and they are requesting additional support from the Growth Fund and the BND's Business Development Program. He reported that the Growth Fund Committee recommended approval of the loan and tax increment financing.

A rep. of Agvise was in the audience, and stated he was here to answer any questions they might have. There were no other comments; and Chairman Lien closed the public hearing.

Lien moved that the City approve a $120,000 loan to Agvise; loan to accrue interest at the rate of 4% per year; pay- ment of principal and interest to begin one year from date of loan; loan to be amortized over a period of nine years; outstanding principal and interest will be due ten years from date of loan; security for loan to be the personal guaranty of Dr. Edward H. Lloyd; and the City also approved an estimated $90,000 tax increment financing package. The motion was seconded by Hanson.

Carpenter stated he has problem with tax increment financing because tax used to repay loan, deny those funds to the City/County/Park for governmental purposes for a long period of time; that this is significant expansion of tax exemption; would encourage committee that we not grant the tax increment but fund the $90,000 directly from the Growth Fund through a grant of $90,000 to them and they will be paying property taxes.

Moved by Carpenter to amend the motion that the $90,000 be an outright grant from the Growth Fund; Hanson seconded the motion for discussion purposes.

Mr. Carpenter stated that increment tax value would be paid to County and turned over to City, all property taxes based on mill levy that determines that amount, and is used 100% to pay the bonds. City making decision for County, Park and School; doesn't disagree with assisting business but doesn't think decisions that we make should affect other governmental entities and does for long period of time; if from Growth Fund City will be funding entire amount for the development.

Mr. O'Leary stated that the reason for economic development is to strengthen tax base in other ways. City is charged with doing
economic development by the Century Code; City not required to
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have them participate in the process; municipal decision but does affect other entities.

Carpenter stated City charged with economic development but not with tool that will adversely affect other entities of government; if use TIF and Growth Funds, don't know number of $'s spending for economic development. He stated they need public debate on the issue.

Mr. O'Leary reported they have tried to look at total cost of economic development, not only tax exemption but other kinds of subsidies; that to get economic growth other communities throwing more and more subsidies on the table; very competitive process. He also stated that tax increment financing is a more useful tool than tax exemption; for most businesses the TIF provides an upfront equity for those businesses.

After further discussion and upon call for the question on the amendment, Carpenter voted in favor; and Lien and Hanson voted against the motion. Upon call for the question on the original motion, the motion carried.

b) GFG Food Service, Inc.
Chairman Lien called for a public hearing on the application by GFG Food Service, Inc. for $134,615 from the Growth Fund in the form of an interest subsidy grant to buy down the interest on a P.A.C.E. and/or conventional bank loan, and an estimated $1 Million in tax increment financing. He reported that the Growth Fund Committee had recommended approval of the $134,615 interest subsidy and tax increment financing up to $1.4 Million for up to 20 years.

A rep. of GFG Food Services, Inc. was present to answer any questions. There were no comments; and Chairman Lien closed the public hearing.

Moved by Hanson and Carpenter that the City approve an interest subsidy grant in the amount of $134,615; and further that the City approve tax increment financing in an amount up to $1.4 Million for a period of 20 years.

Carpenter moved an amendment to the motion that the tax increment financing be changed to a $1.4 Million direct subsidy from the Growth Fund. Hanson seconded the motion for discussion purposes.
Carpenter voted in favor of the amendment; Lien and Hanson voting against the amendment. Upon call for the question on the motion, the motion carried.

c) Q-Mas (Quality Management and Analytical Services, Inc.)
Chairman Lien called for the public hearing on the request by QMAS for $75,000 in funds from the Growth Fund for expansion of
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the laboratory and purchase of instruments. He reported that the Growth Fund Committee had recommended approval of a $75,000 loan.

There were no comments; Chairman Lien closed the public hearing.

Moved by Carpenter and Hanson that the City provide a loan in the amount of $75,000, that interest will not accrue for a period of two years from the date of the loan, at which time, interest will begin to accrue at the rate of 4%; repayment of note is to be by monthly payments to begin in two years from the date of the noted with the amortization being spread over eight years; and any remaining balance of principal and accrued interest will be due and payable on the tenth anniversary of the date of the note. It was recommended that security for the note will be a security interest in equipment owned by the company and purchased with these funds; security interest can be subordinated if necessary; and also a personal guaranty of the principals of the corpora- tion, i.e., Mr. Mark Bandy and Mr. Tron Bandy. Motion carried.

d) Syntu Technologies Corporation.
Chairman Lien called for the public hearing on the application by Syntu Technologies Corporation for $100,000 in Growth Funds as an equity position, $35,000 as a P.A.C.E. interest subsidy to be converted to equity upon maturity of the P.A.C.E. loan. The Growth Fund Committee recommended approval subject to several conditions.

There were no comments, and the hearing was closed.

Moved by Carpenter and Hanson that the City approve an equity participation of $100,000; that the City provide $35,000 for an interest subsidy, with this subsidy to be converted to equity on the same basis as the original $100,000 upon payment of subsidized loan; and that the following conditions must be met: 1) Syntu must raise $300,000 of additional equity; 2) must obtain $600,000 of bank financing for operating; 3) the management of Syntu must locate in Grand Forks; 4) must hire 51 full-time employees within two years from City of City participation; and that this offer is valid for sixty days from date of city council approval. Motion carried.

e) New Vision Fiberglass
Chairman Lien called for the public hearing on the application by New Vision Fiberglass for $58,000 from the Growth Fund to buy down the interest on the P.A.C.E. loan; that New Vision would have to meet several conditions: obtain $368,000 in bank financing, provide $125,000 in equity; and will have 7 additional full-time jobs within two years. The Growth Fund
Committee recommended approval of the interest subsidy.

Chairman Lien called for the public hearing; there were no

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comments, and the hearing was closed.

Moved by Carpenter and Hanson that the City approve an interest subsidy grant in the amount of $58,000. Motion carried.

2. Public hearings for public service projects for CDBG (Com-
munity Development Block Grant) funds.
Bob Gustafson, chairman of the Advisory Committee, presented the recommendations of the Advisory Committee after hearing testimony from the applicants. Mr. O'Leary thanked Mr. Gustafson and the Advisory Committee

It was noted that the total amount of the block grant is $605,000, of which 15% or $90,750 can be allocated for public service projects; $373,250 for other projects (bricks and mortar); $121,000 for administration and $20,000 for Conts.

Mr. Gustafson reported that the Advisory Committee held hearings on 8th and 15th of February, and each applicant or organization was notified that they could only submit one application and each was given 15 minutes to make presentation; they asked each committee member to make determination whether applicant should be funded, using criteria set up by the committee (that 60% of members should support the project) that 2 projects pulled because they did not receive this support - ND Special Olympics and Sr. Citizens' project. He reported that the applicants were ranked based on public and community needs; that one applicant didn't meet guidelines and committee waived that requirement. He reported that the committee ranked the projects from tabulated information. He stated there is lot of need and lot of want out there; though number of applicants down this year. He reported his recommendation for future is greater percentage of yes votes by advisory committee - to raise from 60 to 75%, and hopefully more effective in funding those organizations. He thanked Mr. O'Leary and his staff for their cooperation and assistance. He stated he was here to answer any questions from the committee.

It was moved by Carpenter and Hanson to thank the Advisory Committee for all their hours of work in going through process and a job well done. Motion carried.

Chairman Lien called for public hearing:

1) Proj. #3 - Adult Abuse Community Service, Inc. - $38,000
Funding is requested for program operations. A rep. of the organization thanked committee for support received in the past, that they have proposed budget of $318,800 for 1994, which would
provide for additional persons in counseling, etc.; that they have received cut in federal and State programs, will receive $23,000 less in 1994 than in 1993. Mr. O'Leary reported that last year this organization received just less than $28,000.

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2) Proj. #2 - Grand Forks Housing Authority - $$10,000
Funding is requested for youth program at housing areas. Last year they received $12,000.

3) Proj. #8 - Third Street Clinic - $11,431
Funding is requested for computer hardware and software acqui- sition. It was reported that they received $4,000 last year.

4) Proj. #15 - Office of Urban Development - $15,000
Funding is requested for the GF Affordable Housing Assistance Program.

5) Proj. #12 - Listen, Inc. - $20,000
Funding is requested for operations. Charlie Bremseth stated funds would subsidize staff for adult programs. Last year they received $19,000.

6) Proj. #9 - GGF Emergency Food Cupboard - $10,800
Funding is requested for supplying emergency food cupboard. Reps. of the organization presented information on income guidelines; that 70% of their clients referred from either Social Services or Quad County. Mr. Gustafson stated that there are a number of organizations providing this service in the community; would be nice to see more consolidation. Last year they served almost 6,000 people - children and adults.

7) Proj. #7 - Operation Transition - $8,658.00
Funding is requested for operation of halfway house for recovering alcoholics; program not funded last year. Mr. Gustafson stated this applicant made good presentation, and there is lot of good volunteer effort there.

8) Proj. #10 - ND Special Olympics - $11,100
Funding is requested for unified sports program.

9) Proj. #19 - Senior Citizens Center - $30,000
Funding is requested for parking lot.

Chairman Lien closed the public hearing.

Carpenter moved and Hanson seconded a motion to allocate funding for public service projects as follows:
Adult Abuse Community Service, Inc. $ 30,000
Grand Forks Housing Authority (Youth Program) 10,000
Third Street Clinic 10,000
Office of Urban Development (Affordable
Housing Assistance Program) 10,000
Listen, Inc. 19,000
Greater Grand Forks Emergency Food Cupboard 5,875
Operation Transition 5,875
Total $ 90,750

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3. Matter of Community Needs budget.
Terry Hanson reported that the council had allocated $2,000 to the Red River Lions for help in sponsoring an all-star hockey game in Grand Forks in March, that they have been unable to obtain additional funding to carry out the program, and were releasing the funds. Mr. Hanson and Mr. O'Leary informed committee that two years ago there was $22,000 in the Riverbank
Maintenance Fund, that funding cut by 10% to allocate other programs; that since then they have added 7-8 acres on the other side of Kennedy Bridge, and would request that the committee restore those funds to the Riverbank Maint. Fund. Moved by Carpenter and Hanson to reallocate $2,000 from Red River Lions project to the Riverbank Maintenance Fund. Motion carried.

4. Status report on St. Anne's Guest Home project.
Mr. Hanson reported he has received calls from residents re. safety - windows broken and children going into building, etc.
Mr. O'Leary reported that this isn't a City project any longer, City only interested observer because of need for available housing in that area. He reported current owner is Clarence Peterson, who has agreement to sell to developer from Minneapolis, who has applied for number of subsidies through the State. This project going to be all one-bedroom units; and this project ranked too low for tax credits. He also reported that the option to purchase property coming due soon so decision by the developer has to be made whether continue agreement with Mr. Peterson. He also noted that City funds have been repaid. Information only.

5. Applications for funding under Housing Rehab Program.
Curt Siewert submitted two applications for housing rehab. funds: a) 611 Plum Avenue in the amount of $5,000 for updating of electrical and plumbing systems, installing shower unit in basement; and 2) 21 Euclid Avenue in the amount of $5,000 for updating electrical system and replacing boiler. Moved by Lien and Carpenter to approve the applications. Motion carried.

6. Application for funds under Rental Rehab. Program.
Terry Hanson presented application from Julie Smith for monies for rehabbing property at 2220 University Avenue; and reported this is rental property with 3 sleeping rooms in basement and one-bedroom apartment upstairs. He reported that HUD requirements are for 2 bedroom or larger units; doesn't meet criteria. Moved by Carpenter and Hanson to deny application. Motion carried.

Meeting adjourned.
Alice Fontaine
City Clerk

Dated: 3/01/94.