Committee Minutes

MINUTES/URBAN DEVELOPMENT COMMITTEE
Tuesday, July 12, 1994 - 1:30 p.m.

Members present: Beach, Glassheim.

1. Public hearing on proposed Growth Fund project for ARC
Laboratories.
John O'Leary reviewed application for funding from ARC Labs. to expand its operations and scope of work, to acquire a new building for the business at 1323 9th Avenue South at cost for the building and improvements of $45,000, acquisition of a lead paint analysis machine at a cost of $15,000, and working capital needs in the amount of $80,000. He reported that projects have been acted on by the Growth Fund committee.

Terry Hanson, Community Development, reported this is local company, with offices here and in Colorado Springs, CO; chemical and lead testing, mainly do sub-contracting, and do analysis; they do lot of government contracts. He reported total project $140,000, they are applying for local bank loan, and they have asked Growth Fund for a three-year $30,000 at a zero % second position loan with payments deferred until the end of the third year at which time they would commence to pay back at a 4% rate over a 5-year term, and they are also seeking a $3,000 loan forgiveness for each new job created by the end of the third year, with a max of $15,000. He reported that the Growth Fund Committee approved $25,000, requiring that Mr. Worman come up with the additional $5,000 of his own Money and they would forgive $3,000 per job created from time of application, for a max of $15,000, contingent upon the bank financing being approved in the amount of $110,000, and recommendation that Mr. Worman get financial consultation through accountant or some other form.

Chairman Beach asked for comments.

Council Member Carpenter, who is a member of the Growth Fund Committee, stated his opposition to the application, and urged committee to reject. He stated concern re. financial status of this company, that 50% of receivables over 60 days old, lack of equity, that Growth Fund already spent allocated funds, and this project, if approved, would be funded out of excess sales tax; and urged defeat of the project. He also noted he was only member opposed to project at the Growth Fund meeting.

There was some discussion re. zoning of property at 1323 9th Avenue South (located behind Beckstad's Auto Repair), property would have to be rezoned - commercial zoning in three directions. Mr. Worman stated he is presently leasing space at 214 DeMers Avenue.

Mr. Glassheim expressed some reluctance to approve anything from surplus sales tax, and suggested dealing with applications on quarterly basis. However, Mr. O'Leary stated that would be difficult because projects can't or don't wait for given time

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July 12, 1994 - Page 2

frame, esp. when competing with other communities, and cited specific cases (Philadelphia Macaroni, etc.). Mr. Worman stated he has other collateral for loan (home, other land, vehicles, and other equipment - not new equipment); that he needs $140,000 to make work, if one or the other doesn't work, nothing does. Mr. Glassheim asked if they could assist only in purchase of machine. Mr. O'Leary suggested holding for 2 weeks and giving committee time to digest material. Mr. Worman stated time is critical.

Moved by Glassheim and Beach that the application be rejected. Motion carried.

Mr. Glassheim advised Mr. Worman that they are open for negotiation on the equipment. Mr. Worman stated that he wants Grand Forks to be headquarters, however, if not able to be competitive, may have to move to Colorado where he also has offices. The committee asked if application granted, and Mr. Worman then decided to move, what would be option. Mr. O'Leary reported they can condition loan that if business leaves community, change interest rate or not subsidize at all.

Motion carried.

2. Matter of Growth Fund application for WELCO (from PACE buy-
down to grant).
Ken Welter was present. Terry Hanson reported that Mr. Welter presented application to Growth Fund which was approved in July 1994 for $10,000 buy-down on a P.A.C.E. loan, that at that time he hadn't finalized lease with Eco-lab in the Nicoa building; that Eco-lab has made one expansion and now finishing second expansion (walkway and remodeling of second floor of former Deaconess building); that project may not be eligible for P.A.C.E. funding, and Mr. Welter asking committee to convert $10,000 buy-down to a grant to apply to building rehab., funds have been expended.

Moved by Glassheim and Beach to approve converting of buy-down to a grant. Motion carried.

3. Applications for rental rehab. funds:
a) Mr. O'Leary presented request from Grand Forks Housing Authority for housing rehab. grant to fix house at 515 8th Avenue South purchased by Housing Authority for rental unit, property located on 35x50' lot, and Housing Authority would rent to low income family. He also stated that option is there to sell property to low income family. He reported property needs maintenance. Joel Manske, Dir. of Housing, reported they have program to teach home ownership skills, to put into their own homes and make taxpayers of them. Moved by Glassheim and Beach to recommend approval of $15,000 grant to Housing Authority to provide renovation grant for house at 515 8th Avenue South from

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Housing Rehab. CDBG.

It was also noted that property purchased for $32,000, and if put rehab monies into the building, sell for $45,000. Mr. O'Leary also reviewed areas which need work: bathroom and kitchen, windows, replacement of furnace; and noted that building structurally sound, has hardwood floors, fireplace, poured concrete basement. Motion carried.

b) Mr. O'Leary reported that about year ago had opportunity to buy two properties in the process of being forclosed upon, properties under one umbrella of mortgage, 1702 Dyke Avenue and property on corner behind Greek Orthodox Church on Walnut Street, and under previous action decided to acquire both houses, one on Walnut to be demo'd and it was intention to sell house at 1702 Dyke Avenue to occupant who was visually impaired, however, he moved out of town. He reported they inspected house, which has new poured concrete foundation, hardwood floors; nothing done in house for quite some time, needs siding, work in kitchen, bathroom; plumbing and electrical good; needs storm windows, garage re-roofed, and their recommendation to remodel house, est. cost $14,000, and to rent property to low income family with possibility of selling to tenant. He stated that the neighborhood is on the mend, and requested funds to rehab. He also noted that they need 3-bedroom rental units, would rent at fair market rent, about $450, to low income family.

The committee stated they would like to view property, and the matter was held to Monday, July 18, at 7:15 p.m.

5. Matter of CDBG funding for Operation Transition, Inc.
Mr. O'Leary reported that Operation Transition, Inc. given grant to operate half-way house for recovering alcoholics, however, Operation Transition went out of business; that when they went out of business, they walked away leaving residents to fend for themselves; Centre, Inc. offered to manage property and does good job. He stated they are requesting authorization to transfer grant to manage house to Centre, Inc., and staff strongly supports that request; that Centre, Inc. is a private, non-profit corporation to provide social services for recovering alcoholics. He also noted this is 6-bedroom facility located at 1407 10th Avenue South, and holds up to 12 residents. He reported that Centre, Inc. operates facility at 1902 24th Avenue South. He stated this is last step of process: 1) detox, 2) treatment, 3) half-way house, and back into society. Moved by Glassheim and Beach that CDBG funding previously approved for Operation Transition be transferred to Centre, Inc. for the operation of the half-way house located at 1407 10th Avenue South. Motion carried.

6. Mr. O'Leary reported that special committee will be
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interviewing architects for a detox facility, and provide recommendation to the council; that one of the members unable to
attend and asked for someone from this committee to sit in on that meeting. It was consensus of committee that Bruce Hanson be designated as representative of Urban Development Committee.

Meeting adjourned.

Alice Fontaine
City Clerk

Dated: July 13, 1994.