Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, February 14, 1995 - 3:45 p.m.

Members present: Carpenter, Babinchak, McCabe.

1. Matter of delinquent water assessment at 1401 12th Ave.S.
Steve Akerlind was present. John Schmisek reported he had met with Mr. Akerlind; that in reviewing current policy in handling utility bills, it is difficult to recommend that Mr. Akerlind pay this bill; that because of length of time involved that the assessment be forgiven. He presented policy for processing delinquent and final bills for committee's review prior to next meeting to set timeline into place to avoid this type of situation; and his recommendation is to cancel the assessment. Carpenter stated he doesn't feel this is setting precedence, that at next meeting committee can review and adopt new policies and hopefully this problem won't arise again.

Moved by McCabe and Babinchak to cancel the assessment. Motion carried.

2. Matter of tax exemption for old Roosevelt Center property.
Bill Schoen, Schoen Associates, presented plan for Roosevelt property, that they are proposing to turn this into 16-unit apartment building; that plan has been submitted to Planning and Zoning and will be coming up at their March meeting; they are planning to rebuild building in manner sympathetic with historic nature of the building; will be tearing down old gym and con- structing 14 garage stalls on north and south; Historical Comm. has awarded historic building certificate and halfway through neighborhood approval process. He stated they are looking for 10-year tax abatement on the property; there is some federal funding tied to the project which has 10-year deferred payment; so tax abatement and deferred government loan flip-flop at same time, so plan is to have conventional financing paid off in first ten years, and then able to pay taxes and federal loan off.

Mr. Schmisek reported they are asking for exemption under the urban renewal portion of Code and is in Planning Commission.

Moved by Babinchak and McCabe that we hold this item pending creation of urban renewal district by the Planning and Zoning Commission. Motion carried. (committee only) It was also moved to refer this matter to the Planning and Zoning Commission for creation of a district. Motion carried.

3. Request for tax increment financing for proposed Warehouse
Apartments (Kedney Warehouse building).
Mr. Schmisek reported this is pending action by the Planning and Zoning Commission for formation of an urban renewal district under slum and blight portion of the Code. Mr. Schoen has
brought in costs of the project to Mr. Carsen, looking for feel of the committee; then take those costs and submit to Springsted for bond sizing, and once P & Z done, we will have all the
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numbers together so that Mr. Schoen can sign agreement on tax increment financing; and Mr. Swanson has drafted agreements.

Mr. Swanson advised that if committee inclined to consider, motion would be to authorize city auditor and city assessor to work with Springsted in creating initial bonding, this is tax increment bond.

Mr. Schoen stated this is 6-story building they are proposing to purchase along with adjacent property to the RR tracks, clean up property, build garages to shield RR tracks, raise basement floor for underground parking for about 3/4ths of units; build 55 apartments from 1,000 to 1200 sq.ft.each, entire project developed in manner sympathetic to Freighthouse property, so works together visually, are excited about visual impact on area, and looking at $2.7 Million of work on this project, and looking for tax increment financing. He stated they have figure of $500,000 built into costs and the auditing department working on that to verify if good figure or not; and they are interested to know so can plan. It was noted that Elks project, St. John's, plus others used tax increment financing.

Mel Carsen stated that on Elks property 1995 assessments are not complete, but perceive them to be higher than original estimates, that may not hold for long term; even with that feel safe.

Mr. Carsen stated that with this property has done some preliminary work, currently have $300,000 market value on this property and looks like might have increment of about $2 Million, could go higher; Mr. Schoen's cost about $2.7 Million, and his value seems to indicate $2.3 so would give about a $2 Million increment value which would generate $50,000/year and possibly slightly more.

Mr. Schmisek stated they are looking to committee whether in favor of continuing to pursue and continuing to work with Springsted in trying to establish what that financing can be, and that there would be some capitalizing of interest to protect us over the term.

Carpenter stated he felt this is good area for development of housing and would be willing to go forward.

Moved by McCabe and Babinchak to hold in committee pending report from Planning and Zoning Commission on creation of a district, and to authorize city auditor and city assessor to work with Springsted on the financial package. Motion carried.

Mr. Dornfeld, Springsted, stated that at $50,000 if that's what increment going to be, that would probably support $550,000 bond issue; however, in the past where run into difficulty have to
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have capitalized interest, so can't make judgment now but would be somewhat less than $500,000 that they would get.

4. Matter of FTZ building expansion financing.
Wally Dornfeld, Springsted, reported this is briefing on FTZ project that occured late last year; that at beginning of project they labored, as did bond counsel, that this was a mfg. operation and found out later that it was not, so therefore it threw those bonds into a taxable bond issue. He reported they reviewed TAG statement of earnings and found that their history of earnings is not indicative of what they could support, so proceeded under that assumption and assumption was that they would pay $63,000 annually for debt service as a lease, and since project thrown into taxable arena the $63,800 wouldn't support that bond issue totally; and ordinance reads that you will first pay debt service on the bonds (reserve revenue bonds), first pay debt service from the lease earnings and he thinks that lease reads that they will pay whatever it takes, so have designed bond issue to include an allocation of sales tax revenue which is dedicated to economic development; if that were not allowed or put into bond issue, because of the history of earnings for TAG the bonds would be virtually unsalable. He reported they have structured two sets of numbers and will meet with John O'Leary to find out which sizing would be in best interest of TAG and that operation, so looked at one of $780,000 and capitalized reserve of $78,000 and put in all necessary costs, and again include capitalized interest because during construction no additional lease revenue is being paid; so that's item that would make difference between the $780,000 or $750,000 issue; and if John would feel comfortable after his analysis they would proceed to finance this project. He stated that under the reserve revenue bond issue, that they intend not to have rated and intend to negotiate with private sale; that this is briefing and official action will have to be taken in a few weeks. He stated that City would be commiting average of about $20,000 annually if large issue is the appropriate sizing, if other issue appropriate sizing would be around $17-18,000. He stated that bond holders in all probability going to demand that John takes those dollars immediately and sets those aside from the first revenues received for that dedication purpose to additionally secure those bonds. It was noted that it is the intent that the lease will pay full dollar amount. He thought that the lease would pay whatever it takes to amortize it. He stated this is purely economic development venture, because don't have history of earnings, so have had to beef up with sales tax revenues. Mr. Schmisek stated that if the leases aren't there you have to be aware that City's
going to be obligating $80,000 of that sales tax revenue. Mr. Dornfeld stated he thought it would be appropriate to appear here and to apprise committee of that situation.

Mr. Carpenter asked if they were intending to be paying about
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$20,000 annually of sales tax, should this go back through Growth Fund and Urban Development Committee. Mr. Schmisek stated they could do that, but didn't know what difference that would make, as construction done and bills paid, and they will sell the bonds and money has to come from somewhere. He stated that he recalls that lease stated that they will pay whatever it took to pay the debt for the construction of the addition, but that should go back to that committee for rewriting of the lease when they know the dollar amount. Mr. Swanson stated that the sale tax would need to be set aside, and that could occur only after other obligations.

5. Matter of Senior citizens Center parking lot.
Mark Rios, member of Board of Directors and chairman of the building committee, and Marty Torkelson, director of Senior Citizens Center were present and stated that they had formally applied for funds through office of Urban Development from 1991 through last year and been rated last each year; that currently Center has 30-32 spaces and they are requesting some funding or assistance to increase that to about 49 or 50; that there is space to the west toward Cherry Street, right now have average attendance of 150 on functions once a month, and they have people 79-80 years old who get discouraged because they come to functions and have to park across street and then sometimes don't attend; so would like assistance in construction of 17 to 19 additional spaces at estimated cost of $30,000.

Martha Torkelson stated they are asking for City to do something for them, have applied through urban development, but their track record not good and so are asking the City if there is some funding to assist them; that people come to Center and leave because no parking and becoming critical situation, and asked if there was some way to get into the City's budget. Mr. Carpenter stated there is the Human Needs and the Urban Development Program through block grant program and both are open for application; however, wouldn't be able to be considered until the 1996 budget because 1995 budget already set, and amendment unlikely. He also stated he could forsee great many requests if start circumventing that process.

Mayor Polovitz spoke in favor of City funding the parking lot - suggested looking at excess sales tax for this particular project, and to give every consideration we can.

Mr. Swanson stated only use of sales tax is one of 3 purposes: infrastructure, economic development or property tax relief; and that this is not infrastructure; would be up to council whether under other two categories.

Mayor Polovitz then suggested if can't use sales tax, would like to fund through Loan and Stabilization Fund, that it's a matter
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of priorities; that providing facility and activities for the elderly is a high priority.

It was noted that the garage constructed in 1980's from CD funds and monies from Myra Foundation. Mrs. Torkelson said they have tried to look for monies through other sources, 4,000 seniors.

McCabe moved to define economic development and allocate monies from that to pay for the parking spaces. Mr. Swanson advised they would have to amend general budget to increase line items and also revenue side of the budget in a similar amount. McCabe withdrew his motion; and moved to approve from Loan and Stabilization Fund from 1995 budget and amend budget to use unanticipated carryover; Babinchak seconded the motion.

It was noted that they do not know cost; city engineering department would do plans and specs., City would call for bids, etc. and when bids received and amount known could make amendment. After further discussion McCabe and Babinchak withdrew their motion.

Moved by McCabe and Babinchak to table for 2 weeks, and direct city attorney and city auditor to investigate further timetable and consequences and bring back to committee. Motion carried. (comm. only)

6. Applications for 3-year remodeling exemption for the fol-
lowing properties:
a) 1911 10th Avenue North
b) 1110 North 43rd Street
c) 117 Polk Street
Mel Carsen, city assessor, reviewed applications for remodeling to exempt added value of property (additions do not qualify), that 2 aps. for 3 years and one for 2 years, that properties qualify and is recommending approval. Moved by Babinchak and McCabe that the applications be approved. Motion carried.

7. Matter of first access service agreement with First National
Bank.
Mr. Schmisek reported this is service agreement that allows us to have direct access to account information at bank; that Mr. Swanson had reviewed agreement and had some concerns which they addressed with the Bank and they are not willing to change those items.

Roxanne Fiala, Finance Analyst, listed advantages to theCity in having direct access: will allow City to have instant access to account balances for all checking accounts, can do our own stop
payments, know all the outstanding checks, no longer have to call bank to make telephone transfers, check reconciliation, plus in
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interest would have knowledge of cash balances as far as transfering between market and checking, etc. She reported we have all the equipment and are on the network; that First National has 26 customers on line (including School District and Park District); that cost is minimal, City would have significant time savings; cost is $150 to set up, $70/mo. for all of our accounts, that is max. we would pay; and a $50/yr. maintenance; so first year approx. $890 and after that $50/year plus $70/mo., and would forsee in interest earnings alone would recoup cost.

Carpenter asked to be excused from voting on this matter; moved by Babinchak and McCabe to excuse Mr. Carpenter from voting. Motion carried.

Mr. Swanson reviewed comments in his memo; that only concern was that in paragraph l some language, that due to the City's required compliance with ND open records law, the City may not be in a position to identify all persons that may have had access to the agreement, however City would be able to provide notice of any known persons attempting to utilize the ID, provisions of the system, or other information relating to the agreement in an unauthorized manner; 2) disclaimer by the bank, that bank would have no liability for errors or problems that might develop, that auditor's office has discussed with the bank and felt that errors minimal or modest; and also true with 3) 4); bank insulating itself from exposure to its errors and liabilities, etc. up to dept. whether product one in which they are interested in obtaining.

Moved by McCabe and Babinchak to authorize proper City officials to enter into the agreement. Motion carried; Carpenter excused
from voting.

8. Matter of restructuring inspection department and job
descriptions.
Ken Vein, city engineer, and Bev Collings, code enforcement officer, reviewed the request for restructuring of the inspection department, flattening out of structure with direct supervision by the code enforcement officer, and proposed job descriptions with more generalized duties rather that listing each specific duty or task; the restructuring would include changing the Deputy Bldg. Inspector to a Bldg. Inspector II, Housing Inspector to
Building Inspector I, and addition of Inspection Technician, other positions to remain the same. Mr. Vein stated that job descriptions developed by department and not by individuals; that there is no change in the basic requirements with exception of Inspector I, and submitted anticipated increased cost from the changes. He also stated they are not seeking any reclassifica- tion; and Mr. Swanson stated that is decision of Civil Service Commission, department can't determine - that if committee approves job descriptions Civil Service Commission would have
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opportunity to review. There was some discussion as to when Civil Service Commission could review and Dan Gordon, acting human resources director, stated Commission probably couldn't review until regular meeting in April. Mr. Gordon stated he supported change in descriptions which were written on demands of the job rather that towards person in the job and supports restructuring.

After further discussion it was moved by McCabe and Babinchak to refer this matter to the Civil Service Commission for preliminary classification of the new job descriptions. Motion carried.

9. Matter of amendments to City Code - technical corrections
ordinance.
Mr. Swanson distributed copies of proposed ordinance relating to changes and/or corrections to the Civil Service section of the Code, and reviewed the changes with the committee: defining disabled veteran and permanent part-time employee, identifying benefits for permanent part-time employees, pay upon termination of employment (vacation and sick leave), use of compensatory time, and deleting type of disciplinary action against employee by the mayor for due cause. He noted that effective date of these changes, if approved, would be retroactive to January 1, 1995. Moved by McCabe and Babinchak to approve the proposed ordinance and introduce for first reading. Motion carried.

10. Matter of bidding process re. local preference.
Mr. Hamerlik stated he brought the matter up to see how much interest there was by council in doing something in determining award of bids in addition to cost and quality. He stated he would like to know committee's and council's thoughts whether to even proceed any further. Mr. Swanson reported his office has researched and in some instances where preference adopted, has
been struck down on constitutional basis, vacation of equal protection provisions, etc.; ND has not ruled on state preference, and is not aware of any city that has adopted preference. He noted that in some equipment bids, service and response time weighed in award of bid; would need to know what local is, and what type of bids preference would apply to, ie., construction, materials, products, etc. Mr. Carpenter stated concern re. cost to taxpayers, going to be enforced only when cost of local bidder higher, and would be willing to look at
something more narrowly drafted. Mr. Schmisek asked whether if establish percentage, would there be dollar limit.

Babinchak asked to be excused from voting on the matter; and McCabe and Carpenter so moved.

Mr. Swanson expressed some concern in moving in this direction - that few years ago had product preference in project challenged, and this delayed project until hearing held, City spent fair
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amount litigating the case and lost, project rebid the following year at higher cost than initial bid. He stated further that most ordinances challenged on basis that percentage mandatory.

Moved by McCabe and Carpenter to defer to the public service committee with some interest on the part of finance committee in this issue. Motion carried; Babinchak excused from voting.

11. Matter of bids for city flag.
McCabe submitted copies of flag design and bid proposal, and asked for approval of specs. Moved by McCabe and Babinchak to approve bid specs. and authorize call for bids with a due date of March 14. Motion carried.

12. Matter of discussion on budget process for 1996.
Mr. Schmisek submitted copy of 1996 budget process timeline and budget policy for 1995, and stated they would be following same process as last year except moved timelines up. The committee reviewed and noted that the budget committee for 1995 consisted of four committee chairs or designees. Moved by Babinchak and McCabe to adopt the 1996 budget process timelines and appoint committee chairs or designees to be budget framework committee. Motion carried.

13. Matter of agreement
Mr. Swanson reported City has agreement with the County of Grand Forks relative to transfer of some cases from municipal court to county court; as of January 1, 1995, there no longer is a county court, only a district court, and need to enter into new agreement with State of North Dakota with respect to responsibilities and obligations for the prosecution of offenses, costs of jail, the distribution of fines recovered and paid; that he has been negotiating with Judge Medd who until recently was presiding judge, that Judge Bohlman now taking over; and he would like to make a proposal to District Court that the City enter into agreement with State of North Dakota similar to that of City of Bismarck where fines paid are split on 50-50 basis, that City retain all responsibilities it presently has and District Court will assume all responsibilities of the County Court.

Moved by McCabe and Babinchak to authorize city attorney to
propose to District Court as presented. Motion carried.

Meeting adjourned.

Alice Fontaine
City Clerk

Dated: 2/15/95.