Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, May 9, 1995 - 3:45 p.m.

Members present: McCabe, Babinchak

1. Matter of bond issues:
c) tax increment financing - GFG
d) tax increment financing - Wintergarden Assoc., LLD (Kedney Warehouse Apts., 901 University Avenue
Wally Dornfeld, Springsted, Inc., reported that the General Obligation Tax Increment Bonds, Series 1995B, is a combination of Grand Forks Grocery Project, $220,000, and the Schoen & Kobetsky Project of $520,000, for total issue of $740,000. He stated that the City issued $1.315 in January of 1994 for the Grand Forks Grocery Project, and in the resolutions it was included that if the TIF revenue was sufficient, they could issue additional bonds, that it is sufficient, so are able to issue more bonds to help that project, and that is shown on schedule A presented (Schedule B shows amortization for Schoen & Kobetsky project,and Schedule C shows the combined issue). He reported that capitalized interest of $69,745 is included in S & K portion to cover interest payments through December 1, 1997, and thereafter increment income is expected to cover the annual debt service requirements. The S & K portion was sized according to what TIF revenue would produce, and they recommend that a provision in the official terms of the offer that would allow an increase or a reduction in size of issue if interest rates come in better or decrease if higher rates so it all fits within revenue projections made by the City. The apportionment of the proceeds would be (net) to Grand Forks Grocery of about $211,000 and to S & K of about $429,000, so total proceeds after deducting cost of issuance and capitalized interest would be $647,000; and offered on June 19.

a) water revenue bonds
Mr. Dornfeld reported that construction proceeds $2,040,000 after deduction of possible grant from the State of $800,000; and added to that the cost of issuance and discount, and recommended bond issue of $2,100,000. He stated that in determining the size of the issue the water bonds outstanding have some current balances and have taken all that into consideration so a reserve fund does not have to be funded with this issue, and the City will still have a reserve fund of approx. $459,000, which is surplus and those funds can be used for other purposes (primarily water portion of this issue). He stated that they have analyzed and that there are possibly some other projects coming up which will require funding, but it is their recommendation that these bonds be issued in the amount of $2,100,000, which should fund needs for 1995 and portion of 1996. He stated that the water system is in good shape and shows good coverages for revenue compared to debt service because not much debt left on the water system.

b) sewer revenue bonds
Mr. Dornfeld reported that this issue needed to fund a project,
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May 9, 1995 - Page 2

and are recommending issue size of $1,240,000; that reserve funds available from other issues are sufficient so reserve fund does not have to be included and does not have to be increased.

He reported that Grand Forks Grocery shows good coverage of the debt over the projected income and provides a surplus in almost every year; S & K very similar and shows that we have $40,890 and $28,865 as capitalized interest, so in 1998 start to pay out of tax increment that's generated from this project, shows there is coverage so that those should be self-supporting.

He reported that the Water Revenue Bonds would mature 1997 through 2015. He stated that the Sewer Fund is one that's having a little bit of a problem but think they can meet parity test based on the way schedule has been constructed, and should have no problem issuing these bonds. He reported in Sewer Revenue Bonds they are recommending provision that would reduce the size of the issue if interest rates come in higher. He stated their full recommendations will be here for Monday's meeting and also resolutions to move ahead by setting sale date of June 19 to receive bids.

Moved by Babinchak and McCabe to adopt initial resolutions authorizing issuance and call for the sale of General Obligation Tax Increment Bonds, Series 1995B, with a term of 20 years, and set the date of sale as June 19, 1995. Motion carried.

Moved by Babinchak and McCabe to adopt the resolution authorizing the issuance and call for the sale of Water Reserve Revenue Bonds, Series 1995C, and set the date of sale as June 19, 1995. Motion carried.

Moved by Babinchak and McCabe to adopt the resolution authorizing the issuance and call for the sale of Sewer Reserve Revenue Bonds, Series 1995D, and set the date of sale as June 19, 1995. Motion carried.

e) revenue bonds - FTZ expansion.
Held in committee.

2. Applications for 3-year remodeling exemption:
a) 901 Belmont Road
Mr. Carsen reported this is single family home and qualifies for 1995 and 1996, without exception.
b) 808 Lincoln Drive
Mr. Carsen reported this is duplex property, and qualifies without exception.
c) 4324 University Avenue
This is remodeling that was done for ProMark Telemarketing and would qualify for 3 years starting in 1995, exclusive of parking lot improvements.
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Mr. Carsen recommended that the applications be approved.
Moved by Babinchak and McCabe to approve applications for the 3-year remodeling exemptions with exceptions as noted by the city assessor. Motion carried.

3. Financial report for TCI of North Dakota, Inc.
Jerry Hovet of TCI was present. Mr. Schmisek reported that in agreement with TCI they are to furnish the City a financial report each year, that we review that simply to see if revenue sent to us compares with financial report, and that it does. Moved by Babinchak and McCabe to receive and file the auditor's report from TCI. Motion carried.

4. Matter of sale of City lot located at Gateway Dr. adj. to BN tracks. (Pt. NW 1/4 375'x156.9' in northwest corner of NW 1/4 exc. .24 acres Rd. 5-151-50 Unplatted Parts, Grand Forks Twp.
Mr. Schmisek reported this is a piece of property off 13th Ave.N. between 13th and Gateway Dr., that City has had offer and earnest money check for $100 for couple years from Lloyd Sampson; that over this time line it has been difficult how to determine to furnish sanitary sewer to this lot; and have notified Mr. Sampson that we need to come to finalization of this purchase; and he has expressed his concerns in trying to work out easement to get service to that property. He reported that Mr. Swanson has reviewed and also Al Grasser of Engineering is present. He stated that the City has had interest in this property from three other individuals and need to bring to completion.

Mr. Grasser stated this parcel on Gateway and 42nd Street, that they researched, that understanding was when that private line went in was that all of these property owners would be allowed to tie into that at a pro-rated cost; however, only have some notes on the sewer permit. He reviewed options: 1) follow up with owner who put line in and remind him of that understanding and hopefully that will take care of the problem; 2) there is another utility easement and could run separate sewer service to this property from public sewer; 3) City could propose public sewer, remove one that's there, and assess all property owners for their proportionate costs. He stated that they will try to investigate and get written letter authorizing connection fee and establishing what that dollar amount would be.

Mr. Swanson stated the City has received earnest money agreement but there is no purchase agreement; and that he is not sure City in a situation to move forward with this as they are demanding that the sewer connection be provided. He stated that normally they try to close sale within 90 days. He stated that the private service line installed was to serve other property; however, in the event that Mr. Klinkhammer does not accept that position, City may be forced to put in another sewer line with cost assessed back to the property.
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Lloyd Sampson stated sale was approved, but that there is no access to sanitary sewer and that has been the problem, need access to sewer.

Charles Klinkhammer stated he owns lots around that property, that he has 3 lots and has made substantial investment in the property; that when this lot came up for sale two years ago, his bid overridden and assumed City sold lot. He stated there was new sign put up on that lot and he submitted another offer. He did state he would like to know what's going to happen on that lot; however, he is not prepared to make any comments re. sewer, etc. today.

The committee held the matter for 2 weeks to allow Mr. Klink-hammer and Mr. Sampson opportunity to discuss.

5. Matter of amending Chap. XIV of Code, parking Auth., to amend
definition of operation and maintenance to include construc-
tion and acquisition of property.
Don Tingum and Dick Jackson were present. Mr. Tingum stated they had attempted to find some financing for parking ramp across from Valley Bank and ran into some financing problems; that they met with Mr. Swanson to see how to amend Code to give ability to Central Business Dist Auth. to finance 100% of the project, not only assessment but add maintenance fees for acquisition or construction of property, which would give CBD Authority right to make those assessments, and asking for introduction of ordinance to provide that.

Mr. Swanson reported their operating assessment spoke in terms of operation and maintenance and what they were asking for was authority to collect funds for acquisition of property, and award construction of a facility, and without the term being defined in the Code, looking at definition of operation and maintenance doesn't normally include acquisition and construction, so suggested they define operation and maintenance to include acquisition and construction costs or expenditures. He stated it might be appropriate to include in the basic parking charge definition the definition of maintenance and operation. He stated the effect of this would be that if a ramp were to be built at a future date, there would be a special assessment district in addition to that those businesses operating within the CB District would pay through their quarterly statement an additional amount which would go toward retirement of bonds for the acquisition and construction of a parking ramp. Mr. Swanson noted that they are not looking at changing the structure of the financing package, but an avenue to come up with the Parking Authority's share of the cost of construction, so a portion of the district will pay both a special assessment and an operating assessment, and a portion of the district will only pay an operating assessment. Mr. Tingum stated that both areas in
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May 9, 1995 - Page 5

district would have right of protest.

There was some discussion re. combining of Central Business District and Parking Authority and funds. Mr. Schmisek stated that money is segregated; and about 6 years left on City Center Mall bonds.

Moved by Babinchak and McCabe that we amend the ordinance to include in the definition of basic parking charge language allowing the costs for acquisition and construction; to include the addition of a separate definition of the phrase "operation and maintenance" and in addition to its common usage to include cost of acquisition and construction of parking facilities; and to introduce for first reading.

6. Request to defer finalizing any plan for detox center until holding vote of people on the matter.
Mr. Hamerlik asked that this matter be held as the following item is being held. Held for 2 weeks. (Place at top of agenda for next meeting)

7. Matter of final finance package for detox center.
Held in committee.

8. Consideration of proposals to provide long distance telephone
service.
Held in committee.

9. Matter of drug testing policy and procedure.
Dan Gordon, Human Resources officer, presented information as it relates to drug testing policy; to inform committee of how they are proceeding with a drug testing program. He stated that as of January 1, 1996 they are required to have all employees who hold a commercial driver's license to be drug tested - a random testing of 50% of the pool of candidates (of 120-150 employees), that of that 50%, 25% will be tested for alcohol. He stated in addition to that aspect of the program, there is reasonable suspicion testing, post accident testing, pre-employment testing. He stated they are in the process of meeting with area con- sultants that are professionals in this area, that they want to make sure they have an administrator on neutral ground that does the random selection of numbers tested, etc. He reported that cost per test is $70. He stated this mandatory through Federal Dept. of Transp. and want to start program by September. He also noted that before any implementation of the program, training of employees will be completed. He stated that by January 1, 1997 want to include all safety sensitive positions, and by January 1, 1999 entire work force of the City would be under this policy. He also reported there is a possibility in the future through League of Cities to pool different cities to establish a larger pool, will start out independently. Information only.
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10. Matter of job description for Project Engineer III.
Al Grasser reported that last year this position included in the budget at a grade 16, and because new position no job description established, they now have job description for that position. He stated that job halfway between Project Eng. II and Asst. Eng. for Grants, and duties of this position will involve greater duties than a Project Engineer II and less than an Asst. City Engineer. He stated they are asking for approval. and to refer to Civil Service for rating. Job posted in-house prior to going outside. Moved by Babinchak and McCabe to approve job description and refer to Civil Service for classification. Motion carried.

11. Matter of bond for auditor, municipal judge and assessor.
Mr. Schmisek reported this is required annually by ND Century Code. Moved by Babinchak and McCabe that bonds as required by NDCC40-13-02 be approved through the State Bonding Fund for the city auditor, municipal judge and assessor. Motion carried.

12. Budget amendments.
a) Civic Auditorium - $1,127
Mr. Schmisek reviewed budget amendment, moving money from Noxious Weed Control to Beautification Fund for weed control around City buildings, etc. Moved by Babinchak and McCabe to approve the budget amendment. Motion carried.

b) Civic Auditorium - $3,515
Mr. Schmisek reviewed budget amendment, moving of money from Loan and Stabilization Fund to Inventory Fund to allow purchase of city flags. Moved by Babinchak and McCabe to approve budget amendment. Motion carried.

13. Matter of pledged securities.
Mr. McCabe will review securities on file in auditor's office.

Meeting adjourned at 4:50 p.m.

Alice Fontaine
City Clerk

Dated: 5/09/95.