Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, May 23, 1995 - 3:45 p.m.

Members present: Carpenter, Babinchak, Geller, McCabe.

1. Request to defer finalizing any plan for detox center until holding vote of people on the matter.
Gerald Hamerlik, council member First Ward, stated his referral to committee should have read "to defer finalizing any plans for a detox center until a regular election of the citizens of Grand Forks can be held in order to obtain the will of a majority of the voters, and that we abide by the outcome of their vote." as he did not intend that a special election should be called. He stated that he believes that sometimes there have to be decisions made by the city council without the vote of the people, but major decisions should be made by the people if at all possible. He reported he tallied number of people talking to him, his count is 176 people saying no to the City being involved in a detox center, and 31 saying yes (with other factors entering in, who it's run by, how run, etc.) He stated there probably is a place for a detox center in Grand Forks, that he looked at property and was impressed, but for City to give that building away or to go against the will of the people (those he talked to), thinks would be inappropriate. He stated that it won't be too long perhaps before have another vote, and that may have some bearing on it. He asked committee to carefully consider and hopefully come out that if council decided that if there's financing, site, operation, that it go to a vote of the people and that vote be binding.

Member Geller stated that majority of decisions council makes don't go to vote of the people, that with any plan, no additional taxes but allocation of funds - matter of budget and prioritizing. Mr. Hamerlik stated he thinks this is a tax issue, and if monies out of general fund, give to tax relief.

Council Member Glassheim stated he didn't think this matter should go to a vote of the people, because there are hundreds of allocations made that they don't send to a vote of the people; that if they begin precedent of having each allocation that someone disagrees with, could crowd ballot, cause delays, etc. He also stated there are no property tax dollars involved in the funding of a detox center as being proposed, what there is, is an allocation from a number of different funds of money already targeted for human service or rehabilitation purposes, and it's a prioritizing for that purpose. He stated these dollars will be spent regardless, but is question of whether you want to spend on detox. He stated there is in the detox financing plan the $100,000 budgeted this year from surplus sales taxes, not in-creasing taxes to use that money. He noted that under plan as he understands, the City will not be operating the detox center, but will be asking non-profits already in the business to request monies for providing certain services. He stated putting to a vote would be delaying it, should have chance to see it work, and MINUTES/FINANCE COMMITTEE
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year from now no obligation to continue; and that this is rightfully a decision of the council.

Chairman Carpenter also stated he didn't think this should go to a vote of the people.

After further discussion it was moved by Geller and Babinchak to receive and file request. Motion carried.

2. Matter of final financing package for detox center.
Council Member Glassheim presented proposed funding plan; stated that building renovation approx. $45,000, with sources of funding: CDBG funds, up to $20,000; Special Assessment Tax Delinq. Fund (income from those building, which has been used before), up to $15,000; from $100,000 (set aside), up to $10,000. He stated that operator will be looking at other foundations. He stated funding for first year (using August 1 start-up date) at $9,000/mo or $45,000: $10,000 in Human Needs, $10,000 CDBG public service, with the non-profit agency applying for funding: to the County, to United Hospital, and to Northeast Human Service Center, to cover this year's operating costs. He est. cost for 1996 at $105,000: $20,000 Human Needs, $20,000 CDBG public service, County contribution to be negotiated, $0 to $10,000, $20,000 from United Hospital, $5,000 NE Human Service Center, and his proposal would be to take up to $30,000 of the $100,000 (over 3 year period). He stated he would expect non-profit operator to go to number of other funding sources (United Way, County, Central Business District, Riverforks), foundations which do give locally and have a history of supporting social type well-being programs, and Indian tribes and liquor dealers as a donation.

Geller stated that based upon the Fargo experience and ultimately based on the will of the council, somewhere between $100-120,000/year is a reasonable operating expense; questioned whether CDBG funds not City funds but federal pass-through funds, and is was noted they were; so really in terms of City money (money collected through sales taxes), the max. contribution if use entire $30,000 annualized would be basically $50,000.

John Schmisek stated that use of the Special Assessment Def. Fund, the intention is that the group would pay rent to the City. Mr. Glassheim stated that people renting this space before were paying $400/mo. and he included $5,000/yr. for rental as part of their budget.

Howard Swanson, city attorney, advised committee that they do not have authority to directly allocate sales tax for use of this nature; the manner in which they would do that would be through general fund and then as off-set or credit for property tax relief; so it may or may not appear to be use of sales tax but as MINUTES/FINANCE COMMITTEE
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practical matter and as an accuracy matter it is property tax relief funds that are being allocated. He stated that it is very clear in the Home Rule Charter what your uses of sales taxes are, and that use is not one of them. It was noted that this is true of the entire Human Needs budget and not unique to the detox center; and true for the Community Needs budget and number of things funded indirectly through sales tax, but for the existence of the sales tax, the mill levy would be higher.

Moved by Geller and Carpenter to approve the 1995 allocation of funds and recommend that the FY1996 proposed allocation as budget guidelines. Geller and Carpenter voted in favor of the motion; Babinchak and McCabe voted against the motion.

3. Matter 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. Swanson reported that the City entered into a contract for deed with Mr. Klinkhammer for the sale of Auditor's Subdiv. No. 24, Lot 1, Block 1; that property has been developed (motel); and City has entered into a purchase agreement with Mr. Sampson for what is former Sioux Trading Co. Tract and now also identified as Lot 1, Block 1. He stated that at the time this property developed, there was no sanitary sewer available to any of these lots (water available off service road); that the sale of the property to Mr. Klinkhammer was with the understanding that a private sewer line was to be installed to serve all of these properties (4 lots); and sewer permit issued November 22, 1993 also indicates that the property owners will pay for a proportionate share to connect to the private sewer. He reported that Mr. Klinkhammer did install a private sewer, that he is not aware if Mr. Klinkhammer and Mr. Sampson have made an agreement that they both can use this private sewer. He reported that the proposal he has for the committee to consider would be in addition to whatever agreement or alternative approach to whatever agreement the property owners would have, is to advise Mr. Sampson that he has ninety (90) days from date of approval from the city council to close the sale transaction on the lot that he wishes to buy; and refer to the public service committee for their meeting next Tuesday, the consideration of the installation of a public sewer line to replace that portion which is now private, which in effect will serve all of the lots, and that main be special assessed back, as determined by the Special Assessment Commission, with respect to all of those lots. He stated that if the parties can reach their own agreement, there would be no need to put in the public main; if they can't reach agreement, the City will provide the sewer service which it is obligated to do and special assess back to the property owners.
He stated that in lieu of an agreement between these two property owners the motion would be to provide a 90 day period to close the sale, and to refer it to public service for the development

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of plans and specifications and creation of a special assessment district for the installation of a public sanitary sewermain to serve these four lots.

Mr. Swanson reported that the private sewer has less value than a public sewer because it's to the exclusion of other property owners to use it; however, Mr. Klinkhammer might receive some credit or off-set for the value that he has invested, that there may be portion that could be utilized or portion that might be surplus and not useable. - those things would come into play as to whatever plans engineer comes up with and an issue for the Special Assessment Commission to determine benefits. He stated City has obligation to provide sewer service, whether to lot City owns or not; if don't have means to provide, acquire those means; however, there is adequate easement. He stated it doesn't make much sense economically to do this way, but is an alternative if these two people can't reach their own agreement. He also stated that these property owners have not been aware of this proposal.
Mr. Klinkhammer stated he will be represented by counsel, and that he wants to know what they plan to do with the property, but they perhaps can reach an agreement.

Lloyd Sampson stated that what they want is access to sewer to serve the property, and willing to talk with Mr. Klinkhammer.

It was moved by McCabe and Geller that the City advise Mr. Lloyd Sampson that the purchase contract be closed within ninety days from date of approval; and refer to the public service committee for consideration the installation of a public sewerline to serve those four lots. Motion carried

4. Application by Sengewald USA, Inc., 4955 10th Avenue South,
for 5-year property tax exemption.
Mel Carsen, city assessor, reported that Stone Container had received a five-year property tax exemption on this property, with 1995 to be the fifth year exemption (40%), that exemption is extended to the project operator; that when Stone Container was bought out by Sengewald, that exemption expired with the termination of the lease to Stone Container; that now have new lessee who does basically same operation as Stone Container, but the exemption cannot be automatically extended to that new project operator. He reported that he notified Sengewald that in order to extend the exemption City would have to have new re-application, which we just received; and now have re-application to extend the exemption, the 40% fifth year exemption, which will then terminate. (He reported that Stone Container received exemption for 100% for two years, 80%, 60% and 40%). Moved by McCabe and Babinchak to establish date of July 3 as date of the public hearing, and grant preliminary approval to the request for extension of the exemption. Motion carried.
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5. Application for 3-year remodeling exemption:
a) 2225 9th Avenue North (Brian and Cindy Green)
Mr. Carsen reported there is extensive remodeling and an addition to the building, however, the addition doesn't qualify, and recommending approval of the exemption for the remodeling. Moved by Babinchak and Geller to approve the application. Motion carried.

6. Matter of industrial water rates from Utility Rate Committee.
Mr. Schmisek reported that the Utility Rate Committee was asked to look at approx. a year ago when Simplot knew they were going to be expanding and using considerably more water; that it was felt that there should be another break level in the rate structure for the high industrial users, and to do in such a way as not to cause any increase in rates of other users of the system. He reported they have instituted their remodeling and are using considerably more water, and Committee is recommending a proposed new rate of $1.44/per thousand gallons for those users, and only relate to two companies - Simplot and RDO Foods, who break the 3M gallons per month usage rate. The committee also looked at lower usages but felt this was geared more to industries. He reported that there is a splitting of the costs, Simplot will save 50% of what the old cost factor would be, but the City is getting 50% more than in the past (rate starts at gallon 3 million), that City adding another tier to the rate structure in place and would require an amendment to the ordinance. (Reps. of industries were present, Simplot, UND, etc.) Moved by McCabe and Geller to amend the ordinance to include new rate of $1.44 for usage over 3 million gallons per mo. Motion carried.

7. Consideration of proposals to provide long distance telephone
service.
Mr. Schmisek reported they had looked at internally because City receiving service from five different carriers, and trying to centralize service, and reviewed summary of bids. He reported that recommendation from group of departmental personnel is to go with U.S. Link who bid a .299/cents per minute charge on card usage but a .119 flat rate for normal long distance telephone charges; that the police department presently has U.S. Link and are very happy with their service; and stated that City would receive considerable savings. He also noted that City would have option of one or two-year term; one year has 6% discount factor or two-years 8% discount factor, and no minimum requirement and install dialers at no cost (replacement would be City's obligation). He also noted that rate applies to both in-state and out of state. Mr. Swanson recommended entering into a one-year contract.

Moved by Babinchak and Carpenter to accept proposal from U.S.Link for a one year term.
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After further discussion Mr. Swanson stated preferable if bid specified term but given lack of appearance and lack of apparent controversy, there may not be real risk, but normally bid on one year basis; whether considered service or product, don't need to bid service, but feels can defend a two-year contract if challenge should arise but can't say what risk would be.

Moved by Geller and Babinchak to amend motion to two-year term. Motion carried; McCabe voted no.

Upon call for the question on the motion as amended, the motion carried.

8. Matter of imposing city gas tax designated for improvement of streets.
Mr. Swanson advised that if the committee's decision is to proceed to impose a tax on the retail sale of gas, it will require a Home Rule Charter amendment, which means authorization by a majority vote at either special or regular election. Moved by McCabe and Geller to receive and file.

Ken Vein reported this came up at CIP meeting when discussing future long-term needs of the city (re. breakup of South 34th Street, 40th Avenue South, etc.) and submitted updated listing of future needs for classified streets and streets shown on transportation plan (with no funding mechanism), est. cost $150 Million worth of needs. He noted that all these streets (classified streets on summary) are eligible for federal funding, that there is no way that federal funding would be available for this. He noted that one advantage is that these streets built out of concrete and still useable; need some mechanism for funding to assure we have monies in a timely manner. He stated that they have limited amount of funds coming in, that South Washington Street eligible for funding in 1997 and 1998; constructing 6th Avenue this year; and then to Minnesota/4th or the downtown streets that will take us through 2004/05 so not any urban monies available for these other streets; don't know what new highway bill is going to be or what funds available. He stated that at some point in time City is going to have to look at how to maintain street system, not look to federal government, but institute some type of tax (gas, sales or some type of assessment route), and it's very expensive. He stated he wanted them to be aware that major concerns coming up that need to be addressed. He stated that City has done good job in all of its infrastructure (watermain replacement project, sanitary sewer rehabbed, water treatment plant on-going, but not a good program for maintaining streets. He also stated they will probably be coming in with special assessment projects for those temporary streets (South. 34th Street. 40th Ave.S.)

Chairman Carpenter stated that probably reason for the receive
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and file is that we have another project that will probably require Home Rule amendment for a civic center.

There was some discussion re. tripper or registration fee.
Mr. Swanson advised that under the Century Code there are enumerated powers for a Home Rule city, one says to levy and collect franchises and license taxes; however, there is an additional section which says to impose registration fees on motor vehicles or sales and use taxes in addition to any other taxes imposed by law; that City has not incorporated that provision of State law into our Home Rule Charter, that we altered language to specify that we will allow the imposition of a one percent gross retail sales tax and for limited uses. He stated we don't have immediate ability to utilize another type of tax unless it falls into one of our other provisions (such as fee or license) and no ability under the Home Rule Charter.

Mr. Schmisek reported that after checking with State Tax Department they were unable to provide him with any figures, that they couldn't determine specifically how much sales of gasoline generated in city of Grand Forks. He stated they would do additional research.

Mr. Vein asked whether committee would object to pursuing other mechanisms of financing that they could present; the committee stated they would be interested if it did not require Home Rule Charter change.

Upon call for the question, the motion carried.

Geller excused.

9. Bids for financing of sidewalk improvements for 1995.
Mr. Schmisek reported they sent requests to local financial institutions for bids for sidewalk warrants for 1995, received no bids, but received call from Community National saying they had forgotten about bid deadline but did want to bid. He submitted bid in writing, which was not opened. Mr. Swanson advised that because received no bids, committee can determine that there were no bids, and authorize the auditor's office to negotiate with Community National who has been prior purchaser of warrants or authorize them to negotiate with any and all financial institutions.

Moved by Babinchak and McCabe that no timely bids were received. Motion carried.

Moved by Babinchak and McCabe to authorize city auditor to negotiate with Community National Bank. Motion carried. (Committee only)

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10. Temporary and overtime statement as of May 18, 1995.
The committee reviewed the statement. Moved by McCabe and Babinchak to approve the statement. Motion carried. (Committee only)

11. Request from Health Dept. for utility vehicle lease buyout.
Mr. Schmisek reported that a memo had been sent to committee re. request by health department to use Loan and Stabilization Fund to purchase a vehicle in the health department. Mr. Shields reported they had been working to maximize the use of grant funds to buy out lease they currently have on a utility vehicle (1994 Ford Explorer) which expires in 1996; that they have received authority from the State to use some grant funds, $8,567 to do this; that these funds not available last year and probably not available next year. He stated they were asking to borrow $8,000 of an $18,000 total note owed on that vehicle, and use combination grants, City and County dollars in the amount of $10,200 to purchase that vehicle before the end of June when these grant funds still available, and requested approval. It was noted that loan would be repaid over a period of three years with interest at rate of earnings. Moved by McCabe and Babinchak to approve loan at current earnings rate of 5.875%, and to amend the budget. Motion carried.

12. Matter of negotiation with State and County re. fines on cases transferred from Municipal Court to District Court (after elimination of County Court)
Mr. Swanson reported that sometime ago they struck agreement with State for 50-50% split of fines, City currently receiving 40%; however, the County requested portion of those funds, 25%. Mr. Swanson stated he did not agree, that there was no reason for the City to accept less funds than presently getting, and sug- gested 10% for County. He stated that he received letter from Mr. Odegard dated May 19, 1995, making counter-proposal: that the State receive 50% of all fines, the City receive 40% of all fines and County would receive 10% of the fines; that in the event the court fines/assesses any administrative costs above and beyond the fines, that those would be shared equally between the State and County. He stated that he doesn't have any problem with that because in the past City not recipient of any administrative fees. He also reported that at last legislative session the Assn. of Counties received an additional $2Million appropriation (over the next biennium) that was directly reduced from the District Court budget; their argument was that the counties are now facing a significant reduction in their income due to the loss of these fines being paid to the State Treasury and therefore, should be some mechanism for the State to reimburse the counties for everything from remodeling expenses or changes to courtrooms to accommodate the unification of the court system, and that passed. He stated that the County doesn't have any new costs, their suggestion is that they still have to provide the
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physical plant and utilities for the court; they still provide clerk of court staff but they no longer have the fees as revenue but they no longer have the salary for county judge, etc., that physical plant and utilities are fixed costs. He also reported that the City doesn't agree to this, 100% of the funding goes to the State. He stated it would take all three to agree on division of the fines. He stated that County would have to rely on their general fund to provide clerk of court and physical plant costs; and that in part was what $2Million appropriation was to reflect, and that he doesn't know what distribution formula is to break down per county.

McCabe out.

Mr. Swanson also reported that the total amount collected last year is about $14,000 of which we received 40%, so not talking a large item. He reported that State has given us two proposals: 1) that they will take 70% of the revenue and pay for the indigent defense, cost of witnesses, etc. and City has to provide prosecutor; or 2) they will take 50% and City will do everything as far as indigent defense, prosecution, witness fees; and if City doesn't agree to one, State gets 100%. He stated cost of indigent defense not as great as cost of prosecution, probably balance so would possibly gain by keeping the indigent defense under current scenario over what retain in the cost of prosecution which runs $50-55,000/year.

Moved by Carpenter and Babinchak that the City enter into an agreement with the State of North Dakota, the County of Grand Forks in which all fines will be divided 50% to the State, 40% to the City and 10% to the County, with the City not seeking any share of any imposed administrative fees. Motion carried.

Meeting adjourned at 5:35 p.m.

Alice Fontaine
City Clerk

Dated: 5/24/95.