Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, August 15, 1995 - 3:45 p.m.

Members present: Carpenter, Geller, McCabe.

2. Matter of sale of bonds for FTZ building.
Wally Dornfeld, Springsted, Inc., reported that this is a matter of the updating and procedure started about year ago with the financing of the Federal Trade Zone building (addition to the building, TAG is lessee) and have worked with bond counsel and Mr. O'Leary, and have determined that these bonds could be tax exempt and are now proceeding with the negotiation of this issue; that bonds primarily will be payable from lease between TAG and the City but they have advised City, and City has taken proper action, to also create a reserve fund and to pledge sales tax to refund that if necessary (funds from economic development portion of the sales taxes). He reported that they are going to be placing a call feature in the bonds, not going to be rated, but negotiated with one dealer, and will be back on September 18 with a bid. He also reported that they have to get an allocation from the State under the IDB (Industrial Bond) provision, and that's being prepared for forwarding to the State, doesn't see any problem with that and will be able to move ahead. He stated that the cost being financed is $599,000, debt service reserve of $57,000, and an underwriter's discount, which bring total bond issue to $670,000 (that this could increase by $10,000). He stated that in talking with Mr. O'Leary, and one of the reasons that this has been delayed is that if you do taxable all issuance costs can be paid from proceeds, however, if you do a tax exempt with an allocation only 2% of the total issue can be allocated to cost of issuance (fees, legal opinion, official statement) so Mr. O'Leary has agreed to allocate some dollars to pay those costs. He noted that the reserve fund would stay in existence until that final maturity has been called, and using some of the investment earnings to knock down that lease payment.

Moved by Geller and McCabe to authorize Springsted, Inc. to negotiate the sale of the $670,000 Sales Tax Revenue Bonds, Series 1995, for the FTZ Building. Motion carried.

3. Matter of refinancing airport revenue bonds.
Mr. Dornfeld reported that in 1985 bonds were issued for airport improvements (Air Flight Service Station and facility for Northwest Airlines) under a MIDA bond allocation and were payable from sources of revenue such as NW Airlines income, and money was incorporated in that bond issue to fund the Air Flight Service Center; that Airport Authority's obligation was paid off through the revenues of the airport, so incumbent upon City to pay off remaining debt - to come from sales tax and Mr. Schmisek has budgeted for that under Sales Tax/Infrastructure. He stated that because those bonds callable as of November 1, they are recommending that the City do a current refunding (lower rate of interest) and reduce payments considerably over the term of the bond issue, and reviewed current refunding summary, existing debt MINUTKES/FINANCE COMMITTEE
August 15, 1995 - Page 2

service and an annual savings analysis. He stated that by refunding those bonds and utilizing cash on hand will reduce payments by about $600,000, that they deducted funds on hand, with true net savings of $281,000. It was noted that the original bond issue was $2Million+, that there is $935,000 remaining on the issue, but by using cash on hand (bond reserve + interest on this issue) to call bonds, are reducing the remaining balance by $300,000.

Moved by Geller and McCabe to authorize Springsted, Inc. to negotiate sale of the $645,000 Airport Refunding Bonds, Series 1995. Motion carried.

1. Matter of sale of City lot (Lot 1, Block 1, Medvue 6th Addn.
Mr. Schmisek reported that offer had come in from Tracy Doe; that he and Mel Carsen, assessor, negotiated with Mr. Doe and tried to set up arrangement where they would sell Lot 1 plus get firm commitment and binding contract for Lots 2 and 3 for a reduced amount; that Mr. Doe has been checking on the establishing of specials and a project in that area; and he's not quite ready to accept the counter-offer, and are here to recommend rejecting the offer and open up properties for other offers. Mr. Doe reported he had just found out final numbers for some of the project and cause him to go back and see what possibilities are, if any. Moved by McCabe and Geller to reject the offer. Motion carried.

4. applications for abatement of 1993 and 1994 taxes:
a) Earl and Myra Trude, 3720 Cherry St., Unit 45 L (Lot 45, Block A (of Replat), Landeco Addition)
Mr. Carsen informed committee that application clearly qualifies but was filed too late to do administratively so do by application for abatement, and recommended approval. Moved by Geller and McCabe to approve the application. Motion carried.

b) Delco Properties, 105-107 North 3rd Street (Lot "B" of
replat of Lots 9 and 11, Blk. 18, Original Townsite)
Chairman Carpenter stated that in letter from Mr. Carsen it stated that the 1995 appraisal is not sufficient grounds to go back to prior years, that it's burden of the property owner to support a reason for a lower valuation for prior years. Mr. Carsen reported that when you lower a value, in this case for 1995, it's easy for the property owner to come in and ask for abatement for 1993 and 1994, and Supreme Court ruled on that in 1970 and that followed on the heels of a total re-evaluation of downtown properties. He stated that they have not finished a general re-appraisal of properties downtown, but checked this property at the request of the owner; that 1995 value in place at $125,000, and now Mr. Doe is asking to have value used for l993 and 1994. He stated that perhaps value of $168,000 excessive for 1993 and 1994, but should be very careful so don't just

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automatically reduce values for prior years.

Tracy Doe stated he is co-owner of the property, that comparable sales in the downtown support even lower values than the 1995 value set by the assessor. He reported they purchased property in 1985 for $70,000, it was assessed at $168,000 and has been set at that value for the last ten years; that in that time number of properties sold in the downtown at very low prices, and gave examples of several comparable sales (407 DeMers Avenue, 318 South 3rd Street, 121 North 5th Street, 10 North 3rd Street).

There was some discussion whether this could start landslide of aps. and impact on budget. Mr. Carsen reported that two years max. can go back; reduction in taxes would amount to about $1,000/year.

Moved by McCabe and Geller to approve application and establish for 1993 and 1994 $125,500.00 as value of this property. Motion carried.

5. Matter of employees' car allowance.
Mr. Schmisek reported this item came up during budget talks with some of the departments, that there were requests for vehicles for number of individuals who are now receiving car allowance, and some saying that they wouldn't furnish their vehicle any longer; the Mayor asked them to go back and meet with employees receiving car allowance to see if proposal could be brought forward. He reported that Chief Aulich, Randy Thompson and Mel Carsen were selected by that group to look at alternatives. He stated that City now pays 30/cents/mile for in-town mileage and 22/cents for out-of-town mileage, and feeling that there should be a higher value to be more equitable with someone who is provided with a vehicle.

Mr. Carsen presented copies of car expense reimbursement comparison with other cities in ND and several other local firms; and presented proposed recommendations for those who provide car for in-city operation: two tier flat rate of $20/mo for regular usage but not on a daily basis, and $50/mo flat rate for regular usage and to have car available for daily use, plus milage reimbursement for each mile travelled for City business; and providers of vehicles outside the city would be reimbursed in amount equal to IRS allowable mileage reimbursement.

The committee asked if any thought had been given to a car pool. Mr. Carsen stated that part of the problem is that the total reimbursement for mileage for private vehicles by 48 employees (some part-time) is $14,000.00; and employees providing vehicles for the City to use for a total of $14,000, which wouldn't provide one vehicle. He noted that there are 10-12 employees who need a car every day.

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Mr. Schmisek stated inequity maybe won't be resolved until have fleet manager running central garage and all vehicles under control of that area, and that's something that will be looked at in the future; that they keep mileage logs individually but no central record keeping for all vehicles (there's process being set to do that). He also stated they may look at delivery service, or part-time runner, etc. and could eliminate number of people from that list.

The committee stated that they don't want to buy or lease any more vehicles; that they want to address inequities; and asked for listing of needs by departments, i.e., number of employees using private and/or city vehicles, for what purpose, frequency of use, etc. number of miles, etc.

Held for 2 weeks.

Meeting adjourned at 5:00 p.m.

Alice Fontaine
City Clerk

Dated: 8/17/95.