Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, November 28, 1995 - 3:45 p.m.

Members present: Carpenter, Babinchak, Geller, McCabe.

1. Applications for abatement of taxes:
a) 1992 and 1993 taxes by Johnson Farms for property at 2397 DeMers Avenue (ASCS Office Bldg., Lots F and C, Blk. A, Westward Acres Subdivision)
There was no rep. of Johnson Farms present (notice was sent). Mel Carsen, city assessor, reported he has nothing further to present (information presented at ll/14/95 meeting), that there is another hearing at the county level; that his recommendation is to reduce valuation for 1992 from $463,700 to $440,600 and for 1993 from $474,700 to $440,600. Moved by Geller and seconded by McCabe to reduce the valuation of the property congruent with assessor's opinion for 1992 to $40,600 and to $440,600 for 1993. Motion carried.

2. Matter of clarification of CVB lease.
Ben Hart, CVB, reported he had presented lease for land to their Board of Directors, they reviewed and had several concerns and that he has received answer from state legislative counsel, that Mr. Swanson made original opinion that monies in the capital construction fund couldn't be used for the acquisition of property, therefore, they couldn't use bond money to pay for the land; but that it's very specific in NDCC that funds may also be used for acquisition of buildings or property consistent with the visitor attraction or promotions, and that they would rather take money from bonds and pay for land, so wouldn't have to go through lease. He stated this would save interest and lot of operating costs over the next three years. He reported that he just received information this afternoon, and Mr. Swanson hasn't had opportunity to review.

Mr. Swanson stated he didn't know what issue is so not in a position to render an opinion; and needs to have question identified.

Committee noted that issue is: 1) clarification of nominal fee for the leasing of the land, 2) paying for land outright from proceeds of the bond issue.

The committee held the matter for two weeks to allow city attorney to review.

4. Matter of utility rates.
Mark Lambrecht stated he was representing staff persons in public works and finance that work with rates, distributed copies of minutes of the utility rate committee of November 16, 1995, and presented recommendation from the utility rate committee for rate increases for 1996. He reported there were reps. of industry at the rate meeting and this matter was discussed in detail; that there was understanding on the part of the industry

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reps. of the need for the increases. He reported they are recommending a 5% increase effective the first of the year in water and stormwater rates and a 10% increase in wastewater rates. He also noted that these rates are reflected in the revenue projections of the adopted 1996 budget. He stated they were maintaining philosophy of not implementing any rate increases more often than once a year, and trying to keep to nominal amount; but looking at some of the projects that are coming in the future, feel it's good planning and responsible action to take these increases and to keep at a nominal amount. He recommended that the committee forward their recommendation to council that these increases be implemented on first of January or as soon as possible thereafter.

Moved by Babinchak and Carpenter to implement rate increases and to introduce ordinance(s) for first reading.

3. Request for tax increment financing by Baltic, LLP for Pink
Hanger building.
Jim Struckness, Lonnie Laffen, and Steve Melby, rep. Baltic, LLP were present to answer questions re. to their request for tax increment financing in the amount of $108,000 for their project to renovate the Grand Forks Mercantile Exchange Building at 124 North 3rd Street.

John O'Leary reported they have been working with the developers on this project, noted that there is other renovation/repair of buildings in this block (storefront on building across street, back of building two doors to the south, etc.), that they share concern re. small tifs, that he visited with Mr. Schmisek and asked if City could carry for period of time and roll over into one issue. He noted that there are several other issues coming in. He noted there is a problem with parking and they are working with developer to provide access to parking area.

The committee and staff expressed concern re. tax increment financing because of size of issue, and that bond counsel has advised City to proceed with caution, and discussed whether there's another mechanism, ie., tax exemption. Mr. Swanson stated there was no time table to put on tifs, no way to package, bond counsel advised what consequences to City are, will affect bond rating because of size and frequency of issues. The committee asked whether City could advance monies, and once year package request. Mr. O'Leary reported he suggested they look at tax exemption, but developer needs more equity, financial institutions require 30-40% equity.

Mr. Struckness reported they have met with other committees/
commissions, that they are aware and in support of this project (River Forks Commission, Planning and Zoning Commission, engineering department, Historical Register, etc.) He stated

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November 28, 1995 - Page 3

they need tif monies to approach banks, have to give personal guarantee for remaining $450,000, personal guarantees to back up the partnership and are asking for City's help.

Mr. Swanson advised they have to define boundaries of the tif, and to move forward, send to Planning & Zoning to hold public hearing and/or make certain findings. Mr. O'Leary reported this is part of the urban renewal district. Mr. Swanson stated Planning and Zoning would have to determine boundaries and make finding of compatibility. Mr. Laffen stated they would like to proceed as there is tenant in the building, and they have promised 90 days notice.

Mr. Carsen reported that he hasn't looked at in detail and doesn't know how calculated to $108,000. Mr. Swanson stated that it makes more sense economically to create larger tif district if additional requests down the road; no financial reason to do bond issue in amount of $108,000, with bond costs in 40-45% range; and needs to research question of whether they can advance City funds. He advised that under the urban renewal form of tax increment, council cannot approve a tif until after P & Z has acted and noted process need to go through for bond sale (notice requirements for public hearings, etc.)

Moved by Geller and Babinchak to refer to the Planning and Zoning Commission. Motion carried.

The committee instructed that this matter be placed on their next agenda, and report presented on alternate financing, whether council can advance City funds, and do bond issue at later date.

5. Temporary and overtime statement for October, 1995.
Saroj Jerath, deputy city auditor, reviewed statement, and stated that transfers would be made to cover any funds with negative balances (Dept. of Finance and Admin. Services, and Dept. of Human Resources) Moved by Babinchak and Geller to approve the statement. Motion carried. (comm. only)

Meeting adjourned at 4:50 p.m.

Alice Fontaine
City Clerk

Dated: 11/29/95.