Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, April 30, 1996 - 3:45 p.m.

Members present: Carpenter, Babinchak, McCabe.

1. Protest of assessor's 1996 valuation of property:
a) Eman and Leona Hejlik, 25-27 Polk Street
Mel Carsen, city assessor, distributed copies of market analysis, and reported that last year this property received 7% neighborhood factor and added a garage in 1995 so increase quite substantial; that after protest filed staff went out and looked at property and made a new appraisal. He stated that cost approach indicates value of $66,600 and market approach indicates a value range of $66,220 to $67,100 based on comparables. He recommended a reduction in the valuation of the property from $72,600 to $66,600. The property owners were in agreement with the recommendation and the committee informed them that this recommendation would be presented to the Board of Equalization at their meeting next Monday evening. Moved by Babinchak and McCabe to recommend a reduction in the valuation from $72,600 to $66,600. Motion carried.

b) Lyle and Yvonne Nelson, 1218 Shakespeare Road
Mr. Carsen distributed copies of market analysis, and reported that this property received increased value of 6% through neighborhood factor; that there were improvements made to the property and valuation adjusted to $109,000 for 1996. He stated that staff inspected property and made new appraisal since the protest was filed; and his recommendation is to uphold the assessor's valuation.

Lyle Nelson stated that in 1994 valuation of property increased by 8% and that he didn't protest; that in 1995 the property received increase of 7%, and received notice of an increase of 8.5-9% this year. He stated his property is located at the northernmost end of Shakespeare Road at 13th Avenue and directly across from their property is vacant lot which is zoned commercial, have Burger King, motel, gas station there and have problems in summer getting property mowed, affects appearance as well as mosquito problem. He stated there are bunch of wrecked cars in that area and they get brunt of what's across street from them, and feels appraised too high. He also noted that there is a drainage problem on the vacant lot. Mr. Carsen stated that the vacant lot across street needs to be part of the value and they addressed that and adjusted valuation for location. He reviewed comparable sales with the committee.

McCabe moved to reduce valuation by 10% because of adjacent lot; the motion died for lack of a second.

After further discussion it was moved by Carpenter and Babinchak
to uphold the assessor's valuation of $109,000. Motion carried; McCabe voted no. Mr. Nelson was advised that he could appear before the Board of Equalization next Monday evening.
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c) Jerome Bakke, 1239 Dyke Avenue
Mr. Carsen reported that this building built on Dyke Avenue on east side of Washington Street, and houses auto repair/body shop, and that after protest staff reviewed their appraisal using cost approach and income approach, etc. and recommended reduction in value from $148,400 to $142,000. Mr. Bakke stated this would still be highest taxed property in the neighborhood. Moved by Babinchak and Carpenter to recommend a reduction in the valuation from $148,400 to $142,000. Motion carried.

d) Hospitality Assessment Services for Pizza Hut, 2751 32nd Avenue South.
Mr. Carsen reported that this is a tax service that is appealing the assessment on the Pizza Hut, that building built in 1992 and that value of the property hasn't changed since 1993. He reported that Pizza Hut does not own building but rents building; that he talked with Hospitality Assess. Services, who rep. owner, and they were asking that value be reduced to $293,000 (from $471,400) and that request supported by an income approach. He reported that he reviewed income approach and didn't think it represents market value. He recommended they uphold the assessor's value. Moved by Babinchak and McCabe to uphold the assessor's value of $471,400. Motion carried.

e) Ernst and Young for Holiday Air Apartments, 805-925 North
43rd Street.
Mr. Carsen reported that this is a 98-unit subsidized housing project built in 1972, that 1996 value is $2,166,200, that they looked at building, rental income, etc. and that when using in- come approach to subsidized housing also have to consider bene- fits of the subsidy and don't know all the details of those bene- fits. He stated that condition of the buildings has not been considered, that exterior not in good shape, needs residing, new windows, etc., that they made improvements to 3 of the 11 buildings, and plan to do 1 or 2 each year for the next 5 years or so. He stated that when they reappraised considered con- dition of the buildings, using cost approach, came up with value of $1,901,600 and would recommend reduction to that amount. He stated that copy of letter has been sent to the agent but has not heard from them. Moved by McCabe and Babinchak to reduce value of the property from $2,166,200 to $1,901.600 as recommended by the assessor. Motion carried.

2. Request for tax increment financing by LUCO Properties,
1710 North Washington Street.
Bill O'Connell and David Kvidt were present.
Mr. Schmisek reported this request came to committee at prior meeting as a TIF, and after reps. of LUCO met with Mr. Carsen and Mr. Swanson now have a request for a 15-year tax exemption.

Bill O'Connell and David Kvidt stated their loan ability doesn't
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appear to be a problem and that is why they are requesting a tax exemption; that when they purchased the building they looked at budget of half million for moving operations, and after discus- sing aesthetics of building, etc. project going to run $1.1 million along with tax increase, $15,000/year, and are here to see if feasible to have tax exemption, and would then proceed with entire project; if not, would scale project back. They also stated that when they appeared before Planning & Zoning Commis- sion, there were some recommendations made to clean up property with painting, greenery, etc. and their intent is to make as aesthetically pleasing as can.

The committee questioned whether this project eligible under slum/blight provision or under economic development provision for 15-year exemption. Mr. Swanson stated that he believed project eligible either way and that definition of what is slum and blight is set out in statutes with determination for council to make, some basis for slum and blight; and it also fits under the commercial/industrial provisions and both would allow 15-year tax exemption. He noted that the property has been rezoned to industrial. He stated that the difference between the two is that the uses of funds wider under slum and blight; much more limited under commercial, ie., acquisition of property, infra- structure, some of the zoning requirements, buffer yards, etc. He stated committee's options are: 1) to deny, 2) give pre- liminary approval, refer to Planning & Zoning if under slum and blight, and set public hearing, and make final determination at that point on number of years, but is 100% exemption on the im- provements above and beyond present value to a max. of 15 years; if approved, value locked in at February 1996 and exemption based on improvements made; exemption much truer reflection of what's done to a project than under sale of bonds which is based on forecasted value and if not, have deficiency in revenues for bond payments. He also noted that if property value increases or mill levy increases, property owner has opportunity to take advantage of greater savings or benefit. Mr. Carsen stated that present value of property is $338,000 and after project est. value of $948,000 or $610,000 increase which would generate $14,900 in taxes. Mr. Swanson suggested to the committee not to compare the bond issue and tax exemption on the same basis; that tax exemption should be preferred method if they use these tools because of lack of risk to the City. The committee expressed some concern re. amount of tax exempt property in the city, and that this is marginal project for tax exempt purposes.

Moved by McCabe to grant an 8-year exemption (which is what the TIF would be plus getting benefit of present value situa- tion); Babinchak seconded the motion. Mr. Kvidt stated that if granted only for 8 years, they would change their request to a TIF.

Babinchak moved an amendment to a 10-year exemption; the motion
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died for lack of a second. After further discussion McCabe withdrew his motion.

Moved by McCabe and Babinchak to refer to Planning & Zoning for determination of slum and blight, amendment of the urban renewal district and calling for a public hearing on the consideration of tax exemption for LUCO Properties. Motion carried.

3. Request for tax increment financing by EAPC for commercial/
office park project (DeMers English Coulee Center II).
Mr. Swanson reviewed definitions of slum and blighted area in NDCC and stated he did not see how this area could be determined to be slum area as there are no buildings there and definition of slum requires existence of some form of structure or buildings), however, it may be blighted area. He stated that it appears that this request may also be eligible under industrial/commercial sections. He stated that as an alternative to finding of slum and blight, NDCC provides that governing body may use tax incre- ment if a project is for development of industrial/ commercial property; the uses of the funds are much more limited (cost of acquiring property, cost of demolition, removal or alteration of buildings or improvements, clearing and grading, installation, grading, reconstructions of streets, parks, etc.)

Don Tingum, 1103 South 19th Street, stated he is representing EAPC on financing plan for their new construction, that this is a depressed area and would say it is a blighted area; that EAPC has intention to build building across from their present building; and have been contacted by other developers who are planning to improve an area to the east of proposed property to the Columbia Road overpass. He reported they had planned to go to P & Z to discuss slum/blighted area at their meeting tomorrow night. He reported that Phase I of the project is est. at $1.25 million, and future developments would cost about $5 million and generate approx. $117,000 in additional taxes. He stated he doubted that adjacent property would be developed without EAPC's development.

Ray Engen, EAPC, reviewed project (13,000 s.f. building), and that they are trying to improve that corridor, are out of space in their present location, that they went from 21 to 40 employees in 6-year time frame, and would continue to expand, projecting another 10-15 employees. He stated project will increase tax rolls and clean up the area.

Mr. Carsen stated he did not know what land value is, but would think very small value, unplatted land.

Mr. Schmisek stated that if committee decides to proceed with this, that he, Mr. Carsen and Mr. Swanson would like opportunity to sit down and discuss tax exemption vs. TIF, don't know if feasible for them.
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Mr. Tingum stated that they could use commercial/industrial type bond, which can be used for land purchase, site work ($290,000)

and would agree to go that route rather than blighted area. Mr. Carpenter stated that he didn't think City should do industrial/
commercial as really setting precedent as almost anything tax exempt or tax increment and destroying future of Grand Forks; that they need revenues as growth occurs. He stated that this is undeveloped property and probably not blighted property. Mr. Engen stated that TIF allowed them to proceed with the last project, thinks very much factor to proceed with this project.

After further discussion Mr. Swanson stated that the role of Planning and Zoning is to 1) find that proposed development is consistent with the zoning, long range plan for that development, that boundaries of an urban renewal district are established and that it is consistent with the finding of blighted area.

It was moved by Babinchak and McCabe to refer to Planning and Zoning for determination of slum or blight in addition to the plan and call for public hearing on a tax exemption for EAPC
for commercial/office park project. Motion carried; Carpenter voted no.

4. Request by Central Business District Authority for transfer
of funds to purchase properties at Division and S. 4th St.
Mr. Schmisek reported that request is for transfer of $200,000 out of excess parking ramp funds, which has balance of $602,000; they are requesting funds to purchase additional land.

Don Tingum reported they need funds to acquire property for parking lot which would provide 90 stalls, that they are negotiating with property owners to acquire property, with Church to donate their property and with the County to transfer their property to the City (Authority) in lieu of providing 30 parking stalls for County purposes. He stated that site work is est. at $400,000; and that they are requesting release of $200,000 at
this time. Dick Jackson stated he is still negotiating with the County. Mr. Jackson stated they will be also working on the bridge lot behind the Dacotah, and the riverboat lot (waiting for engineering and Corps of Engrs. to do some evaluating on the dike), County lot, and First Bank lot. He noted that Ecolab adding more employees, County, Social Services, etc. needing more space for their clients, etc.

Moved by Babinchak and McCabe to authorize transfer of $200,000 to the Central Business District Authority. Motion carried.

5. Matter of offer to purchase City-owned lots in Auditor's Sub-
division No. 27. Mr. Schmisek reported to committee that they had received
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offer from Craig Tweten, Community Contractors, for Lots 5 and 6; that they met with Mr. Tweten and he submitted another offer: Lot 5 of $7,581 and on Lot 6 of $7,560, which is 63% of value placed on the lot by the City. He also noted that there is other interest in those lots, and their recommendation is to reject bids. Moved by Babinchak and McCabe to reject the bids for purchase of Lots 5 and 6. Motion carried.

6. Matter of policy re. draw-down of sick leave, after worker's
compensation.
(Several employee reps. and/or employees were in the audience.

Dan Gordon, human resources director, reviewed revised policy for following workers' compensation procedures with the committee, and stated that these measures will give them the tools to maintain and monitor their worker's comp. program and does not adversely affect the employees through any use of sick time. He stated the policy has the support of the employees.
He stated that the policy addresses main issue as follows:

"We ask that upon authorization from a physical therapist and the employee's physician and/or specialist of the injured employee's inability to ever perform the essential functions of their current job, that we receive a resignation letter. The injured worker will be eligible for other city employment through our rehabilitation and re-employment registers (this relates to employees with an on-the-job injury)" and

"Upon a letter of resignation from the injured employee, they will receive pay back according to City Code of any unused sick or vacation time and will not be allowed to carry out those hours in duration. (This relates to employees with an on-the-job injury)."

He stated this solves issue that was before the committee several weeks ago. He stated that what has changed from before is that
employee will not use sick time in any part of a work-related injury; that they will do light-duty.

After some discussion it was moved by Carpenter and Babinchak to adopt the policy as presented. Motion carried.

Babinchak suggested that employees who terminate because of on-the-job injuries should receive 100% of sick leave payback rather than 50% as allowed under the Code for employees who resign. It was noted that in the past five years there have been 3 employees who have had to terminate employment because of on-the-job injuries. Ron Grande stated he would be in support of this.

It was moved by Babinchak to amend the Civil Service Code to
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allow employees who resign due to an inability to perform the essential functions of their position because of an on-the-job injury to receive 100% payback of their accrued sick leave, and to introduce the ordinance for first reading. Motion carried.

7. Matter of workers' compensation refund check.
It was reported that monies would be re-allocated propor- tionately to each department and/or fund. Info. only.

8. Matter of driving review board and City's vehicle policy.
Mr. Gordon reviewed revised policies with the committee.
He stated that they were notified by the insurance company that since the first of the year there have been 21 claims involving City employees and/or vehicles, and that their office has been notified of 8 of those claims. He stated this will be good tool in reviewing of all accidents reported to the City's insurance agent. There was some discussion re. board structure: 5 members: director of finance, dir. of human resources, safety coordinator, elected employee rep. and local rep of ND Insurance Reserve Fund; Mr. Swanson had advised that the insurance company rep. be non-voting member.

Moved by McCabe and Babinchak to adopt the driving review board policy with revision that the local representative of the North Dakota Insurance Reserve Fund be a non-voting member of the board. Motion carried.

Mr. Gordon reported that there was not a formal vehicle policy in place, reviewed the proposed policy and stated this policy provides general guidelines for the departments. Moved by McCabe and Babinchak to adopt the vehicle policy as presented. Motion carried.

9. Budget amendments:
Mr. Schmisek reviewed the following budget amendments:
a) Emergency Management - $5,000
Cash carryover for remote weather stations; Board approved $7,000 but only using $5,000 at this time.

b) Human Resources - $4,500
To provide work station for intern in the office.

Moved by Babinchak and McCabe to approve the budget amendments. Motion carried.

10. Temporary and overtime statement for March, 1996.
The committee reviewed the statement; moved by Babinchak and McCabe to receive and file. Motion carried. (committee only)

11. Matter of financing youth commission.
Mayor Polovitz presented the matter to committee. Dennis
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Hrbeck distributed copies of proposed budget and formulation of what youth commission might be like, stated that this does come
out of 20/20 and were one of the KPA's (key performance areas) that include infrastructure, economic development; that when KPA met they made determination that this was direction they wanted to go and reach solution to some of the problems in the com- munity; and requested $50,000 to finance a youth commission director and funding to handle this process and do the work that needs to be done. He stated that they look at process as an umbrella for all issues and youth-related matters in the city, possibly region. He stated financing is very important, but appears they could get by with $19,000 for the balance of this year, and ask for full amount in next year's budget.

Vera Uyehara, exec. dir. for the Children's Science and Technology Education Foundation, stated that one of major programs they are working on for next year is youth development, would like to become partner in this process and bring their resources into this organization. She stated that she would like to see the coordinator position coordinate all the activities that work with youth development in the city.

Mr. Hrbeck stated that coordination was key issue, need a central point or clearing house for some of those issues; that they have never had agenda for youth issues; that his main interest in this is that it's public agenda sponsored by the City.

Pam Larson stated that currently Grand Forks does not have a comprehensive program for youth issues, not one agency that can tell you about every program, facility, service or support that exists in this community; that Grand Forks does not have tracking program that identifies duplication of services. She named various groups that are in support and are anxious for them to get started. She stated that the Youth Commission would like to establish and facilitate all of their needs, as well as act as a primary advocate for youth issues, and would address universal
issues such as teen pregnancy, child care, violence, guns, gangs, alcohol, drugs, AIDS, mentoring programs, etc. She stated they believe commission needs to be established in City Hall because the well-being of the children of Grand Forks represents a community responsibility over special interest responsibility. She stated they need to establish community ownership to give stability and accountability.

The committee stated this is more 20/20 project, questioned adding another employee, and whether other entities could fund the position and if other organization, etc. had been approached for funding. Mayor Polovitz stated they are not looking for this as another full-time employee under Civil Service and spoke in
favor of funding the position. He stated this program would
coordinate the hospital, youth commission, youth gang commis-
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sion, school network, School Board, Children's committee, etc. and this would bring all of these under one umbrella so see what's happening in the city and move the youth in the right direction. He stated that coordinator position would be run through Human Resources department.

Several persons in the audience also spoke in favor of the request and the program: Pauline Kilbride, Michaela Saunders.
Mr. Hrbeck stated that it is critical that the City take ownership of the project; and Ms. Uyehara stated that it is critical that position be funded through the City as a neutral agency.

After further discussion, the committee suggested holding this matter of 2 weeks in order to consider and discuss with other council members, that there is more to be considered that just the funds; that if agree to this part, agreeing for future years. Committee also asked for more participation by other entities and also how determine if program is successful.

Meeting adjourned at 6:50 p.m.

Alice Fontaine
City Clerk

Dated: 5/01/96