Committee Minutes

MINUTES/GROWTH FUND AUTHORITY
Monday, June 3, 1996 - 7:00 p.m.

The city council of the City of Grand Forks sitting as the Growth Fund Authority, met in the council chambers in City Hall on Monday, June 3, 1996 at the hour of 7:00 p.m. with Chairman Carpenter presiding. Present at roll call were Council Members Beach, Hamerlik, Glassheim, Carpenter, Sande, Klave, Babinchak, Geller, Mayor Polovitz - 9; absent: Council Members McCabe, Hoeppner, Beyer, Johnson, Hagness - 5.

Chairman Carpenter called for the public hearing on the applica- tion and asked for comments.

a) Minn-Dak Growers, Ltd.

Council Member Hanson reported present.

Chairman Carpenter noted that all members should have received a copy of the project summary and stated that the request is for a PACE financing participation and that the Growth Fund recommended the approval of the PACE buydown in the amount of $135,000.

The project summary stated that Minn-Dak proposes to construct a 42'x72' buckwheat processing facility adjacent to their main office in Grand Forks in order to convert buckwheat into a finished product. The current project is for milling and roasting the buckwheat; the building is estimated to cost $1,000,000, the milling equipment will cost approx. $2,500,000 and roasting and packaging equipment will cost approx. $1,500,000, for a total project cost of over $5,000,000. Minn-Dak expects to create 20 new positions with an annual payroll of $416,000. It was reported that the facility will be built on the site of Minn-Dak's current facility and they will contribute $500,000 for equipment, another $210,000 for land and building acquisition and will finance the project with Norwest and Bank of North Dakota.

Gene Schneeweis questioned the meaning of the buydown; and Chairman Carpenter explained that monies would be used for an interest buydown to a lower percentage, and this is a local match.

There was a question as to funding, and Chairman Carpenter re- ported that they would look for approval contingent upon funding by the city council.

Chairman Carpenter closed the public hearing.

The city auditor read the recommendation from the Growth Fund which was to approve a PACE buydown in the amount of $135.000.

It was moved by Council Member Beach and seconded by Council Member Hanson to approve the application subject to the
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June 3, 1996 - Page 2

availability of funding as determined by the city council.

Council Member Geller questioned whether reasonable time-frame should be included in the motion, so that if funding cannot be located, petitioner knows that and can opt for other alternatives or wait until Growth Fund replenished.

Mayor Polovitz questioned if there were monies available from other funded project which have not been used; Chairman Carpenter stated that was discussed but still over-committed. He stated that Mr. Schmisek suggested that they could deal with this as an added item at the council meeting tonight with possibility of monies coming from the Loan and Stabilization Fund, or go to finance next Tuesday; doesn't foresee this as going on very long.

The city auditor stated his suggestion was that if funds from Loan & Stabilization Fund, it would be a loan and repaid by Economic Development Funds when available.

Council Member Geller stated that implication is that if they approve this, have over-committed the Growth Fund based upon its budget; if already over-committed does it make sense to fund this project from other sources when other applications in the pipeline and not funded; and questioned have we afforded same consideration to them. Chairman Carpenter stated that there were no other applications at this stage in the process, have had some pre-aps. approved but no full aps.

Council Member Beach stated that time is of the essence, that Minn-Dak owns real estate upon which expansion will take place, and they are ready to move; and that this is one of the soundest application ever seen with greatest chance of success in the last couple years.

Council Member Glassheim questioned how much we are committed over amount allocated to economic development; and the city auditor reported that when look at budgeted amount and anticipated income, it's approx. $453,000, but that includes one project for $250,000 that may not come through (has June 30 deadline); and that also includes this project.

Council Member Glassheim questioned whether the PACE loan was already approved. Mark Mondry, controller for Minn-Dak, stated that funds reserved but loan not in place. He stated that PACE
program allows $75,000 of loan for each job created, and they are looking at creating approx. 20 jobs, which would mean they are requesting a loan of $1.5 million; that the $135,000 that the Growth Fund contributes locally would be matched by $250,000 by the State of North Dakota and those funds are used to buydown the interest rate by 5%. He stated that the interest buydown may not be large enough that they would use funds up in one year, it may
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June 3, 1996 - Page 3

extend out over several years. He stated they plan to be in operation by the first of December.

Mr. Schneeweis stated that last year the Growth Fund gave $1 million to EERC to create 66 jobs, and the Growth Fund only reports 2 jobs; $275,000 to the UND Aerospace Foundation, that they have $12 million budget and have generated $88 million worth of things for the State, and asked why they didn't ask UND Aerospace for $275,000 back, and use for this project. He also stated that he was filing a letter with the City to do that, because mis-intended, not used properly; that there were others.
Upon call for the question and upon voice vote, the following voted "aye": Council Members Beach, Hamerlik, Hanson, Glassheim, Sande, Klave, Babinchak, Geller, Polovitz, Carpenter - 10; voting "nay": none. Chairman Carpenter declared the motion carried.

ADJOURN

It was moved by Council Members Hanson and Hamerlik that we do now adjourn. Carried 10 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor