Council Minutes
15241
December 15, 1997
PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
Monday, December 15, 1997
The city council of the city of Grand Forks, North Dakota met in its regular session in the council chambers in City Hall on Monday, December 15, 1997 at the hour of 7:30 o'clock p.m. with Mayor Owens presiding. Present at roll call were Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; absent: none.
Mayor Owens announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter.
Mayor Owens welcomed Troop 20 from Calvary Lutheran Church along with their leaders.
HEAR PRESENTATION ON PROPOSED CORPORATE
CENTER IN DOWNTOWN GRAND FORKS
John O'Leary, Urban Development Office, reported that there were three staff people involved with this project: Lonnie Laffen, architect who worked with tenants, Dick Olson, Grand Forks Regional Economic Development Corporation and himself.
Mr. Laffen made video presentation on overall plan very similar to that presented several months ago, and includes approx, 110,000 sq.ft. of office space and associated parking at the corner of 4th and DeMers, which was identified by studies by three groups over the summer (The Re-imagining Committee, Urban Land Institute and the HUD planners). He reported that the current plan is slightly different and used video showing locations of various buildings, etc. and project occupies two buildings with new parking ramp off 4th and 5th Streets, and that the two buildings include the 110,000 sq.ft. He reviewed floor plans for the five story building, and the parking ramp. He reported that the smaller of the two buildings is about 30,000 sq.ft. on three levels with main entrance off 4th Street and viewed pictures of the areas; and connections with new building and existing ramps so allowing all buildings in two block area to be interconnected. He noted that the parking ramp will hold 400 vehicles.
Mr. O'Leary reported there have been number of questions asked about project and part of the problem has been speed with which to assemble components, and a lot of funding sources, the needs and the desires of the tenants have been answered. He stated that one of the issues is lack of public input and would like to remind council how they have tried to keep public involved in this process. He reported they have done interviews on KCNN, in the newspaper, KNOX and public hearings all of which have been kept live and public's right to know is foremost. He reported that the building will be on the tax rolls and will be contributing entity, but if valued at $8-10 million will generate $200,000-250,000/year and of 40 buildings destroyed by the flood, these two building will not only replace that lost tax base but increase by 50%, and will enhance value of adjoining buildings. He reported another question asked is why don't corporate tenants build their own building, and thinks that Mr. Olson will report that the City approached them because of loss of buildings in central business district, need for tax base, shops and restaurants, etc. in the central business district. He reported they have run through Historical Society and they concur. He stated that the City is trying to support tax base and downtown and rebuild those old buildings there. He reported that the corporate tenants have made a commitment for ten year lease and this is a long time for business lease, and have also indicated that they are willing to look at rental rates in the downtown. He stated that one way to portray ourselves to the nation, people gravitate to downtown and that's what got our national publicity and that it's come back bigger than ever. He reported that one of responses for purchases of buildings, have building appraised, but in this case wasn't possible because between Grand Forks and East Grand Forks. We have tied up appraisers for surrounding areas and they could not do before Christmas, but 2-3 weeks looks like a long time - one of the tenants went from 10-15,000 to 5,000 sq.ft. and they can't continue to be in that space for long time so need to keep on time frame of next year, proceeding with appraisal would have thrown time frame off. Mr. O'Leary asked if City paid too much for the Clifford Annex building, and stated perhaps, but since the flood seeing escalation of costs in single family units as well as business units, etc. - if take 100,000 sq.ft. off market because of flood and fire, see what's going to happen to supply and demand, etc.; the difference is not as great as talking about in the public because the value of the Clifford Annex building has increased substantially (have appraisal done by end of the month), and see where sit with value. He also stated they need to move ahead with this for an appraiser. He talked to Mr. Swanson for condemnation, which could take about year; if procrastinate this issue for condemnation proceedings or evaluation process could jeopardize the project.
Mr. O'Leary introduced Dick Olson of the Grand Forks Regional Economic Development Foundation, who has been instrumental in negotiation with tenants.
Mr. Olson reported he talked with tenant groups, but stated that in relation to the tenant group, took proposal to them because process started with citizen group. He reported that no one has alternative to come downtown and provide customers to staff shops, boutiques, etc. He reported that tenants working with are First National Bank, Brady/Martz and Camrud law firm, those are corps group out of First National Bank, other banks, etc. and YMCA has talked to Mr. Laffen to put fitness center and daycare center in one of the buildings. He stated that if add up space to clients to work with them according to specifications would fill up first building, other clients would more than fill second building. He stated he needs downtown to continue selling Grand Forks to prospective outside clients.
Mr. O'Leary reported that DDC has met only three times, and that Mike Maidenberg of the Grand Forks Herald, will make a few comments.
Mr. Maidenberg reported that behind this meeting there are hundreds and hundreds of hours of volunteer hours through Re-imagining process that met weekly over the summer and looked over other areas and tried to bring imagination and vision as to what downtown could be like. He stated this is historic decision and will be defined by our downtown and this project is a critical ingredient in making the downtown vision come alive, and speaking for the Downtown Development Commission strongly support the project and hope that it goes forward in judicious fashion.
Mr. O'Leary reported that this is a very complex project, there are historical considerations, environmental, federal regulations with funding sources, property acquisition, needs of the tenants and needs of the taxpayers of the city of Grand Forks, not all come together at the same time, and somebody has to take the lead and that's the role City government has taken, not without risk, may not work but risk is calculated and manageable. He reported it enjoys support of the DDC, the polls taken by the Grand Forks Herald, and by taking initial steps for structures involved you are taking leadership to make happen. He reported that the impor-tance of a development of a corporate center in the central business district cannot be understated, a small investment now will build huge dividends for generations to come, will save important old buildings, will build tax base and generate money for the Growth Fund and encourage private sector investment and show the nation a beautiful, revitalized downtown, rather than the burned out, flooded out one, and need the courage and vision to see beyond immediate issues, the corporate center is our only chance to leave our children with something very important and lasting a central business district, and may be only chance to leave them with a downtown. Mr. O'Leary then asked for questions from the council.
Council Member Bakken stated that people want to know if property is going to pay taxes, is it going to cash flow, will they get stuck with and are tenants to be subsidized. Mr. O'Leary stated that the building will pay taxes and council involved in each step of way and whether to proceed; if it doesn't cash flow, won't work. He reported that there has been tremendous interest in this building by people predominantly who were in the downtown prior to the flood.
Council Member Hagness stated public caught by surprise, that it looks exciting, but 80% commitment before being filled, but asked about funding for downtown, and is that money coming from housing buyouts, etc. and jeopardize that funding; and any bonds being sold for which citizens guaranteeing that if not successful, have to pick up that money later. Mr. O'Leary reported that the funding doesn't impact any of the buyouts in process, misunderstanding on part of the public, that money identified in the cost matrix for the central business district isn't targeted for the corporate center, $5 million for corporate center with $3 million in EDA money which wouldn't be available for any other place in town, it's specifically targeted for the downtown area so coming into project with $8 million in equity and that's great position to be in. He reported they are looking at two or three options for financing for balance of the debt needed to be secured by the tenants lease and will bring to council.
Council Member Babinchak stated that both buildings 80% committed before being built, and asked if larger building about 100% filled. Mr. O'Leary reported that they will have 80% of the 100,000 sq.ft. leased and looking at as one project. He also reported that if building one filled, they would build second building, and stated that if we put one 100,000 sq.ft. building it will look out of place so their recommendation was to put up two buildings, one 70,000 and one 30,000. He stated there's another reason that corner was targeted by everyone looking at that area because of central location and it can max. the impact of that corner, greater visual impact over the city; he noted there are other practical reasons as well, parking, etc.
Council Member Polovitz asked for status of existing First National Bank; Mr. O'Leary reported that Board still discussing and because on Register of Historic Places poses some development opportunities that really suit private sector the best by taking advantage of tax credits for historical buildings, etc. and some of the depreciation, makes for great opportunity for private sector. He stated First National looking at number of options, that it is not Mr. Olson's recommendation nor his that the City have ownership in this building, but really belongs in the private sector. He stated that it's very important to cooperate with First National in development of that building, as it is one of the most significant structures in the city and that it's rehabable and would compliment the corporate center.
Council Member Sande reported she had received calls re. price of the Clifford Annex building, talked with the city assessor, and last time the City assessed that building was 1992 so price City taxing it at is five years old and is her personal opinion that the value of the building has increased in the last five years and would probably be something more than what on the books at, and that because of reports in the Herald that many houses have been purchased at more than their assessed value, and does he have idea where City has purchased at more than what carried on the assessing books. Mr. O'Leary reported that most of them have; there were few at initial offer but could get numbers within next few days. He stated that values have escalated, property values have increased in recent years and values will be seen in appraisals for central business district when they were done.
Mr. Olson reported that the City is not subsidizing tenants, proposing to put $5 million in CDBG funding into it but doesn't think subsidy. City ends up with building that has $5 million grant and $3 million EDA grant allocated to this project and end up with $8 million bonding secured by tenants.
Council Member Babinchak asked will we have 80% of tenants in building before proceed, and where do rental monies generated go to, tax relief, etc. Mr. O'Leary reported that the revenues will go to Jobs Development Authority and probably get waiver of regulations through HUD to reduce complex formulas with CDBG funds and need to spend 70% on benefits that benefit low/moderate income people, but can get down to 51% and that's going to dictate where CDBG funds spent. He reported they are talking with HUD and with Congressional delegation as to flexibility with funding.
Council Member Beach asked whether they could amplify EDA monies, that this is a grant and not a loan and wouldn't proceed without their approval. Mr. O'Leary reported that EDA is a branch of Congress and get assistance for primary sector businesses (mfg. businesses), and they have helped with streets, sewer and water in Industrial Park, Noah's Ark building and buildings in Foreign Trade Zones building, and director looked at downtown business district and that they thought they could help but will provide a grant and that was trip they took couple weeks ago and believe they will do it. He reported that the Dept. of Commerce will put lien on the building that requires you to maintain ownership of the building during life of the improvement and will not you to sell building in immediate future and Mr. Olson trying to make that as short as possible, and give future councils opportunity to sell if the choose to do so. He stated that revenues off EDA grant come back to the City.
Jerry Youngberg stated important to correct incorrect information as soon as possible, and that one of the reasons used for bypassing some of the processes that go on in the development of a community enterprise and reason being used as part of the reason for speed and bypassing of normal procedures has been the rapidly escalating prices seeing, but have not seen rapidly escalating house prices, and that house prices have only increased by about 4.6% this passed year after the flood and prior to the flood saw house prices increasing at about 4.8% over the passed four years, so housing should not be used as justification for this process, may be true that business prices escalating.
Mayor Owens reported that it was never council's intent to not keep public thoroughly informed as to what's happening; that this process just moving so fast and going into different stage and aware that public need to know what's happening, and will be discussing with Information Center how to keep public more informed, but asked if have comment or question, call so we can answer as try to rebuild our community.
APPROVE MINUTES
Typewritten copies of the minutes of the special council meeting held on July 15, and regular meetings held on July 21 and August 4, 1997, were presented and read. It was moved by Council Member Hagness and seconded by Council Member Sande that these minutes be approved as read. Carried 14 votes affirmative.
ADOPT ORDINANCE NO. 3689, RELATING TO
TRAFFIC AND MOTOR VEHICLE PENALTIES FOR
SPECIFIED OFFENSES
An ordinance entitled "An ordinance amending Section 8-1503 (11) of the Grand Forks city Code relating to traffic and motor vehicle penalties for specified offenses", which had been introduced and passed on its first reading on November 17, 1997 was presented and read for consideration on second reading and final passage.
Council Member Sande submitted an amendment to the ordinance to include revisions to subsection (E) for parking in violation of Section 8-0816: for period from April 1 to October 31 of each year and listing the violations within the subsection, and for the subsection for period from November 1 to March 31 including amount of dollars for each of the subsections. Council Member Beyer seconded the motion for amendment to the ordinance.
Upon call for the question of adoption of this ordinance and upon roll call vote, the following voted "aye": Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; voting "nay": none. Mayor Owens declared the ordinance adopted.
ADOPT ORDINANCE NO. 3690, AMENDING ZONING
MAP TO INCLUDE WITHIN B-3 (GENERAL BUSINESS)
DISTRICT, LOTS 2 THROUGH 6, BLOCK 2, FAIRGROUNDS
SECOND RESUBDIVISION
An ordinance entitled "An ordinance to amend the Zoning Map of the city of Grand Forks, North Dakota, to rezone and exclude from the A-1 (Limited Development) district and to include within the B-3 (General Business) District, Lots 2 through 6, Block 2, Fairgrounds Second Resubdivision to the city of Grand Forks, North Dakota", which had been introduced and passed on first reading on November 17, 1997 and upon which public hearing had been scheduled for this evening, was presented and read for consideration on second reading and final passage.
The city auditor reported that the required legal notice had been published calling for a public hearing to be held on this matter this evening and further that to date no protests or grievances had been filed with his office.
Mayor Owens called for the public hearing; there were no comments and Mayor Owens declared the hearing closed.
The city auditor presented and read the report from the Planning and Zoning Commission who had considered the matter of the request from the City planning department for final approval of an ordinance to amend the Zoning Map to exclude from the A-1 (Limited Development) district and to include within the B-3 (General Business) District, Lots 2 through 6, Block 2, Fairgrounds Second Resubdivision to the city of Grand Forks, North Dakota (located northwest of the intersection of Gateway Drive and North 26th Street), and recommended final approval and passage of the attached ordinance amending the zoning map. The recommendation had been moved and seconded by Council Member Polovitz and Council Member Beyer.
Upon call for the question of adoption of this ordinance and upon roll call vote, the following voted "aye": Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; voting "nay": none. Mayor Owens declared the motion carried.
APPROVE FINAL PLAT; AND ADOPT ORDINANCE NO.
3691, AMENDING STREET AND HIGHWAY PLAN TO
INCLUDE PUBLIC R/W SHOWN AS DEDICATED ON
THE PLAT OF TJ'S SECOND ADDITION
An ordinance entitled "An ordinance to amend the Street and Highway Plan of the city of Grand Forks, North Dakota, to include the public rights of way shown as dedicated on the plat of TJ's Second Addition to the city of Grand Forks, North Dakota", which had been introduced and passed on its first reading on November 17, 1997 and upon which public hearing had been scheduled for this evening, was presented and read for consideration on second reading and final passage.
The city auditor reported that the required legal notice had been published calling for a public hearing to be held on this matter this evening and further that to date no protests or grievances had been filed with his office.
Mayor Owens called for the public hearing; there were no comments and Mayor Owens declared the hearing closed.
The city auditor presented and read the report from the Planning and Zoning Commission who had considered the matter of the request from CPS, Ltd. on behalf of Thompson and Johnson for final approval of the plat of TJ's Second Addition, Grand Forks, North Dakota, lying within the SW 1/4 of the NW 1/4 and the SE 1/4 of the NW 1/4 of Section 27, T151N of Range 50 West of the 5th Principal Meridian (located between 51st and 55th Avenues South and between Cherry Street and South Washington Street, and recommended final approval subject to special conditions shown on or attached to the review copy and passage of the ordinance amending the Street and Highway Plan map. The recommendation had been moved and seconded by Council Member Polovitz and Council Member Hagness.
Upon call for the question of adoption of this ordinance and upon roll call vote, the following voted "aye": Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; voting "nay": none. Mayor Owens declared the motion carried.
CONTINUE PUBLIC HEARING AND SECOND READING
OF ORDINANCE TO AMEND THE STREET AND HIGHWAY
PLAN TO INCLUDE PUBLIC RIGHTS OF WAY SHOWN
AS DEDICATED ON THE PLAT OF VERN'S ADDITION
TO JANUARY 20, 1998
An ordinance entitled "An ordinance to amend the Street and Highway Plan of the city of Grand Forks, North Dakota, to include the public rights of way shown as dedicated on the plat of Vern's Addition to the city of Grand Forks, North Dakota", which had been introduced and passed on first reading on November 17, 1997 and upon which public hearing had been scheduled for this evening, was presented and read for consideration on second reading.
The city auditor reported that the required legal notice had been published calling for a public hearing to be held on this matter this evening and further that to date no protests or grievances had been filed with his office.
Mayor Owens called for the public hearing; there were no comments and Mayor Owens declared the hearing closed.
The Planning and Zoning Commission reported having considered the matter of the request from CPS, Ltd on behalf of Vern Gornowicz for final approval of a plat of Vern's Addition, Grand Forks County, North Dakota, lying within a portion of the Southeast Quarter of Section 35, Township 152 North of Range 51 West of the 5th Principal Meridian (located on the north side of U.S. Highway No. 2 between the Grand Forks Gun Club and Swangler Auto Wrecking and currently occupied by Swangler Building Movers), and recommended tabling and continuing the public hearing until January 20, 1998.
It was moved by Council Member Polovitz and seconded by Council Member Klave that this recommendation be and is hereby approved. Carried 14 votes affirmative.
HOLD PUBLIC HEARING ON SALE OF $4,085,000
REFUNDING IMPROVEMENT BONDS, SERIES OF 1997C
The city auditor reported that public hearing had been called relative to the sale of $4,085,000 Refunding Improvement Bonds, Series 1997C.
Mayor Owens called for the public hearing on the sale of the $4,085,000 Refunding Improvement Bonds, Series 1997C.
The city auditor reported that as part of the public hearing there was a copy of Moody's ratings for the two issues they will be discussing and highlighted a couple of things which relate to how the flood recovery is going and that they have left the City's bond ratings the same. He reported that they stated that "..the high quality rating and stable outlook are based on the city's strong regional economy, sound management strategies that successfully met numerous challenges resulting from the April 1997 Red River flood and catastrophic downtown fire, well-managed flood-related cash flow pressures, and a manageable debt position". He also stated that "..Officials responded by forming a Flood Recovery Team which included city officials and various representatives of the Federal Emergency Management Agency and Housing and Urban Development; ..and that the efforts of that team have been successful in minimizing the economic impact of the flood"; and that Moody's believes that Grand Forks' strong financial position which has been thoroughly tested by challenges associated with the flood recovery will be maintained due to ample reserve levels, demonstrated prudent fiscal policies, and increased revenues resulting from a post-flood economic resurgence." He stated that Moody's has certainly recognized the efforts that the mayor and council have taken to allow a quick recovery from the flood and was a very good conversation that they had with Moody's and the rates council will see on the bonds.
Mayor Owens closed the public hearing.
It was moved by Council Member Sande and seconded by Council Member Hafner to declare an insufficiency of protest. Carried 14 votes affirmative.
Committee No. 1, Finance, reported having considered the matter of sale of $4,085,000 Refunding Improvement Bonds, Series 1997C, and recommended that we adopt resolution establishing terms and directing issuance of definitive improvement warrants on the funds of Sanitary Sewer Districts Nos. 370, 388 and 390, Storm Sewer Districts Nos. 379, 384 and 389, Street Improvement District No. 85, Paving Districts Nos. 545, 546, 547, 548, 551 and 552 and, Pedestrian RT-S/W Easement Districts Nos. 5, 14 and 15, and Watermain Improvement Districts Nos. 247, 251, 254, 255 and 257 and providing for and appropriating special assess-ments for the support and maintenance of said funds, and also recommended that the City adopt a resolution directing the issuance of $4,085,000 Refunding Improvement Bonds, Series 1997C and prescribing the terms and covenants thereof, and to award the sale to Harris Trust & Savings Bank at a true interest rate of 4.7763% and adopt resolution awarding sale of special improvement warrants and exchange thereof for Refunding Improvement Series 1997C.
It was moved by Council Member Babinchak and seconded by Council Member Bakken that this recommendation be and is hereby approved. Upon roll call the following voted "aye": Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; voting "nay": none. Mayor Owens declared the resolutions adopted.
ADOPT RESOLUTIONS AWARDING SALE OF SPECIAL
IMPROVEMENT WARRANTS AND EXCHANGE THEREOF
FOR REFUNDING IMPROVEMENT BONDS, SERIES 1997C
The city auditor presented an affidavit showing publication in the official newspaper of the City of a Notice of Bond Sale of $4,085,000 Refunding Improvement Bonds, Series 1997C (the Bonds) of the City, bids for which were to be considered at this meeting as provided by resolution adopted December 1, 1997. The affidavit was examined and approved and ordered placed on file.
The city auditor reported that 5 sealed bids for the purchase of the Bonds had been received at his office from the following institutions at or before the time stated in the Notice of Bond Sale, and the bids were then opened and publicly read and considered, and were all found to conform to the Notice of Bond Sale and to be accompanied by the required security, and the purchase price, interest rates and net interest cost under the terms of each bid were found to be as follows: Document No. 7392 - Bids.
Council Member Babinchak introduced the following resolution and moved its adoption: Document No. 7393 - Resolution.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member Bakken and upon vote being taken thereon the following voted in favor: Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; and the following voted against the same: none; whereupon the resolution was declared passed and adopted and was signed by the Mayor and her signature attested by the City Auditor.
ADOPT RESOLUTIONS ESTABLISHING TERMS AND
DIRECTING ISSUANCE OF DEFINITIVE IMPROVEMENT
WARRANTS ON THE FUNDS OF VARIOUS IMPROVEMENT
DISTRICTS AND PROVIDING FOR AND APPROPRIATING
SPECIAL ASSESSMENTS FOR THE SUPPORT AND
MAINTENANCE OF SAID FUNDS; AND DIRECTING
ISSUANCE OF $4,085,000 REFUNDING IMPROVEMENT
BONDS, SERIES 1997C AND PRESCRIBING TERMS AND
COVENANTS THEREOF
Council Member Babinchak introduced the following resolution and moved its adoption: Document No. 7394 - Resolution.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member Bakken and upon vote being taken thereon the following voted in favor: Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; and the following voted against the same: none; whereupon the resolution was declared passed and adopted and was signed by the Mayor and her signature attested by the City Auditor.
Council Member Babinchak then introduced the following resolution and moved its adoption: Document No. 7395 - Resolution.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member Bakken and upon vote being taken thereon the following voted in favor: Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; and the following voted against the same: none; whereupon the resolution was declared passed and adopted and was signed by the Mayor and her signature attested by the City Auditor.
ADOPT SUPPLEMENTAL RESOLUTION RELATING TO
$4,085,000 REFUNDING IMPROVEMENT BONDS, SERIES
1997C TERMS BONDS
Council Member Babinchak introduced the following resolution and moved its adoption: Document No. 7396 - Resolution.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member Bakken and upon vote being taken thereon the following voted in favor: Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; and the following voted against the same: none; whereupon the resolution was declared passed and adopted and was signed by the Mayor and her signature attested by the City Auditor.
HOLD PUBLIC HEARING; AND ADOPT RESOLUTION
AUTHORIZING SELLING AND ESTABLISHING THE
TERMS OF TAXABLE GENERAL OBLIGATION TAX
INCREMENT BONDS, SERIES 1997D AND CREATING
A SINKING FUND THEREFOR
The city auditor presented an affidavit showing publication in the official newspaper of the City of a Notice of Bond Sale of $400,000 Taxable General Obligation Tax Increment, Series 1997D (the Bonds) of the City, bids for which award was to be considered at this meeting as provided by resolution adopted December 1, 1997. The affidavit was examined and approved and ordered placed on file.
The city auditor reported that 2 sealed bids for the purchase of the Bonds had been received at his office from the following institutions at or before the time stated in the Notice of Bond Sale, and the bids were then opened and publicly read and considered, and were all found to conform to the Notice of Bond Sale and to be accompanied by the required security, and the purchase price, interest rates and net interest cost under the terms of each bid were found to be as follows: Document No. 7397 - Bid tabulation sheet.
Mayor Owens opened the public hearing. Clarence Nikle, 9th Avenue South, asked what the bonds were for; and the city auditor reported that the bonds are to pay for housing of Ecolab; and the $10,150,000 Housing Revenue Bonds are for funding conduit for the Grand Forks Homes, which is a non-profit and does not leave any liability on the City. Mr. Nikle stated he has never been in favor of tax increment bonds and especially when tied to general obligation and asked if any of those funds have been expended at this point. Mr. Schmisek reported that they have started the project on Ecolab and some public hearings prior to this and council had moved forward with that project; and also noted that some of the work has also started on the housing revenue bonds west of the Interstate. Mr. Nikle questioned why having public hearing on this; Mr. Schmisek reported this is a requirement of the funds.
Mayor Owens closed the public hearing; and there was a motion by Council Members Hafner and Hagness to declare an insufficiency of protest on the project. Carried 14 votes affirmative.
Committee No. 1, Finance, reported having considered the matter of $400,000 Taxable General Obligation Tax Increment Bonds, Series 1997D, and recommended awarding sale to Miller, Johnson & Kuehn, Inc. at true interest rate of 6.4775% and adopt resolution authorizing selling and establishing the terms of taxable general obligation tax increment bond Series 1997D and creating a sinking fund therefor.
It was moved by Council Member Babinchak and seconded by Council Member Bakken that this recommendation be and is hereby approved. Carried 14 votes affirmative.
Council Member Babinchak then introduced the following resolution and moved its adoption: Document No. 7398 - Resolution.
The motion for the adoption of the foregoing resolution was duly seconded by Council Member Bakken and upon vote being taken thereon the following voted in favor: Council Members Beach, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness - 14; and the following voted against the same: none, whereupon the resolution was declared passed and adopted and was signed by the Mayor and her signature attested by the City Auditor.
Alan Erickson, Springsted, Inc., stated he wanted to echo some of the statements made by Moody's and they are very impressed with what has taken place in the recovery effort and that he is very happy to be part of that team and glad to be here tonight.
HOLD PUBLIC HEARING ON $10,150,000 HOUSING
REVENUE BONDS, SERIES 1997 (GRAND FORKS HOMES,
INC.)
Pursuant to due call and notice thereof a regular meeting of the city council of on the $10,150,000 Housing Revenue Bonds, Series 1997 (Grand Forks Homes, Inc.) Mayor Owens opened the public hearing.
Terry Hanson, rep. Grand Forks Homes, Inc., reported these are non-taxable housing revenue bonds issued by the City of Grand Forks for the benefit of Grand Forks Homes, Inc. and used for the construction of the homes building west of the Interstate and are building approx. 200 homes and the Board of Grand Forks Homes has authorized these funds be used for building up to 400 homes if necessary. He reported that this is part of meeting that he attended in June and talked with Senator Conrad and he stated that the City has to find way to turn $500 million into billion dollars knowing that we weren't going to get all that money, but leverage those dollars. He reported that Grand Forks Homes came back and with help of local banks approached City for help in financing homes in the city, revenues go back into trust company to be held until next advance is made. It was noted that 80% of proceeds come back and 20% to pay for cost of land and infrastructure through CDBG funds. Mr. Hanson reported that proceeds will come back to First Bank and other proceeds come back to Grand Forks Homes for infrastructure.
Jerry Youngberg, 3514 10th Avenue North, reported that why public becomes so frustrated with government, because it makes no difference what input they have because process goes forward and decisions made and council rubber stamps public hearing is a mere formality for the public. He stated that it is important to have government that is supported by the public rather than government by edict and would hope keep that in mind. He stated they have to have that input. The city auditor reported that there were public hearings on the projects that were held previously and reasons for this public hearing to decide is whether or not there are additional reasons not to issue the bonds; and that on this bond issue believes if there was strong protest, council could decide not to sell but use CDBG funds to fund this and leave that much less money for buyouts, etc.
Mr. Youngberg asked amount of issuance of bonds in cost of these homes. Mr. O'Leary reported that their is a small savings in interest between going to a commercial loan vs. bonds vs. cost of using CDBG funds; they are trying to leverage use of the CDBG money to make go as far as can, the program income would be subject to new CDBG funds regulations and lot of flexibility as to how use those funds, and that's what allowing home buyouts, fixing dikes, infrastructure, etc. because making as many dollars as flexible as can and going to save CDBG money for projects for which we can't find money any other way.
Mr. Youngberg questioned if using CDBG funding, same would occur. Mr. O'Leary reported that each time use CDBG funds, as those funds repaid to City, supplemental regulations raised so best use of funds is not to use CDBG money but to use other revenue through housing revenue bonds so don't subject to new regulations. Mr. Youngberg asked what difference between new and old regulations. Mr. O'Leary reported they would have to publicly rebid the project, have to do with Davis/Bacon, historical review, City of Grand Forks would have no waiver of low and moderate benefit, 70% of funds would have to benefit low/moderate activities and if that regulation existed, would not be able to buy those houses in various park areas of the city, wouldn't be able to use for assisting residents for repair of their homes, etc. Mr. Youngberg stated that all public bidding procedures have been bypassed and should be of concern to everyone through these CDBG funds and is abuse of City's authority. Mr. O'Leary reported that the federal government has given latitude to abbreviate the bidding requirements and in most instances have chosen not to do that, but have following City requirements which are more stringent. He stated that neither City nor federal government has formalized bidding requirements for sub-grantees, however, have gone through bidding process, specs., etc.
Council Member Beyer stated that council members are listening, heard people saying they needed help and everyone in council doing best they can.
Jerry Tuchscherer, Grand Forks Board of Realtors, and Government Affairs Board of Realtors, raised some questions and have addressed those questions. He stated they wanted to keep raising questions, because if not asking questions, not finding answers. He stated they are not intending to fight the City nor the building of homes, but their intentions and concerns are what is happening to the general public, that bond issue had to do with building of new homes which they need, but no one can say how many, so bond issue to building additional homes, those 400 units are being subsidized to some degree and the interest covered by CDBG funds, and concerns in real estate industry, does that create a non-competitive environment for the 8000 home owners who have homes here today and when some are leaving town, can they compete with home being subsidized by federal funds. He stated he agrees as financing mechanism and leveraging, financing good business sense, but want council to be aware to stop to think about those trying to sell their homes today.
Council Member Bakken stated they have opportunity to build town better, lost 650 homes and will lose more when levees constituted , and before flood were looking at how to build affordable homes, now have answer, and if Grand Forks going to grow need homes. He stated it may not work for everyone, but down the road good for everyone.
Bob Gustafson, Grand Forks Chamber of Commerce, stated there were lot of builders after flood who were asked if they were interested in making investments in our community, and came at time when lot of concern re. population loss, and as people come into city one of the things they ask about is affordable housing, and if don't have affordable housing difficult for them to come here. He stated that currently city has unemployment rate of l.2%, that doesn't add to the mix, there comes time when City has to come forward and take calculated risks and thinks what doing tonight positive one, that as taxpayer and home owner the worst case scenario is short term dip in property valuations, but those who are going to stay here as residents of community, market will balance itself out and homes that may not be sold in the short term will be sold in long term and helping solve problems our community facing now, which is affordable housing, and would encourage City to move forward to go ahead with bonding opportunity and work towards facing us towards work force and affordable housing.
Mayor Owens closed the public hearing.
It was moved by Council Member Hafner and seconded by Council Member Glassheim to declare an insufficiency of protest to the project. Carried 14 votes affirmative.
Committee No. 1, Finance, reported having considered the matter of sale of $10,150,000 Housing Facilities Revenue bonds (Grand Forks Homes, inc. project), Series 1997, and recommended that subject to public hearing the City adopt a resolution relating to the holding of a public hearing and authorizing and approving a project and the issuance and sale of housing facilities revenue bonds to provide funds for a housing facilities project on behalf of Grand Forks Homes, Inc., a North Dakota non-profit corporation.
It was moved by Council Member Bakken and seconded by Council Member Babinchak that this recommendation be and is hereby approved. Carried 14 votes affirmative.