Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, August 26, 1997 - 3:45 p.m.

Members present: Carpenter, Babinchak, Bakken, Hamerlik.

1. Matter of request from Nodak Electric Cooperative for exten-
sion of franchise for an electric distribution system.
Mr. Schmisek reported his office received letter from Nodak requesting extension of the franchise, that they have 20-year franchise agreement which is up for renewal on October 3, 1997. George Berg, general manager of Nodak, was present.

There was some discussion re. term of franchise and Mr. Swanson noted that under ND law have to have defined time period, that City may want to re-negotiate rate over period of time, from engineering perspective may have concerns re. placement of utilities, etc. and adjust to circumstances, whatever they may be, that as city has expanded into their service area needs on both sides of agreement may change, they are providing service on south and west side of city and outside city limits. It was noted that the rate in fran-chise is 2% on gross revenues.

Moved by Hamerlik and Babinchak that we extend the franchise agree-ment with Nodak Electric Cooperative for a period of twenty years according to terms of the ordinance and at the same rate, and introduce ordinance for first reading.

Babinchak questioned whether there should be term for renegotiation included in the franchise ordinance. Mr. Swanson stated cable franchise little different where have some ability to renegotiate rate at halfway point; haven't done that with utility franchises. He stated that whether 10 or 20 year franchise, he has no recom-mendation; no objection and no recommendation on rate. He noted that historically and nationally 2% rate is typical; NSP franchise at 2%.

Mr. Swanson reported that there has been only one item of conten-tion and that was re. placement of transformer, relationship between City and Nodak very positive. He stated he will redraft
franchise ordinance and send to committee.

Upon call for the question, the motion carried.

2. Matter of Lola's financing.
Mr. Schmisek reported that action was taken in February of 1996, preliminary approval given at that time for tax increment financing in the amount of $110,000 to reimburse project costs of Grand Forks Mercantile Exchange and intention was to hold until such time as we had more tax increment financing to do so economize on costs; that with situation of flood to do tax increment financing not in the best interests of the City because do TIF on building where strong potential that building may not be there in a few years because of the diking and would then be City's responsibility to pay off those bonds.
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Mr. Schmisek suggested that in this case where they had commitment to assist them and had unique situation of the flood to change this, there is possibility they could approve a loan to Lola's and change from tax increment to do a tax exemption for them, and loan agreement would state that upon sale of the building, the loan would be paid off; would need to do the loan through the JDA

Mr. Swanson reported that the bonds had not been sold, need to do something to accommodate promises made to them without selling bonds; one option would be if use JDA to advance amount equal to net amount out of bond sale, that this would act like TIF, would require JDA to make exception to guidelines because typically wouldn't qualify for Growth Fund. He stated they could do tax exemption agreement and modify normal Growth Fund loan documents to tie back into exemption.

It was noted that valuation established in 1996; Mr. Carsen stated they increased value for 1997, and could roll value back to 1996. He also noted that value generated $13,500 in net taxes per year at today's mill levy.

Moved by Bakken and Hamerlik that we give preliminary approval and authorize staff to finalize negotiations with property owners, and to establish public hearing for September 15. Motion carried.

There was some discussion re. JDA meeting, and it was noted that on the 15th after holding the public hearing, the council could meet as the JDA and act on this matter.

3. Matter of Varmints Baseball Team loan.
Mr. Schmisek reported that approval was given to loan the Varmints Baseball Team $40,000. Saroj Jerath, dep. city auditor, reported that the Varmints are delinquent for last four months in making their payments, they have made only one payment; delinquent for April - July in amount of approx. $6,000, and also delinquent in payment for downtown parking and office in City Center Mall. She noted that monthly statements were mailed each month and that she had talked with Mr. Coutts. She also reported that she had received letter from Mr. Coutts (copies to committee) stating that they have made application to SBA for Economic Injury Loan.

After some discussion the committee stated that if Varmints working through SBA, willing to wait before pursuing (having attorney send letter putting them on notice). Mr. Swanson noted this was unsecured loan, would fall to guarantees.

Moved by Hamerlik to table until the first finance committee
meeting in October. The motion was seconded by Babinchak. Motion carried.

(Committee suggested that staff respond and Mr. Schmisek stated

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August 25, 1997 - Page 3

they would make Varmints aware of committee's action).

4. Request for replacement of flood-damaged vehicles.
Mr. Schmisek reported there were some vehicles damaged in the flood, 12 vehicles in various departments; that they have received settlement of $125,000 for all vehicle damage and about $14,000 of that was for repairs to be made to vehicles, so have $111,000 to apply against these purchases, which will be approx. half the price, and will have to take funds out of the cash carry-over line item in the general fund. He stated they asked departments for bid specs. used previously.

Mrs. Jerath reported they requested specifications; that there were 6 vehicles from health department, 5 from engineering and 1 from planning. It was noted that specs. for engineering for four-door sedans and 2 pickups (two-wheel drive with extended cab), planning vehicle is 4-door sedan; health department, 4-door sedans and requesting replacement of pickup with mid-sized vehicle because mosquito control program has their own pickup).

Moved by Babinchak and Bakken to approve specifications and authorize call for bids. Motion carried. (comm. only)

5. Matter of exempt status for various positions.
Dan Gordon, Human Resources, reported that this matter was considered by public service last evening and presented listing of positions in the exempt status, positions they are proposed to be included in the exempt status: MI manager, asst. director of Human Resources, environmental coordinator and asst. dir. of public works; and positions to be deleted: project engineers I and II and senior project engineer, and asst. dir. of enterprise fund (changed to asst. dir. of public works and added above).

There was some discussion whether classified as exempt employee to receive more points and to receive higher classification; however, it was reported that the exempt status wasn't evaluated within classification points, and according to letter from consultant who did study that no positioning done because of exempt status, as had been done in the past. There was also some discussion re. overtime.

Moved by Hamerlik and Babinchak to change ordinance to include positions in exempt status and delete positions from exempt status as noted and to recommend preliminary approval. Motion carried.

There was some discussion as to whether there were other positions that should be included in the exempt status (police department, fire department, etc.); Mr. Gordon stated that would require study
and/or analysis. Committee asked that be done and to bring back to committee with recommendations and rationale. It was noted that there are three categories of exemption: executive, administrative

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or professional and there was some discussion by committee.

Moved by Hamerlik and Babinchak to adjourn; meeting adjourned at 4:40 p.m.

Alice Fontaine
City Clerk

Dated: 8/26/97.