Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, July 14, 1998 - 3:50 p.m.

Members present: Babinchak, Brooks, Carpenter, Hamerlik

1. Matter of County Board of Equalization's intent to reduce
assessor's 1998 values on four properties:
Mel Carsen, city assessor, reported that owners of property took these four properties directly to the County, did not come to the City first, and that is their right, County took action after having review of the matter by himself and the director of county tax equalization, Debbie Johnson.

Mr. Carsen reported that the County Board of Equalization does have the right to reduce values when there's an individual pro-test on a property, they took the matter as a protest the third week in June, scheduled a hearing for July 7, and he and Mrs. Johnson reviewed each of the four cases and came back with a recommendation, County concurred and approved the three they recommended reducing; the fourth one needs to be addressed. He stated that if they do nothing on the County matter the reduction will be made. He stated he had a question on the fourth property and asked whether the council wanted to have testimony on this property (to reduce Grand Forks Glass and Paint property). He stated that's why put on the agenda, council has the right to do that, that he spoke quite vehemently against any reduction and when they considered all the facts (his arguments, using uni-formity in assessment and the owner's argument that the property was over-assessed based on its construction cost, which was com-pleted a few months before the assessment date; that owner's construction costs were about $70,000 less than assessor's value and the County Commission intends to reduce it by about $44,800.

He reported that the property owners were aware of what the reduction was and were satisfied with that, that the report that went to the County Commission also went to each property owner and none showed at the meeting.

There was some discussion re. land value on building comparison for Glass and Paint Co.; he stated there were several properties on north side of 32nd Ave.S. that should have been revalued for 1998, Grand Forks Glass & Paint was one of those, and would be increased for 1999, County reducing building value. Osco Drug and Dakota TV also low.

a) 1306 South 11th Street, James/Shelley Olson
Mr. Carsen reported this is a 4-plex and City had recommended reduction that was granted, reducing value from $93,400 to $81,200, that there was flood damage in one of the lower level units that had not been allowed, but had assumed repaired, and concur with the reduction. He reported that the County is concurring with assessor's recommendation. He reported they had recommended reduction on three out of the four properties.

Moved by Carpenter and Hamerlik for approval in reduction in assessed value of property from $93,400 to $81,200. Motion carried.
MINUTES/FINANCE DEPARTMENT
July 14, 1998 - Page 2

b) 603 3rd Avenue South, Kay Thompson
Mr. Carsen reported this is rental property, single-family; and they recommended reducing value from $37,100 to $35,600. Moved by Hamerlik and Brooks to approve reduction in assessed value from $37,100 to $35,600. Motion carried.

c) 1422 4th Avenue North, Kay Thompson
Mr. Carsen reported they recommended reducing value from $25,600 to $22,600. Moved by Brooks and Hamerlik to approve reduction in assessed value from $25,600 to $22,600. Motion carried.

d) 2030 32nd Ave.S., Grand Forks Glass & Paint, G.E. Satrom
Mr. Carsen stated that property owners listed their stated cost was $79,706 different than assessor's cost, they had cost on the building including parking lot of $565,094 and assessor's appraised building at $644,800, plus land. He reported that the County Commission did not take action on the land and took action to reduce to $600,000 which is splitting value between assessor's value and owner's stated costs, reducing $44,800. He stated that if the council wanted to discuss this with County Commission, they would have to take formal action, that he's not sure that his going back to the Commission even with full force and effect of the council behind him and a written statement, etc. would be very beneficial.

There was some discussion as to why property owners took protest to the County Commission without first coming to the City, was because they received notice very late. They have authority to make reduction, only requirement is that they notify the city council that they intend to do that, and that gives council an opportunity to refute that action. He stated that the County plans to meet the 21st of July to take final action. He reported that what County does for 1998 would not govern what they do for 1999, and County made it clear that very likely assessed value would go up for 1999. He stated he will relook at the land and building for 1999.

He reported that the County gave considerable weight to the construction cost of the building, and that he argued that the construction cost was not typical construction cost because John Satrom is in the business of laying carpet, put in own ceiling tile, put his own storefront in, and provided paint and the labor for painting inside and out, that construction cost was for the shell of the building, partitioning, plumbing, heating and parking lot, and were typical costs but felt that the other costs of those interior items and storefront were not typical costs, and yet they argued they had a 25% markup. He stated that his cost is based on typical cost for that type of building based on Marshall Swift which they use on all commercial buildings and for sake of uniformity, their system is more uniform than trying to use various costs on buildings. He stated that if he owned building, he would argue that assessed value exceeded his actual cost by $79,000 and that's what they've done.
MINUTES/FINANCE COMMITTEE
July 14, 1998 - Page 3

Moved by Carpenter and Babinchak to accept the recommendation to reduce value of the property.

There was some discussion re. motion, whether to accept that recommendation, or if take no action County would reduce based on their own recommendation. Carpenter and Babinchak withdrew their motion.

Moved by Hamerlik and Carpenter to receive and file. Motion carried.

2. Matter of year 2000 planning process.
Roxanne Fiala reported on status of process, that she will be serving as budget coordinator and will be having meeting tomorrow to put team together and how to go forward from there. She reported that the MIS Users Group will report next week, and will take information, do brain-storming and communicating to the finance committee and give updates on a regular basis. She stated to keep track of everything is one of the main things; that she's had the opportunity to attend two seminars and as long as documented and show that trying to do best to cover everything that may occur. There's a software program called "Year 2000 Planner" that she's reviewing and will make a decision on that by August 1 and will help in keeping track; from that point will establish the test, getting letters back from vendors is not necessarily sufficient, need to test various things, ie., elevators, etc. and then be prepared to out source, upgrade, maybe change vendors if need be. She stated she doesn't foresee lot of that happening, and will establish contingency plan. She stated you will assume in the Year 2000 Project that everything will go wrong and have contingency plan set up. She also stated there are no experts.

Carpenter asked if they will receive written plan with dates when various things will happen; Ms. Fiala stated she would anticipate that by the time that this team is put together by first of August, that by September 1 have dates set up. Carpenter stated he was anxious to see that plan and testing dates, timelines, etc. because make sure we hit those. Ms. Fiala stated that if they have any ideas, suggestions, etc. she's more than open. Information.

3. Matter of 1997 financial audit.
Ron Jahnke, Brady Martz & Associates, stated they performed the audit on the records of the City for this year, that they have copies of the report the City has prepared and they have issued their opinion on that. He stated that this report has been submitted to the GFOA (Government Finance Officers Assn.) for the certificate of educational achievement and the City has had that award for the last 11 years, and in their opinion this will meet all the criteria for the award for the next year.

Mr. Jahnke stated there's lot of information in the report and that one section he would like to point out in the report is
MINUTES/FINANCE COMMITTEE
July 14, 1998 - Page 4

introductory section, and that is very much like an executive summary of what's happened during the year, both financially and non-financial, and this section would be one to focus on and study.

Mr. Jahnke reviewed the different types of audit thAt happened this year along with letters submitted. He. stated that their opinion on the financial statement is a clean opinion and unqualified opinion. There were some questions re. several comments in the management letter and that those items are being taken care of.

Moved by Brooks and Carpenter to approve and accept the annual financial report and to approve payment of the audit fees subject to State Auditing Office's finding an acceptable report. Motion carried.

4. Matter of wide area network update.
Ms. Fiala reported that this is for committee's information, that there was included in packet a copy of her response to a vendor who was questioning our selection of vendors for the wide-area network, that she responded but has not heard anything further. She stated they are proceeding and by the end of the week City Hall will be wired; and they will be going to police building to do walk through and get situated on that; that they are on schedule and wiring and availability will be available by September 1. Information.

5. Matter of sale of former public works garage.
Mr. Schmisek reported this was referred back to committee by the Mayor, that she has discussed with various departments, that there is a concern of selling that building at this point in time and trying to find a new location for the impound and also for storage of landscaping crew's equipment. Mr. Owens, who is in charge of landscaping, has done some research and would need a 6,000 sq.ft. building and have determined that cost would be around $100,000 to replace that portion alone, and had received information from police department that they need 24,000 sq.ft. He reported that the Mayor had contacted individual re. purchase of this building and she doesn't feel comfortable in continuing that pursuit and is waiting for reaction from committee.

Chief Packett reported that staff has researched somewhat, and would need about 2.3 acres of land and about 1246 ft. of fencing and building to house vehicles, evidence, etc. and would be their preference that should the current facility on Mill Road be disposed of and sold, that something else be identified prior to that; and it would be their preference that they utilize existing City properties rather than the expense of purchasing other properties, but there is a cost factor here and would concur with finance and mayor that they have concerns that it could be more expensive than originally thought if disposed of the property and weren't able to get an equipment site for the same amount of money. He thought current site about acre and half.
MINUTES/FINANCE COMMITTEE
July 14, 1998 - Page 5

Babinchak stated that she had talked to the Mayor and that it would cost $90-100,000 for building from what they've been able to gather as information now and felt at this time it wouldn't be prudent unless could find replacement or better estimate or another building available. The Mayor had talked to public works and that building is pretty well full with wastewater and water distribution going to that building.

Hamerlik stated that State Mill Road and appearance of the city could really e improved if that was rehabbed, we could do our-selves, sell, etc.; and that we probably shouldn't advertise to sell it today until find something more adequate than what has been proposed, certainly more prudent than what has been pro-posed. He also reported they have several entities that are working on this, but need to pass motion with intent of selling so that can pursue and have somebody working on it to find and work on how to do it. Mr. Schmisek stated he would hope the study would include the option of the City renovating the pro-perty itself, and should be looking at it. Carpenter stated he would like to see listing of all buildings we have, sq. footage, use, etc.; that someone needs to put all information together and bring back to committee. Mr. Schmisek volunteered the finance department because that is valid finance operation and should be doing these kinds of analysis for the council, and asked for 4 to 6 weeks to gather information and put report together. Babinchak asked that they also look at renovating the property. Info.

6. Matter of joint powers agreement with School District re. special assessments.
Mr. Schmisek reported this agreement requested by School District, that there is some infrastructure at new south middle school which they would normally special assess to a wide area and the School District would be a portion of that district, would pay their costs. He stated that the School Dist. was able to get agreement with FEMA for $1.8 million of DSR money to put in infrastructure, discussed with them and Dr. Sanford asked if there was a way that they could still set up the assessment districts, School Dist. could use those funds to pay the cost of the projects out there and they could recover funds as people annexed and assessments are put on to use for other projects in the school district. He stated this is similar to what they in areas of Columbia Mall and north end McDonald's came in and paid upfront costs and as other development came in, City collected money in special assessments and remitted it back to those com-panies. He reported that Mr. Swanson drafted an agreement and that he and Mr. Fischer, School District's attorney, have some wording they need to clarify. He stated that part of the reason for doing this is that the School District has agreed to pay for putting in South Columbia Road and across on 47th where not yet paved and put in as a rural section at this point, and they would receive some credit back when paving came down Washington and crossed on 47th for the cost of what they are putting in farther west. He reported that projects include watermain, storm sewer, and paving on Columbia Road, and also watermain and sanitary
MINUTES/FINANCE COMMITTEE
July 14, 1998 - Page 6

sewer on 20th Street south of 32nd and goes directly into that. He stated that Mr. Grasser has done some analysis on the cost of these projects and come to a total of approx. $1.4 million and seemed like a match to allow us to go in and put projects in, and perhaps to service the School District with an opportunity then to recover some funding to be used elsewhere in their district.

Hamerlik stated the last time they looked at agreement there were some deletions, any itemization having to do with the federal government. Mr. Swanson reported that the document was not in final form but intent was to see whether enter into joint powers agreement under those terms.

Carpenter asked if money coming directly from FEMA for these projects or is it general infrastructure losses of the School District.

Dr. Sanford reported it's coming for that area and guidelines they had were that should apply it to the best interests of the School District from the standpoint of making the south facility accessible and useable as soon as it is completed, so road is one of the major areas; there is going to be $550,000 worth of tem-porary road going down Columbia and on 47th, there's going to be oversized mains installed, and idea is when school ready , the road would be ready and the infrastructure also ready, City doesn't have to fund upfront and that was gist of the discussion with FEMA. He reported that recouped money would be about $225-250,000 for special assessments for the School District or things for those projects; $550,000 to $600,000 would go for contribu-tion to the City for temporary roads; it was noted they wouldn't collect all of the funds back, collect about one-third back and most would be between Park Dist. and the School District, only about $300,000 that would be developer related and that's water and storm sewer that comes down 20th. They would pay their assessments out of that $1.8 million. He stated they would contribute $85,000 to oversized watermain costs, contribute $488,000 for paving and in exchange for that paving when paving made permanent would not be charged special assessments for the permanent paving (5 to 10 years) only in front of their building; and in addition to that there is $210,000 of specials they would be paying; this comes down Washington and 47th along 20th, plus paving. Mr. Schmisek stated there would be a special assessment district established when permanent paving put in and share they would be credited for would only be the amount for the length of their property; the City would pick it up as City's share (don't have Highway Users funds) and amount for their share in front of their property wouldn't be $488,000.

Dr. Sanford stated that the idea of their request was that if could do this in this particular way, there would be benefits for everybody; City would benefit for not having to do temporary streets, for not having to finance any of the other projects and School District would have their special assessments essentially paid and from standpoint of getting the work done quickly for
MINUTES/FINANCE COMMITTEE
July 14, 1998 - Page 7

potential development and those were issues they were looking at.

Moved by Hamerlik and Brooks motion of intent to enter into agreement giving preliminary approval and bring back to committee.

Dr. Sanford stated there is a bit of timeliness issue from perspective of bidding projects this fall, engineering has been holding on 20th Street and has some significance in terms of placement of 20th, infrastructure along 20th, and becomes an issue for them as they are trying to get the entrance into the middle school lined up with 20th so can get entrance in and get visitor parking lot that they are going to put on the west side of entrance, which will bring it next to the softball complex. Softball complex is going to host a national tournament this fall and would like to have that parking in.

Mr. Swanson stated his drafting is done and is looking to Mr. Fischer, but questioned whether alignment contends upon joint powers agreement. Dr. Sanford stated that financing of that infrastructure is related to the joint powers agreement. Mr. Swanson stated he will call Mr. Fischer tomorrow and get drafting done and have it for committee before Monday.

Carpenter asked what would happen if est. cost of $1.8 or less were more than that; Mr. Schmisek stated that anything over and above that would be additional assessment to the District and in the joint powers agreement. Dr. Sanford reported that part of the issue relates to the fact that 20th may run along side future park and some trade-offs that are going on, but part related to the joint powers agreement because specials being used with developers as potential for future park and school land.

Committee will hold meeting on Monday providing that they have copy of agreement by Saturday.

Upon call for motion, the motion carried.

7. Matter of benefits for municipal judge.
Mr. Schmisek stated this is an issue that has come up now because we have a new judge, that after about 10 years into his term Judge Noack was authorized to join into the City's benefits package program, virtually having all benefits including pension. he stated that is an elected part-time position - and don't advertise that the judge is going to get benefits nor are they told that when anticipating to run; that Judge Eslinger has asked if there is potential for that and that is really a council deci-sion. Mr. Schmisek stated that recommendation from his depart-ment is not to reinstitute this. Dan Gordon, Human Resources, stated they do not have any full-time elected positions so dif-ficult to compare ourselves to the County positions that are full time; they do receive benefits in that comparison to the County (treasurer, auditor, district judges, etc.) who receive full benefit package, and circumstance with Judge Noack was quite
MINUTES/FINANCE COMMITTEE
July 14, 1998 - Page 8

unique, that after 10 years entered into a lot of the City benefits; and concurred with recommendation from the finance department.

Moved by Carpenter and Brooks that the municipal judge position not be qualified for benefits. Motion carried.

8. Matter of financing for new blacktop machine for street
department.
Todd Feland, public works department, reported this was referred to finance committee for possible financing, the machine the street department was looking at was included as part of the capital equipment requested for 1999 budget, this machine costs about $80,000, including truck, and will allow street department to do more extensive pothole patching, that the machine they have was purchased in 1994 and is not made for patching that street department does; that they have accrued a lot of expense in fixing it and machine has failed in its use. Carpenter stated they get so many complaints about potholes, etc. and if some way with cash carryover to do now if get it in time for benefit. Mr. Schmisek reported that they ended 1997 with $1.2 million more in general fund than anticipated, and may be higher going into 1999 and this is type of thing should use that one-time money for, and question is timing so get machine in place for any significAnt use. Mr. Feland stated they wouldn't get machine in 1998, trucks are on long delay - 6 months to a year but helpful to write specs. now so have it next summer. Mark Aubol suggested they could probably get machine and put it on one of their current trucks or find used one. Mr. Feland stated he wouldn't want to make hasty decision but have to visit with operators to see if comparable operation - and have machine here 8 to 10 years. Babinchak asked if could rent machine or bid out patching potholes as a city project. Mr. Feland stated there's no money in street department to fund that; however, Mr. Schmisek stated they would need to use same source of funding. Hamerlik stated that would like to see done before winter comes; Mr. Aubol stated they would be able to do worst ones.

After further discussion it was moved by Carpenter to refer as an added item to public service agenda subject to approval of the public service chair, and that financing is available. Motion carried.

9. Consideration of option to extend agreement for CAFR for
1998.
Mr. Schmisek reported that when the 1997 audit was approved there was an option for extension of one year for 1998 and need to know if they would concur in extending audit report to Brady Martz & Associates for 1998. He reported that the base bid in 1997 was $17,850, and base bid submitted last year for 1998 would be $18,350 or up $500; the single audit portion of the 1997 had a range of $4,350 up to $6,000, the range for 1998 because some of the preliminary work is done, is $2,950 up to $4,000, so cost for 1998 would end up being less than the 1997 cost because of
MINUTES/FINANCE COMMITTEE
July 14, 1998 - Page 9

initial work done with the single audit act in the federal programs; and their recommendation would be to extend the option.

It was moved by Carpenter and Brooks that we extend the audit for one more year to Brady Martz & Associates for the year 1998. Motion carried.

Babinchak stated she was on similar position as Mr. Hamerlik that we keep it as year but would go with the motion; it would be her preference to go out on quotes again.

10. Budget amendment.
Mr. Schmisek reviewed budget amendment for finance department for office remodeling in amount of $1,150 and $6500 for education and training for entire office in area of customer service teamwork, for total of $7,650.00 using departmental carryover from past years to cover those costs. Moved by Carpenter and Hamerlik to approve budget amendment. Motion carried.

Hamerlik asked if by next meeting that they have report on City Code and when books coming out, knows they are trying to get upgraded also.

Moved by Carpenter and Hamerlik to adjourn; meeting adjourned at 5:20 p.m.

Alice Fontaine
City Clerk

Dated: 7/15/98.