Committee Minutes

MINUTES/GROWTH FUND AUTHORITY
Tuesday, January 26, 1999 - 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 Tuesday, January 26, 1999 at the hour of 7:00 p.m. with Chairman Carpenter presiding. Present at roll call were Council Members Brooks, Lucke, Hamerlik, Bouley, Klave, Babinchak, Bakken, Hafner, Owens, Carpenter - 10; absent: Council Members Polovitz, Glassheim, Beyer, Martinson - 4.

Chairman Carpenter stated that the purpose of tonight’s meeting is to hear appeals for the Business Disaster Assistance Loan/Grant Program, and because of confidential nature of the applications, and if Authority agrees, will be going into closed session which will mean that everyone that’s not on the body and staff associated with this, will have to leave the room while discussing each individual appeal. No actions can be taken while in closed session and after the Authority has heard each and every appeal would then go back into open session and at that point in time motions can take place to approve or deny the appeals.

Chairman Carpenter asked for a motion from someone on the Growth Fund Authority to authorize us to go into executive session in reference NDCC 44-04-19.2.

Council Member Hamerlik stated that the presenting agency business would be in the room and that anybody that they had with them could be present with them or anybody they decided to be with them; Chairman Carpenter stated that anybody here on behalf of a specific appeal can be present when that one is heard.

COUNCIL MEMBER LUNAK REPORTED PRESENT

Council Member Hamerlik stated that before they go into closed session that there may be some things that should be discussed publicly, but as they go back into the history of this matter, that there was a presentation and approval to have $2 million set aside in CDBG money, that they asked staff to come in with a presentation which they did, the presentation came with the proposal which was passed and which included $250,000 out of the $2 million, or $1.750 million, for Business Assistance. He stated the proposal was passed to have the $250,000 for employee assistance (helping agencies with their employees, internship,

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etc.) He stated as he recalls some 170 applications came in with about $8 million so committee and staff started paring it down, that they came out with an A list and a B list, and some of the people here today on appeals must be on the A list and some on the B list, and from that have some 30 or 40 that were funded, and came out exactly to $1.750 million and it wasn't a forced balancing, but have spent all the money, and asked do they have any money. He stated they should decide whether they can objectively look at this and not turn down for lack of money but for the appeal for which they are presenting it; that if not going to do that and when go into city council allocate money for the program, we should know that now.

Council Member Bakken stated he understood that we would do this in case there were more funds allocated at a later date, and this would be out of the way.

Chairman Carpenter stated the way he anticipated the process working, if they’re granting of appeals and awarding of funds from this body, he would anticipate if this group decides that some of these merit approval and funding at some level, this is the same body that serves on the city council and is going to approve the additional funds to come out of the CDBG funds. He stated that’s a factor you take in as you make your decision and if make a decision tonight to award funds, then need to follow up with that at the city council level. Council Member Hamerlik stated he feels very comfortable with that approach as long as they look at them, and not looking if there’s money or not, but look at face value of their appeal, but is there some action or some straw vote or something they could do so have ground rules before start appeal process.

Council Member Hafner stated he agrees with Council Member Hamerlik that it may be futile to discuss appeals if don’t have any money but are here and if any need that we could help out with, should go through the procedure, but hope that everyone understands that there may not be money even though we think some are viable, have to find out where that money is, and at the moment not prepared to make that decision but willing to listen to the appeals.

Chairman Carpenter stated that if any are approved, and not sure if they will be or not, that will find the money for them; he

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stated they cannot formally vote on that, it’s not a matter of agenda of council tonight so nothing binding could be done to approve that tonight.

Council Member Hamerlik stated that the other thing that came to mind is because there was quite an elaborate system that was established by the subcommittee and staff that for us to make a specific amount may not be in order tonight but maybe to say yes there’s ground for some assistance here, but to pull it into context with the rest.

Council Member Bakken stated that out of 175 that applied, hard pressed to find any that don’t deserve some funding, that out of all these people all probably need funding, all need help and out of the ones that we have as appeals, there’s more that didn’t appeal. Council Member Hamerlik stated he didn’t dis-agree, however, we’re acting on 22, the rest had that oppor-tunity to appeal, but the 22 we’re acting on tonight rather than setting a specific dollar amount to throw out of line, either too low or too high, in comparison that the committee has already funded to have it more in line and be a matter of fairness.

Council Member Lucke asked for an overview on how process went, what main criteria were for ranking so when listening to people, can be making notes and asked if they would do that so everyone here can hear that overview even though most of them know it, or wait until go into executive session, but now might be best time to do that.

Terry Hanson, Urban Development, stated that upon the allocation of $2 million to Business Assistance Program by the city council, their office developed a program they brought back to the city council for their review and approval; that out of $2 million, $1.75 million was to be used for a loan/grant program and $250,000 would go towards an Employment Assistance Program with one-third of that going through the University of North Dakota Coop. Program and rest to an employment program that they utilized the Job Service of North Dakota to review the appli-cations. He stated that the Loan Program began with a pre-application, held two seminars at the University (Rural Tech-nology Center) and did advertise in the paper and in the


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Chamber of Commerce news letter (went out twice), was in the Grand Forks Herald, was on radio, trying to avoid what had happened in the previous program where they were criticized for not having it publicized enough. He stated they received 172 pre-applications and reported to council the number of appli-cations and total dollar amount requested, and that they would now be going back and asking for additional information that was necessary to determine the financial viability of the individual applicants. Two requirements under economic development for CDBG regulations: 1) can’t have more than $35,000 per employee, and 2) that you must perform a financial review of the applicant; and they requested from all of the pre-applicants a list of items they felt they could review which would con-stitute having a financial review. There was a deadline placed on that, and one week or 10 days prior to that deadline, they sent out a reminder letter to all of the applicants stating that this information was due (in late October), from that applica-tion they received the information from around 80 applicants and could start some kind of financial review, checked off the information that they received and if felt they were lacking enough information for a full financial review, they did contact those applicants and stated they needed additional information. He stated from that they initiated a Growth Fund Committee meeting to organize procedure, steps that would be taken to review the applications and set up criteria for the review. He stated that one of the main key components of what council approved in the Program was that economic injury was eligible for application but preference would be given to physical damage, but economic damage would be considered. He stated that the criteria: 1) must be located within the city limits of Grand Forks; 2) business existed at the time of the 1997 disaster and current ownership; 3) business owners must have primary residence in the immediate trading area; 4) business employees must need HUD’s low to moderate income ratios; 5) each employee of the business assisted will be required to complete a financial income certification.

Mr. Hanson reported they received the financial information, established the committee meetings, and on second meeting the committee went into closed session, and initial step was to review financial information of applications and determined whether they should be granted further consideration for funding or whether the information provided was inadequate or was justification for that entity not to receive any additional
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information, and that the A list included the no’s and the B list were the ones we should give further consideration. He
reviewed criteria that the committee used: did you sustain
physical damage or not; could you prove or show economic injury; are you a viable business; are you under economic distress as what appears to be as a result of the flood; the number of employees that are in the business; any prior assistance that you received both from the City and/or from SBA; and use and intent of the funds. He stated this is criteria they used for reviewing yes candidates for. He stated they held a closed session and reviewed each application individually, they scored all applications and based on that, awarded the funds to the individuals they felt were the most needy. Since that time, and one of the parts of this program that they initially set up was that there would be an appeal process. They sent out letters shortly after the final award to all applicants indicating to them that whether they received funds or not, advised them if they were awarded any funds and how much, or if weren’t awarded funds, told them that there would be an appeal process and have to have a letter back to Urban Development indicating their desire to appeal within two weeks. He stated they received 22 letters of appeal or some indication of desire to appeal the decision, some were from those that were not funded at all, some were from those that were not considered on the B list, or from the initial pre-application, and some were from those that were awarded funds, and that brings us to tonight.

Council Member Lucke stated that he understood how the process worked, wasn’t it a process that where there was a preliminary amount of money that we’d like to award and then take a proportion of that to what was available and that’s how zeroed in to make it come as close as was necessary. Mr. Hanson stated it wasn’t a forced figure, that when they added up the initial total of what the committee allocated, it came to $1.727 million. Council Member Lucke stated that if there were additional monies to put into this Program and wanted to dedi-cate more money to this Program, would almost want to re-massage all those numbers and everybody should qualify for additional monies, because we’ve already tried to make this come out to the number, fairness was the ranking system, the scoring system, what it tried to do was to allocate this money in a fairness to each other relationship, and that’s what he thinks the sub-committee did. Mr. Hanson stated that the subcommittee worked

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very hard and took this in real earnest, when they reviewed
their individual thoughts on each application, very few that they were differentiated on, and those that where there were differences, a large grant in their opinions was discussed by the whole committee and the committee made the decision on the funding level and whether or not they were funded. Council Member Lucke stated that it’s not the $1.75 million that went to small businesses because some of the duplication of benefits computations involved the other programs, that there was a Business and Industry Assistance Program where monies were granted, there was an interest subsidy program where small businesses benefited and also the flood insurance program, and maybe Mr. Hanson could tell us what that was but the sum total of the small business maybe is closer to some where between $6 and 8 million. Mr. Hanson stated he thought it was close to $5 million that they have put directly out to the small businesses, did have $2 million from the initial round, and interest subsidy program the council allocated $4.4 million for that program, and was not very well accepted or utilized and that program put out just under $1 million; the flood assistance program was $150,000 and that originally was $600,000 allocated to that program. He stated that with the other $250,000 left, do have good interest on that and getting very good help from both the Coop Programs at the University and the Job Service Program. He stated to remind the council that the committee allocated that money to Employment Assistance Program, was that shortly after the flood there was a survey taken of all businesses, and another one taken about a year later, and both those surveys indicated that the employers were having difficulty finding employees at all and when did find them, they needed training; and based on that felt that an employment program, one directed to some kind of training, was very warranted, and that’s why they offered it.
It was noted that approx. 70 employers checked that they were interested in that program (on the initial application)

Council Member Hamerlik stated he was not being critical of the total process of the committee, but as total bundle they did a good job, thinks staff and committee really worked diligently and hard.

Council Member Lucke stated that there was some discussion following publication of the listing re. amounts to various businesses etc. and sees in the process that the list doesn’t tell the whole story, because businesses maybe received from

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other programs, and thinks there was a real attempt to do some balancing here and that’s what the media hasn’t done a real job of relaying to people, but watched this process and on surface fairly comfortable but that’s why listen to these appeals to see if some decision should be modified.

Council Member Lucke moved that we go into executive session in reference NDCC 44-04-19.2. Council Member Hamerlik seconded the motion.

Mr. Hanson reported they have received word as of today there are 4 applicants that will not be attending tonight’s meeting and as those applicants come up, he will advise the committee on what their wishes are, why they are not attending, and also have one applicant that is returning the funds, not accepting the funds as awarded.

Council Member Hamerlik stated as a reminder that they will be called in and be given five minutes as was stated in their letter.

Upon call for he question, the motion carried 11 votes affirmative.

Chairman Carpenter stated they will now go into executive session, and everybody other than staff will have to leave the room and they will call in individual applicants based on order that they are listed on the agenda.

EXECUTIVE SESSION.

Following the executive session, the Growth Fund took a five-minute recess at 10:45 p.m.

The Growth Fund reconvened at approx. 10:50 p.m. in open session
and Chairman Carpenter called the public meeting back to order with all members present.

Council Member Babinchak moved to deny any further funding for the following businesses: Conlin’s Furniture; Crown Motor Company, Eileen’s Boutique, Inc., Firehall Rentals, GF Vending, Gateway Sports; Merry Maids, Modern Information Systems, North

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Central Management Group Blockbuster Video, Oldies-N-Goodies, Olson Rentals and Geico & Affiliates, S & H Express, Tony Anderson Construction, and Velkommen. Council Member Lunak seconded the motion.

Chairman Carpenter asked for discussion - from Growth Fund Authority or anybody in the audience. There were none.

Carried 11 votes affirmative.

Chairman Carpenter stated with that denial, that if at some point in time they would allocate additional funds to this Program for general application, they would be considered and contacted at that time.

Chairman Carpenter presented the matter of H.E. Everson Company.
Council Member Hafner moved that we approve an additional $15,000 if funds available. Mayor Owens seconded the motion. Carried 11 votes affirmative.

Chairman Carpenter presented the matter of Knights of Columbus.
Council Member Lunak moved that we approve Knights of Columbus $15,000, under the terms of the Program guidelines. Council Member Brooks seconded the motion.

Mr. Hanson stated clarification to the motion that when grant or rather approve $15,000 under the Program guidelines.

Council Member Klave asked to be excused from voting on this matter. It was moved by Council Members Babinchak and Hafner to allow Council Member Klave to abstain. Carried 10 votes affirmative.

Chairman Carpenter stated he still has some concern that it’s non-profit and has hard time with funding of it, but some discussion as to whether it’s an actual business or not. Gregory Norman stated it has non-profit status and is a business.

Upon call for the question and upon voice vote, the motion carried.

Chairman Carpenter presented the matter of Medvue Fitness and Wellness Center. Council Member Babinchak moved that we approve
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$15,000 in funds under program guidelines. Council Member Lucke seconded the motion. Upon voice vote the motion carried.

Chairman Carpenter presented the matter of O & K Glass. Council Member Brooks moved that we approve $5,000 under the program guidelines; Council Member Klave seconded the motion. Upon roll call vote the following voted “aye”: Council Member Brooks, Lucke, Hamerlik, Bouley, Lunak, Klave, Owens - 7; voting “nay”: Council Members Carpenter, Babinchak, Bakken, Hafner - 4. Chairman Carpenter declared the motion carried.

Chairman Carpenter presented the matter of Super Clean Windows.
Council Member Lucke moved that we approve $4,000 under the program guidelines; Council Member Lunak seconded the motion.
Upon roll call vote the following voted “aye”: Council Member Brooks, Lucke, Hamerlik, Bouley, Owens, Lunak - 6; voting “nay”: Council Members Carpenter, Klave, Babinchak, Bakken, Hafner - 5. Chairman Carpenter declared the motion carried.

Chairman Carpenter presented the matter of Tanfastic Tanning Salon. Council Member Babinchak moved that we grant $15,000 in funds under Program guidelines, and viable business plan be presented. Mayor Owens seconded the motion. Upon roll call vote the following voted “aye”: Council Member Lucke, Hamerlik, Bouley, Babinchak, Owens - 5; voting “nay”: Council Members Brooks, Carpenter, Lunak, Klave, Bakken, Hafner - 6. Chairman Carpenter declared the motion failed.

Chairman Carpenter asked if there was any other motion in regards to this application. Council Member Hamerlik moved to grant $10,000 in funds to Tanfastic Tanning Salon under program guidelines. Council Member Babinchak seconded the motion. Upon
roll call the following voted “aye”: Council Member Lucke,
Hamerlik, Bouley, Carpenter, Lunak, Klave, Babinchak, Hafner, Owens - 9; voting “nay”: Council Members Brooks, Bakken - 2. Chairman Carpenter declared the motion carried.

Chairman Carpenter presented the matter of application of Unique Impressions. Council Member Hafner moved that we grant an
additional $15,000 under Program funds for Unique Impressions. Council Member Hamerlik seconded the motion. Upon voice vote, the motion carried.


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Chairman Carpenter presented the matter of Urban Stampede. Council Member Lunak moved to approve $15,000 under Program guidelines; Council Member Lucke seconded the motion. Upon voice vote, the motion carried.

Chairman Carpenter stated that this takes care of all the applications for appeal. Council Member Hamerlik stated there has to be a change in matrix system for the funding before this becomes official. Moved by Council Members Lucke and Hafner to refer this to Urban Development Committee for consideration of allocating additional funds. Carried 11 votes affirmative.

It was noted that the Urban Development Committee will be meeting on Friday, at 12:15 p.m. Members of the Growth Fund Authority returned their books back to staff.

ADJOURN

Moved by Hafner and Bakken to adjourn. Meeting adjourned at 11:15 p.m.

Respectfully submitted,



Saroj Jerath
Deputy City Auditor