Committee Minutes

MINUTES/GROWTH FUND AUTHORITY (JDA)
Monday, June 7, 1999 - 6:30 p.m.________________

The city council of the city of Grand Forks sitting as the Growth Fund Authority met at the council chambers at City Hall on Monday, June 7, 1999 at the hour of 6:30 p.m. with Chairman Carpenter presiding. Present at roll call were Council Members Brooks, Hamerlik, Bouley, Lunak, Klave, Babinchak, Bakken, Hafner, Mayor Owens, Carpenter - 10; absent: Council Member Martinson - 1.

HOLD PUBLIC HEARINGS ON APPLICATIONS FOR
FUNDING ASSISTANCE

COUNCIL MEMBER LUCKE REPORTED PRESENT

a) Agsco, Inc. (Ag Park, LLP)

The city auditor read the recommendation from the Growth Fund Subcommittee as follows:
Approval of a PACE loan buydown of an amount up to $80,000. The assistance will be in the form of a zero interest loan to be repaid starting at the time the PACE loan is paid in full at the same payment rate as the PACE loan until the balance of the Growth Fund loan is paid in full.

Chairman Carpenter called for the public hearing on the application and recommendation and asked for comments. There were no comments and the public hearing was closed.

It was moved by Council Member Hafner and seconded by Council Member Babinchak to approve the recommendation of the Growth Fund Committee.

Council Member Lunak questioned the number of employees, whether brought to total anticipated. The chief financial officer at Agsco reported they have added a significant number of employees since the first time they came in 1994, after 1997 they hit a cooling off period and it was fairly slow for them, that after the last loan they are 2 employees behind what they anticipate, and by the end of this year will be ahead and year from now they will be farther ahead of what they need to add to their payrolls of full time equivalents in order to more than cover this PACE loan (anticipating 21 employees).

Upon call for the question and upon roll call vote the following voted “aye”: Council Members
Brooks, Lucke, Hamerlik, Bouley. Klave, Lunak, Babinchak, Bakken, Hafner, Carpenter, Mayor Owens - 11; voting “nay”: none. Chairman Carpenter declared the motion carried.

b) Aatrix Software, Inc.

The city auditor read the recommendation from the Grown Fund Subcommittee as follows:
1) Approval of a $400,000 loan at 4.5% with the final payment structure to be negotiated by staff.
2) Approval of a loan up to $51,000 for a PACE loan buydown. The assistance will be in the form of a zero (0.00%) interest loan, to be repaid starting at the time the PACE loan is paid in
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full, at the same payment rate as the PACE loan, until the balance of the Growth Fund loan is paid in full.

Chairman Carpenter called for the public hearing on the application and asked for comments. There were no comments and the public hearing was closed.

It was moved by Council Member Hafner and seconded by Council Member Babinchak to approve the motion of the Growth Fund Committee. Upon roll call the following voted “aye”: Council Members Brooks, Lucke, Hamerlik, Bouley, Lunak, Klave, Babinchak, Bakken, Hafner, Carpenter, Owens - 11; voting “nay”: none. Chairman Carpenter declared the motion carried.

CONSIDER MATTER OF DE-OBLIGATION OF PS
DOORS LOAN AS OF JUNE 30, 1999

The city auditor read the recommendation of the Growth Fund Committee as follows: de-obligation of these loan funds contingent upon action being taken before June 30, 1999, and that a new application can be submitted when funding for the project is needed.

It was moved by Council Member Brooks and seconded by Council Member Lunak to approve the recommendation of the Growth Fund Committee.

Council Member Brooks stated this was contingent upon their leasing the building they are in, PS Doors representative stated they were comfortable with the June 30 date.

Pat Downs, Development Corporation, reported that the amount de-obligated was $199,000, and when they funded this project there was an existing loan on the books and they were going to include that into the new loan, and new loan that is to be de-obligated is only $154,000 (other was an existing project).

Upon call for the question and upon roll call vote the following voted “aye”: Council Members Brooks, Lucke, Hamerlik, Bouley, Lunak, Klave, Babinchak, Bakken, Hafner, Carpenter, Owens - 11; voting “nay”: none. Chairman Carpenter declared the motion carried.

APPROVE BID AUTHORIZATION ON CONCRETE
AND DOORS AT 917 SOUTH 46TH STREET

The city auditor read the recommendation of the Growth Fund Committee as follows: to authorize staff to request bids for two overhead doors and the needed concrete. (Wood Products building) (est. cost $35,000)

It was moved by Council Member Babinchak and seconded by Council Member Klave to approve the recommendation. Carried 11 votes affirmative.

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CONSIDER MATTER OF SALE OF PROPERTIES
ON EAST SIDE OF SOUTH 3RD STREET

Gary Christianson, Urban Development, reported he had sent out an overview of the offer for the purchase and redevelopment of properties on the east side of South 3rd Street, recapping some of the issues related to that, and a copy of the offer for those properties from Architectural Properties and a listing of their conditions and map of the site. He reported that most of these properties were transferred earlier to the JDA after the flood for the DDC to manage the disposition of these properties, and there are some items on the list that are JDA specific and some requests by the bidder that would require some council action.

COUNCIL MEMBERS GLASSHEIM, BEYER AND
POLOVITZ REPORTED PRESENT

Mr. Christianson stated they would want to consider accepting the bid from Architectural Properties contingent upon satisfactory negotiation of the bid conditions and authorizing proper officials to draft the necessary purchase and development contracts to incorporate those conditions, and that action should be contingent upon a positive action by the council on those other issues that are related.

Bill Schoen, Architectural Properties, partnership of himself, Jim Kobetsky, and two other individuals, and presented project they conceived of for 3rd Street, and in order to get a quality project ended up pursuing the entire project, and reviewed map of the area - redevelopment of the storefronts in historic nature and along 3rd Street;they are anticipating a complete restoration of original buildings, and opening up with redevelopment on the town square side of the Phoenix building; to redevelop the back of the buildings to interior parking for the apartments which are proposed for second floor of Phoenix, Panovitz (and third floor) and NSP buildings. He reviewed matter of apartment buildings, parking lots, etc. and to build an infill building.
He stated they would like to be ready for students next year, and would like to start as soon as possible and be done by next fall.

Council Member Bakken asked how much in private funds would be invested in the project; Mr. Schoen stated about $1.4 million and total project $2.6 million and does not include tax abatements. It was stated that the Grand Forks Glass and Paint Company property would be part of the assessed value of the ultimate project and is included in the $2.6 million.

Chairman Carpenter stated that since JDA owns the buildings, this committee would have to transfer the buildings if other conditions were met.

Council Member Beyer stated they discussed in Urban Development whether to discuss tax abatement tonight or approve the concept and then send on to finance committee to deal with the tax increment financing, etc. and then come back to council. Mr. Schoen stated two weeks wouldn’t be a problem, that on the 16th they will meet with reps. of Corps of Engineers and will
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be negotiating details. It was noted that the tax exemption process does take some time because of publications, hearings, etc. Jim Kobetsky stated they do need to know whether concept approved or not.

Council Member Lunak questioned how much work is left to do on hazardous materials in these buildings; Mr. Christianson reported that Curt Siewert was doing most of the demolition work in there and much of that has been done and perhaps some minor lead based paint in one of the buildings and didn’t anticipate that it could exceed $50,000 for all the buildings, and probably less.

It was moved by Council Member Bakken and seconded by Council Member Glassheim to transfer the properties subject to agreements being in positive action by the city council.

Council Member Glassheim stated that what they anticipate is a motion by council to approve in concept the items, and they likely will be discussed by council members, and hopes that the general concept will be approved so there will be further discussion of the particular items
at council meeting.

Upon call for the question and roll call the following voted “aye”: Council Members Brooks, Polovitz, Lucke, Hamerlik, Bouley, Glassheim, Lunak, Klave, Beyer, Babinchak, Bakken, Hafner, Owens, Carpenter - 14. Chairman Carpenter declared the motion carried.

CONSIDER MATTER OF SALE OF 319-322 DEMERS AVENUE

Mr. Christianson reported this is a similar situation of one of the properties that was transferred to the JDA and the DDC did put out advertisement for bids on this and received three bids, and bid that was submitted to the Growth Fund Authority is their preferred alternative, there has been some work on attempting to reach final agreement but would recommend that they authorize proper City officials to draft a final purchase and development agreement which would incorporate the conditions identified and to identify any specifics as to how the title would be transferred and any conditions on that with respect to the items listed in that agreement.

Council Member Bakken asked what the other bids were, and the timeline on demolishing the building. Mr. Christianson stated that in the agreement it states that their hope is to do it by the end of this year, but by May 15, 2000 at the latest. Mr. Christianson stated that the DDC talked about maintenance of common wall and representatives are here that could speak to that., that they shared that concern and it was felt that since the new building would be going up there it didn’t appear to make sense to go to a lot of trouble with that space. It was noted this was discussed at DDC and believes it is hope, but not guarantee, that developer will start demolishing this fall. Ms. Triplett stated that it is the developer’s intent to build a three-story building in it’s place and is the same developer who’s developing the First National Bank across the street and wouldn’t do anything to negatively impact his own property.

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Mr. Christianson reported they had one offer on the building from Dakota Building, Inc., $35,000 and expressed an intent to spend approx. $300,000 for repair of the building, and had hoped to secure a drugstore or finance company to go on the main floor; that they had an offer from Oriental Avenue Partnership, $8,000, and planned to spend about $1.3 million renovating the building and had a perspective tenant that may have been a printing/copying type business and intended to do residential on the second floor; and this proposal was a bid of $20,000 and planning to spend $1.8 million building a new three-story building on that site and putting a bank or other commercial spaces in there.

Mike Maidenberg, chair of the DDC, stated they felt that this was the very best and highest use for this critical corner in the new downtown at 4th and DeMers across from the Corporate Center and the other building and replacement of First National Bank building, to have a new building there - three stories to handle the kind of commerce, as opposed to rehabbing the building with indeterminate results; that they understand the issue about competition, want competition and want there to be a good mix of businesses down there but when looked at all the various pieces and bids, this was far and away in the DDC’s judgment, the best possible use.

Connie Triplett stated that James Hawley intends to build a building on the site at 4th and DeMers, which will be sympathetic to the First National Bank building and that’s what he has instructed the architects to design for him is a building that will compliment the building across the street and the question re. common wall which was concern about appearance of the wall while it was exposed, and that the wall is sturdy enough structurally to handle that, and that’s a question that the architect’s and engineer’s will have to answer, and obviously will have to tear down the existing building in a way that preserves and protects the structure and the structure next door. She stated that the DDC requested that if for some reason the developer doesn’t go forward with the project, that the JDA would have the option of buying back the property so that it could be transferred over to some other developer; that Mr. Hawley has every intention to move forward with this project; and that he’s hoping to do the demolition this fall but committed to getting it started by next May15 at the latest; and then there is a period of time for the reconstruction but approx. one more year before construction and DDC would be able to exercise its option by December of 2001.

It was moved by Council Member Beyer and seconded by Council Member Brooks to approve bid by OJ Properties according to the terms of the addendum to the bid form. It was noted that the recommendation from DDC is based off of review of all the bids and what they believe to be strongest and best for that site.

Council Member Bakken amended the motion to require demolition by December 31, 1999; the motion was seconded by Council Member Klave.

Mr. Maidenberg stated they went over this at some length with the developer and his representative and felt that the plan they have in place which anticipates it will be torn down before the end of the year but that gives the developer until May of the following year is
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reasonable and would be the better choice for them to deal with this particular property, and would prefer that it remain as stated in the DDC proposal.

Mr. Maidenberg noted that there are requests of about $1.4 million more than what is in the DDC matrix or ability to handle but they feel it’s their job and council has given them the responsibility for paring those down and bringing it in within budget. He stated that this corner and the east side of 3rd Street and these are critical parts of bringing back the downtown and these are the ones bringing forth now and for which there is sufficient dollars. Mr. Christianson reported there was $5 million in Downtown Commercial Rehab Grant Program and $500,000 set aside for DDC administrative expenses and $2.8 million in general on downtown improvements.

Ms. Triplett reported that Mr. Hawley has his own separate reasons for asking for the delay to next May if possible, and that is a project that he is working on and finishing in California and if that works out, he will be able to do the demolition this fall, and if it doesn’t then for his own personal reasons he may not be able to get to it until next spring, and asked council to vote against the amendment and leave the time line as it was negotiated.

Todd Nedberg stated he had several comments on this, that Mr. Lunak had asked earlier about not seeing all of the bids on the building and Mr. Christianson had forgotten to give him the bids and it would seem to him to be hard to make a decision unless you had all the information in front of you and knew what all the bids were; and the second matter is if you say you’re going to tear a building down at a certain date, that’s fine, but if you have no penalty for not tearing it down at that date, there’s no enforcement in this to make them tear it down.

Upon call for the question on the amendment (to require demolition by 12/31/99), and upon voice vote the motion carried 2 votes affirmative; 12 negative votes, and Chairman Carpenter declared the motion failed.

Upon call for the question on the original motion and upon voice vote, the motion carried 13 votes affirmative; Council Member Lucke voted against the motion.

MATTER OF SALE OF 22 SOUTH 3RD STREET

Mr. Christianson reported he had presented a memo from the Downtown Development Commission that speaks to 22 South 3rd Street and enclosed with that are the two offers they received for this property, and the DDC’s recommendation was to sell the property to Kim Holmes for $1.00 and that would be contingent upon city council action on the remaining part of the proposal, funding for the interior and sidewall renovation.

It was moved by Council Member Glassheim and seconded by Council Member Beyer to sell the building to Kim Holmes for $1.00 subject to council action regards to the grant award.

Mr. Maidenberg reported that as they looked at this development of the Berg building, felt that
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the particular use of this building as promised by Sanders, Kim Holmes, fulfilled a lot of what they felt Mr. Holmes had brought to the city and brought to the urban scene in downtown as an earlier leader of the downtown renaissance, an established restaurant with a good reputation and that they felt that this would be by far the best use of this building in the right place, it fits quite well with 3rd Street, the overall development of 3rd Street with the opposite side, east side they have discussed and this was unanimous on the part of the DDC that this was the best use for this building.

Dan Samson stated they planned to do the same thing to that building, historic look.

Council Member Lunak questioned that when seeing papers where one firm offering $100,000 for the property vs. $1.00 for the property and how do we make that decision. Mr. Maidenberg stated it wasn’t to the immediate dollar issue but the long term development of downtown bringing into this particular building a particular restaurant which is identified with Grand Forks for which people travel miles to come which has expressed an interest from moving from a suburban location back downtown so it’s not to bring a new restaurant in but transferring a restaurant and that development in that spot will help spur other development around there because people will want to be close to this particular restaurant and in the scheme as they have gone through the downtown. They thought about the uses and the mix of businesses there, this is a restaurant they felt would be particularly suitable as has been proven before, and why choosing this bid over the other bid, the difference was perhaps $80,000 as opposed to where they are now, in the short term it’s not as much money but in the long term it will be to the city’s benefit far more, and this is what the DDC has concluded.

Upon call for the question and upon voice vote, the motion carried 14 votes affirmative.

ADJOURN

It was moved by Council Members Beyer and Lunak that we do now adjourn. Carried 14 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor