Council Minutes

COMMITTEE OF THE WHOLE

Monday, January 14, 2002 - 7:00 p.m.

The city council met as the Committee of the Whole on Monday, January 14, 2002 at 7:00 p.m. in the council chambers in City Hall with Mayor Brown presiding. Present at roll call were: Council Members Brooks, Bjerke, Stevens, Hamerlik, Burke, Gershman, Lunak, Christensen, Klave, Kerian, Kreun, Martinson - 12; absent: Council Member Bakken - 1.

Mayor Brown announced that when addressing the committee to please come forward to use the microphone for the record, and advised that the meeting is being televised live and taped for later broadcast.

Mayor Brown reported that we were proud to host the Marketplace of Ideas event in our city, attendance surpassed expectations, it strengthened Grand Forks relationships across the state, and thanked Senator Conrad and Ag Commissioner Roger Johnson, the local volunteers and everyone who attended this important event.

He reported that Health Trip 2002 starts tomorrow at Century School, this is the 12th year that Health Trip has been in session, it uses teams, incentives and flexibility so it is fun to stay healthy, would like to applaud all participants and encourage everyone to take part, and can join any time between now and April. For more information the co-sponsors are the YMCA, Grand Forks Chamber of Commerce, and Altru Health System.

He stated he would like to welcome our Schroeder Jr. High students tonight who are attending this meeting for special credit.

COUNCIL MEMBER GLASSHEIM REPORTED PRESENT

2.1 Request from George G. McEnroe for preliminary approval of the plat of Mac’s NGF Addition, Falconer Township, Grand Forks, ND being a part of the SE Quarter of section 18, Twp. 152 North, Range 50 West of the Fifth Principal Meridian and including a variance to the subdivision code as it relates to access onto a section line road (arterial) and to minimum lot sizes of 2.5 acres for Non-farm Single Family Lots, said addition is located west of North 42nd Street and north of 54th Avenue North.__________________________________________
Council Member Hamerlik asked if there would be any difficulty if there were any litigation involved in the property, and if it would have any bearing on how we proceed. Mr. Swanson stated typically no unless there were a restraining order or some other form of injunctive relief issue.

Council Member Glassheim asked what the acreage of the 3 lots and what would have to be done to make it into three 2.5 acre lots. Dennis Potter, city planner, reported that a copy of the plat map was included with the staff report, and that at discussion of Planning and Zoning Commission meeting that lot lines would have to be adjusted in area of Lot 1 to reduce some of the lots at the north so could get 2.5 acre lots all the way through. Mr. Glassheim asked what is Lot 1 as they propose it. Mr. Potter stated he would have the answer for them next week. Mr. Glassheim asked what the impediment is to making it go a little farther north; Mr. Potter stated none, that the developer proposed it the way you see it, and Planning and Zoning Commission felt that since they could actually achieve a 2.5 acre minimum lot size for all the lots, that they did not want to grant the variance, and can reasonably reach that.


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2.2 Request from Rick Tonder on behalf of the University of North Dakota for preliminary approval of the plat of West Campus Resubdivision, being a replat of all of Blocks 2 and 3, Burlington Northern Industrial Park Resubdivision including portions of North 42nd Street and University Avenue right of way and vacated North 43rd Street and 1st Avenue North. This plat also hereby corrects the plat of Burlington Northern Industrial Park Resubdivision by the removal of the southerly 15 feet of Lots 3, 4 and 5, Block 2, Burlington Northern Industrial Park Resubdivision, Grand Forks, North Dakota._____________________________________
No comments.

2.3 Request from Rick Tonder on behalf of the University of North Dakota for preliminary approval of an ordinance to rezone and exclude from the U-D (University District) and to include within the West Campus PUD (Planned Unit Development) Concept Development Plan all of West Campus Resubdivision, Grand Forks, North Dakota.__________________________
Council Member Bjerke asked Mr. Carsen, city assessor, if he could briefly review the policy as far as the state law if part of the building is used for instructional purposes, and what happens as far as the whole building concerning property taxes. Mr. Carsen stated that under State statutes buildings that are located on state-owned land and used at least in part for academic, research purposes by the State University or students, exempts the entire building.

Council Member Bjerke asked if Barnes & Noble property is exempt from paying the dike special assessments because it’s a private enterprise on state land; Mr. Carsen stated that special assessments are spread by the finance department. Council Member Bjerke asked if he could have that information by next Monday. He stated that if we’re going to be developing state-owned land for private businesses, that the private businesses should pay all applicable city taxes, fees and special assessments, including the dike assessments, and if we fail to do this, will give an unfair business advantage to other businesses - some directly competing or competing as far as employees, but if fair to all of our citizens, they should all pay the same taxes. He stated we also need to look at whether or not these buildings are going to be paying the dike special assessments but if have drawn up into lease as a condition of zoning, that any private business that locates on University property be required to pay that dike special assessment, that the City needs to protect our businesses and there is a potential to have businesses that basically are getting away tax free.

Mr. Swanson stated that the City of Grand Forks does not own any property nor would it be in a position to enter into a lease with any developer; the other item that he does need to caution the council, insofar as you’re acting upon a request for rezoning - a land use issue - you need to be aware that discussions regarding whether property will or will not be taxable with respect to its ultimate use may not be necessarily germane to the question of land use - discussion should really focus on whether or not the intended use or potential use is consistent with your long range planning documents or the present use in the area or the potential uses in the area.

Council Member Bjerke asked that if the City rezones the property and the building starts, is it too late to ask these questions then. Mr. Swanson stated you can ask the questions at any time you deem appropriate, but uncertain as to how germane they are to a request for rezoning. Council Member Bjerke stated that the council needs to look at this and would hope during the legislative session we need to look into two things: 1) should private enterprise businesses on state-owned land not have to pay property taxes because a small portion of their building is used for instructional purposes; 2) should they not have to pay the dike special assessments because they are on state-owned land, that if they are a for profit business, they should be treated the same as any other business; and would hope that this would be addressed at the next legislative session.
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Mr. Swanson stated that those are two items that he, as being staff to the City’s legislative committee, has on his list for legislative matters, along with several others that have arisen since the last session; that those are issues that were passed during the last session, which they could not address at the time, and whether it’s with regard to the hotel or other properties that are being developed, but thinks they are separate issues from land development concerns.

Council Member Brooks stated we need to act on the zoning request and tax concerns are concerns they both have as their ward includes the University area before any redistricting, but talks will proceed - that he likes to see any kind of development but there are concerns and council will be kept abreast, but premature to get into those discussions.

Council Member Gershman stated he wished to make a clarification, that he had a conversation with Mr. Schmisek asking why we wouldn’t consider putting the next dike assessment on the property tax, and answer was because if you do that, then it exempts the non-profit entities from paying the special assessments, and it appears that if we keep these special assessments then those entities that are normally exempt do pay the specials for the dike.

Council Member Christensen stated that the State Legislature passed a statute last session that exempted the State of North Dakota’s properties from the special assessment for the dike in this city; if council members are concerned if a non-profit is going to get engaged in a for--profit activity, then the City might consider user fees in lieu of property taxes for fire, police and other protections and perhaps could craft an ordinance that would garner the revenue equivalent to the taxes that would be paid to the City for the property tax portion of the special assessment. He stated that if this is set for a public hearing next week and if other people were protesting the zoning or rezoning because of the threat of competitive activity, it would behoove this group and the executive to direct staff to look into that and perhaps draft an ordinance that would relieve the citizens or the people who felt it would be anti-competitive from the problem at the city level.

It was noted that the public hearing date is February 19, 2002 (also on items 2.1, 2.3 and 2.4)
Mayor Brown stated they need to consider tonight city council meeting on that night.

2.4 Request from the Grand Forks Planning and Zoning Department for preliminary approval of an ordinance to amend Chapter XVIII of the Grand Forks City Code of 1987, as amended, amending Article 8, Comprehensive Plan, Section 18-0802, pertaining to the Grand Forks-East Grand Forks 2022 Transportation Plan Update, (2001 Bikeway Element, 1999 Pedestrian Element, 2001 Transit Element, Year 2001 Street and Highway Element, and 2000 Grand Forks/East Grand Forks its Strategy Plan Element, together with all maps information and data contained therein._____________________________________________________________
Council Member Glassheim asked if the council has approved the new fare structure, thought that the motion was coming back for a hearing. Mr. Potter reported that the city council did approve the fare increase on December 3, 2001 for the fixed route and dial-a-ride, and that when this is done, the City has to take the fare increase to MPO for either their approval, disapproval or suggestion for modification; that what is before you this evening is the first step in the amendment process to comply with the MPO’s public participation program, and that requires running it through the Planning and Zoning Commission and amending the City’s Comprehensive Plan.

Mr. Swanson stated his notes indicate that a motion made on December 3, 2001 by Mr. Kreun and seconded by Mr. Christensen approved the recommendation of the task force with regard to the fares, earlier a motion altering the recommendation had been made but was defeated.
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Council Member Glassheim stated his impression was that a preliminary first reading approval with discussion that it was going to come back to the council for final approval and the issue that night was whether it would come to council in the form that the committee recommended or whether it would come to them in the form of the amendment with the understanding that it could be amended either way, and doesn’t remember it coming back a second time.

Mr. Swanson stated his notes indicate that it did not come back, however, he doesn’t agree with Mr. Glassheim’s characterization as a first reading, that fares are not adopted by ordinance so there would not have been a first reading, notes show that there was a public hearing for the MPO plan, but because not adopted by ordinance it does not require first and second readings, but no other meetings that it’s been discussed since that date in his notes and notes are unofficial.

Council Member Christensen stated that on the public hearing after they get the input, will make their final decision and will get another opportunity to move and amend the fare increases.

2.5 Arts Regranting Program.
Council Member Hamerlik stated that in the past NOVAC made those decisions and doesn’t see a need to change that or get council involved, that NOVAC is viable, well and operating; there is a slight change - it is no longer administered through the Empire, and asked why we are changing the allocation process.

Terry Hanson, Urban Development, reported the reason they brought this forward back in November or December was that this is a new grant on behalf of the City; in the past when they administered the City promotion fund, the Arts Community was eligible to apply for those grants as well as any other promotion activity within the city; NOVAC participated and submitted applications annually and was awarded a grant - their grant application was for redistribution within the Arts Community; he stated when they initiated this staff report that this was actually a new grant function of the City, it was not the intent and not his understanding that it was the intent at the time to direct it all towards NOVAC for regranting, but trying to establish a body that would prepare the applications, prepare the criteria for grant applicants, review applications and recommend funding to the city council, that he is not opposed to giving that authority to NOVAC if that is the council’s wishes, but was under assumption we were starting a new grant program.

Council Member Kerian stated she sees this as similar to what they do with United Way, to have somebody who is knowledgeable in that area to continue to manage the grant proposal process and do some follow up for it, that NOVAC is changing a little bit but this would help strengthen them by giving them this responsibility and the coordination of arts in this city - NOVAC could continue in that area of trying to coordinate and bring communication among the arts so that we have a better offering for our community and the communities around us.

Council Member Klave stated that if we’re having money going out, NOVAC is the group, they understand it and know it rather than making a committee of council people - they would do an excellent job with the funds as to how it is distributed.

Council Member Kreun stated that NOVAC is a volunteer group and does have a part-time individual, that the people that are selected for this regranting process are volunteers and do not receive any of the granting monies that are brought forth through this process - and seems to be an unbiased group that would be able to put that forth and make a good selection for the arts program; he would be in favor of leaving it with NOVAC.
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Mayor Brown stated that he did not see an administrative fee; Mr. Hanson stated that was not part of their staff report this evening.

Council Member Gershman stated he would like to make a clarification, that in today’s paper the last sentence in the article relating to this issue states that this year the $100,000 available in the city budget is too much for NOVAC to handle, that was not said and that is not the position of Mr. Hanson nor of Urban Development and doesn’t think that any of the council feels that either.

Council Member Christensen stated that in the attachment to the letter they received from Ms. Paulson, there was a 15% retainage of $35,000, now we’re doing $100,000 so maybe 15% of $100,000 might be spendy, but would support NOVAC in the regranting capacity, and could discuss with them what they would need for the administration.

Council Member Bjerke stated that from 1989 up to this year, we gave $139,000, which is about $11,000/year and that with council’s efficiency and accountability and fiscal responsibility, increased spending for the arts by 9 fold in one year.

2.6 Special assessment district for special assessment of City Project No. 5322, District No. 583,
alley paving at 210 North Washington Street.________________________________________
No comments.

2.7 Amendment No. 3 to the design agreement and Amendment No. 2 to the construction period services agreement for Project No. 4371, Wastewater Treatment Plant.___________________
Council Member Bjerke stated that the staff report states that one of the justifications was the late delivery and asked for reason behind the late delivery.

Mark Walker, asst. city engineer, reported that the late delivery includes all the mechanical pieces that one contractor was supposed to provide - that the German manufacturer of the micro-bubble flotation process was bought out by a larger company, and that company decided to no longer support the wastewater industry; that required the contractor to look for another vendor, he was unsuccessful and finally had to develop that process himself locally and the amount of time that it took to develop it and test it was about 18 months. There were a number of other problems that were the result of the delays - that when the plant expanded it was required that they use 800 hp compressors and the compressors of that size were causing some problems to Nodak Rural Electric’s grid so they had to develop a model and model their grid in different startup scenarios to determine the proper power conditioning equipment to resolve that problem. There was also a problem with the control systems - originally control systems were intended to be provided by a German based company and they came forth late in the game and said they could not provide the control equipment as fast as what we needed - the result of that made us look for a different vendor of the control systems, we eventually switched to use of Allen Bradley hardware and instrument control systems technology of software which is a big benefit to the City as that is the same type of technology that the City uses in the water treatment plant and our lift station systems - and switched over to something that we’re already used to and actually stock parts for it and get available parts easily in the States. There was another thing that caused a significant delay in that the original layout of all the process equipment pieces was originally submitted and that layout was enhanced and as a result of those enhancements we were able to build a smaller footprint building, costing less money and the operation and maintenance of the layout of the equipment was going to be cheaper and provided a higher level of operator control, but did cause some problems in delaying some of the equipment selection; those are the more significant delays.
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Council Member Hamerlik questioned a statement under the design contract amendment No. 3, $142,000, which says, “…cost does not include markup for profit.” and if there will be another amendment for the extra cost, if that was correct or if there wouldn’t be any extra cost. Mr. Walker stated that what that statement indicates is that the $142,060 does not include any markup for profit, that is the consulting engineer’s true cost for labor and overhead, fuel, etc. and will also see that same statement under the construction administrative service’s contract, both of those numbers do not include profit, but their true cost. Mr. Hamerlik asked if there was going to be additional cost; Mr. Walker stated this is intended to be a final amendment.

Mr. Walker provided some background to the project and give everybody a history of how they got from the original project to where they are.

He stated that currently the City operates a 1,65 acre wastewater stabilization pond, a little over 2 sq. miles, that we were having problems with the discharge meeting the State requirements regarding water quality and at times capacity was nearly full when they needed to discharge and there was a need to expand the system. The two available options were a mechanical or biological plant or an expansion of the existing pond facility - with the proximity of the ponds to the airport they dismissed the idea of expanding the ponds - that in 1998 the city council approved to build a mechanical biological plant and also looked at using the design build process which is something new to us, usually design a project in its entirety and then bid it out. The design build process cost less time and less costly than designing it upfront, but the end costs were not relatively known as well as they could have been.
1) the original estimate on the wastewater treatment plant was around $13.2 million in 1996, that was a plant that had a capacity of 10 mgd and a 30,000 lb.BOD loading;
2) the City decided to expand the capacity of the plant, increasing the capacity by about 50 to 70% and did that in1998 at a cost of $9.8 million additional, bringing the total to $23 million;
3) the project was intended to be built on floating slabs and when they actually got to the site and started investigating the solids, they found there was a need to set the buildings on piles and the cost of those piles was an additional $2.5 million, bringing the project cost to $25.5 million;
4) the original treatment buildings had included a metal roof and there was some concern that the metal roofs may deteriorate sooner and the City decided to go with a pre-cast concrete roof which they felt had a much longer life and required less maintenance and considered a savings overall, that cast in place concrete was an additional $1 million to the project cost, bringing it up to $26.5 million.
5) the reactor tanks were intended to be open to the environment, no roofs at all and the thought process was that if we could put an aluminum roof on those reactor tanks, the biology would better survive and run the plant more effectively, that cost was $1.4 million, which brought the project cost to $27.9 million.
6) He stated in looking at the delays in the project we’re probably a bit behind schedule than they originally anticipated and figured their engineering estimates, adding some inflation to that, two years of delay, 3% inflation can account for about $1 million of inflation costs, bring project total to about $28.9 million;
7) that they did add some additional engineering work to KBM’s contract, that they ran into some litigation problems with one of the 13 or 14 contractors that worked on the project and the engineering firm had to expend quite a bit of time in dealing with the litigation efforts and to take care of the problems that were encountered on the job site; the City also asked them to do a compost study which was significant and to help us on doing some permitting for some bio-solids that we need to get a permit from EPA and also do some SRF, and a lot of these things are included

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in the amendment tonight, and also to compensate them for their over-runs due to delay in the project lasting longer, that was about $1 million extra, which brings the project to about $29.9;
8) that leaves a remaining balance of $3.3 million which they attribute to miscellaneous improvements that they added throughout the project, unforeseen expenses and higher than anticipated construction bids.

Mr. Walker stated he did a comparison with several other communities in the area and realized that he can’t find a community that’s building a plant exactly like we are building. He stated that Fargo did an expansion of their plant between 1990 and 1998, spent $29 million in expansion that increased their wastewater treatment plant and bio-solids disposal, $13 million of that was spent for their wastewater treatment and they added 5 mgd capacity and 12,100 lbs. of BOD loading, and when add inflation to bring that to today’s dollars, it’s about a $17.2 million project; and in equating that to cost per gallon that’s about $3.44 per gal, and about $1,421 per lb. of BOD, that compared to our $2.21 and $664 and would indicate that our project is relatively lower in cost. He reported that Bismarck did a $13.8 million expansion, their costs come out to roughly $2.78 gal. or $1,563 lb. of BOD and again comparing that to our numbers, our numbers seem relatively reasonable. He stated they expect the plant to start up in March or April, running on clean water and switching to actual wastewater sometime in May or June.

Council Member Burke asked if there would be any additional amendments in any phase of this project; Mr. Walker stated no, the project contracting schedule is believed to be what this project will eventually cost, their best guess. Council Member Burke asked if KBM has worked out its relationship problems with the various other contractors; that he thought there were some sub-contractors in the past several months that had problems with KBM and the delays and costs and whether or not those costs had been worked out between the engineer and the subcontractor. Mr. Walker stated he was not aware of any relationship problems that they have worked out, and that he couldn’t speak for KBM; but that he had asked what the final costs will be and those costs are indicated on the project contracting schedule.

Council Member Burke asked if the $142,060 and $303,300 was the sum of the amendments and how did we get to those numbers. Mr. Walker stated that was correct and there were some negotiations between KBM and the City; originally they came forth with some numbers which the City reviewed, that they discussed excluding the profit and KBM did that and the actual engineering costs went down, making this amendment at least for the design overruns and the construction engineering overruns basically their actual costs.

There were some questions re. Fargo’s plant improvements and Mr. Walker repeated those figures. Council Member Bjerke stated we’re looking at the potential of $15 to $30 million on the bio-solids; Mr. Walker agreed and that our plan for the bio-solids is to bring that to council for decision and to gather some more information sometime in February. Council Member Bjerke stated if we have different technology than other cities and asked if we hadn’t gone with this technology and went with technology other communities were using, what a plant could do as far as handling the amount of water, etc. and what would be a comparable price. Mr. Walker stated he wasn’t the right person to ask that question, but believes that the costs would be more, that what Fargo and Bismarck are doing is that they based their original plant on technology that was available at the time they built the plant and when they do an expansion, they’re not always looking at the best way for them to improve their system and making it as cheap as they can, they have their system in place and needed to enhance it, and believes that if we went with another system it would probably be more expensive, but dependent on the system you chose.
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Council Member Burke stated they were going to have a presentation on the composting part next month, and asked if he could preview what it is he expects to tell us in terms of what this com-posting plant might cost, who would operate it, what it would cost or save us in operations. Mr. Walker stated that the initial decision that needs to be made is do we treat just the bio-solids from the wastewater treatment plant or do we include solids from the water treatment plant, how big do we make this composting facility if we choose to go with the composting facility - that decision hasn’t been made; their intentions were to lay out the process and try to gather enough information so that a decision can be made so they can say this is the facility that we want to build.

Council Member Burke stated that in all the discussions that he’d heard about this plant before, composting was integral to it in terms of achieving its lower cost of operation, that the composting product, if not saleable, would be able to be distributed and there would be takers for it so it wouldn’t cost us anything to dispose of it - that it sounds like it is two different projects and have gone from $13 million to $33 million and wondering how big a price tag we’re looking at in the future on this. Mr. Walker stated that depends upon whether it’s made specifically to handle only the wastewater treatment plant bio-solids or handle the water treatment solids and further enhance it to produce more compost than what you need to produce to get rid of the solids. Council Member Burke asked if what they would tell us in February is based on the KBM composting study; Mr. Walker stated they would provide information that would tell the results of that study, but this goes beyond that study and method, and of us to choose where we go to select a bio-solids disposal facility that we need to build. Council Member Burke asked if they would come with a recommendation or where will we be in February. Mr. Grasser stated it would be to outline going through a more deliberative process than we have done with the wastewater plant, and what he is expecting to do with the residuals management system would probably mean another study or review to verify which is the best way to go, but try to give you a process and if the council agrees with that, will have to start implementing the individual steps to that process.

2.8 Resolution of city council of Grand Forks to authorize the filing of an application with the North Dakota Department of Health (NDDH) for a State Revolving Fund loan under the Clean Water Act._______________________________________________________________________
No comments.

2.9 Street Department street sweeper and motor grader bids.
Council Member Bjerke asked how many graders the City owns and how many we need in the winter; Mr. Feland stated the City owns 5 motor graders and in the winter we need 2. He stated their plan, since they use 2 motor graders year round, is in the near future to have 2 motor graders on a 5-year buy-back program, other option would be that the remaining motor graders that we need during the winter season is to lease those pieces of equipment so operate newer, more efficient equipment and to cut down on our maintenance costs. He stated other reasons to go to a motor grader operation is that they provide a better quality of service and are able to remove some of the snow better from the streets. Council Member Bjerke stated if we lease equipment, will save money because only lease for half a year. Mr. Feland stated that some of the equipment providers may tell you that it maybe even cheaper to lease it for the full year because they get discounts, etc. and to save money is his goal.

Council Member Brooks stated in looking at bids - but also looking at less a trade-in and if that enters into the bid process. Mr. Feland stated the trade-in is of our existing machinery and plus whatever the buy-back is after 5 years or 7500 hours - he stated they didn’t do it this way but one of the dealers (RDO Equipment) did raise the concern that it’s very close and if look at the spec. sheet
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that the net final cost is within $3500; net cost $69,318.00 for Butler and $72,700 for RDO - and if looked at residual value of that - 5 years at 3% interest and if you did that, it would probably reverse the bidders - that they didn’t do that but that is a concern that was put on the table and want to make council aware of.

There was considerable discussion relative to the bids and maintenance of equipment; and Mr. Feland stated he would put a spread sheet out showing interest costs, etc.

Mr. Feland stated their goal is to trade equipment out when it’s at its optimum value, where don’t have to do a lot of repairs on equipment. He stated he wants to know what that company feels their piece of equipment is worth in 5 years and goal is to turn this over so they don’t have equipment in disrepair because they’re 10 to15 years old and reduces their customer service and increases their maintenance.

Council Member Hamerlik stated the minimum repurchasing in contractual agreement and what happens if go over the 7500 hours; Mr. Feland stated they would get some residual value but wouldn’t be guaranteed that amount.

Council Member Brooks stated that the maintenance budget is $400,000 for street department, and how many piece of machinery do they have; Mark Aubol stated about 30-35 pieces. He also stated that on the bid contract, none of this is computed into the bid, none of the bidders were aware that was even going to be brought up and this is just speculation and really shouldn’t weigh into the factor at all. Council Member Brooks stated his concern is the credibility of our bid process.

2.10 Mayor’s appointment to Housing Authority.
Council Member Burke questioned why this is on the agenda, and why under the recommended council action it states to confirm the mayoral reappointment because the last time we dealt with the Housing Authority, the council was told it was a unilateral appointment by the mayor and now item states that it requires confirmation by the council. Mayor Brown stated that Mr. Swanson has to review his opinion and will get that opinion to the council.

Council Member Burke asked the Mayor if it was his understanding that the appointment requires confirmation; Mayor Brown stated he was waiting for Mr. Swanson’s opinion. Council Member Bjerke stated he had a copy of the council minutes of May 7, 2001 re. that matter, which stated “..Mr. Swanson stated that by statute the appointments to the Housing Authority is at the discretion of the mayor, there is no confirmation required.” Mr. Swanson stated he didn’t have benefit of the minutes and would like to have the opportunity to review either the minutes or his previously provided opinion, not prepared to give either the mayor or this council an advice off the top of his head on an issue of this nature; and if his opinion at that point in time was that the mayor had the authority without consulting council, doesn’t suspect that anything has changed in the interim, unless there was any legislative enactments that would have come into effect on August 1, 2001, and that should be the only thing that should change the opinion unless he was in error.

INFORMATION ITEMS

3.1 Policies and procedures on financing infrastructure for City Growth (tapping fees).
Scott Zainhofsky, project engineer, gave a brief presentation; that the city of Grand Forks is growing and as a result City staff felt that it was necessary for council to know the current policies that we have re. infrastructure and to see if they wanted to make any changes to those policies.
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There are 4 methods they have for dealing with installation of trunk infrastructure in the city: 1) tapping fees (or connection fees); 2) special assessments or future special assessments; 3) cash; or 4) defer installation of the infrastructure. Tonight they would focus on tapping fee portions and deal with others at future meetings.

The current tapping fee structure is based on a March 16, 1998 council action that stated that the purpose of tapping fees was essentially to fairly spread the cost of infrastructure to all benefiting properties. Without a tapping fee policy or similar policy, properties that are outside the city limits would essentially get a free ride on infrastructure and not pay for that infrastructure that benefits them; properties that are inside the city limits would end up carrying those properties outside the city limits and pay more than the benefit they receive - tapping fees are a method for balancing the cost and benefits to all properties. He stated that the same city council action set the process by which we collect tapping fees and is a long complicated process - these fees are calculated based on a formula that is determined by the city council for each individual project, formula based on the lot area, total tapping area, total fees that need to be collected by the tapping district and a depreciation schedule. The Inspections Department collects these fees in their entirety at the time that a building permit is issued, this is done for two reasons: the City carries all costs for the installation of infrastructure so the longer it takes us to recoup those costs, the more costs we end up having; the second is that we essentially lose our stick to force people to pay these tapping fees if we don’t require them to pay them at the time they take out the building permit. There are some ramifications - major one is that the Inspections Department is performing a County function by collecting what amounts to a property tax or a special assessment in the form of a tapping fee and that’s an additional cost that the City has to bear as a result of tapping fees; the costs for the installation of infrastructure are carried by the City because by law the City must determine a fair and reasonable funding source for all infrastructure installation - that with tapping fees on streets, the council has used Highway Users or for watermain, use the Water Utility Fund, but the main point is that the City carries all those costs and those costs can include our lost investment, cost for bonding and the depreciation - this is main impetus for why it has been recommended that we add interest to our tapping fee calculations, that this is legal but the main question is if it is reasonable. This is strictly a policy decision, may or may not be right answer depending on your point of view.

Cindy Voigt, assistant city engineer, discussed an example of how we currently calculate tapping fees and reviewed the depreciation schedules. She stated that two depreciation curves were included in the packet, one was for paving with depreciation over 25 years and one for underground utilities depreciated over 50 years. She stated that over the first 5 years there is no depreciation charge regardless of whether pavement or underground utility; after 5 years a straight line depreciation on pavement projects; on sewer/water projects they depreciate over 50 years.

She reviewed an example for the council - that assigning tapping fees to a collector street is that the benefiting area is included on either side of the paved street and is the tapping fee area, that they assign a benefit to the area, 150 ft. outside of either side of the R/W line have considered that 100% benefiting area, that the area outside the 150 ft. line, usually assign a 25% benefit - and if assume you are going to pay your tapping fee in 10 years and if no development and within the 25% benefited area, no interest charge, straight line depreciation after 5 years and have a project cost of x amount of dollars, calculate the tapping units for this area, divide the project cost by the units;
and if had a typical lot that gets developed (95’x125’) in 25% benefit area, to figure out what the builder had to pay when getting a building permit, take his tapping rate times the area of the lot times the benefit factor times depreciation factor; depreciation factor is the length of the project

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depreciated over the appropriate length, number of years you’re at, divided by that factor and get approx. dollar amount before he could develop that lot.

Council Member Martinson suggested a recommendation, there is a lot of confusion for people who are buying lots and developer talking about tapping fees, they’re thinking tapping into water line, etc. and should be using “connection fee” because not only water and sewer but streets, sidewalks, etc. and much less confusing to purchaser of the lot and new homeowners. Mr. Grasser stated that under the City Code it is stated as “connection fee” and could do some re-naming.

Mr. Grasser stated that under the next committee of the whole under potential action items because want to make sure that we have a system that this council is comfortable with; and thought was to take no action - that there maybe some arguments they want to explore for keeping tapping fees at a more level basis for longer periods of time as opposed to depreciating them out as quickly as we have now. He stated if the council has some ideas, showed examples of how depreciation works, how interest rates might function and if want to change this, have no objections.

Council Member Bjerke stated he would like to know what other cities do as far as this type of procedure as a comparison, and also including benefit (100% or 25%) and would like analysis or discussion on that.

Council Member Hamerlik stated when this comes back he would like to request that you work out what the state statute requirements are, whether legal or not, and like more definitive at that time.