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Council Minutes

COMMITTEE OF THE WHOLE

Monday, May 13, 2002 - 7:00 p.m.

The city council met as the Committee of the Whole on Monday, May 13, 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, Christensen, Klave, Kerian (teleconference system), Bakken, Kreun, Martinson - 12; absent: Council Member Lunak - 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 announced that he attended the 4th Grade Essay Contest winners presentation where the 4th graders in Grand Forks read their essays about their favorite older person and reinforces how important our grandparents or older people are in the lives of our children and what a positive role model they can have, and emphasized those children to keep writing and communicating and invited the ones who could to come here tonight and presented to the city council: Samantha Ackerland, Ben Franklin School; Stephan Swatlowski, Lewis & Clark School; and Seth Lang, St. Michael's School.

Mayor Brown thanked Senator Dorgan and Senator Dodd, CT for their discussion on border security this past weekend; it was well attended by local law enforcement, policy makers, Border Patrol, INS, Customs and Rep. Pomeroy. He stated they took Senator Dorgan on a tour of our flood protection project and thanked Senators and Rep. Pomeroy for being here.

He stated the unofficial meeting this afternoon with UND and the Park Board re. Springfest, agreed that behavior was appalling and acting to make sure it doesn't happen again; the government has the role of protecting the citizens and are looking at measures to balance community needs and that includes zero tolerance for offenders, must keep the parks open for the whole community and have to be careful not to condemn all young people and UND students in that tone. He stated they are working on that and plan to bring forward a report in about 4 weeks.

He congratulated UND graduates and got to see the achievement and promise of our UND students; the first graduating class of the Skin & Body Works Institute and this is one of the renaissance zone projects and is a testament to the program and its success; Melanie Parvey-Biby and the greenway staff - that the Grand Forks and East Grand Forks greenway project won an honor award for their planning of the greenway project, the judges cited the extensive cooperation between the cities, states and federal entities and were impressed with the spirit of innovation and creative solutions. He also invited the council and others to attend the luncheon with the Canadian Counsel General Susan Thompson. She will discuss the importance of trade between Canada and our region (she was mayor of Winnipeg during the 1997 flood) and she is responsible for promoting trade, investment and bilateral relations between Canada and 8 US states; that what she has to say is very important to the economic development of our area and asked council members to please try to attend.

He congratulated Scott Hennen and his new bride, Maria, and to the blushing father in law, Gerry Hamerlik, who looked great in his tuxedo.

He stated they have a card from former Mayor Pat Owens who came back for the dedication of the Park, thanking them for inviting her back to Grand Forks for the presentation, and stating that our city has come a long way since April 19, 1997, it is amazing what determination, hard work and team work can produce; and her best as you continue to work to make the city bigger, better, stronger.

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2.1 Protest of assessor's 2002 values by Wal-Mart on the Wal-Mart Store at 2551 32nd Avenue
South and Sam's Club at 2501 32nd Avenue South.___________________________________
Mel Carsen, city assessor, stated he has a written report, which the council has before them. Jeannie Allen, Region 3 Tax Manager for Wal-Mart, was present.

COUNCIL MEMBER GLASSHEIM REPORTED PRESENT

Ms. Allen stated she and Mr. Carsen had a stand-still at their assessments and presented copies of her information to the council members, and stated that her job is to insure that Wal-Mart is not only treated fairly and equitable on their property but also to try to establish some camaraderie and a relationship with the different municipalities that they venture into. She stated she visited with Mr. Carsen in February and was her intention to leave this information and try for an interaction and a reduction on both the Wal-Mart and the Sam's Club.

Ms. Allen reviewed the documentation for Sam's Club because the same information is pertinent to the Wal-Mart Stores. She stated there are three approaches to value: cost approach, sales or market approach and the income approach; cost approach is what it says coming up with different components for a new value and applying depreciation according to age and other depreciation factors; sales or market approach is an arm's length sales of like properties; and income is basic tool for the valuation of income producing properties and is related to investor thinking and motivation; that they analyze the property's capacity to generate benefits or rents and convert these into an indication of present value or capitalization. She stated she has compiled three of these approaches for this hearing and reviewed information with the committee.

She stated if use sales approach and the income approach they are both indicating somewhere around $40 to $45 sq.ft.; the sales are indicating much less and when reconcile these she's saying the two strongest approaches would be the income and the cost approach which are coming in very close. She stated she would like to have the council go through this, and if need additional information that she can send she would do that; the reason she didn't go into the Wal-Mart Store that she was in error when she talked to Mr. Carsen and didn't realize that they had added a seasonal box which added about 4,000 sq.ft., and if take the 119,000 sq.ft. and take it by the same rent, apply the same applications and still coming up with $42.75 sq.ft. She stated she tried to give them several different approaches and let council see how close they are coming in together, that if used the sales of the stores would be coming in a lot less, somewhere around $20-30 sq.ft. and is asking somewhere between $40 and $45.

Council Member Gershman stated he is concerned about using the income approach because it is the vagaries of people who run the business, and this is a classic case of income approach to the cost approach and the concern he has is that if go to the income approach that we could take other big box retailers in town and could get one in Chapter 11 and through no fault of the city, taking in much less income, and ours is a city that is very prone to floods and building a $390 million dike for protection and not looking for more income but looking for equitable income from all of the businesses, and his question to Mr. Carsen is it our policy with big box retailers or shopping centers to use the cost approach or the income approach.

Mr. Carsen stated they typically value retail stores based on the cost approach and do that for several reasons; that typically retail stores like this do not rent, but has some rents on stores that are similar to this which supports $5 to $5.50 sq.ft. triple net - triple net means the owner pays everything (taxes, insurance, maintenance, etc.) and the tenant pays $5.50 sq.ft. on an annual basis for the right to use that store. Wal-Mart typically owns their own stores, they will build a store, sell it to an investor and rent it back from the investor to give the investor a return, and asked if that is economic rent, that is not economic rent, economic rent is when unrelated people negotiate a deal on rent, and that's the kind of rent he has here -
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rents at $5.00 sq.ft., one at $5.50 sq.ft. and one at $6.75 sq.ft. all triple net; that he has used a $5.00 sq.ft. to make this comparison; second part is the capitalization rate, to assume the capitalization rate based on some sort of mathematical formula is totally improper, you go to the market and see what investors are paying and find a relationship between net rent and value. According to publication of a group of people that do this study on a quarterly basis, in the first quarter of the year 2002, there were 88 retail store sales nationally, average sale price $14 million, average cap rate 9.6 and when you apply that to the $5.00 sq.ft. it supports his value plus a little change. Ms. Allen disagreed with him that that's the proper way of getting a cap rate, because on the income approach it would be. Mr. Carsen stated that the cap rate is relationship between the net operating income and the sale price based on actual sales transactions, anything else is a mathematical way of trying to get at that and try to anticipate that.

Council Member Martinson proposed that Ms. Allen and Mr. Carsen try to iron this out, and doesn't see how the council body can act intelligently on this tonight. Mr. Carsen stated the problem with that is there is no referee; he stated he thinks he is being asked to compromise or negotiate the value, that taxation cannot be compromised or negotiated, taxation is based on valuation which is a matter of fact; and if asked them to get together can guarantee that it's going to be an impasse and somebody is going to have to decide who is more right. Mr. Swanson stated that under ND law the property owner has the right to appeal a determination by the assessor's office to the Board of Equalization, and the city council acts in that capacity, the property owner who is appealing from a determination of the assessor carries the burden of proof and the burden of persuasion, and Board acts as a judge of fact, whether you wish to make the decision or not, isn't the question, under ND law you must make the decision, arrive at a decision that one or the other is correct or arrive at an opinion of value different but has to be based upon the evidence presented to you.

Mr. Carsen stated he presented some of the information, some verbally and some in writing, and suggested that a group of the council sit down and review all the figures with him and Ms. Allen and maybe come to some conclusion, but Board of Equalization is due to close next Monday, perhaps could be extended some, the County Board meets the first Tuesday in June.

Council Member Klave asked Mr. Carsen to go back and review the 100% textured face block wall which can make a difference and Wal-Mart is only saying 30%, and maybe legitimate concerns that need to be addressed and reworked.

Council Member Christensen stated that if Mr. Carsen feels that he would like some of the council members to review, he would be willing to review that.

2.2 Protest of assessor's 2002 value by Moine Gates, 4998 South Pines Court.
2.3 Protest of assessor's 2002 value by W. Gene Theroux, 4994 South Pines Court.
2.4 Protest of assessor's 2002 value by Harvey Gabbert, 5056 South Pines Court.

Moine Gates, 4998 South Pines Court, stated that the original protest was made between himself and his two neighbors, who were also at the meeting, and since the original protest was made Mr. Carsen and he have had some discussions and they are satisfied with the recommendation that Mr. Carsen made on all three properties and asked the council to go forward with his recommendation.

He stated he has listened to the council and committee of whole over the past several weeks where they have talked about substandard buildings, he stated there is a building at the corner of 47th Avenue and Cherry Street (block building), the Christian School, been there for about 4 years with nothing being done to it, that it is becoming a problem in the neighborhood and will affect property values and would ask that
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someone look at that building to see if anything can be done with it. Mayor Brown stated that Ms. Collings should note that complaint.

2.5 Protest of assessor's 2002 value by Paul Eggebraaten, All Reasons Self-Storage, 3000 S. 38th Street._________________________________________________________________________
Mr. Carsen reported that Mr. Eggebraaten called him after they had met and indicated that he would accept our values.

2.6 Protest of assessor's 2002 value by James Hawley, Ogier Properties, L.L.C., 322 DeMers Ave.
Mr. Carsen stated this is the former First National Bank building, that building was extensively remodeled by Mr. Hawley, and prior to that remodeling he sought a partial exemption through the City of Grand Forks, that the City granted that exemption for a 6-year period, with first 3 of those years 100% exemption, then 20% exemption, and next year scheduled to go to a 40% exemption for 2 years and then 100% taxable starting 2005. Due to the high vacancy in the building Mr. Hawley thought that he would like to readdress the council and revisit the terms of that exemption. He stated he visited with the city attorney, it seems that the city council would have the authority to revisit the terms of that exemption and extend it. The City Board of Equalization could not make that determination, the city council would have to make that determination, after proper hearings, etc. and would be a period of time before you could do that. He stated that no matter what they did with the exemption extension, the 2002 value couldn't be upset because any agreement you make now couldn't be made retroactive, and his recommendation is to uphold the assessor's 2002 value but possibly consider talking about the terms of that exemption.

Mr. Hawley, 924 South 30th Street, stated this is not a protest but with respect to the fact that it's a tough market in Grand Forks and has an expensive building, and asked that they consider his request, that he has less than 5% of the building leased makes it difficult for his group to come up with $80,000+ in the next year or two, and only asking an extension of 2002 and appreciates consideration.

Council Member Gershman asked what the amount of money would be to extend the exemption one year, and what would be the process to extend the TIF Mr. Swanson stated the general process would be notice to be published in the paper, notice given to any known competitors, notice to other governmental entities that share, and a public hearing held; there is no process under the ND Statutes for a TIF on how you renew or how reconsider, but would be within the boundaries by literally treating it as if it were an original application, and cannot retroactively apply that decision, but would have the ability to address any remaining terms of the TIF Mr. Carsen stated the current taxes for 2002 are scheduled to be about $21,500, that is the base value of $287,000 approx. and 20% of the added value due to the extensive remodeling; next year it goes to 40% taxable for 2 years and then 100% fully taxable in 2005.

Council Member Christensen stated the value that is anticipated for the year 2003 and 2004, which is $1.5 million, why wouldn't you consider reassessing the fair market value in light of the location and the comparable rents that are being derived downtown rather than using $1.5, why stay with that number if back in 1999 you assumed it might go to that value, but it hasn't so maybe Mr. Hawley want to think about a reassessment of the project in light of its actual rent and maybe revalue the property in its entirety and eliminate the tax exempt status.

2.7 Resolution of the Grand Forks City Council requesting an Attorney General's opinion of the
matter of conflict of interest by a member of the Grand Forks City Council.______________
Council Member Gershman reviewed some of the information relating to this matter where Mr. Burke asked that Mr. Swanson look at this issue - that during the time that Mr. Swanson was researching this issue, Council Member Burke decided to circumvent the process and go directly to the Attorney
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General, and at the same time Mr. Burke submitted a resolution to the council to send to the Attorney General, and finds curious why he requested Mr. Swanson to do some work, that Mr. Swanson noted that it would take some time, and then resolution appears before the city council and then contacted the Attorney General himself, and tells him that the resolution is moot because process circumvented. Mr. Swanson stated he hasn't given a specific time line when his opinion would be complete. It was also noted that Council Member Burke went to the States Attorney's Office and they mentioned that it would be 5 or 6 weeks for them to give a determination, and that usually the Attorney General takes 5 or 6 weeks to render an opinion It was also noted that on the radio this morning Mr. Burke talked about fellow council people (in addition to Council Member Kreun), Mr. Christensen and Mr. Klave that they had a conflict of interest; that Mr. Swanson rendered opinions: that Mr. Swanson stated that there was not a conflict of interest on Mr. Christensen's part re. landfill, and on the attack on Mr. Klave with his conflict of interest, Mr. Swanson stated that in 1998 or 1999 he rendered an opinion with regard to a transaction involving property owned by Grand Forks Homes and no conflict of interest as it did not involve the City of Grand Forks; that Mr. Christensen and Mr. Klave according to our city attorney, did not have a conflict of interest as they were accused of by Mr. Burke, and a simple phone call to the city attorney would have answered those questions - we have tremendous issues facing the city, have flood control, Air Base retention, have success of tourism, the Alerus Center, wastewater, an impending water plant, many things that are of import to the citizens, and suggested that as soon as possible get back to addressing the issues that are important to the city, and stop attacking each other and if one has a question, to ask our city attorney if there has been a decision rendered.

Council Member Kreun stated that quite a bit of this has been directed at him, that Mr. Burke made allegations that he has a conflict of interest because of his business dealings which involve his agreeing to act as a subcontractor for an individual who was a general contractor for Urban Development, the individual who was awarded the contract came to him and said they had too much work to do and asked if he would assist them in mowing some of that area that they had agreed to mow. That apparently his agreeing to act as a subcontractor for an individual who made a contract with Urban Development is perceived by Mr. Burke and other members of this council to be a violation of certain ND statutes, neither he nor Mr. Burke or other people are trained to interpret the laws of the State of North Dakota or to render legal opinions. The Mayor had directed the city attorney to render an opinion and Mr. Swanson has not rendered that opinion; that he doesn't know if the attorney general will entertain a council member's request for a written opinion, knows that Mr. Swanson is continuing to work on this issue; that whatever decision is reached by the attorney general or Mr. Swanson will be the decision that he and other members of this council and future councils will abide by. That in the meantime we have 3 council meetings left which require the members of the council to attend and make decisions on behalf of the citizens of Grand Forks, and intends to focus his efforts to represent the citizens of his ward and the citizens of Grand Forks.

Council Member Burke stated that despite what some people think and have said tonight, he doesn't do
this for personal reasons nor to attack individuals, that most of the people who don't like this activity won't
believe that but that's what's in his heart. He stated some have questioned the timing - that he raised this
issue before the council 4 weeks ago a few weeks after he learned about it and had an opportunity to do a
little research at the Urban Development Department to find out about the contract, and after he learned
about the situation he raised it - that 4 week ago when he raised it Mr. Swanson stated he would work to
determine what the applicability of the NDCC was with regard to this situation; that last week he had a
conversation with him and he said he thought he was nearing the end of his work and might have
something to tell us either last week or this week - that with regard to conflict of interest, that one of the
things was from the document prepared by the city attorney entitled 1994 primer on conflict of interest -
and it says in part that the interest need not be a direct prospect of gain but merely enough to raise
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a reasonable suspicion as to the member's ability to avoid the temptation of acting for some other
reason than to promote the interest of the public good faith, good faith is not enough to overcome a
conflict of interest because the purpose of disqualification and disclosure is to protect the public
confidence in their government. The issues here are not great with regard to the potential violation
but what is important is that we have a state law and it says that there will be no direct or indirect
benefit to a member of a body from the payment of public funds controlled by that body, and also
says there is a mechanism for that brought before the body so they can determine whether there are
extenuating circumstances and the relationship between that member and the City can go forward
and if there is a unanimous vote of the council and the council determines that, and also provides
that the person involved should bring this matter to the body so that the body can be informed of it
and make that determination, that they never had that opportunity, it was never brought to them. He
stated that Mr. Swanson is going to tell them in legal ramifications and it seems fairly plain that there is a
direct or indirect benefit to the city council member with regard to that and the question really is
are we going to ignore the state law or not. He stated that going back a couple weeks he started
thinking about Mr. Swanson's role in this, and the reason for asking for the Attorney general's
opinion was to relieve Mr. Swanson of any problems that he might have as someone who serves at
the pleasure of the mayor and council, most of whom whose opinions are well known on this matter,
allowing him to not be involved in that and preserve his good offices here in the community and
have it go to the Attorney General and have the opinion which would have more standing coming
from the Attorney General. In talking with the Attorney General's Office he was aware that a
request for an opinion from him as an individual would not be honored and understood that when
he wrote the letter, but wanted to have that on the record that he had asked for it so when he came
here with the resolution it would be clear that he explored that avenue, and has the letter from the
Attorney General's Office saying that they would not be able to render an opinion on the question
that he posed and that letter would be sent to the council members.

Mr. Burke stated that if they want the A.G. to make a determination on this, how do that - either the city
council to request an opinion or for the city attorney to request an opinion; that he drafted a resolution and
asked that it be on the agenda tonight - earlier today he suggested to the mayor that they might be able to
circumvent this whole situation if he would simply direct the city attorney to go ahead and ask for the
opinion, and that he understood that the A.G. got involved it would probably be a month or more before
they received the opinion - satisfied with that - and suggested that to the mayor and he decided that
wasn't something that he wanted to do and now talking about the resolution which serves them all -
in terms of acknowledging that there is a state law and a question about whether we are in conflict
with that law and have it determined - the penalties are not great - that the legislature some years ago took
out any penalties, and that the penalty could be that the person would be guilty of an infraction and the
penalties could be and up to and including removal from office, and doesn't think that would be
appropriate, what he thinks is appropriate is to acknowledge that we have law, that it applies to all of us,
and acknowledge it and get on with it. He stated he would like to know who on the council thinks we
should ignore state law and have a show of hands; who thinks we should observe the law only when it is
convenient, who thinks the law should apply to everyone except themselves and their friends but no one
thinks that.

Council Member Burke stated the point of this is that there is a lot of talk in this town, it didn't start 4
weeks ago, started months and years ago and we would be served if we moved on more directly
with the debate about conflict of interest ordinance and dealt with some of the specific issues that
people are talking about but council has never seen fit to address, and if seems like he is rushing
this, he is because in 4 weeks after he is gone and a couple other people are gone, this issue won't be
addressed.
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Council Member Bjerke stated the process being circumvented and believes in organization
and plan but results are more important that process, agrees there is a violation of all and need to
have an answer because as long as he sits up here and as long as he lives in this town, he'll be
asking tough questions - when he brought this code of ethics up on April 8 the intent was to have a
discussion on this but it's been 35 days and we can't get a meeting scheduled, but never had a
chance to debate that - that they tried to have this debate, discussion and every time told that they are
not going to have it -

Mayor Brown stated there is a code of ethics for U.S. Government Service which was passed by the
Congress and also applies to the Senate and feels should be adhered to by all government employees
including office holders and that is available on the web and will make copies for the council and is
a code of ethics and says will uphold the constitution of law, put loyalty to the highest moral
principals, code they could live by and talks about ways to find more economical ways of getting the
task accomplished, never discriminate unfairly by dispensing special favors, make no private promises of
any kind re. use of public money, engage in no business for the government which is inconsistent with the
conscientious performance of governmental duties, never use information given confidentially in the
performance of his duties as a means for making profit, expose corruption wherever discovered, uphold
these principals every conscious that public service is a trust, results warrant bypassing the process and
that's why thought we had this nation of laws where we followed the process. Council Member Bjerke
called point of order, that he did not say that; he stated that the process is very important but results
important also. Mayor Brown stated he feels we have a process in place to address this and important that
we follow that, and that Mr. Swanson was asked to render an opinion as a department head, expects him to
give an honest and unbiased opinion and does not think that he fears for his job based on what he tells him
because he doesn't surround himself with yes men, but surrounds himself with people who will give him
honest answers to the questions we have facing the city and trust that they will do that.

Mr. Swanson stated he is somewhat bewildered as to what he is asked to do or not do; that he has
done this job for 18 years and that he has not rendered opinions based upon his personal opinion
but rather based upon what the research is, and in those 18+ years and 4 different mayors that not
always have the mayors agreed with his conclusions, but will stand on his principals - doesn't know if
the questions here is to his abilities to research and render an opinion but the question is not as
crystal clear as you might think it is - Statute that he was originally asked to review dates back to
1887 and been amended 8 different time, last time in 1973, subsequent to that the new statute which
was referred to by Mr. Burke, 4404.22 was adopted in 1995 and in fact there are inconsistencies
between the two conflict of interest provisions - there is no ND Supreme Court decision on either
statute and no ND District Court opinion on either statute, no direct A.G. opinions issued by the
State of ND on either statute, there are opinions that reference or discuss the application, the closest
law is a 1956 opinion; as a result of not finding much in ND and realizing that this body didn't
really particularly care what Howard Swanson's thought of the statute as his opinion is no better
than any of yours, then started reviewing all 50 states, and in that research we find that there are 16
states that have reasonably similar statutes and of those 16 there are 4 that have language that is
nearly identical or identical with the State of ND and of those 4 states none of their highest courts
ever entered an opinion, that what they are in the process of doing now are trying to determine if
there are unreported lower court (either appellate or district court) decisions in those jurisdictions
- also reviewing the A.G. reports from those states, and that is as comprehensive a research project
as he can provide you; he has had communication with the States Attorney's Office, communication
with the A.G.s Office and both instances requested that they provide me any information that they
find, and not prepared to release his opinion at this point and will not give a preliminary opinion,
you will receive from his office a reasoned decision based upon supportable law from either the
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State of North Dakota or other jurisdictions that have similar provisions. He stated if this body
wishes an A.G.'s opinion he wouldn't have a problem with that but don't conclude that he is afraid
of facing a difficult decision, and some have had some disagreement with a ruling or opinion or
comment that he has made - and also know that he is up to the challenge to sit down and debate
that issue with you, discuss it with you and admit mistake if he makes one and if attempting to
appease him by taking him out of it, don't feel you need to do that; if however you think it warrants
an A.G.'s opinion for some other reason, he has no problem with that. He stated his experience with
the A.G.'s Office is that they do take about 4 to 6 weeks. He stated he thinks this is an issue that
taken upon it a life of its own, separate and apart from his office can provide it, he will move
forward as their office can in providing you with a reasonable opinion without regard as to who it
affects or doesn't affect.

Council Member Gershman stated that the mayor formed a task force to look at a code of ethics
and they will come forward this council or the new council when they finish their work in a
reasoned way and there will be a code of ethics. He stated that nobody here is going to ignore State
law, and when the code of ethics was first brought forward and were told to vote for that, and
what's wrong if you don't vote for that - in there was that the city attorney would need to investigate
any councilperson within 30 days of an allegation by a fellow councilperson or citizen, but now
hear from Mr. Burke that Mr. Swanson is not qualified to give an opinion of other council people
because he's beholden to us of his job; that there are a lot of inconsistencies here.

Council Member Hamerlik stated he believes in a code of ethics and shouldn't have a conflict of interest and been accused and praised for trying to keep us on track - we have before us the topic of a resolution, whether pass it and send to the A.G. and have heard just about everything except working towards that item; we are bringing out our pet peeves, etc. and rises to a point of order, let's be on the issue.

Council Member Kreun stated there have been many interpretations prior to Mr. Swanson's actual opinion, and before we render an opinion or come to judgment we should listen to that opinion and act upon it accordingly, that it bothers him that they have to name names, individuals that talk about other individuals and should let this sit and let Mr. Swanson come with his opinion and bring forth the decision.

Don Dietrich, 5198 West Lanark, stated he was a little angry, that he has never seen so much waste
of time by personal attacks, that he has know many council members for many years, worked with
Mr. Swanson and city auditor, etc. and been attending council meetings since 1969, that the committee
has been on this issue for 48 minutes, we have people's business on here and have two more pages of
agenda items to discuss; never had a problem with Mr. Swanson's opinions, always been by the book
and been through 8 mayors and they need to move on and no more personal attacks, let's be civil;
the posturing we have up here, need to get on with city's business - no room for personal attacks -
let's get on with the peoples business, that we're tired of this.

Council Member Burke stated we've been aware of this law and has moved it forward and is sorry if people
think these are personal attacks, they are not personal attacks. He stated there are other people on the
council who didn't want to have discussion about things that may or may not put them in a good light,
not deal with those issues and the motion was made to table the ordinance; that this council has worked
in certain ways to cut off debate about things they didn't want to deal with or at least discuss and left
some of them with no other mechanisms to air their grievances than to do an end run and bring things up
this way.

Council Member Hamerlik requested that they go to item 2.8.
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Council Member Kreun stated a lot of the facts are true and are questions, but you cannot
prejudice anybody by interpreting the law in your own way - have to let the law do what its
supposed to do and then come forward with it, not bring the information forward first and then
come back and ask for an interpretation.

Council Member Christensen stated that the contract that Mr. Burke is referring to that Mr. Jay
Fiedler in his office has was formulated back in 1998, that Mr. Swanson called Mr. Fiedler and
asked him if he would represent the City of Grand Forks in the landfill issue, Mr. Fiedler said he
would, and that he wasn't even thinking about running for city council in 1998, that in 1999 the
City hired an attorney, Jay Fiedler, to represent its interest in the landfill, did not hire the firm of
Pearson & Christensen, and that it didn't hire him. That after Mr. Swanson and Mr. Fiedler met
with Mayor Owens on March 14, 2000 and that he was out circulating petitions to get his name on
the ballot about that time; that Mr. Fiedler appeared at a meeting on May 15 at Township and on
May 30, 2000 and received Twp. decision and order on June 4, 2000; apparently when Mr. Fiedler
appeared before this council on July 17, 2000, that peaked the interest of Mr. Hoff and he wrote a
letter to Mr. Swanson inquiring as to whether he (Mr. Christensen) would have a conflict in that
issue; that he didn't believe he did and no financial remuneration was coming his way direct or
indirect as the statute says and didn't bring it before this body; this body had Mr. Fiedler appear
before it on one occasion or more, and this body knew he practices law with Jay Fiedler along with
others; Mr. Swanson then wrote an opinion to Mr. Hoff that there was no conflict. Mr. Swanson
has not had time to retrieve that opinion. He stated the task force on code of ethics on which he is
sitting and upon which they will meet (if elected) the task force will continue and render a report
and that task force will address these issues and other issues.

Council Member Hamerlik asked to get on with item 2.8.

2.8 Economic Development policy.
Council Member Gershman stated the issue with property tax exemptions that are given to businesses that are expanding or relocating in Grand Forks is taxes that we are not collecting at this time and is not as if on the books, that we have property tax exemptions of $l.25 million, those were monies that were never collected but will be, that was an incentive for business to locate or expand in Grand Forks, and to say that we should take the economic development money and replenish the fund for $1.25 million every year doesn't make sense because we never had that money but that money will start rolling onto the tax rolls; cannot say that is cash we had that we're using.

The city auditor stated that he and the city assessor have provided a synopsis of state statutes relative to discretionary tax exemptions that are provided and that this doesn't contain all the detail in State Statute and highlighted what the allowable incentives are under each of the exemption areas:

1) under NDCC 40-57.1 tax exemptions for new and expanding businesses: that the type of allowable incentives are a complete or partial exemption from ad valorem taxation throughout the five years following commencement of project operation or up to 10 years for a project that produces or manufactures a product from agricultural commodities or do a payment in lieu of taxes that may be used or a combination with the property tax exemption for qualifying projects and that maybe no longer than 20 years from the date the project operations began.

2) under 40-58 Urban Renewal Law (tax increment financing or exemptions) the type of allowable
incentives are basically a financing option where the City would do a sale of bonds to provide money upfront for eligible project cost with the taxes generated by the incremental value obligated to pay the debt
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for a period not to exceed 20 years; or may do an exemption of total or partial tax exemption of the incremental value for a period not to exceed 15 years; and will want to read these because there is a lot of other information and detail in those.

3) under NDCC 57-02-08.37 Definitions of tax exemptions, there is one for day care where the governing body of the city for property within city limits or of the county for property outside the city limits may grant a property tax exemption with a portion of the fixtures, buildings and improvements, used primarily to provide early childhood services by a corporation, limited liability company, or organization licensed under Chapter 50-11.1 or used primarily as an adult day care center; this exemption is not available for property used as a residence.

4) He stated there is a 3-year property tax exemption of certain improvements to commercial and residential buildings that is also allowed by State Statute and is discretionary by the council, and again have submitted some of the background on that as to what types of improvements will qualify, the application process.

5) Also enclosed in your documents are two policies, one adopted in 1988 that is the City of Grand Forks policy on 5-year property and income tax exemptions that has some other specific requirements that past council's have approved and considerations that we go through in reviewing those, also a policy adopted in 1994 for tax increment financing that was had certain provisions and other enhancements to what the City would look at when somebody applies for that type of financing.