Council Minutes

MINUTES/COMMITTEE OF THE WHOLE
Monday, July 28, 2003 - 7:00 p.m.__________

The city council met as the Committee of the Whole on Monday, July 28, 2003 in the council chambers in City Hall with Mayor Brown presiding. Present at roll call were Council Members
Brooks, Hamerlik, Glassheim, Gershman, Christensen, Kerian, Kreun - 7; absent: none.

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

Mayor Brown commented on various events of the past week as well as upcoming events:
1) He thanked the Congressional delegation and Senator Dorgan for the efforts to secure flood protection construction funding, for his hard work and determination to our region and residents and will have funding for work scheduled for this summer; that they continued to work for additional funding for upcoming seasons but wonderful news from Senator Dorgan's Office last week that December's construction will move forward on pace.
2) He thanked mosquito control crews for providing us with a summer we can enjoy and thanks to public health department.
3) Kelly's Slough - he was thankful to be invited to be part of celebration dedicating Kelly's Slough as part of the Western Hemisphere Shore Bird Reserve Network, that Kelly's Slough has long been destination for outdoor enthusiasts, esp. bird watchers and this designation will further establish this area as an immensely valuable destination location.
4) He stated he had opportunity to send off runners and walkers on the CVIC Run/Walk for Peace last Saturday morning, and event raised over $6,000 and more than 80 people participated and thanks to everyone involved.
5) Catfish Days is this weekend and wonderful time to celebrate some of our natural attractions, and day to recognize progress that East Grand Forks camping area has made, and invited everyone to attend and sample bit of best chili at Chili Cookoff.

2.1 Pledged collateral report.
There were no comments.

2.2 Application for Class 2 (Off-Sale Alcoholic Beverage) license by Tom and Jerry's
Dug-Out Partnership, 121 North Washington Street._________________________
There were no comments.

2.3 Special election for the destination city initiative.
Mayor Brown stated it was important to find a positive solution to this proposal that works for the community and important to work on that together. He stated through listening to council members has heard each one have a special problem or interest in the community they feel is their charge to make this a destination community or safe community for our residents, and have to look at balanced needs of the whole community, and have to look at how we're going to fund this and have a $2.5 million shortfall coming up in our Highway Users Fund this year, have greenway coming on line which will require maintenance, third dike assessment, infrastructure and streets that have to be repaved and assessed and have to find solution to pay for those things and if don't want to pay for by additional sales tax then will pay for it on property tax and behooves the leadership to plan and anticipate and if don't, not doing our job. As mayor wants what best for the city and take charge seriously as elected leaders and public servants and are here to serve and listen but must also anticipate and let people know the choice is theirs and choices have repercussions and to make sure they are informed on the vote so that we can move this community forward and continue to be a strong and viable community.

He reviewed tax proposal comparisons and looked at what this community needs to plan for, this plan is to eliminate a portion of special assessments; greenway maintenance coming on-line and anticipated at $500,000 year and if don't plan that will have to be assessed to the citizens for payment; additional economic development, need to have plan in place; community marketing and would propose that be in each of the options; aquatics facility, that task force came forth with information that this facility would cash flow at 50,000 sq.ft., that over estimated cost of construction and under-estimated revenues and is affordable for residents of the region, visitors and residents of Grand Forks.

He stated that the aquatics center is critical to the development of the hotel and if this community puts $13 million into an aquatics center we're getting a hotel for free and that would help develop that whole project of development out there. Reduction of third dike assessment: that second dike assessment will be in your hands before the end of the year and third one is coming and if can anticipate that, and doesn't feel wrong about letting people pay that with sales tax because people from region use our facilities and allowed to be here because of the dike. We are now regional responder for weapons of mass destruction or natural disasters and if send our fire department out to a city, don't want to have to bill them for our support, etc. but want to say we're a region and have capability and been designated with this role but have to fund it to do it properly. Property tax relief: important to recognize what the people need and want. His proposal is 1% sales tax and does all these things and sets us to be in position in the future to be strong, and if go less than that, 3/4% is doable, 1/2% does not accomplish the things we need to accomplish as a community because next mayor and council will have bills that are due if we do not plan today and next administration will have to find creative ways to solve these problems that he is proposing to you as a solution. He stated he understands reluctance of people but need to plan and proposes to this body a 1 penny tax to fund things that he feels are important to the continued development and strength of this community.

There were comments by the council members.

Council Member Kerian stated we don't have all the water park information, there is a meeting tomorrow night and will have what the dollars are that would be required for this, that we've listened to the citizens. She stated that some of the case being made has been that our property taxes should be replaced with sales tax and that is an area she disagrees with, that when she looked at what the Tax Commissioner put out for 2002 we are higher than Bismarck and Fargo but to replace parts of that with sales tax is not progress, but is a regressive tax; there was talk about how the schools may participate in this and understand that they are not, that the schools are significant portion of the property tax problem that we have and not unique to Grand Forks County, but a state-wide problem, that schools are funded on the backs of property taxes; and that the property tax problem is state-wide to try to resolve. She stated that she didn't think the answer is to make our sales tax the highest and if concerned about property tax being high then should also be concerned about the sales tax being high. She stated we need to pay some attention to the region, our purpose is not to discriminate or lay our problems on the back of any people - and that she would want to see if what the water park will cost and if our residents decide that it is something they want to add to the things they have available to them, would like to give them that opportunity to vote on it, can do that on 1/2 cent and then not look at reducing the existing property tax but how might we handle some of the potential increases that were mentioned - the greenway and dike that we need to pay for and then some of the infrastructure, and that there is value in letting the people decide on how it is they want to move forward, that we continue to have the responsibility as there is some additional property tax from increases in the commercial and residential growth of the city and to apply that money to lowering property taxes.

Council Member Glassheim questioned the estimating of the amount of money raised by 1%, 3/4%, 1/2% and estimates of 1/4%, that half is not one-half of 1% and asked for explanation. The city auditor explained that the reason for that - we have 1% and an extra 1/4% on the entertainment area but are not adding additional percentage to the entertainment sector, and general percentage would raise, and that the State passed legislation this year looking to go to a streamlining tax method for taxing internet sales, and in order to do that you have to have the same rate in the municipality.

Council Member Glassheim stated he was reluctant to vote on anything until he has what he considers to be more crucial information, and he would like to see what we would get for about $9 million construction and if that has been considered and what kind of aquatics center you would get for that rather than the $13 million.

Council Member Christensen stated the report he has in front of him suggests approx. 48,000 or 49,000 sq.ft. facility and the projected construction costs are approx. $12.9 million and there is a summary that shows the sub-components and there are certain things that could be subtracted from the facility which might bring it down by $1 million. The consultant will meet with the task tomorrow. He stated that when they talk about what this is going to cost, the issue we'll have is the level of subsidy that can be derived from two sources, the sale tax revenue and/or the amount of money the developer of the hotel is willing to contribute towards the operation of the facility; it is his understanding that the developer of the hotel will be town tomorrow and expects that the task force will go into executive session to meet with consultant to find out how one of these facilities would enhance a motel facility as to operating costs, they are expecting to get a report on August 10 and prudent not to vote until after that date but the issue is really going to be the level of participation they are able to extract from the developer of the hotel, because that will drive the cost of the maintenance and operation of the facility.

Council Member Glassheim stated he was interested in 1/4 cent and putting that on the ballot, and is very interested in building something that would be useful, desired and used by citizens of this town but might be less than what currently looked at $13 million and would like information as to what that would mean cutting out, what level of interest would that mean for the citizens, and would like to propose 1/4 cent sales tax. Information could be obtained when consultants here tomorrow. He also asked how will young children get to this place, how transport people to the center.

Council Member Hamerlik stated he was interested in the aquatics center, but that he cannot buy into without having a ceiling on the expenditure and having a sunset on the aquatics center, that he cannot buy into 1 1/4%, 1%, 3/4% and if get down to 1/4% gets his vote very fast, need to take something to the people but need not over-emphasizing the sales tax.

Council Member Brooks stated there have been recent surveys come out and been discussed, concerns that the data wasn't correct, that he reviewed survey done in 2001 with 63% saying taxes were high in 2001 and people said need affordable housing, higher paying jobs (economic development); and stated some semblance of the initiative will go to the voters and should be two questions, water park needs yes or no and to send to them sales tax percentage and let voters look at it, and should wait for good financial picture of where we're going, vote for park has to go on ballot and how he votes will be mix of those, but need to look at expenses and bottom line.

Council Member Christensen agrees with Mr. Brooks and citizens should be given the right up or down as to a water park, there are certain initiatives where council people do not what know the costs are going to be - greenway and maintenance of a dike, our current budget has $50,000 for maintaining greenway, and doesn't know if appropriate or not, that dike will not be completed until 2006 or 07 at given rate of funding and have a better handle of cost to maintain and develop plans to cover cost of maintenance. The city auditor advised us this evening why taking away revenue tax for hotels/motels/etc. because of streamlining for internet, not sure of effective date of that, and if that is an issue that should be addressed that we have ample representation in our state legislatures so that we could preserve that tax; because if it is truly a destination initiative you have and if going to have 80% of the people who are going to visit our city pay the cost of operation of the water park, then should seriously consider retaining that tax.

He will join in comments and perhaps could support a sales tax increase of 1/2 percent and if not allocated to the water park, use that for the needs that they have identified. He stated he doesn't believe the language should be that they get 1/2%, believes that the ballot language be authorized to impose up to or no more than 5% and as need identified, can implement the needs, and not sure if that is permissible or not but Mr. Swanson can tell us that. He stated he didn't think it was prudent for us to impose our internal burden upon region, we are a regional destination already and that we have our own problems and people come here and buy and shop here and use our streets but we benefit from the people coming from the outside to this community and they shop and spend the money and add great value to our community. All those citizens have reason for coming here but have to pay their own taxes, fund their own schools, pay their own parks, and these are our internal problems, and as this debate continues, we're going to have harder information and not sure can project a facility that is going to have a potential cost to operate of several millions of dollars at a minimum based upon revenue that is going to be drawn by 80% of people outside the community, not sure of numbers until have numbers from consultants, and if citizens vote this down, all have identified some needs but that we can adequately meet those needs going forward in the future with 1/2% sales tax.

Mayor Brown stated it is interesting that he quote a study, find fault with the study and then extrapolate the results of that study.

Council Member Christensen stated he finds it interesting that proponents of the water facility prepared a report and that there are provisions in this report that you choose to ignore, for example, the 1% initiative has 41.6% agree on that initiative, 52.3% disagree and as Mr. Hamerlik suggests on the 1/4% have 58% of the people that agree, that if the citizens vote the water park down still have the 1/4% or the $1.4 or 5 million to fund these need, and if citizens vote down and get 1/2% have $3 million to fund all the needs and can develop an infrastructure fund, don't need to spend $500,000 on the greenway tomorrow, but won't require that kind of funding for 4 or 5 years so can build a fund, and other ways rather than a 1% sales tax to solve all the problems.

Council Member Gershman that he is the only one that collects sales tax and is quite sensitive to collection of the sales tax, it was stated that it is only 1 penny, and according to Kipling report, US Postal rates will stay as is the same though the rest of the decade, because driving away customers, increases hurt more than it helps and they won't go up more because losing customers. He stated he too has a problem with the property tax being paid for by others, that people who live in apartments and those living in the region, and also has a concern with those same people paying for the third assessment for the dike, this is our issue, that the State of ND has appropriated $52 million to the city of Grand Forks to help us and doesn't think additional payments from the regional people is fair; that he would like to see in a tax and moving towards 1/2% for the aquatics center but with these three things: economic development, greenway and dike maintenance and infrastructure for our streets, and very concerned about federal government cutbacks in the future and this is a chance for us to plan, and when we get down to the cost of the aquatic center, need to see clear information as to the cost of operation and admission. He stated that he has concern that this is just a draft which they received tonight, that 80% of the general admission will be non-residents of Grand Forks and the price they will pay. He would like to see a cap on the aquatics center of what it will cost, and when stated the price no overruns on construction, and if overruns would have to do cutbacks and stay within the price, because of the experience with the Alerus Center. He also believes that the citizens should have all of the information before they make a decision on this, he is not sure of the up or down vote but wants to give the aquatics center a good chance of passage by the citizens and if go with 1/2% and aquatics center is defeated, then could spend the winter going over CIP programs and deciding what our real needs are and come back to the citizens at a later date with another tax initiative; that he would not go beyond 1/2%; and appreciates work task force is doing.

Council Member Kreun stated we have so many dollars and so things out there: 1) landfill and have financial plan for that and have a lot of money put aside to develop that, we have money for the closure of the existing landfill put away and don't have to tax residents any more; 2) we have plan for water treatment plant, and when passed the rate study that was a 20-year plan, plan in place to pay for reserve tank in Industrial Park with transmission lines going back and forth with our new raw water intake; 3) flood control situation is in limbo but do have a plans for that and comes out of special assessments, and what talking about for future funding and don't have a plan for is our total infrastructure and streets, been utilizing Hwy User Tax dollars to off-set our general fund, and now have to rethink that and go back and redo the financial plan for our infrastructure; 4) have wastewater treatment plant and revising that to keep cost down and have a plan for that - these are very large projects and long range plans and won't be affected by what we have in the sales tax initiative; that we have lot of things on our plate but have lot of plans and funding mechanisms in place for them and not let those be confused with the tax initiative. He stated he had received calls from realtors re. taxes in our community, that have to bring taxes down because that is what people look at when come to buy a home, other cities have a phone tax that generates $2 or $3 million/year in taxes which we don't have and goes into their General Fund and lowers their property tax, they take all of their Highway User Funds and put it in their General Fund to offset their general taxes and special assess residents and doesn't show up on their tax statements. They take their Enterprise Zone funds (sewer, water) and take maximum amount that the State allows out of that Enterprise Zone fund and put in General Fund and that doesn't show up on the tax statement; these are the things that people look at when making those comparisons and those are some of the things they are trying to do with diversified tax plan, that a lot of cities are doing that because can't put burden on property tax and have to spread it around. He stated it was important to remember that out of that tax bill that you receive, only 25% goes to the City in General Fund (not including specials), but what trying to do with all this is trying to keep that property tax down, and when the citizens vote on this and take all this information in, keep those factors in mind because that is what drives your tax bill .

Council Member Glassheim stated he was going to speak out against anything over 1/4%, bad tax policy in shift they are proposing, we're not lowering taxes a bit, doing slight of hand and shifting the burden, and if people vote it in can only trust their judgment. There is also a shift in proposal at 3/4 or 1% and shift in individuals who have infrastructure work done and get special assessed, shift to general public. There are proposals to put $600,000 in economic development, 50% increase in amount of money in economic development and in past have done some good things and supports economic development but have not done much with ones we now have and not sure why wanting an additional $600,000 set aside and haven't used it to the benefit of Grand Forks. He thinks we can use the aquatics center and would like to see it pass and looks at it as a replacement for Riverside and if handled property, great boon for residents of the city, at a quarter cent even the aquatics center will pass, but higher you go will endanger the passage of it.
He stated the only concrete thing before us is the aquatics centers and if go beyond 1/4% risking the aquatics center and not very sensible.

Council Member Kerian stated if going with an ordinance to look at maximum, where any retail sales tax shall not exceed $75, that would be significant purchase and would like discussion of increase. Mr. Swanson stated the cap is based upon an assumed $2500 max. purchase, and if were to keep cap at $25, then don't change the sales tax, accomplish nothing, but if don't change the cap then discussion about the rate is moot, but if change rate, change cap.

Council Member Christensen stated that once the council decides on a percentage, should be talking about the Home Rule Charter and the amendments thereto, not convinced at this point that should reduce a tax until such time as the State mandates a reduction of the tax because of internet sales - he is not convinced that it behooves us as a council to reduce the tax that is contemplated in the draft of your ordinance on motels/hotels because that is used to fund the Alerus shortfall right now; as he read through this there were some issues as to why would want to reduce our use tax, there is a sunset on the use tax dealing with the Alerus, a use tax is tax we impose on goods that are bought out of town to be used here, and as a body shouldn't reduce the use tax because it is good tax, State charges it and should continue to do that at city level, that we haven't seen statute or when implement and what final word of the legislature will be. 3) Property tax reduction; and that people can't afford them when they buy homes, we have 15 mill because of dike, that the City of Fargo doesn't have high mill levy because of things noted by Council Member Kreun, they tax on phones and have allocation from Enterprise funds of x% which we are allowed to do to reduce the mill levy and other ways of reducing mill levies by future councils and can do that through fees, that he agrees that the needs have not been fully defined and suggested using words up to 1/2% and no more than" so can be implemented as needs are defined and requirements more finely honed, and have to get ruling from Mr. Swanson if can do that, that if go to the citizens at this point and they choose to vote down a water facility, it isn't to say that we don't have responsibility as elected leaders to tell them what the upcoming needs are because some council come back asking for increase in sales tax of some sort. He stated your city council didn't bring this initiative to you, was brought to you at the request of another governmental entity, the Park District who identified what they believed to be a need in this community but didn't have ability to finance it or get it done, and mayor embraced the request and we are asked to endorse the request at some level and draft upon that request an additional tax needs coming down the line, try to keep historical issue of how got before us, we have been asked to help as a council and if citizens identify this as a need then they will tax themselves, and if don't identify this a need, we still have the responsibility to preserve some degree of sales tax to pay for the ongoing needs.

Mayor Brown stated when first elected met with Mr. Staley and asked why don't we have an indoor pool in this town, and that's when started the discussion of an aquatics facility, and fee is more aggressive than a sales tax on those on fixed income, with sales tax can choose not to buy something.

Council Member Hamerlik stated that the use tax was right way to go and would ask Mr. Swanson if car sales are excise sales and would not be included in the sales tax and that is reason $2500 is appropriate.. Mr. Swanson stated he was correct.

Council Member Brooks stated people he represent state property taxes are too high and this gives them a choice, that Enterprise Funds have some expenditures that are administrative costs and can be charged and should pay for some of those costs but not a percentage to reduce mills, He stated greenway with $500,000 and probably don't need until 2006 and specialized equipment and initial costs are in start up, that greenway costs have no where else to go except General Fund, and doesn't know where we're going to pick those funds up.

Mr. Swanson answered Council Member Christensen's question, whether Home Rule Charter could have a provision to allow for a sales tax or imposition of a sales tax up to a given amount, and the answer is yes; what you are technically voting on or need to vote upon to increase any sales tax is an amendment to the Home Rule Charter, that is a document that gives you the authority to act, once that is passed, your tax is not implemented until the council passes an ordinance to impose the tax, that ordinance would dictate the level of the tax up to a maximum of

Council Member Kerian stated Mr. Christensen brought up the relative amount of the use tax and if that could be addressed. Mr. Swanson stated he has not researched that issue, but impression is that you would or could have the authority to charge a higher use tax rate than a sales tax, however; there is no city in ND that has an uneven use tax versus sales tax, and suspects that based upon contract with the Tax Commissioner Office which requires them to be identical, that may cause some administration issues with the Tax Commissioner's Office, but from legal theory could impose a use tax at a different rate than sales tax, but historically has not occurred.

Council Member Kreun stated that comment that we've not done well with our economic development program, that to say those things without defining those, puts bad light on our community, most of the things we've done are successful, L.M.Glassfiber, Cirrus, Conte Luna, etc. and have been successful.

Mayor Brown stated we expect our leadership to be infallible, confident and moving ahead, and tonight we see seven different ways to go to the future, that he has a task force that he trusts, people in place that he respects, and consultant who has done over 400 of these, and thinks the process is good and have to balance the whole community and have to do thoroughly and that citizens who elect us to lead and if council brings forth 1/4% for water park, he would support it, if brings forth half percent would support it, 3/4% and 1% then looking for the future, and that's what citizens entrust us to do with this, that they are people and have concerns but because someone feels differently doesn't mean they love this city less, and hope they bear with us during this process.

2.4 Entry level housing policy discussion.
Council Member Gershman reported he and Mr. Kreun met with two developers, Crary and Greenberg, and had concerns that we need to protect the City if they did not meet the requirements for affordable housing, developers had good ideas and wanted to protect the citizens of Grand Forks in their investment in this community, and what decided to do is that if in fact a home will be built in one of the affordable housing districts that will be above the $135,250 level, in addition to the finance/development committee wanted them to get a letter of credit from the developers that would cover their half of the specials that the City will be advancing to spur the development, they readily agreed to that, so that if the infrastructure cost will be $1 million, the City is putting up all of that but the developer is saying that if they default they will have a letter of credit that will guarantee the City will receive portion of the assessment, so it is fail-safe, good for developers, good for the homeowners, appears to be a lot of interest in these homes and lots.

Council Member Christensen stated when they had finance/development standby committee meeting had four points, and received an e-mail from Mr. Lund and Mr. Hoover this afternoon where they wanted us to monitor the homes to be under the $135,250 level so we maintain the integrity of the affordable housing project, and should include those four items in report.

Council Member Kreun stated this is pilot program and after the construction season of 2004, want to look at this program again to see if there is anything that we have to change, make better or anything they have to work out so it can continue to self-sustain itself and be a program for many years, and that is one of the critical areas. He stated one item that was a little confusing was when asked about the 60-day holding of the contracts but did pass the bids that night and weren't requesting to hold them for 60 days or wouldn't be able to complete any of the projects. Council Member Christensen stated that we need to have this in place. Council Member Kreun stated with that in mind and have these corrections or additions in place by next Monday, that the developers are very interested in getting this infrastructure in the ground and want to get some houses up this year, and will revisit this issue at the end of 2004..

Council Member Kerian asked how the value of the land fits into the picture of the $135,250. Council Member Gershman reported as Urban Development reviewed this. Council Member Kreun stated that the Housing Authority is also involved in one of the districts and theirs will be set up for LMI and that area will be subsidized with infrastructure and use of CDBG funds, Fannie Mae loans and that will be entry level housing; that they are picking up three different type of starter homes, one replacement homes.

2.5 Bids for construction of Project No. 5217, 32nd Avenue and Columbia Road Recon-
struction._______________________________________________________________
There were no comments.

2.6 Consideration of bids for Projects No. 5467 and 5468, paving and street lights on
34th Avenue South east of Belmont Road; Projects Nos. 5326 and 5454, paving and street lights on East Elmwood Drive from 32nd Ave.S. to Elmwood Ave. and bike/pedestrian path on 32nd Ave.S. from Belmont road to Greenway access on Elmwood Drive. ________________________________________________________
There were no comments.

2.7 Bids for Project No. 5456, District 416, Lift Station 89 Rehabilitation.
There were no comments.

2.8 Street Department equipment bid.
There were no comments.

2.9 Storefront Rehabilitation Program - Round III.
There were no comments.

INFORMATION ITEMS

3.1 Night bus report.
Informational - no comments.

3.2 2003 Curbside Recycling Program Update No. 4.
Informational - no comments.

3.3 Financial Management Report.
Informational - no comments.

MAYOR AND COUNCIL MEMBER COMMENTS

1) Council Member Brooks presented request and asked when it comes to council appointments to different boards, etc. if there are terms with these and if reappointments or rotate through, and if should be reappointment or shifting people around. Mayor Brown stated his office will look at that. Mr. Brooks stated in the survey he was quoting earlier tonight from 2001, noted that survey said that 93% of the citizens surveyed believed that the City should have a 5-year long range plan and thought the development of that plan should include other community interests such as CVB, Park District, Economic Development Corporation in developing that plan.

2) Council Member Hamerlik stated in the start-ups, building permits up in apartments, etc. but in all construction way down, asked for further information; and that they e-mail him that info.

3) Council Member Kreun thanked Congressional delegation and engineering department for working hard to acquire funding for on-going levee system and appreciates people working with the Corps of Engineers because important and high on priority list.

4) Council Member Gershman thanked the mayor for his comments about the city council and others who, whatever side they are on in this issue, have the best interest of the city at heart and said it very well, and would hope citizens noted as they watched this tonight, there was level of humor and respect for each other as they may disagree and hoping that goes forward that people will develop their arguments based on principal and not personality because all hoping to create better city.

ADJOURN

It was moved by Council Member Gershman and seconded by Council Member Kreun that we adjourn. Carried 7 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor