Committee Minutes

MINUTES/GROWTH FUND AUTHORITY (JDA)
Tuesday, September 7, 2004 - 7:00 p.m.____________

The city council of the City of Grand Forks sitting as the JDA (Growth Fund Authority) met in the council chambers in City Hall on Tuesday, September 7, 2004 at the hour of 7:00 p.m. with Chairman Gershman presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Christensen, Kerian, Kreun, Gershman - 7; absent: Mayor Brown - 1.

APPROVE APPLICATION FROM CONTE LUNA
FOODS FOR GROWTH FUND LOAN

The staff report from urban development director relating to Conte Luna Foods - Growth Fund application, with recommendation to hold public hearing on the proposed funding for Conte Luna Foods PACE interest rate buy-down loan, and to approve a loan to Conte Luna Funds per staff report.

Chairman Gershman opened the public hearing.

Jim Melland, Economic Development Corporation, reported that Conte Luna Foods has provided an application to the Growth Fund Committee, that they are in the food processing industry and manufacture pasta and macaroni lines here, and have begun implementing the installation of a packaging line of equipment in their existing facility and because of the growth of the company will generate 11 new positions, the company is doing well in an industry that has suffered some setbacks in recent years. The new line that they will making in the Grand Forks plant is called Annie's Organic Mac & Cheese and the recommendation is for approval of the PACE participation loan in the amount of $80,000 to help the company continue its growth in the Grand Forks area. It was noted that the PACE loan is contingent on the company closing a loan in the amount of $1,125,000 with a bank. He noted there is organic grain grown in central North Dakota and that is a potential source for them.

Chairman Gershman closed the public hearing.

It was moved by Council Member Glassheim and seconded by Council Member Christensen that the recommendation to approve PACE participation interest rate buy-down loan applied to bank loan for the purchase of equipment, with a maximum amount of $80,000, with 0% lending rate, with payments deferred until maturity of bank loan for equipment (7 years), monthly payments at the same rate as the bank loan to be made until debt is satisfied. Upon voice vote the motion carried 7 votes affirmative.

APPROVE LOAN TO AMERICAN DEFENSE
INDUSTRIES, INC. AND LOANS TO PRIBULA ESTATES,
LLC

The staff report from the urban development director relating to American Defense Industries, Inc. Growth Fund application, with recommendation to hold public hearing on the proposed funding for American defense Industries, Inc., and to approve a loan to American Defense Industries, Inc. and two loans to Pribula Estates, LLC as per this report.

Chairman Gershman opened the public hearing.
Jim Melland, EDC, reported that American Defense Industries, Inc. is a new start-up company in Grand Forks, owned and run by Tim Pribula, and will be manufacturing metal parts under contract primarily with the National Department of Defense but also doing contract manufacturing for other customers, that there is significant investment in this company by Mr. Pribula and some loans which he is personally guaranteeing. The company will be located west on US 2 and expect to employ 32 fulltime equivalents within the first two years and have already begun some operations with 11 employees. The company is requesting participation in two PACE loans, one to buy down the interest rate on a loan to purchase the facility and expand it in the amount of $110,000, and the second PACE participation loan will be used to buy down the interest rate for equipment in the amount of $25,000; and they are also requesting a third loan from the EDA Revolving Loan Fund (a special fund within the Growth Fund that was furnished by the Economic Development Administration, a federal agency, about 7 years ago) and is a straight loan with 7-year amortization on it and a balloon in three years, and these funds will be used for improvement of some property surrounding the facility. He noted the EDC and the Growth Fund Committee have reviewed and recommend approval of these loans.

Council Member Hamerlik stated that the third loan has an interest rate according to the New York prime and is adjusted annually.

Chairman Gershman closed the public hearing.

It was moved by Council Member Brooks and seconded by Council Member Kreun that the recommendation be approved as follows:

Loan #1 is PACE participation interest rate buy-down loan to Pribula Estates, LLC in the amount of $110,000, 0% lending rate, with repayment terms as follows: payments deferred until maturity of bank loan for real estate (17 years), monthly payments at the same rate as the bank loan to be made until debt is satisfied, interest rate buy-down applied to bank loan for the acquisition of real property; and personal guarantee from Mr. and Mrs. Pribula.

Loan #2 is PACE participation interest rate buy-down loan to American Defense Industries, Inc. in the amount of $25,000, 0% lending rate, with repayment terms as follows: payments deferred until maturity of bank loan for equipment (7 years), monthly payments at the same rate as the bank loan to be made until debt is satisfied; and personal guarantee from Mr. and Mrs. Pribula.

Loan #3 is EDA Revolving Loan fund to Pribula Estates, LLC, in the amount of $25,000, New York prime rate, annually adjustable, with 7 year amortization with a 3-year balloon, use of proceeds for property improvements; with UCC filing on equipment valued at $25,000 and personal guarantee from Mr. and Mrs. Pribula.

Upon call for the question and upon voice vote, the motion carried 7 votes affirmative.

APPROVE FUNDING AND INSTALLATION OF
TEMPORARY ROAD FOR LM GLASFIBER

The staff report from the urban development director relating to LM Glasfiber installation of temporary road, with recommendation to hold a public hearing on the proposed funding and installation of the temporary road for LM Glasfiber, approve the installation of a temporary road on Lots C and D, Block 3, Maier's Fourth Resubdivision as described in this report, and approve a loan to LM Glasfiber for the cost of the project as summarized in this report.

Chairman Gershman opened the public hearing.

Jim Melland, EDC, reported that the LM Glasfiber is experiencing some growth again and
there is a significant need for temporary storage which they have been using on optioned land adjacent to their plant and have requested that a temporary special use road be put in to utilize that land to the west of their facility. The Growth Fund Committee met and approved two motions, that they are permitted to have the road built on the City-owned property and to fund the cost of putting that road in and have it repaid by LM Glasfiber over a 48-month period at an interest rate of 4.5% and requested that an amendment to the first motion, that company is considering paying for the road themselves.

Chairman Gershman closed the public hearing.

It was moved by Council Member Christensen that the JDA authorize the development and construction of a road upon the optioned real property, that the city attorney be directed to prepare a license agreement that authorizes the construction of the road upon city property, and further that upon the licensing agreement being prepared and approved by the city attorney the president of the JDA be authorized to sign the same. Council Member Brooks seconded the motion.

Mr. Melland stated that the land that this road would be constructed on is optioned to the company in conjunction with the lease which was renewed in June, and that lease is for a five-year period of time as is the option for that land.

Upon call for the question and upon voice vote, the motion carried 7 votes affirmative.

Council Member Christensen moved that we approve recommendation of the Growth Fund as far as the lending of the money to LM Glasfiber as recommended by the Growth Fund if they choose to avail themselves of borrowing the money from the JDA. Council Member Kerian seconded the motion. Upon call for the question and upon voice vote, the motion carried 7 votes affirmative.

Chairman Gershman thanked Klaus Thiessen, Jim Melland and staff and also the Growth Fund members for their work on these projects.

ADJOURN

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

Respectfully submitted,

John M. Schmisek
City Auditor



RECONVENE GROWTH FUND (JDA) MEETING
It was moved by Council Member Glassheim and seconded by Council Member Brooks to reconvene the meeting of the Growth Fund (JDA) to reconsider action of the council members at the request of Chairman Gershman to allow him to recuse himself from the vote on the issue of loan application by Conte Luna. Carried 6 votes affirmative.

Chairman Gershman asked to be recused from voting on the recommendation of Conte Luna Foods loan application; and it was so moved by Council Members Glassheim and Kerian. Carried 6 votes affirmative.

It was moved by Council Member Kreun and seconded by Council Member Kerian that
the recommendation to approve PACE participation interest rate buy-down loan applied to bank loan for the purchase of equipment, with a maximum amount of $80,000, with 0% lending rate, with payments deferred until maturity of bank loan for equipment (7 years), monthly payments at the same rate as the bank loan to be made until debt is satisfied. Upon voice vote the motion carried 6 votes affirmative; Chairman Gershman recused.

ADJOURN

It was moved by Council Member Glassheim and seconded by Council Member Kerian to adjourn. Carried 7 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor