Committee Minutes

Minutes/Growth Fund Authority (JDA)
Monday, May 23, 2005 - 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 Monday, May 23, 2005 at the hour of 7:00 p.m. with Chairman Gershman presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim (teleconference), Christensen, Kerian, Kreun, Gershman, Mayor Brown - 8; absent: none.

APPROVE APPLICATION FROM UND ENERGY
& ENVIRONMENTAL RESEARCH CENTER

The staff report from the urban development director relating to the University of North Dakota (UND) Energy & Environmental Research Center (ERC) Growth Fund application, with recommendation to hold a public hearing on the proposed funding, approve a grant as summarized in the staff report:
To University of North Dakota's Energy & Environmental Research Center a grant in the amount of $500,000; with $250,000 granted in calendar year 2005 and $250,000 granted in calendar year 2006, for construction of a 15,000 square foot hydrogen test facility.

Chairman Gershman opened the public hearing.

Klaus Thiessen, Grand Forks Region Economic Development Corporation, reported that the Growth Fund had given approval to the Energy & Environmental Research Center for funding support - they are requesting a $500,000 grant over a two-year period for construction of a new hydrogen fuel cell research center, and Growth Fund support will be contingent upon EERC successfully obtaining a $2.5 million support from the State of North Dakota Center of Excellence Program,

Tom Erickson, Associate Director for the Research Center, stated their request is for funding for the National Center for Hydrogen Technology facility, that EERC was designated as the National Center for Hydrogen Technology by the U.S. Department of Energy in 2004, and with that designation and with aggressive business philosophy have seen tremendous amount of opportunity and growth starting and will continue in the next 12 months up to 5 years in the area of hydrogen technologies. He stated that today they have brought in approx. $7.5 million worth of funding from the federal government - Department of Energy and U.S. Department of Defense through the Army Corps of Engineers along with private sector funding from Excel Energy, Basin Electric Power Cooperative, Air Products and Chemicals, Hydrogenise and these people are coming to Grand Forks to work with them in this new growth area. He stated he is tracking about $13 million worth of activities that range from activities with the Department of Defense to Department of Energy, etc. and from that $13 million of project they will see an additional $6 million within next 12 months and expect this to continue for a long period and within the next 5 years expect to hire an additional 50 people as a result of this growth in the hydrogen area, these will be high value jobs and est. salary somewhere in the $50 to $70,000 range; and are requesting from the Growth Fund $500,000 over 2 years along with $2.5 million from the State's Center of Excellence Program to build a 15,000 sq.ft. facility that will provide the additional space they need to grow these programs but also provide specialized space that they need for the hydrogen technologies. He stated the military is commercially ready and one of their projects is focused on working with the Grand Forks Air Force Base and they would like to turn the Grand Forks Air Force Base into the cold weather testing center for all hydrogen related studies from the Department of Defense and will be setting something up in the near future.
Chairman Gershman closed the public hearing.

Council Member Hamerlik moved on the recommendation from the subcommittee of the Growth Fund that we allow a $500,000 grant to EERC to be paid over two years, 2005 and 2006, to build a center providing that they secure the $2.5 million grant from the North Dakota Center of Excellence Program. Mayor Brown seconded the motion. Carried 8 votes affirmative.

APPROVE APPLICATION FOR GROWTH FUND
FUNDING FOR SURE FOOT CORPORATION

The staff report from the urban development director relating to Sure Foot Corporation, Growth Fund application, with recommendation to hold public hearing on the proposed project for Sure Foot Corporation, approve the financing summarized in the report and authorize staff to proceed with the project:
Loan 1: $47,000 PACE participation interest rate buy-down loan, 0% interest with payments deferred for 7 years. Repayment will be two equal monthly payments beginning immediately after the underlying debt is retired, for interest rate buy-down applied to $750,000 bank loan for working capital, with personal guarantees from Jon and Van Larson.
Loan 2: $43,000 PACE participation interest rate buy-down loan, 0% interest with payments deferred until maturity of bank loan for real estate (15 years) balloon payment when underlying loan is retired; interest rate buy-down applied to $486,000 bank loan for building, mortgage on the property.

Chairman Gershman opened the public hearing.

Jim Melland, Grand Forks Regional Economic Development Corporation, reported that Sure Foot is a home-grown company and manufacturer, assembler and distributor of footcare accessories, the project is to expand their business and they will be adding about 13 new jobs over next two years, average income about $36,000 in annual salary averages for their entire membership, and total employment will be 50 people within next two years and funds are for PACE loan participation, the loan through the Bank of North Dakota will be for slightly over $1 million and actually 2 loans, one is for working capital and second loan is for construction of an addition to the building that they own on Dyke Avenue, the PACE participation is for a total of $90,000, $47,000 of those dollars will be tied to the working capital loan which matures in 7 years and the other $43,000 will be tied to the construction addition over 15 years, that the funds will come back to the Growth Fund, half at the end of 7 years and the rest at the end of the 15 years. He stated this will help the company meet their demand for products, they have experienced about 20% sales gains over the last three years and these funds are needed to help them continue that.

Jon Larson, president of Sure Foot Corporation, thanked the City for their support.

Council Member Kreun stated that is a scenario that we have to look at more of our existing businesses in our community that are capable of growing, loan them the money, they pay it back and returns back to the community again and again, and this is the way our JDA is supposed to work.

President Gershman closed the public hearing.

Council Member Christensen stated this is the strategy the Economic Development Corporation embraced about 18 to 24 months ago - that is to grow our own and tonight have two growing our own proposals before us and one growing with a partner in the community, University of North Dakota, and locally owned and grown business that has grown at every step of the way and good participation, and that is what economic development is about in this community, growing what we have here and have all the citizens know that if they have businesses which don't meet the anti-competitive aspect that we embrace their application and will work with them moving forward.

Mayor Brown moved that we approve the recommendation from the subcommittee of the Growth Fund for Sure Foot Corporation's Growth Fund application; seconded by Council Member Kerian. Carried 8 votes affirmative.

ADJOURN

It was moved by Council Member Hamerlik and seconded by Council Member Brooks that we adjourn. Carried 8 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor