Council Minutes
PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
February 9, 2004
The city council of the city of Grand Forks, North Dakota met in special session in the council chambers in City Hall on Monday, February 9, 2004 at the hour of 7:00 o’clock p.m. with Mayor Brown presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Gershman, Kerian, Kreun - 6; absent: none.
Mayor Brown announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter, and that the meeting is being televised.
Mayor Brown congratulated organizers of this year's Greenway Ski Day, which was a total success, and that we are an active community and the greenway will be used over and over again to help us remain active and fun.
He announced that he proclaimed February 14, 2004 as Congenital Heart Defect Awareness Day, that congenital heart defects are the number 1 birth defect and over 40,000 babies a year are born in the U.S. with a congenital heart defect and proclaims February 14 as a day to remember those who have been lost to this defect and increase awareness of this condition.
COUNCIL MEMBER CHRISTENSEN REPORTED PRESENT
He welcomed the mathletes who are here from cities all across the region for the math competition, this is important to show these young people that we value education and training and learning and wished them congratulations on their achievements.
Congratulations to the UND basketball teams on excellent games this weekend, the old Bison rivalry may be in jeopardy but it was great to see the heart that was exhibited Saturday night and a special congratulations to Coach Glas and the men's team for their victory..
He stated he read the story about the effect the MCI layoffs have on the surrounding area because we are a part of the surrounding area, what affects areas like Pembina and Cavalier also affect us and we cannot forget that, and that he appreciates the comments from the Cavalier administrator and local legislator and sent him a brief letter to thank him for those comments and offer his support. He basically said that people want to live here and that soon the secret of rural North Dakota will no longer be a secret and the trick is to be here when it is discovered and that it is simply not a matter of jobs for providing a good affordable quality of life for our residents so that we can stay here when that day arrives.
SUSPEND AGENDA TO CONSIDER ITEMS ON
GROWTH FUND AUTHORITY AGENDA
It was moved by Council Member Gershman and seconded by Council Member Christensen to suspend the agenda and consider the items under the Growth Fund Authority (JDA). Carried 7 votes affirmative.
CITY COUNCIL RECONVENES
Following the Jobs Development Authority meeting the city council reconvened with all members present.
HOLD PUBLIC HEARING AND APPROVE APPLICATION
BY CANAD CORPORATION FOR FIVE-YEAR PROPETTY
TAX EXEMPTION
The city auditor reported that pursuant to the provisions of Section 40-57.1 of the North Dakota Century Code, notice had been given that the city council would meet this evening to consider the application of Canad Corporation of Manitoba, LTD, 1200 South 42nd Street, for a five-year 100% exemption of the property taxes to the Canad Entertainment complex consisting of an attached hotel, aquatics center and cinema complex to be located on Lot 12, Block 1, Danks Second Resubdivision to the city of Grand Forks, North Dakota, which the applicant will use in the operation of his business to compliment any and all Alerus Events Center events and activities, and further that no protests or grievances had been filed with his office.
Mayor Brown opened the public hearing and asked anyone present who had comments to make on this matter to limit their comments to the five-year tax exemption application by Canad Corporation of Manitoba, LLC and to define comments to a time limit of five minutes.
The following individuals opposed the granting of the tax abatement:
Terry Bjerke, 5356 5th Avenue North
Gary Westmark, District Manager for Carmike Cinemas, 2306 32nd Avenue South, requested that you vote against the abatement for Canad or give Carmike the same types of abatement to keep competition levels fair for all parties involved.
The following individuals spoke in support of the tax abatement:
Scott Sansburn, 2119 10th Avenue North, representing the Building and Construction Trades Council.
Sandy Glas, 323 Terrace Drive, representing Grand Forks Events Center Commission.
Former mayor Mike Polovitz, 2529 9th Avenue North
Rich Becker, 3633 Lynwood Circle
Senator Duaine Espegard, 3629 Lynwood Circle
Tom Bures, Best Western Town House, spoke in favor of the abatement but asked for freeze on their current property taxes to make it a level playing field.
Mayor Brown closed the public hearing.
Mel Carsen, city assessor, stated that the question is, could the City freeze the taxes on existing properties, (motels and theatres) and that the answer is no - that the city council has no authority to freeze a value or taxes on any property - taxes are a function of state law and state law says that property needs to be assessed at its market value, and the assessing department would do that, so if the value goes up they would follow that market up and if it goes down, they would follow that market down. He stated only in a few cases does the city council have authority to grant exemptions - one of those is a new business exemption as the council is considering tonight in the Canad proposal. He noted several other exemptions - the state legislature allows the local governing body to grant exemptions to new homes for a two-year period, it also allows the exemption of remodeling improvements as it essentially freezes the value at present value for a three-year period, and property in the renaissance zone and that is a provision where the state legislature has granted at local discretion of those exemptions - the state law dictates how property is to be assessed. He stated that since about 1996 he has followed the motel occupancy with great concern and the occupancy rates in Grand Forks have been fluctuating, generally downward, and has been trying to track the market value of the motels downward at that same pace, not every property goes down at the same rate because he has tried to establish the occupancy rate of each motel to use as a guide to establish the value for the upcoming year. He stated that if the values were to rise he would have to have justification for that sort of an increase and that would be based most directly on the average daily rate of the motel coupled with the occupancy of the motel.
Mr. Carsen stated there are two other theatres in town that would be in direct competition with the new theatre being built and would also have to address it but it is not quite as easy because don't have an average daily rate and don't have typical occupancy. Council Member Christensen asked if he would he be inquiring of them as to how this may impact their cash flows in the future to make their business valuations. Mr. Carsen stated he would be willing to do that.
Council Member Christensen moved that the City of Grand Forks grant the request for an abatement of the real property taxes to be levied and assessed against the Canad Inns project that is currently before us for a period of five years and further that the exemption would start when the project is certified as ready for occupancy. Council Member Kreun seconded the motion.
Council Member Glassheim questioned when they would have guidance on the terms of the proposed agreement and when would they do that. Council Member Christensen stated it would be his suggestion that we address this issue first, whether grant the exemption or not, and if the exemption is granted the Canad Inn people have a request before us that deals with the modification of an existing marketing agreement and an existing lease which have already been approved by this council, and to fine tune some of the issues in their request to make sure that they mesh; that he would anticipate that Mr. Duquette along with the city auditor, the city attorney and the members of the negotiating team would reconvene to get discussion points with the principals from Canad and get it back to the council within the next two weeks. Mr. Duquette stated they could do that.
Council Member Gershman stated he concurred with that and with the resolution that the Hotel/Motel Association put forth several issues, one was the marketing agreement with the additional revenues that would be generated after one year by Canad Inns and would hope that particular issue would be part of that discussion as it goes back to the negotiating team and that it is a valid request and is done in the interests of the City and not in the interest of themselves.
Council Member Glassheim stated he has had doubts over granting this property tax abatement, and two good reasons to vote against the property tax abatement and most important reason is that we have honored the principle that we do not give property tax breaks to retail businesses or businesses which compete with other existing local businesses to capture the same amount of local dollars; a second reason to be uneasy about this property tax abatement is that one of two major purposes of economic development is to increase the investment and construction in order to help control or lower the tax on our citizens' homes and businesses but in this deal we are anticipating significant sales tax dollars coming to the city from increased tourist business activity while at the same time for five years are not capturing any dollars to reduce general property taxes. He stated that if wanted to give a subsidy to help the entertainment complex get off the ground, should take it from the increase in sales tax collections which the businesses' patrons will be paying. He stated he has tried to stimulate interest in this way of helping the entertainment complex but no one on the council seems interested. He stated he has decided to vote for the property tax abatement for one reason - to guarantee that we have a convention hotel that will increase the usage and income of our public convention facility to complete the project that we started many years ago; however, for the next 5 years he hopes the council will take care to put more resources into the things for which a city has first responsibility, police, fire, water, public health, sewer and streets, using business and residential growth to lower property taxes on its citizens.
Mr. Swanson suggested with respect to the motion on the floor, would encourage either by friendly amendment or by actual amendment including four separate findings: 1) that the granting of the exemption would not create an unfair advantage that would be a substantial detriment to existing enterprises, 2) that the granting of the exemption is in the best interest of the city; 3) that the proposed project is located entirely within the city limits; and 4) that all notices required by law have been timely given.
Council Member Christensen stated he would accept those as friendly amendments to his motion; Council Member Kreun also accepted.
Upon call for the question and upon voice vote the following voted "aye": Council Member Brooks, Hamerlik, Glassheim, Gershman, Christensen, Kerian, Kreun - 7; voting "nay": none. Mayor Brown declared the motion carried.
ADJOURN
It was moved by Council Member Christensen and seconded by Council Member Gershman to adjourn. Carried 7 votes affirmative.
Respectfully submitted,
John M. Schmisek
City Auditor
Approved:
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Michael R. Brown, Mayor