Council Minutes
PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
March 29, 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, March 29, 2004 at the hour of 7:00 o’clock p.m. with Mayor Brown presiding, pursuant to call by two council members, Council Members Kreun and Hamerlik, which was served on all members on March 26, 2004. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Gershman, Christensen, Kerian, Kreun - 7; 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 for delayed broadcast.
Mayor Brown commented on various events during the past week and upcoming events:
He stated it was a great weekend for concerts in Grand Forks: the Bare Naked Ladies concert at the Alerus; the Airmen of Note concert at the Red River High School gymnasium, a free concert for the community, this was the band that was formed to carry on the tradition of Glenn Miller's dance band; the Red River jazz band played several songs to introduce the concert and was impressed with their talent.
This week is the 35th Annual Time-out and Wacipi week in our community and there will be educational and cultural events all week at UND to help our whole community celebrate and learn more about American Indian culture. Johnette Gillis and Melissa Street stated that Time-out Week is a week of events, that they had the ground-breaking ceremony for their new center, that the POW-WOW starts Friday at 7:00 with grand entry, two grand entries on Saturday at 1:00 p.m. and 7:00 p.m., and one on Sunday at 7:00 p.m.; there will be traditional meal served Friday at 5:00 p.m. free to the public at the Hyslop, serving buffalo burgers and buffalo chili and invited everyone to come and enjoy the singing and dancing, have people coming from 7 states and 2 Canadian provinces. UND will be hosting the regional conference of American Indian Science and Engineering Society on Thursday and Friday. They presented the council with posters and programs; and thanked City for their commitment and donation to their organization and event and to their cause to help promote their culture.
FLOOD UPDATE
Mayor Brown asked Mr. Grasser to give quick update on flooding caused by recent rains in the area; and thanked staff and emergency management staff who have been monitoring it and in some cases providing assistance to the communities in the region; that they have made contact with several communities and offered assistance and have been able to help in a few cases by providing sandbags and pumps.
Al Grasser, city engineer, reported that the river has risen as a result of the rains this weekend, now at 35.5 ft., and latest prediction from the Weather Service is 37.5 ft. late Wednesday or early Thursday, have had meetings with staff of public works, street department, wastewater distribution people and reviewed our flood fight plan and preparations on our side, don't have any gates that are closed and can handle with system that we have at these levels. He stated they had a meeting with the Corps of Engineers and their contractor because there are some areas that are under active construction and have been coordinating some of those activities with them - that they may see some activity at Belmont and 15th Avenue South and at Belmont Coulee as taking some preventative actions there, setting up some pumps. He also noted that some areas are barricaded from travel, the old Lincoln Drive area and Riverside Park area, and cautioned people not to go around those barricades as some roads under water. He stated they have seen some evidence of benefit from the flood protection project - that if not had original and current diversions would have had significant water in the southwest part of the city (on the west side of the Interstate, 32nd Avenue South), diversions working very well.
Mr. Grasser stated surrounding areas are doing most work on their own but coordinating that through EOC with Jim Campbell; there are some pumps and sandbags that have gone out, and that they will be available to offer any kind of assistance we can on recovery type issues also. Mayor Brown noted that if we can be of assistance to please let him know.
APPROVE CANAD/SHELTER ENTERTAINMENT
COMPLEX LEASE AND MARKETING AGREEMENT
The staff report from the administrative coordinator relating to Canad/Shelter Entertainment Complex lease and marketing agreements, with recommendation subject to the approval of the city attorney and a showing of financial capacity by Canad Inns, authorize appropriate City officials to enter into the amended lease and marketing agreements.
Rick Duquette, administrative coordinator, reported that the committee met last Thursday and worked through last piece of the details and called special meeting. He stated that tonight would like to work through the amended lease agreement and amended marketing agreement to show modifications that have been made to accommodate the entertainment complex, that the initial agreements revolved around the hotel and that Canad has brought a proposal forward to include an aquatics center and cinema complex and have had to modify our agreements for that and that is what the committee and the city attorney have been involved with in the last several weeks. He asked Mr. Swanson to walk through some of the modifications to the agreements.
Howard Swanson, city attorney, reviewed final changes to the marketing agreement and to the lease agreement with Canad Inns; that there were no substantive changes to the marketing agreement from the last draft provided. He stated the initial changes appear in the section of Definitions, that the prior drafts referred to room tax and became more specific throughout the marketing agreement and referred to it by motel-hotel tax, the other definition that has been changed and added is cinema complex and if look at definitions have specifically defined motel/hotel tax and tied it to the City Code. He noted in section which addresses the additional marketing payments, the only change from prior draft is they have changed the reference from room tax to motel/hotel tax and no change in the manner in which that is calculated or the definitions.
Council Member Gershman stated section 10 (a), Marketing Agreement Payment, re. additional money available that "…provided that the Motel-Hotel Tax paid or payable by all of the hotels/motels…" and his concern is that could be interpreted that every single hotel or motel would have to show that their revenues were up, that it needs to be cumulative, that the total amount of the tax dollars because some hotels might not have an increase in business and that it is the total. Mr. Swanson stated he believed that counsel for Canad would have no concerns by adding the word cumulative in advance of Motel/Hotel tax. Council Member Christensen stated that the word "all" is inclusive and takes into the meaning of all cumulative and doesn't think change is needed. Council Member Gershman stated he doesn't want this to not be able to happen if several motels in town say they weren't up. Mr. Swanson stated he didn't think concern would be a reasonable interpretation of the clause but doesn't see that adding the word "cumulative" would be a particular concern
Council Member Christensen stated in section 10, item (b), which says that "that the obligation of the city for payment of the Additional Marketing Payment shall expire upon payment by the City to Canad of the fifth (5th) payment thereof.", and that he thought the term was that this marketing agreement had a five-year term and asked for clarification and if the interpretation was that that payments will go on beyond the fifth year term of the marketing agreement payment, or if it is being paid in addition to the monies being paid under paragraph 9 during the same term. Mr. Swanson stated he didn't believe the term of the marketing agreement is a five-year term, that in section 12 that the term of the marketing agreement runs contemporaneous with the terms of the ground lease, which is fifty-years, however, the definition of additional marketing payments in conjunction with paragraph 10 and although the term of the marketing agreement is a fifty-year term, there is no obligation beyond a five year payment - the only time period that any payments are due, however, are for the five payments and it may be more than a five year because of when the hotel goes into operation, the combination of paragraphs 9 and 10, may have different initial dates of payments between fixed payment and additional marketing payment, and that is why that paragraph is written with reference to five payments as opposed to five years, they are annual payments but could occur in the sixth year.
Mr. Swanson stated those were the only changes in the marketing agreement and would consider the changes in the marketing agreement primarily as housekeeping.
Mr. Swanson stated regarding the proposed/amended lease agreement, that he would consider this to be fairly complex and comprehensive lease, that there are not substantial changes in the amended lease from lease approved earlier, and will walk through the agreement referring to section numbers as to various changes.
He noted under Definitions they have added a definition of "cinema complex" and "entertainment complex", earlier lease only spoke of hotel and has been expanded to contemplate additional improvements and proposals. The other definition of "completion date" is changed to add or reference cinema complex as having a different construction time period than the hotel. He stated that city council has the ability to approve the concept plan which would include numbers of rooms or the layout and maybe change in the footprint but the plans that he is aware of now contemplate 11 story hotel; and that the 192 rooms there has been some discussion as to whether some rooms maybe made into suites and reducing the room count to reflect larger combination rooms.
He stated an area he would identify as having substantive change is section 9.1 which deals with construction criteria and detailed plans, and addition is that in negotiations and discussions the city council has always had the ability to approve the concept plan which includes generally the footprint, number of rooms, type of amenities, etc. and as part of an oversight earlier, they had not included the construction cost estimates and have added and incorporated into the conceptual plans the construction cost estimates and no other changes in the construction criteria, concept plan, detailed plans or construction or pre-construction obligations on the part of either party.
He stated that the City of Grand Forks has entered into a naming contract with Alerus Financial allowing or extending the use of the trademark name "Alerus"; that Alerus has asked that they control the use of their name prior to previous draft had Canad Inns entering into an agreement, and Alerus has asked that they have that licensing agreement directly with them so have deleted all references to any licensing agreement with the City and have indicated that the use of the name "Alerus" has to be done with the consent of Alerus Financial.
He stated that section 30.1 and a number of subsequent sections is the portion of the lease dealing with parking and took greatest amount of attention for the attorneys. He stated that all of the language in Sections 30.1 through 30.5 references are to priority parking (which means common parking) and dedicated parking (limited parking use) where appropriate. He also identified two lots called Parking East (which does not presently exist) and Parking West which are depicted on a map attached to the agreement; and reviewed sections relating to shared use of parking facilities and maintenance. He also noted a new provision that states none of the tenants or sub-tenants may charge for parking on the premises without approval from the City, the Alerus Center does not separately charge for parking and they did not want to have any of the tenants charge for parking. He also noted that they modified section 30.11 to allow the tenant for an event or for periods of time designate that either parking lot or portion of those lots can be converted to dedicated parking, and that if that occurs there are tax consequences that do attach to it, the dedicated parking does convert those parking spots to a leasehold interest and will carry a tax bill with that.
Mr. Swanson stated he didn't find where there were any other substantive changes to the lease, the bulk of the discussion was with respect to the parking.
Council Member Christensen moved that the city council approve the lease that has been presented and the marketing agreement that has been presented and to the lease would suggest that Section 30.9 be amended to include the words in the second sentence after the words "priority parking" in the priority parking areas or any future dedicated parking areas, and that we amend Section 30.11 and that we authorize Mr. Swanson and Mr. Duquette to work with the amendment of 30.11 to provide that if the Parking West becomes dedicated parking as provided in 30.11 that the dedicated parking area cannot restrict the use or access of the loading areas adjacent to the Alerus; and as to the marketing agreement would add in addition to the word all to insert the word cumulative tax collected . Council Member Kerian seconded the motion.
Upon call for the question and upon roll call vote, the following voted "aye": Council Members Brooks, Hamerlik, Glassheim, Gershman, Christensen, Kerian, Kreun - 7; voting "nay": none. Mayor Brown declared the motion carried.
Leo Ledohowski, president and CEO, Canad Corporation, thanked everyone very much, that it has been a long process but thinks the citizens of Grand Forks should be very comfortable that there has been a diligent and careful effort by the mayor and negotiating committee, that these things take time but it is very important to get them correctly and thanked them for their efforts and is looking forward to becoming part of this community and looking forward to it very much and hoping to get going as soon as possible.
Council Member Gershman thanked the mayor who continued to have communication, thanked the negotiating committee that worked long and hard and very diligently, Rick Duquette, Howard Swanson, John Schmisek, Curt Kreun, Dean Hamerlik and Doug Christensen. He also thanked the Hotel/Motel Association for their input and for their resolution supporting this and that was big help in bringing this community together and moving this project forward, and thanked Mr. Ledohowski and his crew and looking forward for you becoming part of our business community and our community in general.
Council Member Hamerlik thanked them and appreciates continuing efforts and glad to have them aboard.
Council Member Kerian stated she wanted to add to those folks who had pictures of the way 42nd could be an interest to the city, that the hotel is a big piece of that entrance, but there are some other good ideas too that have been out there for a long time and recognized and thanked all of the people who are going to come in with their additional ideas and business interests and continue to grow that area so can look at other parts of the city.
Council Member Brooks welcomed Mr. Ledohowski and his people, they will be a great addition, and thinks negotiations went rather well, long process and thanked mayor of Warren for allowing him to be here between his meeting there.
Council Member Christensen stated lesson to be learned for the community is that just because they happened to disagree on the way of achieving a common goal doesn't mean that they don't have a common goal, and the common goal they have seen developed since November is a council and the mayor and his staff working together to achieve that which a lot of folks wanted but just a different way of getting it, and looks forward to working with Mr. Ledohowski, Canad Inns, group and sure they will have more ideas and hope we are all here to work with you on those ideas.
Council Member Kreun stated that the ideas are already there.
ADJOURN
It was moved by Council Member Gershman and seconded by Council Member Christensen that we adjourn. Carried 7 votes affirmative.
Respectfully submitted,
John M. Schmisek
City Auditor
Approved:
_______________________________
Michael R. Brown, Mayor
He stated what attempting to do was to identify that there would be cross-over usage of all of the parking at the Alerus and for events at Alerus crossover parking and for events at the cinema complex or aquatics center or hotel there was parking available and that at certain time or occasions one part of the other may have the need to designate certain parking areas as being limited access or restricted use of something of that nature; and ultimately determined to use terms such as priority parking which means common parking and agreed upon the term of dedicated parking which would mean limited parking use.
He stated in 30.1 (a) they identified two lots called Parking East and Parking West and are depicted on a map attached, that Parking East is an area that does not presently exist, land that was purchased year or so ago that is still grass/dirt, that Parking West is the area immediately north of the loading doors on the north side of the Alerus and will be on the west side of the hotel and do identify that some of the priority parking demonstrated on the map is intended for use of the tenant but not exclusive.
Section 30.2 shows specific reference to the shared use of parking facilities.
Section 30.3 identifies that Parking West must be maintained to provide access to semi trucks, buses, etc. to the north gate of the Alerus Center, the Landlord (City) will have the responsibility to repair that portion of the parking lot if there is any damage caused by those vehicles accessing the Alerus.
Section 30.4 is reference to Parking East, the tenant (Canad) has full obligation to build that lot and to maintain it, have to put in paving, lighting, etc. and construction of that lot is to occur concurrent with construction of the hotel, intent being that parking spots are not going to be eliminated during the construction period..
Section 30.5 they have changed the manner in which maintenance for the parking will be conducted, in prior lease Canad had maintenance responsibility for certain parking facilities that were going to be used by Canad, the City had some concern that there be uniform parking maintenance throughout the Alerus Center and have indicated that the Landlord (City) is now responsible for all of the parking maintenance ; however, Canad, the water park, cinema complex will all be responsible to pay a pro-rata share; there is a provision where any of the tenants may object to the manner or level of which the City is maintaining it and there is the street resolution mechanism built in there and that is the same resolution mechanism that is throughout the agreement and if concern or dispute about how cleaned, striping, maintained the parties can go to an arbitration panel on that.
Section 30.9 have added a new provision that none of the tenants or subtenants may charge for parking on the premises without approval from the city, the Alerus Center does not separately charge for parking and we did not want to have any of the tenants charge for parking.
Section 30.11 modified this section and have now allowed the tenant to either for an event or for periods of time designate that either parking lots, Parking East or Parking West or any portion of those lots can be converted to dedicated parking, if that occurs there are tax consequences that do attach to it, the dedicated parking does convert those parking spots to a leasehold interest and will carry a tax bill with that, but without the tenant designating and requesting dedicated parking, all of the parking is considered to be common parking.
Section 30.11 (b) added language to specifically identify when and how priority parking is changed to dedicated parking.
Council Member Glassheim asked if they can change to dedicated parking for a short time period or specific event. Mr. Swanson stated it can be from time to time or for longer time, could be as little as one event, may have need to cordon off part of the parking lot for an event or activity, there would be no tax consequence for an afternoon or day or two but longer term would then be converted toward leasehold interest that would be taxable. Council Member Glassheim asked if they take this for long period of time that the parking spaces are no longer available to Alerus events. Mr. Swanson stated that the City has the ability to override that dedicated upon a particular event and that is item that logistics are going to have to be worked out on the site, that possibility does exist. He stated there will be some need for service parking, etc. that will become designated parking spots but for the general public, the site should remain shared parking unless there is an event or occurrence where ask to convert to dedicated parking.
Council Member Christensen pointed out that 30.11 was result of last conference of committee before council received this draft and has a concern on behalf of the Alerus were a tenant to exercise its trump card and take the 1100 parking spaces and would lose Parking West, that a way to solve that is and might he suggest that to make sure that they never charge for the parking were they to dedicate the parking that we add in 30.9 the language that says the tenant shall not be entitled to levy a charge or fee for the parking of vehicles in the priority parking areas or future dedicated parking areas, then never have that issue as they can't put a charge on any of the parking and would suggest doing that because you can always allow them to do that because future councils can approve a charge, but won't interfere with how the Alerus operates or how price their tickets, etc.; second, that he is concerned about is that we don't lose our access to Parking West for the Alerus for the trucks and vehicles that have to load or unload there and doesn't think this is something we have to work out this evening and would trust Mr. Swanson and Mr. Duquette to modify this dedicated parking language so that we don't lose Parking West and understands 100% why Canad Inns needs this parking, esp. for the Cineplex because can't have a Cineplex and not have parking and expects there will be some dedicated parking adjacent to the Cineplex, and asked that they consider authorizing our negotiators, Mr. Swanson and Mr. Duquette, to add these two minor changes because we won't have any loss of our parking as far as Parking West goes which is crucial to the Alerus nor does he think we'll lose the ability to control a fee on our parking lands; if that causes anybody any problems, let him know.
Council Member Christensen stated this lease provides that any leases for a sub-tenant have to be presented to us and approved by the City. Mr. Swanson stated in the definition it refers to tenant's parking facilities and refers to all parking on the leasehold land and would cover whether it is directly the tenant or sub-tenant. He stated with respect to access on the north side of the Alerus, the lease is written so they cannot block the access to those loading doors and if concerned that there would not be sufficient parking on the north side of the Alerus, whether parking or access. Council Member Christensen stated it is access because come in with 10 or 12 buses or trucks and can be there for several days and wants to make sure that the Alerus doesn't have to play the game once they dedicate the parking and then trump them with writing.
Council Member Brooks stated Council Member Christensen's points need to be brought up and can formulate that in the motion so it can be done without having to bring that back to council.
Council Member Kreun stated that all of the discussion we have had on the parking, esp. access addressed in another part, and the only thing he sees that changes is the priority or future dedicated parking. Mr. Swanson stated access is addressed in a couple different fashions, there are provisions from blocking access but more importantly on a planned concept provision, you have the ability to approve the plan and the footprint of the building and that he has had conversations with reps. of the Alerus Center with that in mind, and as plan comes forward for concept approval that is something you are going to want to take a look at to make sure that the design of the facility does not impair access and 2) that any operational aspects of the plan does not impair. Council Member Kreun stated at this point you can't designate certain one and that is why it comes back to us for approval when they request it and during that time we would have access to our loading/unloading areas at all times. Mr. Swanson stated that both of Mr. Christensen's comments or suggestions are appropriate.
Council Member Christensen moved that the city council approve the lease that has been presented and the marketing agreement that has been presented and to the lease would suggest that Section 30.9 be amended to include the words in the second sentence after the words "priority parking" in the priority parking areas or any future dedicated parking areas, and that we amend Section 30.11 and that we authorize Mr. Swanson and Mr. Duquette to work with the amendment of 30.11 to provide that if the Parking West becomes dedicated parking as provided in 30.11 that the dedicated parking area cannot restrict the use or access of the loading areas adjacent to the Alerus; and as to the marketing agreement would add in addition to the word all to insert the word cumulative tax collected . Council Member Kerian seconded the motion.
Upon call for the question and upon roll call vote, the following voted "aye": Council Members Brooks, Hamerlik, Glassheim, Gershman, Christensen, Kerian, Kreun - 7; voting "nay": none. Mayor Brown declared the motion carried.
Leo Ledohowski, president and CEO, Canad Corporation, thanked everyone very much, that it has been a long process but thinks the citizens of Grand Forks should be very comfortable that there has been a diligent and carefully effort by the mayor and negotiating committee, that these things take time but it is very important to get them correctly and thanked them for their efforts and is looking forward to becoming part of this community and looking forward to it very much and hoping to get going as soon as possible.
Council Member Gershman thanked the mayor who continued to have communication, thanked the negotiating committee that worked long and hard and very diligently, Rick Duquette, Howard Swanson, John Schmisek, Curt Kreun, Dean Hamerlik and Doug Christensen. He also thanked the Hotel/Motel Association for their input and for their resolution supporting this and that was big help to us in bringing this community together and moving this project forward, and thanked Mr. Ledohowski and his crew and is excited about this and they are going to bring wonderful entertainment, some new ideas in town and be a better place to live and looking forward for you becoming part of our business community and our community in general.
Council Member Hamerlik thanked them for the four years and was with them all the way and appreciates continuing efforts and glad to have them aboard.
Council Member Kerian stated she wanted to add to those folks who had pictures of the way 42nd could be an interest to the city and the hotel is a big piece of that entrance but there are some other good ideas too that have been out there for a long time and some people who added to that vision and recognized them and thanked them and all of the people who once we got this corridor set are going to come in with their additional good ideas and business interests and continue to grow that area so can look at other parts of the city.
MAYOR AND COUNCIL COMMENTS
1) Council Member Brooks welcomed Mr. Ledohowski and his people, they will be a great addition, and thinks negotiations went rather well, long process and thanked mayor of Warren for allowing him to be here between his meeting there.
2) Council Member Christensen stated lesson to be learned for the community is that just because they happened to disagree on the way of achieving a common goal doesn't mean that they don't have a common goal, and the common goal they have seen developed since November is a council and the mayor and his staff working together to achieve that which a lot of folks wanted but just a different way of getting it, and when the opportunity presented itself to endorse a tax abatement and looks forward to working with Mr. Ledohowski, Canad Inns, group and sure they will have more ideas and hope we are all here to work with you on those ideas.
3) Council Member Kreun stated that the ideas are already there.
ADJOURN
It was moved by Council Member Gershman and seconded by Council Member Christensen that we adjourn. Carried 7 votes affirmative.
Respectfully submitted,
John M. Schmisek
City Auditor
Approved:
_______________________________
Michael R. Brown, Mayor