Committee Minutes
Growth Fund Committee
Thursday, January 19, 2006, 4:00 p.m.
Urban Development Committee
1405 1st Avenue North, Grand Forks, ND 58203
Chairman Christensen called the meeting to order.
Roll Call:
Present: Terry Smith, Gerald Hamerlik, Doug Christensen, Eliot Glassheim, and Jon Ramsey. Also present: Greg Hoover, Keith Lund, Jim Melland, Rick Duquette, Dr. Jim Petell (Director, UND Technology Transfer and Commercialization), Judd Graham, Jonathan Fu, Connie Mangan, Hal Gershman, Tu-Uyen Tran, John Warcup, Klaus Thiessen, Brad Gengler, Duaine Espegard, and Peggy Kurtz.
REAC Campus:
Doug stated that the University of North Dakota Research Foundation has made application to the North Dakota Centers of Excellence (COE) Program and Dr. Jim Petell was present to speak to that application. Doug said the Foundation is proposing to develop a technology park on what we call the old Amazon land on 32nd Avenue South, west of U.S. Food Service and they propose that 20 acres of the site be dedicated to the tech park. Dr. Petell added that the 20 acres is part of the initial application, and another 60 acres would be part of a broader master plan for development. Doug stated the Foundation is asking that the City allocate at least 20 acres on the site for a technology park and provide between $630,000 to $700,000 in infrastructure. Further, they are requesting that the City participate in the funding of this project with a $500,000 grant and a $500,000 low interest loan. Doug said that traditionally, we have looked at interest rates similar to what we earning, which is between 3.5% and 4%. The Foundation wants 10 years to repay the loan at interest only. Assuming they are successful at the State level, they will return to the Growth Fund to work out these details. Doug said that the creation of the tech park would be a partnership between the City and the University. Dr. Petell stated the Research Foundation will participate in looking at an extensive master plan for all 80 acres and will have to define the terms of how to develop and manage the area. He stated that the Foundation wants the City’s support in that location. The application to the State is for $5 million. Dr. Petell stated they already have a letter of interest from a bank. Doug said it would be a partnership between the City and UND in the management of the park. Eliot stated the application shows $4.7 million of developed land and asked what this is comprised of. Dr. Petell replied that this figure was provided by a consultant from California who completed the feasibility study. He based his opinion from talking to the City Planning Department as well as site work he had done for NDSU’s incubator. This figure assumes that the land is developed. Eliot asked if the Foundation was putting some investment money in as well. Dr. Petell replied this includes the City’s infrastructure investment of $658,000 plus the value of the land, keeping in mind the fact that some of that some site work has already been done. Eliot asked if they were talking about the 80 acres and Dr. Petell replied the tech park would use 20 acres. Eliot asked if they were valuing the 20 acres plus the approximate $650,000 site work with a building not yet constructed at $4.7 million. Dr. Petell replied they were. Eliot asked how much was estimated for the construction of the building and Dr. Petell replied about $13.1 million, stating that other assets are added together. Greg pointed out this is highlighted on page 3 of the handout. Eliot asked if it was understood that the details would be worked out should this come to fruition and Dr. Petell replied it was and, at this time, he was asking for support from this Committee.
Jon Ramsey moved and Terry Smith seconded that the Growth Fund Committee support this project.
Mr. Hamerlik expressed concern that we retain appropriate negotiation options, assuming this is approved by the State, on details such as the interest rate and membership of the management commission. He stated that the Growth Fund’s bylaws call for a recommendation from the President of UND for all Growth Fund applications, and he didn’t see that recommendation in the material presented. Klaus stated they do have a letter of support from the President of the UND. Dr. Petell added they also have a letter of commitment from UND for 14,500 square feet for the sum of $437,000, which is equivalent to what the projected P & I payments would be. Doug stated he shared Mr. Hamerlik’s concern, adding that if they get approval from the State, they still have to get a lot of things done which will give us time to formulate the tech park commission and its governance. We will probably get more of a presentation from UND and their consultants about what they envision as the overall plan. Mr. Hamerlik asked Duaine Espegard how much money had been awarded by the State for developing cooperative efforts between universities and cities and asked if this application had already been reviewed by the State and denied. Mr. Espegard replied that the COE program was funded last year for about $20 million, and there has been one round of applications and approximately $9 million awarded. This application was presented during the first go-round and was sent back for some tune-up. Dr. Petell added, in the first round, it had been suggested to give them $1 million but the committee preferred to have the Foundation come back with a stronger application to include, among other things, tenants for the park and support from the President’s office, which they now have. In addition, the Foundation has completed a feasibility study to ensure that the park could be operational after two years, at which point it would be able to pay for itself. Doug stated there was a motion and a second and asked for further discussion, adding that everyone understands if they get approval from the State, they can come back and discuss the land and its management. Dr. Petell asked if a letter would be forthcoming from this Committee. Doug stated the minutes would be available or he could call the State committee. Mr. Hamerlik stated the exact wording of the motion is important. Eliot asked if this needed to be approved by the Council. Doug stated a final decision on the project would need to go to the JDA but, at this point, there is nothing to approve. If the Foundation doesn’t get approval from the State, they won’t be coming back here with a project. This would be a recommendation from this Committee. Eliot felt it would be a lot stronger if the JDA approves. Klaus stated, given the January 24th deadline, the interest and support which has been expressed by this Committee, and that details will need to be worked out at a later date, it would be difficult to get formal approval. Mr. Espegard stated he appreciated the Committee’s action here today. It’s a major project with major implications for the job force in Grand Forks. Chairman Christensen called the question.
Voting “aye”: Gerald Hamerlik, Terry Smith, Jon Ramsey, Eliot Glassheim, and Doug Christensen. Voting “nay”: None. MOTION CARRIED.
Matter of prospective location, relocation, or expansion of business or industry:
(Committee may adjourn into executive session pursuant to NDCC 44-04.19.2.)
Keith stated on the agenda is a matter of prospective location, relocation, or expansion of business or industry in Grand Forks, and we have identified on the agenda that the Growth Fund Committee may adjourn into executive session to discuss negotiating strategy. Amazon.com recently realigned their distribution system companywide last summer and closed the distribution center in the Grand Forks facility. They have, however, increased employment in their customer service operations with the average wage slightly higher than when they had the distribution center open. The facility includes approximately 125,000 square feet of warehouse space. The two rear bays consist of 75,000 square feet which are completely empty and one 50,000 square foot bay they are utilizing to some extent. Amazon.com has formally requested to be relieved of the two furthest bays (75,000 square feet) from its leasehold responsibilities. In communications with them, we said we would consider that, providing we could find another tenant. He stated that Amazon.com is under lease until November of 2008 and we have no reason to believe that they won’t be here until then. Also, staff has been in discussions with a manufacturing company to do some work in this building and we are at the point right now where we need to present our offer to this company if this process is to move forward. Keith suggested that the Committee adjourn into executive session so they can discuss negotiating strategy and staff can obtain negotiating instructions from the Committee.
It was moved by Gerald Hamerlik and seconded by Eliot Glassheim to convene into executive session as provided by NDCC 44-04.19.2 to consider and discuss closed or confidential records and information, negotiating strategy, or negotiating instructions as provided by NDCC 44-04.19.1, 44-04.19.2, and 44-04.18.4. Voting “aye”: Gerald Hamerlik, Terry Smith, Jon Ramsey, Eliot Glassheim, and Doug Christensen. Voting “nay”: None. MOTION CARRIED.
The Growth Fund Committee convened into Executive Session at 4:28 p.m. In attendance were Growth Fund Committee members Doug Christensen, Eliot Glassheim, Gerald Hamerlik, Jon Ramsey, and Terry Smith. Also present were: Greg Hoover, Director of Urban Development; Keith Lund, Deputy Director of Urban Development; John Warcup, Assistant City Attorney; Jim Melland, Vice President, Grand Forks Region Economic Development Corporation; Klaus Thiessen, President/CEO, Grand Forks Region Economic Development Corporation; Rick Duquette, City Administrative Coordinator; Hal Gershman, Grand Forks City Council President; and Peggy Kurtz, Community Development Specialist, Urban Development.
(Executive Session)
The Committee reconvened after executive session at 5:01 p.m.
Other Business:
There was no other business.
Adjournment:
Doug adjourned the meeting.
Respectfully submitted,
Peggy Kurtz
Community Development Specialist
Doug Christensen
Chair