Committee Minutes

MINUTES/GROWTH FUND AUTHORITY (JDA)
Tuesday, January 17, 2006 - 7:00 p.m.____________

The city council of the City of Grand Forks sitting as the Growth Fund Authority met in the council chambers in City Hall on Tuesday, January 17, 2006 at the hour of 7:00 p.m. with President Gershman presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Kerian, Kreun, Mayor Brown - 7; absent: none.

HOLD PUBLIC HEARING AND APPROVE APPLICATION
FOR FUNDING FOR HARRISTON-MAYO, LLC


The city auditor presented the matter of the public hearing on Growth Fund application for Harriston-Mayo, LLC

President Gershman opened the public hearing on the application for proposed funding for Harriston-Mayo, LLC, there were no comments and the public hearing was closed.

The staff report from the urban development director relating to the Harriston-Mayo, LLC Growth Fund application, with recommendation to hold public hearing on the proposed funding for Harriston-May, LLC and approve a PACE loan to Harriston-Mayo, LLC as summarized in the report.

COUNCIL MEMBER CHRISTENSEN REPORTED PRESENT

Jim Melland, Grand Forks Region Economic Development Corporation, stated that the application is a PACE participation to facilitate the continued presence and acquisition of two regional manufacturing companies, that the Growth Fund is being asked to participate in two distinct PACE loans, one is to buy-down the interest rate on some equipment on the underlying loan and the second one is to participate in the interest buy-down on a real estate transaction that is being done; the amounts are $23,674 approx. for the equipment buy-down, with a 0% loan from the Growth Fund for 10 years, that on the real estate portion it amounts to $14,570 for a 20-year period at 0%.

Mike DeLisle, one of the owners and general manager of the Mayo Division of the company, stated they have two companies, Mayo Manufacturing in East Grand Forks and Harriston Manufacturing in Minto, ND and that between them they employ 58 employees, 48 of them are ND residents, including himself, that they had the opportunity to buy these companies back from an investment firm in Denver that they were sold to about 8 years ago, have the purchase pretty much made and still wrapping up a number of details and any assistance that they can be given would be greatly appreciated.

Council Member Hamerlik stated that this is a PACE buy-down but it is only 50% of the PACE buy-down because there is a 25% from Grafton and 25% from Walsh County that constitutes the full amount, that this is a loan and not a grant, and will be repaid.

Mr. Melland stated it is a regional participation, the City of Grafton and Walsh County are participating in the total PACE buy-down loans, their participation has been approved but is pending the action of this body; that there are three public entities participating in helping this company get back into local hands. President Gershman stated the total amount from the Growth Fund is $38,000, and that this is an example of our participating in the region when it is a good viable project and congratulated them and their employees for buying the company and keeping it here

It was moved by Council Member Kreun and seconded by Mayor Brown to approve the PACE loan to Harriston-Mayo, LLC. Upon roll call the following voted "aye": Council Members Brooks, Hamerlik, Glassheim, Christensen, Kerian, Kreun, Mayor Brown and President Gershman - 8; voting "nay" none. President Gershman declared the motion carried.

APPROVE GROWTH FUND EDA REVOLVING LOAN
FUND POLICY

The staff report from urban development relating to Growth Fund EDA Revolving Loan Fund Policy, with recommendation to approve the revised policies and procedures and resolution for annual certification.

Keith Lund reported that in 1997 the City received a $2 million EDA revolving loan fund from the Economic Development Administration, and part of the requirement is that we adopt policies and procedures consistent with the guidelines of EDA and the Code of Federal Regulations, that on September 6, 2005 this body revised its polices and procedures and now we must revise our EDA policies consistent with that action, annually we need to certify that the fund is being operated in accordance with those policies so have provided a proposed resolution for approval.

It was moved by Council Member Christensen and seconded by Council Member Hamerlik to approve the revised policies and procedures and resolution for annual certification.

Mr. Lund stated this is a policy that governs the EDA Revolving Loan Fund and summarized the changes to the policy and procedures approved on September, 2005 with a few exceptions: EDA funds cannot be used for seed capital, interest write-downs, grants or equity positions; finance can only be provided in the form of a loan, interest cannot exceed New York prime nor can it be lower than 4%; funds can be used to restructure existing debt as provided by the Code of Federal Regulations and the citations in the staff report; standard documents are required and we do collect them by EDA requirements and that they be in the policies; and a late fee must be included in our policies as we charge that for late payments beyond 10 days but EDA requires that they be written in the policy.

Upon call for the question and upon voice vote, the motion carried 8 votes affirmative.

ADJOURN

It was moved by Mayor Brown and seconded by Council Member Brooks to adjourn. Carried 8 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor