Committee Minutes

Minutes of Grand Forks City Council/Growth Fund
Authority (JDA)
Monday, March 6, 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 Monday, March 6, 2006 at the hour of 7:00 p.m. with President Gershman presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Christensen, Kerian (teleconference), Kreun, Brown, Gershman - 8; absent: none.

PUBLIC HEARING ON LM GLASFIBER
EXPANSION

The staff report from Urban Development relating to LM Glasfiber expansion, with recommendation to hold a public hearing and approve the proposed expansion with the financing package presented in this report and authorize staff to 1) proceed with bidding per plans and specifications to be prepared by EAPC; 2) solicit bids for the $1,987,500 financing package; 3) enter into a lease agreement with LM Glasfiber as described in the report 4) modify the lease with Amazon.com as described in the report.

President Gershman called for the public hearing

Mr. Thiessen stated before Keith Lund gives the overview of the proposal he introduced two guests from LM Glasfiber, Blake Seas, new general manager, and Sean O'Leary, finance manager for LM Glasfiber and will be available after Mr. Lund gives his presentation. for any questions they may have.

Keith Lund, Urban Development, reported that LM Glasfiber is a world leader in the wind turbine blade manufacturing and their success has led to two facility expansions in Grand Forks in 2002 and in 2004 after they began occupancy in the Industrial Park in 1999, they are pleased with the company's secured customer orders that once again requires them to increase production and the 130 new jobs that will accompany the expansion. Amazon.com realigned their operations in Industrial Park in Grand Forks last year and they are no longer doing distribution from that facility and this realignment created a substantial amount of unused warehouse space in their facility, and has asked to be released from 75,000 of the 125,000 sq.ft. in their facility of the warehouse space; LM Glasfiber requested that the JDA participate in a $2.65 million expansion project that would do some remodeling in their existing facility and fit up the Amazon.com warehouse for manufacturing. This budget is based on information provided by EAPC who was hired by LM Glasfiber to do some plans and specifications; the package proposes that the JDA cover 75% of these costs and LM Glasfiber would finance 25%, and enter into a 3 year lease at a rate of $7.66 per sq.ft. and this is the rate they are being charged at their existing facility in Industrial Park. Staff recommends that the JDA secure a loan for its portion of the project and propose securing a PACE intersubsidy funds from the Bank of North Dakota up to the amount of $250,000 and this would require a match of up to $135,000 from the Grand Forks Growth Fund. It is anticipated that the interest rate of the Growth Fund loan after interest buy-down would be 2.5%, and they are recommending that $2.75 of the $7.66 be retained by the Growth Fund to replace existing cash flow now paid by Amazon.com and the balance be used to pay debt service, and if this occurs they estimate balance of the loan at the end of the 3 years would have approx. balance of $996,000. He stated they are recommending that LM Glasfiber be offered a right of first refusal on the balance of space at the Amazon.com facility, with lease terms to be negotiated at that time if it becomes available.

Mr. Lund commented on the employee wage and benefit information: LM Glasfiber presently has 340 employees, starting hourly wage for the new employees would be $10.00/hr. with $0.50 increases every 3 months for the first year, and after 2 years each new employee would be at a minimum of $12.00/hr.; the company also provides a $1.00 premium for cut and trim department employees as well as working the second or third shift; pay range minimum and maximum for hourly manufacturing employees is $10.00 to $15.00/hr. not including the premium. In addition to the hourly wage LM Glasfiber provides full benefit package that includes health and dental insurance, disability insurance, life insurance and 401K and paid time off on holiday pay; the company calculates the benefit package of 32% of wages. He stated staff is requesting approval of the expansion and financing that he summarized, authorize staff to proceed with the bidding for plans and specifications prepared by EAPC and solicit bids for the financing package, and enter into a lease agreement with LM Glasfiber for the space and modify the lease with Amazon.com He stated the project details were discussed by the Growth Fund Committee on three separate occasions including a meeting this morning, where approval of the staff report was unanimously recommended.

Council Member Brooks stated that the meeting was at 8:00 a.m. this morning and asked Mr. Lund to thank Peggy Kurtz for getting these minutes done and out to them so they could review them before the meeting tonight.

President Gershman asked if anyone from the public wished to address this issue. There were none.

Council Member Hamerlik moved approval of the recommendations stated by staff. Mayor Brown seconded the motion. Upon voice vote the motion carried 8 votes affirmative.

President Gershman congratulated the EDC, Urban Development staff, LM Glasfiber for their cooperation and the Growth Fund, chaired by Council Member Christensen with Mr. Hamerlik and Mr. Glassheim on that committee. He thanked LM Glasfiber and wish them continued expansion and growth in our community and congratulations on a wonderful benefit package also.

Council Member Christensen thanked Mr. Theissen and Mr. Lund for their work on this project.

ADJOURN

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

Respectfully submitted,



John M. Schmisek, City Auditor