Committee Minutes

Minutes of the Grand Forks City Council/Growth
Fund Authority (JDA) - Monday, May 1, 2006 - 7:00 p.m.

The city council of the city of Grand Forks sitting s the Growth Fund Authority met in the council chambers in City Hall on Monday, May 1, 2006 at the hour of 7:00 p.m. with Chairman Gershman presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Christensen, Kerian, Kreun, Mayor Brown, Gershman - 8; absent: none.

HOLD PUBLIC HEARING AND APPROVE GROWTH FUND APPLICATION FROM PS DOORS

The staff report from the urban development director relating to PS Doors expansion project, with recommendation to 1) hold public hearing on the proposed Growth Fund application of PS Doors; 2) approve the sale of 5.5 acres of land in the Grand Forks Industrial Park to PS Doors for $143,748, and approve the actual costs of soil remediation up to $90,000 for the construction of the 32,000 square foot building; 3) approve PACE Interest Subsidy Buy-down loan of approximately $135,000; and 4) recommend that the city council approve a declining five-year property tax exemption.

Keith Lund, Grand Forks Region Economic Development Corporation, presented local expansion project for PS Doors, the business has two distinct divisions - retail sales and service division and manufacturing division; that sales for the manufacturing business are done on a national basis with a growing international presence and the majority of the company's revenues are from the manufacturing division, that 95% of all company sales were outside of the State of North Dakota in 2005, the company has realized 70% sales growth since 2002 and have outgrown their existing 15,000 sq.ft. facility and are undertaking a $2 million expansion with the construction of a new 32,000 sq.ft. facility in the city's Industrial Park, the project is expected to employ an additional 16 employees over the next two years, that they have an average salary of $22/hour plus company benefits. He stated that PS Doors has secured a $1.6 million loan from Wells Fargo, the balance of the project is funded by equity from the company and they are asking for consideration for $135,000 PACE loan that would leverage with the $250,000 PACE grant from the Bank of North Dakota and will be used to reduce the interest rate on their Bremer Bank loan. He stated they will also be requesting a 5-year declining property tax abatement for the project.

He stated the land is in the Industrial Park and is owned by the Jobs Development Authority at 1150 South 48th Street, that this site was used for the temporary housing site after the flood of 1997. He stated similar to the Cirrus expansion project soil contamination or issues associated with the soil and the decommissioning of that site were found, estimates for soil remediation are about $87,000 for the initial 32,000 sq.ft. building, that EDC and Urban Development recommended to the Growth Fund Committee that PS Doors purchase 5.5 acres for $143,748 and that the Growth Fund compensate PS Doors for actual costs of remediation not to exceed $90,000, the company would then agree not to approach the Growth Fund for any compensation for any further expansion at that site. The Growth Fund Committee concurred with the recommendation as well as the PACE loan and the declining tax abatement, and are asking that you approve the PACE loan, approve the sale of the land and provide a recommendation to the city council to approve a declining tax abatement when it is applied for..

Chairman Gershman opened the public hearing.

Council Member Kerian questioned the contamination and if there are federal funds that help with decontamination of a site. Mr. Lund stated a broader discussion about the remaining acreage that was included in that site is appropriate and they will be looking at that in the future. He stated as in the Cirrus project the Growth Fund did compensate for the soil conditions and that was an appropriate action at this time and in similar considerations should be given to PS Doors; and that looking at our existing expenses or past expenses thinks that is something they will want to take a look at from a variety of angles and sources.

Council Member Hamerlik stated when they indicate a declining forgiveness of the taxes to state that specifically. Mr. Lund stated that is a declining tax abatement - for 5 years and first year 100%, 80%, 60%, 40% and 20%.

Chairman Gershman closed the public hearing.

It was moved by Council Member Kerian and seconded by Mayor Brown to approve the recommendation

Chairman Gershman stated that he toured their plant, and quite impressive, and thrilled that they are going to be expanding in Grand Forks.

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

HOLD PUBLIC HEARING AND APPROVE GROWTH
FUND APPLICATION OF MNDAK CONCRETE, INC.

The staff report from the director of urban development relating to MNDAK Concrete, Inc. expansion project, with recommendation to: 1) hold public hearing on the proposed Growth Fund application of MNDAK Concrete, Inc., 2) approve a PACE interest subsidy buy-down loan in the amount of approximately $133,000, and 3) recommend that the city council approve a declining five-year property tax exemption.

Mr. Lund stated that MNDAK Concrete, Inc. has been in the Grand Forks region since 1891, and engaged in the business of pre-cast and pre-stressed concrete products and covers a market area from Wisconsin, Minnesota, South Dakota, North Dakota and Montana; that they are undertaking an expansion project of 6900 sq.ft., batching facility which will allow them to produce high quality structural and architectural concrete components and will replace their current out of date batching system. Several years ago the company completed a $3 million 48,000 sq.ft. expansion on their property and through this project employment is projected to increase from 141 to 189 and salary range of $11.00 to $19.00/hours for an average of $14.30 and excellent benefit package. The project is estimated at $3.65 million entirely financed by Bremer Bank and that they are seeking a $133,000 PACE loan from the Grand Forks Growth Fund which will leverage a $250,000 PACE grant from the Bank of North Dakota to use for interest buy-down and that they will be seeking a 5-year declining property tax abatement. The company is seeking approval of the PACE loan outlined in the staff report and a recommendation from this body to approve the declining tax abatement when it is applied for.

Chairman Gershman opened the public hearing, there were no comments and the public hearing was closed.


Council Member Hamerlik stated that $2.7 million is for the equipment and machinery in order to be in the competitive market.

Council Member Christensen reminded the public that the money that the City of Grand Forks is putting up is a loan and will be paid back at the end of their loan with the other facility, that although giving them a declining tax break, this expansion project is about a third of the entire expansion because most of it is equipment and only 2.5 years abatement because declining tax. He stated that the city council and the EDC shifted emphasis and EDC developed a policy to grow within and working with the businesses that are here, businesses that are growing and exporting product.

Chairman Gershman closed the public hearing.

It was moved by Council Member Kreun and seconded by Mayor Brown to approve the recommendation. Upon call for the question and upon voice vote, the motion carried 8 votes affirmative.

APPROVE FINANCING FOR LM GLASFIBER EXPANSION
PROJECT

The staff report from the director of urban development relating to LM Glasfiber expansion project financing, with recommendation to approve the recommendation of the Growth Fund Committee to award Bremer Bank the financing of the Bank of North Dakota PACE loan or the LM Glasfiber expansion project.

Greg Hoover, director of urban development, stated he wanted to make a clarification re. question raised by Council Member Kerian about the PS Doors site and possible contamination; and assured council (and viewing public and media) that contamination is some material that was left on site when it was decommissioned and not properly compacted. Chairman Gershman asked if the City has any legal recourse with the company that prepared that land; Mr. Hoover stated that they are looking into that.

Mr. Hoover stated the council approved LM Glasfiber's expansion project on March 6, 2006 in the Industrial Park which will remodel some of their existing building and also take up the back two bays that are currently vacant in the Amazon.com site, the budget approved at that time was $2.65 million and they solicited bids for the project that were opened today, proper notice was given and no bidding irregularities, and based on a review today by EAPC, architect and engineer for LM Glasfiber, and they are recommending awarding the general contract to Baukol Builders for $558,412.00, including an alternate, G1 for $16,076.00; the mechanical to McFarlane Sheet Metal, base bid of $860,000 plus an alternate M4 of $14,000 for a grand total of $874,000; and Sun Electric, with a base bid of $255,000 and $4,400.00 for Alternate E1; that these bids, the base and those alternates, are clearly within the budget and that next Monday will come back to the JDA with some additional alternates, that LM Glasfiber is going through and evaluating those to see which ones they would like priority on to do the project, and that they are already working with them on another expansion. He stated there is a very short window of opportunity for LM and they need this project completed so they can begin work in August and these firms have certified that they can complete the project within those time limits. Additional 130 employees

It was moved by Council Member Kerian to approve the recommendation, Mayor Brown seconded the motion. 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 that we adjourn. Carried 8 votes affirmative.

Respectfully submitted,



Saroj Jerath
Deputy City Auditor