Committee Minutes

Minutes of the Grand Forks City Council/Finance/
Development Standby Comm. - July 18, 2007 - 4:00 p.m.

The city council of the city of Grand Forks sitting as the Finance/Development Standby Committee met in City Hall in Room A101 on Wednesday, July 18, 2007 at 12:00 noon. Present at roll call were Council Members Christensen, Glassheim, Brooks, Gershman.

Also present were Greg Hoover, Meredith Richards, John Schmisek, Charlie Bremseth and Rusty Steffan, Listen Center; Kara Odegaard, Development Homes. .

1. Gaming sites limitation..
A request from Development Homes had been received for a change in gaming sites and was referred to this committee by the city council. Mr. Schmisek reported he had received e-mail from Mike Olson who had some concerns about changing number of gaming sites.

Charlie Bremseth ands Rusty Steffan of Listen spoke in favor of changing restriction on number of sites to 7 or no limitation, noting that there are charities in town that if want to expand could, and choosing not to or choosing only to do bingo, there are several places in Grand Forks where there are no sites at all (Red Ray Lanes, The Hub, Judy's Tavern, Overtime Bar, Denny's Tavern, Hilton), charities could go into those sites. Gilly's, Crosstown and Bonzer's have asked Development Homes and Listen to go in there, and even if increase to 7 there are still sites available. It was also noted by Mr. Steffan that in talking with bar owners there are two issues that arise when site limitations in place, that if there is no charity willing to go into the establishment except for a charity that has 5 sites, that site is left out, and bars may not want a certain charity in because of lack of management or lack of professionalism, etc.

Glassheim stated his concern is that you could end up with 3 charities with 7 sites and take up everything but has also heard that it is getting harder to make money from gaming, expensive and difficult to run these operations and the market governs it, his concern is that originally it was and would like to spread things around and have smaller ones go in, once someone is in a place and any new charity wanting to expand will not push them out - fewer charities to get into business or stay in the business. It was noted that there are more places that have been added and more choices.

Gershman stated that difficult for smaller organizations to do it with one site, that CVB is pulling out of Charlie Brown's and maybe altogether, they have 3 sites - and question is whether it is worth it to them to have the expense and seems that even 5 not substantive enough, and noted that Canad Inns wanted charity to get gaming out there but nobody locally wanted to go in. It was noted that not for what they were asking, so much to go into that site, thousands of dollars - $75,000 or $90,000.

When the committee asked if there should be any limitation on gaming sites, Mr. Bremseth suggested increasing to 7 and keeping it at that spot for now.

Moved by Brooks and seconded by Christensen to recommend to the city council to increase number of sites to 7. Motion carried.

2. Flood lot disposition.
Meredith Richards, urban development, reviewed process, that they had work session in
early June and based on that discussion they started some of the pre-sale activities, some title work done and had neighborhood meeting for the Walnut/Chestnut/Belmont area, and part of the process for redevelopment replats were approved by council last Monday night, next Monday will see first declaration of surplus request and looking at the 4 lots that front on Belmont Road and want to get the first round of affordable infill program going. Near Northside area will be the next batch in terms of workload and processing; there are more southend lots that were engineering project lots that should be taken care of so a plat can be filed in a month so can get those on the market and the recommendation for those was a straight bid rather than an RFP, is a quicker process. She stated that the Belmont Road and southend lots are some of the highest value and highest visibility lots that the City has and easier to do those first to get those back on the tax rolls. She stated they are also looking at another neighborhood meeting for the University Park area, and another segment in the Walnut/Chestnut area where have some other issues to be resolved as workload issues permit.

Design Review Committee - Ms. Richards stated they got strong response at neighborhood meeting of people interested in volunteering to be a part of it and they are recommending a 4-person review committee: the urban development director, council representative from that area, neighborhood member (Judd Graham) and a rep. from the Historic Preservation Comm. Criteria for ranking will be part of request for proposal packet and after proposals ranked, recommenda-tion will come back to council for selection of successful proposal.

Glassheim asked if there should be an architect on the design review committee, however, Ms. Richards stated that architects don't want to be on the review committee because they can't put together the plan.

The committee asked if the lots along Belmont were going to be sold without any criteria. Ms. Richards stated council will declare them surplus and the RFP process authorize staff to proceed for those 4 lots. She stated she has requested assessing department (after removal from the flood plain) for estimate of the market value of those lots which will set threshold for bidding, one of the criteria will be bid price and won't look at anything that doesn't offer the minimum. Criteria will also include elevation, site plans, materials, landscaping, etc.

Christensen reported that several people in the business have asked that they be a bit prudent as to the number of lots they put on the market and how affect the market. Mr. Hoover stated the first are the 4 lots on Belmont, 4 on the Southend once engineering was done, 8 to 10 infill in the Near Northside, and next go around would be some in the Walnut/Chestnut area, and would hope to have decided in early '08 so could begin construction in the spring of '08.

Riverside area: Ms. Richards stated there are 3 lots in the N. 3rd and 4th St. area, 1800 blk., and Near Northside MUNI and bring them up to 8 to 10 number, probably see proposal process this year but not construction.

Gershman stated he had received e-mail and discussion and interest in maintaining some green space in the Walnut area because kids used to having green space but his sense is that they would want to sell all the lots. Mr. Hoover stated they can defer decision because not dealing with those lots but the department's recommendation is to go ahead and sell the lots, that they have approx. $100,000 in program income conservatively and additionally $750-800,000 of tax roll value. Mr. Hoover stated one of the tenants they have held in reselling these lots is to maintain the fabric of neighborhood and that doesn't fit in with what the neighborhood had been and that there are additional recreational facilities nearby, and would not be their recommendation to keep that as greenspace. Christensen stated they would accept that recommendation, Glassheim agreed.
and Gershman stated he would respond back.
Ms. Richards stated the funds would go to CDBG Program income. Mr. Hoover stated that they do not use CDBG for economic development and would recommend not doing that because you have a whole host of what he considers owners requirements on the businesses but it could be a possibility, this money will always retain its federal character until such time as HUD stops giving us a direct appropriation and at that time any program income will lose its federal character but doesn't look for that to happen.

3. University Flats development.
Mr. Hoover reported that he and Kevin Ritterman, Dakota Commercial/Crary, have been working on this for considerable period, that in October, 2005 this committee had directed the development of these 3 vacant parcels, that it also includes development of the parcel with the house on it and Mr. Ritterman has had some discussions with the property owner - that he is proposing to develop 5 units on that entire 4 parcel site, will be for-sale condos with 2 to 3 bedrooms each, brick and siding exteriors, double car garage for each unit and additional off-street parking, the developer is asking for $180,000 to defray the cost of acquisition and demolition of the property. He stated that Mr. Ritterman's development budget calls for construction size of 1300 sq. ft. on average, $85/per sq/ft. at average cost of $110,500, asking price at this point is $160,000 when factoring in all the cost including building acquisition and demolition and not considering giving him the $180,000; he is taking $100,000 at 9.8% developer fee, which is not out of line with the area and is taking no profit, and that his actual profit is based on the development budget is negative $265,510 and if take the $180,000 off that, that approximates what he is taking as the development fee and is almost a zeroing out of his deficit in the development of this project. He stated that if, based on his development budget, he is not provided $180,000 to defray acquisition and demolition cost he will lose $265,000 on the project - if subtract out his developer fee then he makes $30,000.

Christensen stated that as long as they don't have the numbers it wasn't appropriate for them to discuss this, and not prepared to make a decision on this as would like to look at the numbers.
The lots are being given to the developer and those lots have a value and are not included in the development budget. It was noted that this property is in a low-mod. area, however, if have $160,000 units, hard to say if have income eligible buyers for those; that if they put CDBG money into the acquisition of the property they would have to insure that at least 51% or 3 of the units were sold to income eligible buyers which would put a burden on Mr. Ritterman's marketing or going to be providing a big subsidy to make that happen. Christensen suggested that he is hearing $180,000 and that the lots are probably worth about $25,000 each and 4 of them so $280,000 - that for 5 units that is $50,000 subsidy per unit, and wants to understand this more before agreeing to it. Mr. Hoover reported that the current number for 4-member family - 80% of median income is $46,550. Christensen stated he would like to explore that - LMI housing. Hoover stated they also have the American Dream Down Payment Program and can run some scenarios for the committee, but won't have hard and fast figures because Mr. Ritterman has decided not to go to the expense of having that put together until he has a certainty that this project will go forward and will be dealing with estimates.

The funding of the $180,000 - that with the downtown housing they were not able to do CDBG for new construction but could possibly do it for acquisition/demolition of the property, however, that will kick in relocation expenses, which would move it above and beyond $180,000 (3 unit dwelling); will try to figure that out also. Mr. Hoover stated money for other townhouses was from an old rental rehab. program that has expired and used that in the past and are basically using that on a case by case basis because we may get into some more rental development that would be non-low income but that would be the source and if we went forward with this, that would be his suggestion from where the revenue would come; have approx. $600,000 but will get exact figures - no restrictions. It was noted that the repayment money from the Brownstones will go directly to Fannie Mae.

Mr. Hoover stated he has talked to Kevin previously about the interest rate and why they decided to go with conventional financing. Mr. Ritterman stated with the pricing of money, can do better locally, and will do their own financing. He stated the $180,000 could go down, owner is asking $150,000, bought it at an auction and it is probably negotiable and just using demolition figure, and those costs could come down depending on who is going to negotiate with him, he may want to take a unit, might not have relocation costs, few scenarios there and would hope to bring the sale price down, and are only asking for the 3 lots, the acquisition and demolition costs and once get those and then go to an architect, get some hard numbers and come back to committee and hopefully done by fall, would like to see sales price of $150,000 or $130,000 - He stated that if the committee is willing to look at that, he will go to his next step - and maybe get some hard numbers from the property owner.

Brooks and Glassheim moved to authorize Mr. Hoover and Mr. Ritterman to bring the committee a full proposal on the project, and based on committee recommendation go to city council. Motion carried.

The meeting adjourned at 12:50 p.m.

Alice Fontaine
City Clerk