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MINUTES/FINANCE COMMITTEE
Tuesday, June 14, 1994 - 3:30 p.m.

Members present: Kulas, Johnson, McCabe.

1. Request from Humane Society for additional monies for
services provided.
Richard Klockman, health department sanitarian and member of Board of Humane Society, presented request for additional monies for operation of the Humane Society. He briefly reviewed operations of the Humane Society, which also operates pound for the City. He noted that the Humane Society receives monies through 1/2 mill levy for operation and maintenance of its facility, and that they entered into agreement with City to provide pound services for the City; that prior to that City billed on a per animal basis. He stated there has been an increase in direct handling, expenses more than doubled since 1985 when State law authorized City to levy 1/2 levy for this purpose; that general operating expenses increased from $77,000 to $154,000. He reported that the Humane Society also receives revenues through pound fees, fees for animal adoptions and donations. He also reviewed services provided by the Humane Society, clearing house for animals picked up, boarding of animals, 24-hour on-call vet. services; animal vaccinations, and have clean place to take animals. He also noted they have done major repair to run building, replaced concrete to facilitate cleaning, repair to run cages, etc. to provide for safety for animals. It was noted that they are operating at a loss and meeting costs by using up surplus monies from donations, etc. The committee suggested that he present request for budget consideration. The committee also suggested requesting funds through community needs budget, but Mr. Klockman stated they may not qualify. Arlette Moen, director of Humane Society, reported they receive some monies through grants, have received $8,000 Myra Foundation grant for past several years, and are applying for other grants. The committee instructed Mr. Klockman to submit request in writing to city auditor for consideration during budgeting process.

2. Application by Billy Bob's, Inc., 1509 Dyke Avenue, for five-
year property tax exemption.
Robert Wedin, Billy Bob's, Inc., presented their proposal to construct warehouse on Dyke Avenue, 70'x40' to warehouse a new business which they have been operating in Oklahoma, Sno Biz, which they sell to concessions, etc. that business here is limited, sell to Fargodome, coffee houses, and also operate in Winnipeg. He stated they would locate main operation here (distribution center), and are requesting tax relief. He stated this is new business for Grand Forks and State of North Dakota. Mr. Schmisek reviewed process, that public notice required, with final notice not less than 15 days from public hearing, that hearing could be scheduled for July 18, and that applicant responsible for publishing notice and notifying any competitors.

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Moved by Johnson and McCabe to set the public hearing for Monday, July 18, 1994 at 7:30 p.m. and to grant preliminary approval of the exemption on a graduated scale, 100% for first year, 80% for the second year, 60% for the third year, 40% for the fourth year and 20% for the fifth year, subject to the public hearing. Motion carried.

3. Request for extension of leave without pay by Robert Corbett.
Jay Graba, personnel officer, reported that council had granted request by Bob Corbett for 3-month leave without pay which expires June 30, and had authorized payment of 50% of insurance premium; and that Mr. Corbett was again requesting a 90-day extension. He also noted that Mr. Corbett had given his doctor authorization to release information, which he presented to the committee. Mr. Corbett requested that the City continue to pay portion of his health insurance premium. It was noted that Mr. Corbett's condition has continued to improve. It was also noted that Mr. Corbett will be eligible for Medicare in January of 1995. Moved by Johnson and McCabe to grant extension of 90 days and to fund 50% of insurance premium, and to look at again at the end of 90 days. Motion carried.

4. Matter of job description for Secretary II position at civic
auditorium.
Mr. Graba reported he had sent information to committee, and briefly reviewed, and if approved, would make this position equal to office assistant. The committee stated that duties seem to fit as office assistant. Moved by McCabe and Johnson to approve change in job description from Secretary II to Office Assistant. Motion carried.

5. Matter of request to look at funding of projects proposed by
Visioning Committee, such as Riverforks and an events center,
and to make recommendation to the council.
Bob Gustafson, Greg Gerloff, Randy Newman and severl other individuals were present. Mr. Gustafson gave brief report on program in place in Sioux Falls, SD where a group from Chamber and city had visited and met with their participants; that purpose of visioning committee is in getting handle on major issues facing community through grass-roots process. He stated that Sioux Falls passed a 1% entertainment tax, and that there is a consensus that we need to pursue these issues in Grand Forks - Riverforks, events center, etc. He also questioned whether it is appropriate for City to consider tax or taxes for basis of funding so that when undertake projects (capital improvement projects), have basis upon which to start. Mr. Kulas suggested sales tax as another source of revenue, and suggested that they put a max. on funding set aside for property tax relief, and that he felt there should be a combination of two, 1/2% entertainment tax and another $250,000 from sales taxes going to fund. He reviewed amounts set aside for property tax relief - varied from

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36.2% to 50% suggested for 1995. Mr. Schmisek expressed some concern with taking monies from that, raised question of imposing use tax in addition to sales tax.

Mr. Gerloff stated it was hard to understand total financing of City for special projects, and questioned whether keeping taxes low at expense of economic development projects.

There was some discussion re. use of these funds, Mr. Kulas stated fund not for funding project but seed money for these types of projects; would have to have other source of funding for the building itself and operating it.

Mr. Newman stated that City's portion of property tax much smaller than school district's, etc., that businesses look at property taxes before coming to a city, but committee members should step back and look at how this money should be used, not how it has been used; how to appropriately structure. He stated that City government should run off other sources, and allow sales tax to be used for future reinvestment in the city. He stated that these things (water utility, garbage, etc.) should pay for themselves, be self-supporting, and allow sales taxes for funding projects. He stated that if property taxes get too high, City and School should look at and leave sales tax to be used as fund for economic development and seed monies for these projects, and should put cap on property taxes at $2.5 Million or City doesn't have chance to fund future projects.

Mayor Polovitz stated they can only apply sales tax monies to three things: property tax relief, infrastructures and economic development. - then have to define economic development, only one area thinks can touch and that is economic development.

Mr. Kulas stated he would like to come up with recommendation to look at possibility of the entertainment tax - hotels, motels, restaurants and bars.

After further discussion it was moved by Kulas and McCabe that we recommend to the council that they look at the creation of a 1/2% entertainment tax and set aside $250,000 from sales taxes to creat a fund to help fund projects such as civic center, Riverforks and other projects as they come up. Motion carried; Johnson voted no, stating he was more in favor of looking at this at budget time.

6. Matter of possible funding solution for Grand Forks Mission.
Karen Frisch, fund raiser for the Grand Forks Mission, reviewed finances of Mission showing net loss of $9,000/mo; and of Shelter for Homeless, Inc., with net loss of $1,700/mo.; and presented proposal to establish an ongoing, stable monthly income for the Grand Forks Mission and/or The Shelter for Homeless, Inc. MINUTES/FINANCE COMMITTEE
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through process whereby utility customers would round off amount of their bills to the next dollar, with excess to go to the Mission and/or Shelter. She noted that if City gave authorization to use its billing services, utility customers would have to give their authorization, and City would be paid for its expenses. Committee suggested if approved, perhaps a flat amount/fee per account would be way to go. She also noted they would have to work with the Shelter for Homeless rather than Mission as that is considered religious group. Mr. Schmisek raised several concerns re. this proposal: would have to be reviewed by city attorney; other groups/organizations perhaps wishing to do this, that MIS stated this would be programming nightmare; and proposal would have to be studied further. Held in committee.

7. Final pay request, certificate of completion, contractor's
certificate of non-asbestos and non-lead materials, and
affidavit of contractor for City Hall project for interior
furnishings, Project no. 3812.
Mr. Schmisek reported request for final payment for Gaffaney's for interior furnishings in the amount of $33,393.87, received from EAPC, and has been reviewed and approved by engineering department. It was determined that it was not necessary to retain a percentage of funds. It was noted that certificate of completion needs to be signed and returned to EAPC; and other forms for City's files. Moved by Johnson and McCabe to approve final payment to Gaffaney's in the amount of $33,393.8, and to approve certificate of completion for Gaffaney's. Motion carried.

8. Matter of request by Acme Electric for TIF bonds.
John O'Leary, Community Development, and Richard Olson of Grand Forks Development Foundation, presented request in behalf of Acme Electric as Steve and Dan Kuhlman were unable to attend, and because of timing.

Mr. O'Leary reported that they are requesting tax package of est. $265,000 for 15 years to assist in construction of a $1,600,000 telemarketing mail order facility adjacent to Acme Electric's retail location at 1705 13th Avenue North; that Acme would like to proceed with the project this year so they can complete building before Fall. He distributed copies of proposal and summary of use of funds: to build major warehouse addition on city shop grounds for warehousing and distribution center; demolition of existing structure, site preparation, and landscaping, etc. He reported that Growth Fund had approved some assistance, $150,000 loan forgivable through company growth - $3,000 of the loan forgiven for every job created, 3 years to create 39 jobs.

He noted that this company advertising through major magazines,

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this company growing very rapidly; that this company provides fringe benefit package for employees, have long term employees. He reported that it has been long time since any investment on North Washington Street, very little in that corridor, and this project involves major re-investment, and would substantially improve that piece of property, landscaping, etc.

Moved by Kulas and McCabe that we find that the property is commercial or industrial; that we grant preliminary approval of the tax increment financing in an amount not to exceed $265,000 for Acme Electric, Inc. subject to a public hearing to be scheduled for July 18, 1994 before the city council with final action by the council after that date; and further that the proper City officials give notice in the official newspaper and to competitors; and further that we set the tax increment district as shown on the plat. Motion carried.

Meeting adjourned.

Alice Fontaine
City Clerk

Dated: 6/15/94.