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MINUTES/FINANCE COMMITTEE
Tuesday, December 27, 1994 - 7:00 p.m.

Members present: Carpenter, Babinchak, Geller, McCabe.

1. Matter of additional tax increment financing for Grand Forks
Grocery.
Jim Craigmile of GFG was present. John Schmisek, city auditor, reported that when City issued bonds for Grand Forks Grocery, part of the resolution was that we could issue additional parity bonds depending on the valuation of the property as it neared completion; Grand Forks Grocery has put significantly more money into the project than when established original valuation. Mr. Carsen, city assessor, has appraised property, and that was sent to Springsted, and they have done a determination of the value of the bonds that we could sell based on the additional value, and if committee so wishes, would need motion to adopt initial resolution authorizing issuance and calling for the public sale of general obligation tax increment bonds in the amount of $250,000. It was noted that this is part of the original issue.

McCabe present.

Mel Carsen, city assessor, reported that when they first looked at this was just a plan, since then they have increased the size of the building and that size increase and quality would justify the higher value, $700,000 higher than initial estimate.

Mr. Schmisek reported that in original resolution, whenever we do these, are not working with firm numbers, and the people from Grand Forks Grocery had asked if there was the potential that if the value was increased, they could issue additional bonds, and Lynn Endorf of the Dorsey firm placed in the resolution the authority to issue additional bonds based on an increase in the valuation of the property. He noted that all taxes would go to repayment of the debt.

Moved by Geller and Babinchak to adopt initial resolution authorizing issuance and calling for the public sale of general obligation tax increment bonds (Grand Forks Grocery project). Motion carried.

2. Matter of establishing of policies relating to 3-year re-
modeling/renovation property tax exemption.
Chairman Carpenter reported that the committee had talked about this back in October, now automatically give exemption and if property owner not aware, tell them; and they should formalize guidelines. Mr. Carsen stated that State law provides for exemption, that he checked with State Tax Department to see if we could adopt more restrictive guidelines, and we can't adopt guidelines that are more restrictive, either accept all or reject all. He noted that for 1994 total amount of exemption approx. $5Million (largest was Grand Forks Herald up until First American MINUTES/FINANCE COMMITTEE
December 27, 1994 - Page 2

Bank). Mr. Carpenter stated possibility of limiting to specific areas (downtown, etc.) and asked whether committee should consider taking to legislature. Mr. Carsen stated he ran this past city attorney, who agreed with Tax Dept.'s interpretation. There was some discussion re. time frame and Mr. Carsen stated there is perhaps problem in terminating once started.

Moved by McCabe and Babinchak that we request the city attorney to draft preliminary language to introduce legislation to give municipalities discretion.

It was moved by Geller and McCabe to urge mayor to expedite formation of a legislative committee and agenda for the City of Grand Forks.

Mr. Carsen advised that if legislation were introduced, they do have lobbying group with the Assessors' Assn. who understand those laws pretty well, and two of those people live in Bismarck area and can use those people to testify at hearings.

Upon call for the questions, both motions carried.

3. Matter of job descriptions for inspection department.
Held in committee.

4. Matter of funding retroactive pay.
Mr. Schmisek presented calculations needed to cover retroactive pay and a budget adjustment for 1995 to cover those departments that we were unaware of at budget time; the retroactive pay outstanding is $181,615.95 for assessing, police and street departments; and budget adjustment for 1995 for police and street departments totaling $142,578.12, for a grand total of $324,194.07 less $50,000 budgeted for reclassification, leaving net needed of $274,194.07. Mr. Carpenter stated that departments will have to utilize their carryover dollars for this. Mr. Schmisek reported that there is not anywhere near this amount in carryover; could use part of carryover, other alternatives, excess sales tax ($1,760,000) looking at as property tax relief. It was suggested that this could be paid through Loan and Stabilization Fund, and repayment by department over a period of time. Mr. Carpenter stated they have to find way to reduce budget to off-set this, whether individual budgets or all budgets; that he wouldn't want to take from other departments but take from department with specific problem. Mr. Schmisek stated this would create significant hardship on their operating budgets; that fire department given retroactive pay and didn't impact their budget; would be significant burden on those departments if try to repay; and in long run going to affect every department.

After further discussion the committee held the matter to the

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December 27, 1994 - Page 3

second meeting in January when they would have carryover numbers, etc.

The committee also asked to include discussion of budget process for 1996 on that committee agenda.

5. Matter of amendment to City Code re. payment of sick leave
upon termination of employment.
Mr. Schmisek reported there is an error in new civil service code; Mr. Swanson has asked that this be held and he will bring back with suggested changes. Held in committee.

6. Matter of budget amendment.
Mr. Schmisek noted this amendment is for public transportation department, however they won't be meeting for several weeks so was brought to this committee. Amendment request is in the amount of $5,300.00 to replace support vehicle (1985 pickup) demolished in accident and funds are to purchase 1989 Pontiac 4-door). Moved by Babinchak and Geller to approve amendment and to introduce ordinance for first reading. Motion carried.

7. Temporary and overtime statement for November, 1994.
Mr. Schmisek reviewed statement with committee and noted that negative balance for attorney's budget is result of community relations officer position being made full-time and will probably remain that way. Moved by Geller and McCabe to receive and file. Motion carried. (comm. only)

8. Matter of bid by Red Cross for City-owned property.
Mr. Geller reported that he had received call from Tim Sayler re. this matter; that the City had received only one bid on this property (located at 40th Ave.S. and S. Washington Street) - from the Red Cross, that bid was denied; and Mr. Geller asked what the property was appraised at. He questioned whether it made sense to get that property back on the tax rolls. Mr. Carsen, city assessor, reported that if Red Cross purchased property, would be tax exempt. Mr. Carsen reported that the City purchased that property for $35,000 in 1984, that it is appraised at $50,000, and that the Red Cross offered $35,000 for the property.

The committee asked Mr. Schmisek to contact the Red Cross to negotiate and to bring back to committee.

Meeting adjourned.

Alice Fontaine
City Clerk

Dated: 12/28/94.