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MINUTES/FINANCE COMMITTEE
Tuesday, March 26, 1996 - 3:45 p.m.

Members present: Carpenter, Babinchak, McCabe.

1. Matter of resolutions re. proposed MIDA bond issue for United Hospital: a) resolution to approve the 1996 project.
b) resolution authorizing issuance of the Series 1996A Bonds.
Mr. Schmisek reported that the public hearing on this issue has been set for Monday, April 1, and if there are no protests or objections, need to adopt the two resolutions.

Dwight Thompson, United Hospital, stated that everything is on track, subject to council approval, bond closing is set for April 9 and they respectfully ask approval. Mr. Schmisek advised that this bond issue doesn't impact City's bond rating, debt service or liability. Mr. Thompson stated that part of the agreement they have with the City is that any costs incurred by the City because of the bond issue will be reimbursed by United Hospital.

Moved by Babinchak and McCabe to adopt the resolution relating to the United Hospital and a project under the Municipal Industrial Development Act, as amended, approving the 1996 project and authorizing the issuance of revenue bonds to finance such project (subject to the public hearing). Motion carried.

Moved by Babinchak and McCabe to adopt the resolution relating to the Municipal Industrial Development Act, authorizing the issuance of revenue bonds to finance a project for the United Hospital and authorizing execution and delivery of documents relating thereto (subject to the public hearing). Motion carried.

2. Matter of sales tax relief for lumber yards.
Rick Simonson, Simonson Lumber, and Grant Shaft, attorney, were present. Mr. Shaft stated that they were here re. city sales tax, both existing sales tax and approved sales tax for the events center. He reported that the problem that Simonson Lumber is having is with competition from lumber yards outside the city of Grand Forks who compete for business in Grand Forks and provide materials and supplies to home builders, contractors in this area. He distributed copies of letters from home owner and from building contractor. He stated that the competitors of local lumber yards existing outside Grand Forks have begun to use the sales tax as a marketing tool to compete for business against local companies. He stated that the reason this matter coming before the committee is that the lumber yards are now in their bidding season (between March and May of each year), that most prudent home builders obtain a number of bids, and in addition to local lumber yards, have several lumber yards either across the border or in close proximity, and home builders finding that because of the sales tax the outside lumber yards are able to beat the bids of local lumber yards by $1-2,000. He stated that
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they recognize that the use tax is going to be on the ballot but is too little too late for the lumberyards, and it is his opinion as well as others, that it is likely that the use tax will not pass. He stated they are proposing to this committee that they consider adding certain products to the exemptions provided under the city ordinance (Sec. 22-0105, which is exclusion provision of the city sales tax). He stated they are asking committee to con- sider items unique to building, not available in other retail type outlets, and submitted listing of products for exemption. (He stated that material for entire building is bid, but delivery made as needed and owner billed and tax applied for each delivery, rather than the $25.00 cap).

Member Babinchak asked what would be dollar amount of lost revenue to the City. There were no estimates available. Mr. Schmisek noted if those items excluded it would not only be lumber yards, but include other businesses as well (Production Specialties, Overhead Door, Red River Cement, etc.) He also expressed concern re. impact of lost revenue on City's budget, that some of that revenue obligated.

Mr. Swanson noted that Grand Forks only city in the state with sales tax that is without the use tax. He stated that several years ago the City exempted asphalt from sales tax. He stated that there are three ways to accomplish end that they identified: 1) if City had authority to impose use tax, 2) exempting certain products; 3) how they structure the sale of the product. Mr. Shaft stated that installment situation has many ramifications: insurance, storage, whether acceptable to the buyers, etc.

After considerable discussion McCabe moved to amend the city ordinance to provide for a building products exemption; the motion was seconded by Carpenter.

There was discussion re financial impact re. commercial buildings; and Mr. Shaft suggested a tax on the permit based on cost of building. Mr. Klave stated that majority of the material for commercial building projects doesn't come from city of Grand Forks, large commercial contractors buying direct and materials shipped in. He also stated that when the city sales tax initiated there was a cap put on for a reason, so that when major purchase made cap would be $25.00, and a home largest purchase person makes, they are being treated differently and overtaxed, and perhaps have to look at taxing on building permit (which is based on building materials). Mr. Swanson stated that council has authority to implement a building permit fee in addition to what they do now, and building fees differ between residential and commercial now.

Chairman Carpenter questioned if ordinance introduced, could staff obtain further information re. revenue impact, etc. before
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April 15 when ordinance would have second reading. Mr. Schmisek stated they would also need to discuss with financial consultant.

There was some discussion re. items on proposed listing for exemption; Mr. Swanson stated that if he interprets motion and if ordinance were passed, sale of any of these products for whatever use would be exempt. He also stated that if no effective date set, ordinance would become effective upon date of publication.

Upon voice vote, the motion carried; Babinchak voted no.

(This item will be placed on the April 9 finance committee agenda for further consideration.)

3. Matter of setting policy re. realtor's commission on sale of City-owned lots.
Mr. Schmisek reported that several years ago when City had a number of lots for sale, policy established that we would not set up a realtor of record for our properties, but any realtor could go out and sell city-owned lots, and City would pay the 5% commission. He stated they have had contacts from realtors since City got back property near McDonald's; and asked committee whether they wished to retain that policy or change the policy in regards to the fee being paid by buyer rather than City as seller. Mr. Swanson stated that when policy established, the 5% was reasonable commission and would allow the City to enhance the sale of property. He stated he has some concern re. exclusive listing without going through bidding process, etc. and would encourage committee not to get into exclusive listing. He also noted that they have not had a lot of realtor sales, most property City sold has been direct sales.

The committee's consensus was to continue policy in place.
(i.e. if realtor brings in sale, City will pay 5% commission on the proceeds, and City has option to reject offer.)

4. Matter of language for ballot re. publishing of minutes.
Mr. Swanson stated that we have an obligation/opportunity to have the public determine whether there should be a detailed publication of City minutes and a listing of checks issued by the City in the June 11 election; he distributed copies of proposed ballot language; and stated that question straightforward and he has put information into the explanation: Shall the City Council for the City of Grand Forks publish in the Grand Forks Herald, at City expense, its minutes and a listing of individual checks issued by the City? A "yes" vote means you want the City of Grand Forks to publish its Council minutes and a listing of individual checks, naming the payee and the amount of each check, in the Grand Forks Herald. Such publication is in addition to the present publication of minute summaries and agendas. The annual cost of publication is estimated by the City to be
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approximately $36,000.00. A "no" vote means you want the City to continue the present publication of agendas and minutes in the Grand Forks Herald. Complete minutes and bill listings are presently available for public use and inspection at the City Auditor's office. Yes No

Mr. Swanson noted that a yes vote would mean a more detailed summary of minutes (including roll call votes), there would be some modification - are going to have to speed up publication - within 7 days); committee questioned whether the no vote would mean continued publication of minutes indefinitely. After discussion the committee suggested including "or an alternative distribution source" or some other language. Mr. Swanson stated that information on bills, payroll, etc. is available now. It was noted that this question has potential of being placed on ballot every four years.

Carpenter moved approval of the ballot language for the June 11 election with the additional language concerning alternative dissemination of data as approved by the city council; motion seconded by Babinchak. Motion carried.

5. Matter of amending Section 2-0201 of City Code relating to
effective date of standing committee appointments.
Mr. Swanson reported that the present Code requires the appointment of standing committees to be in place by May 1, that since election changed from April to June, proposed that the council introduce an ordinance amending this section of the Code, changing the appointment date from May 1 to August 1. He stated this is longer timeline than what previously existed, but reason he is proposing is because new mayor and members of council will take their positions at first meeting in July, and this would allow mayor and council some opportunity to make their committee assignments during the month of July. It was noted that organizational meeting will take place in June; that mayor appoints standing committees. It was also suggested that perhaps Code be amended to allow council to appoint its own standing committees, and perhaps look at committee structures.

It was moved by Babinchak and McCabe to introduce ordinance for first reading amending the City Code to change the appointment date from May 1 to August 1. Motion carried.

6. Matter of policy on draw-down of sick leave after workers'
compensation.
Mr. Schmisek reported that about month ago had individual in who requested draw-down of sick leave after having using Workers' Comp., that this has been approved on a case by case basis, and
committee had requested that staff look at, come back with additional information for review of policy by the committee.

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Dan Gordon, Human Resources director, stated there are lot of problems associated with Workers' Comp., that lot of the policies have been there for years. He stated that an employee had requested to draw his sick leave after expiration of Workers' Comp. and then resigned; that he wasn't sure it was as much an issue of sick leave and workers' comp. as it was an issue of whether employee could perform essential functions of the job. He stated there was previous policy that employee could be on workers' comp. for a max. of one year, not a written policy, but rule of thumb that lot of physicians use. He stated that the issue of the employee performing the essential functions of the job, because if they cannot with any reasonable accommodations, that is grounds for termination of employment or resignation by the employee, and upon resignation, payback of sick leave. He stated that they have long term disability insurance which becomes effective after 6 mos. He stated they are not taking employee and throwing out in the street - that's why have disability insurance with a max. of 70% of current wage as long as disability maintains that particular level (can be on both but it's max. of 70%) He stated that it would not be anyone within City who would make determination of disability, but physician and/or specialist. He reported they use Great Plains Physical Therapy, have worked out agreement, they will do assessment of injured employee as often as City wishes to determine current status in returning work. He stated that's what they failed to do in the past, allowed those employees to carry through on workers' comp. forever, and no one called that injured employee to the test; and by using Great Plains and physicians, following correct path. He stated that he feels this issue has been abused because City pays 100% of employee's wages on a workers' comp. injury, compared to the 5-day waiting period workers' comp. has and 2/3rd's compensation of their salary; and so no real incentive for an employee to come back to work. (It was noted that the City continues to pay employee his full salary and he turns his workers' comp. check back to the City - City pays 1/3 of employee's wages); and this affects premiums, etc. It was also noted that the employee not only is not charged for sick leave while on workers' comp., he continues to earn sick leave.)
Mr. Gordon also stated that they have implemented policy that the employee is charged for first 5 days of injury, and upon approval of claim by Workers' Comp. that sick leave is credited back to the employee. He reported that in 1995 they have documentation of close to 100 days being lost because employee not working because not feeling well because of previous workers' comp. claim, with no submitting of forms because didn't result in any lost days over five days, and that is why they implemented the 5-day policy.

Mr. Schmisek stated there is concern that no written policy, need to document policies. Mr. Gordon stated they will come back with MINUTES/FINANCE COMMITTEE
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information/proposal for committee to consider. He stated that his office, upon receipt of injury report, will go on site, investigate the accident, talk to witness, and make their filing along with workers' comp. claim to Workers' Comp. Mrs. Babinchak asked that they inform employee reps. of proposed changes.

This item will be placed on the committee's April 9 agenda.

7. Matter of classified secretarial position in Finance & Adm-
inistrative Services.
Mr. Schmisek presented request to have the permanent part-time position made a classified position (senior office specialist, which is new job description being looked at and which relates to the secretary II position), and distributed copies of the proposed job description. He stated that in the 18-mo. position filled, have had 3 people in it. He stated that the position requires fairly high level of ability and making it the classified position with full benefits, can draw that high level of expertise. He stated that the mayor is supportive; and they would move monies from temporary wages to permanent wages, and have enough funds to cover; and that position has been very valuable as it has allowed them to turn letters/documents around very quickly; he noted that this position doesn't supervise anyone. Mr. Gordon stated Civil Service would establish criteria for the position, and he would recommend advertising for the position (written exam and oral interview). Mr. Swanson noted that there is potential for transfer/promotion.

Moved by Babinchak and McCabe that we approve reallocation of funds from Temporary Wages to Permanent Wages, establish a classified secretarial II position in the finance and administrative services department, and refer to Civil Service Commission for selection of criteria. Motion carried.

8. Temporary and overtime statement as of 02/29/96.
Mr. Schmisek reviewed statement with the committee. Moved by Babinchak and McCabe to approve. Motion carried. (comm. only)

9. Applications for 3-year remodeling exemption:
a) Daniel Romuld, 627 4th Avenue South
Mel Carsen, city assessor, reported that this application qualifies under new guidelines established by council (must be filed within 30 days, be within 10% of value of the building, with council to determine approval and length of exemption). Moved by Babinchak and McCabe that the application be approved and the exemption granted for three years. Motion carried.

b) Bill Kuhl, Northland Printing, 1013 North 5th Street
c) Casper Feist and Carolyn Duda, 1305 5th Avenue North
d) Grand Forks Homes, Inc., 810-830 4th Avenue South
e) James S. and Gail S. Hand, 519 Belmont Road
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Mr. Carsen reported that these applications qualify, with some exceptions. Moved by McCabe and Babinchak to approve the applications, with exceptions as noted on the applications. Motion carried.

Meeting adjourned at 5:35 p.m.

Alice Fontaine
City Clerk

Dated: 03/27/96.