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MINUTES/FINANCE COMMITTEE
Tuesday, June 11, 1996 - 3:45 p.m.

Members present: Carpenter, Babinchak.

1. Matter of request from LUCO Properties for tax increment financing/tax exemption on proposed project for relocation/
renovation of business facility at 1710 N. Washington Street.
Chairman Carpenter noted that this matter had been before Planning and Zoning Commission for determination of slum and blight, that a public hearing was held by the council and back to this committee to develop a recommendation to council for consideration. Bill O'Connell, 1831 Riverside Drive, and David Kvidt, 1635 Riverside Drive, rep. LUCO Properties, were present and reported that revised copies of the proposal for improvements necessary for the project which includes repair of roof, new electrical service, painting, cleaning asbestos, fire proofing and fire protection, etc. at est. cost of $435,000 had been submitted. Mr. O'Connell stated that for the additional taxes which will be levied against the property for which they are asking for an abatement of the $14,928 doesn't even come close to interest on their investment. He stated they have changed their request from a TIF to a 15-year tax exemption for their property even though they will be adding some extra jobs. He stated they wanted to go into Industrial Park but they (P & Z) didn't want them there, that they wanted them on Hwy. 81 North and this was the only property that was available within the city limits, that they would like to stay here but would also like some consider- ation for the property. He stated that the improvements are not beneficial to the warehouse but have to clean it up, to install fencing, paving with curb and gutter as City wants, and have to extend storm sewer for drainage. He reviewed additional improvements (including new skin on exterior, new front, black glass, etc.) that their total proposed project is $1.1 to $1.2.
million. He stated they are requesting the 15-year exemption on the additional $14,928 in taxes to recoup some of the costs putting into the building for improvements. He also noted that sewer separation had not been done, and they took care of that. He reported that there have been some improvements to the building which have been made and some improvements not shown on the proposal.

It was noted that the 1995 assessed market value of the property is $338,800 which generates a tax revenue of $9,605; that with the proposed improvements the assessed value of the property would be approx. $946,000, and would generate an additional $14,928 in taxes. Mr. Carsen stated that quite often when do remodeling project, have costs that exceed value of property, City could choose to off-set portion of that through an exemption and perhaps look at that.

There was some discussion re. zoning of the property which is now in a B-3 zone and is up against an I-1 property which is the RR yard. It was noted that B-3 allows them to sell retail, but not
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run a construction business. It was also noted that the plat has not been filed and they are waiting to see what happens here (if exemption granted would rezone as I-1 and include improvements required by Planning). He stated that it doesn't make sense when you own entire property to make one part B-3 and other I-1. Mr. Swanson advised that I-1 zone has to have buffer zone because joins B-3 zone.

Mr. Kvidt stated they were looking for a full exemption or they wouldn't be spending the full $400,000 for cleanup of slum and blight, but only do what necessary to have functional building. Mr. O'Connell stated they would only rust proof roof, not reside entire building, wouldn't pave or install curb and gutter, elimi- nate fencing and landscaping, not replace overhead doors, etc.

Mr. Carpenter stated some concern that all improvements not for slum and blight and not sure should grant full exemption. Mrs. Babinchak stated that she thought project worthwhile, is within the city limits and want it to look nice, adjacent property well cared for. She stated that if they are going to put in over $430,000, agreed that some costs not directly related to slum and blight, but that project is a benefit to the city. Babinchak moved to grant the 15-year exemption. Carpenter seconded the motion. Motion carried.

2. Matter of tax exemption for Cirrus Design Corporation.
It was reported this application for five-year exemption at declining exemption. Saroj Jerath, dep. city auditor, reported that if lease paid by City will have to determine value of lease in terms of exemption. Mel Carsen stated that in order to be consistent with other projects like this, it would appropriate to grant a five-year exemption with step down percentage. Committee noted that the amount of the tax exemption would be $103,000 with 80%, 60%, etc. Mr. Carsen reported that total exemption with step down reduction for five years would be equivalent to 3-year exemption. He also reported that the exemption requires School Board input. Mr. Swanson advised that committee cannot take any formal action on the request other than set the public hearing, that School Board needs to be notified re. application.

There was some discussion re. start of construction which cannot take place until after determination of the exemption (to be eligible); Dick Olson stated construction would start around first of August; however, Mr. O'Leary stated they have bonding problem, but can be settled on July 15. Mr. Swanson stated construction of underground work or site preparation not a problem, only when start concrete work. Mr. Olson then suggested they set public hearing for July 15 and could then postpone if necessary.

Moved by Babinchak and Carpenter to hold public hearing on the
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application for property tax exemption by Dakota Aircraft for July 15, 1996. Motion carried.

3. Request from Tim Lamb for tax increment financing for project
involving the improvement of property at 1624 Dyke Avenue.
Mrs. Jerath reported that finance department's recommendation was they not get into financing of small projects.

Tim Lamb stated that this is new ground for the City, that as an incentive to improve slum and blighted areas this is good idea, that without this type of funding these projects wouldn't be feasible. He presented his request for tax increment financing to move house onto a vacant lot. He stated that lot assessed at about $9,000 and with improvements would be up to $65,000, that general taxes about $225/year and with improvements $1500/yr.; removal of house from present location at 3601 Lynwood Circle would improve that area, and vacant lot would either be sold or new house built. It was noted that current value of that property about $85,000 and vacant lot would sell for approx. $25-35,000. He stated that if consider cost, break even project, and improves slum and blighted area. Committee stated concern with vacant lot being slum and blighted area (it was noted there is a garage on the lot) Mr. Lamb stated he was asking for a $50,000 TIF, and committee stated there was no way this would generate increased taxes to pay for $50,000 TIF. Mr. Carsen stated would generate $10,000 max. Mr. Swanson stated he questioned whether this fits into slum and blighted area as defined in NDCC (same
conditions as in EAPC request). He stated committee's options were to refer to P & Z for determination as to whether consistent with comprehensive plan and whether it is slum or blighted area without taking any action; take no action; or deny the request. He stated question was posed to him if individual project or individual housing unit could even qualify, he stated that in looking at urban renewal law he didn't see any exclusion for the project. Committee stated they didn't see how benefit to city, not increasing number of housing units, difficult to put together with TIF. Moved by Carpenter and Babinchak to deny request.

Mr. Lamb stated that without TIF there is no incentive to improve older areas of the city; Committee stated that there were remodeling exemptions, etc.

After further discussion the motion carried.

4. Matter of cable t.v. franchise negotiations.
Jerry Hovet, TCI, was present. Mr. Swanson reported that the three areas he had raised for discussion and guidance from the finance committee were 1) length of potential franchise agreement with TCI, 2) issues relating to mandatory system improvements (fiber optic cable), and 3) designation of channel 3 as public

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access channel. He stated that the recommendations from his office are 1) that the negotiation for the term of the franchise agreement be up to approx. 8 years to coincide with East Grand Forks' franchise; 2) that council take no mandatory upgrades at this time, and 3) that channel 3 be designated as an education and governmental channel. He reported that negotiations on hold right now pending direction from this body and council; and that the term of the existing franchise will expire this fall (it was a 10-year franchise renewed in 10/86).

Ann Sande, 1110 Belmont Road, reported that she had given committee information she had garnered from the Tele-village Conference two weeks ago, that she has no particular quarrels with Mr. Swanson's assessment but does question whether or not it's important to be in same timeline as East Grand Forks because not using any leverage now or will need any leverage in 8 years or have anything to use leverage on. She stated that she felt it was important in the light of the Telecommunications Act that at least have had chance to look at the instructions.

There was some discussion re. short term extension; Mr. Swanson stated that negotiations are expensive, time consuming, wouldn't gain lot from short term negotiation and wouldn't be opposed to 4-4 or 5-3 year terms but prefers 8 year term. He stated that as it relates to East Grand Forks, under present law, would be an advantage if attempting to regulate rates, however, that rate regulation will be disappearing under the recent modifications, only issue in setting in step with East Grand Forks would be to provide opportunity, if law changes, if appropriate. He stated that he thinks they need to be looking at more cross-river cooperation than what they have had. He stated that if determined that not beneficial to Grand Forks/East Grand Forks to do anything collectively, then wouldn't do.

There was some discussion re. including provision in agreement to allow City in conjunction with University to reopen negotiations in regard to the status of channel 3, giving ability to bring back before the 8 years are up. Mr. Swanson stated that the issue of channel 3 more easily addressed than some of the other issues, that TCI's position has been that they don't really care how designated provided that TCI has no obligation legally, financially or otherwise to assist in the production, operation, maintenance of the channel; they will give us the feed and do the transmission; TCI would be indemnified if there were any litiga- tion; but will take modification by all 3 parties to do it.

Tim Burke, 208 Conklin, asked whether they could provide a second channel for access and let current channel stay as is under pro- gramming control of the University and add additional channel for access for governmental or other purposes, and then no conflict and no need to engage in negotiations; didn't know cost to TCI to MINUTES/FINANCE COMMITTEE
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provide additional channel.

Jerry Hovet, TCI, reported that existing channel 3 was brought in by the University and worded by them into the franchise, and that channel 3 not used to its potential, but to have two channels, they have production facility now and have equipment; that if want additional channel would have to go back and negotiate because that has never been an issue. Mr. Swanson stated that if they want full public access, under Cable TV Act of 1984, have ability to request reservation of more than one channel, can be designated individually as public access channel, government channel and/or educational channel, and set up as would like. He stated that in requiring TCI to reserve one of their lower tier channels should not impact any significant degree the negotiations from the City's perspective, but would require that one of the channels be vacated at the time negotiations concluded or upon exercise of any type of authority the City would intend to reserve, meaning that TCI would have to take something off lower tier and move to higher tier. Committee asked if channel designated as full public access and in agreement, if wide open for anyone to use; Mr. Swanson stated that depending on how designated in the franchise agreement, that potential is there.

Moved by Babinchak and Carpenter to authorize negotiation of franchise agreement to include the following provisions: that City not require mandatory system improvements; that channel 3 be designated as an educational and governmental channel; and that the term of the franchise agreement not exceed eight years. Motion carried.

Mr. Swanson reported that the franchise agreement will come back to committee.

Jerry Hovet reported that the complaint in Ray LeClerc's letter (payment of City franchise fee when he lives outside city limits) had been taken care of, made new billing and franchise fee refunded. He noted that copies of letters to that effect had been sent to the Mayor's Office. Committee asked Mrs. Jerath to get copies of the letters and forward to the committee members.

5. Matter of recording plat of Airport 5th Resubdivision.
Mr. Carsen reported that this property located at I-29 and Gateway Drive, where rerouted North 47th Street; that plat is ready to be filed but is being held up because there are delin- quent taxes on one of the properties; reason that delinquent is because in 1994 State purchased property in mid-year and that they canceled the taxes; however there are taxes owing for first half of year, that tax statement sent to State rather than previous property owner and becomes personal charge to him and shouldn't hold up plat; but County won't file plat without the money being paid or a resolution from council. Mr. Swanson
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reported this has been done in the past and provided for in the statutes, that this is not a waiver of taxes, but simply allows this plat to be recorded.

Moved by Babinchak and Carpenter to adopt the resolution re. Airport 5th Resubdivision. Motion carried.

6. Application for 3-year remodeling exemption:
a) 2420 9th Avenue North
Mr. Carsen reported this application for 3-year remodeling exemption on house 25 years old or older, improvements qualify for the exemption, exemption comes prior to guidelines adopted
and recommended approval. Moved by Babinchak and Carpenter to approve the application. Motion carried.

7. Request for transfer of funds for health insurance coverage
for position of director of GF Substance Abuse and Traffic
Safety Council.
Mrs. Jerath reported the grant for this prgram started in 1991 or 1992, program also getting approx. $6,000 from Human Needs plus grant money from State; that when program started there was funding to cover health insurance as well as life insurance and Workers' Compensation; that grant has decreased and premiums paid out of Miscellaneous Contingencies however funds were not transferred to the program fund. Costs for 1996: $125/mo. for health insurance, $1.98/mo for life insurance plus about $210 for workers' comp. and need to move monies from Misc. Cont. to grant fund to cover. She stated that they also need to look at this program in 1997 because State funds will be cut significantly. Committee asked that keep track of this so that it will be discussed at budget time.

Moved by Babinchak and Carpenter to transfer $1,734 from Miscellaneous Contingencies to Special Grants Fund to cover health, life and workers' comp. insurance costs for 1996 for Grand Forks Substance Abuse and Traffic Safety Council director. Motion carried.

8. Matter of truck rodeo.
Dan Gordon, Human Resources, reviewed proposed truck rodeo (training program for public works employees), that they try to provide annual defensive driving course on an annual basis. He stated that this training program was originally scheduled at noon next Thursday but has been changed to 3:00 p.m. in the afternoon, he stated that 50% of the employees done by 2:30 p.m., would affect some of the operators in the street department but no problem if not result in overtime. He stated there is no compensation, purely voluntary program. He stated that he expects to see this rodeo fully funded next year by vendors of heavy equipment, and are getting some prizes to give to participants, will be getting $300-500 from Thompson Insurance.
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He stated he is not asking finance committee for any money, that under City Code employee cannot receive any money in addition to their salary and would need approval of that. He reported that winners will receive certificates as well as money compensation (provided by Thompson Insurance).

Moved by Carpenter and Babinchak to acknowledge the truck rodeo as training program for the public works department and to approve the awards as submitted in report. Motion carried.

9. Matter of employee assistance program.
Mr. Gordon reported that this program approved by council in 1987 and have had same program for 9 years at cost of $600/mo. and not considered employee benefit, funded by Human Resources. He stated concern re. utilization of current program, which is less than 1% utilization per quarter (3 people every 3 months call). He stated he was requesting authorization for RFP for employee assistance program. Moved by Babinchak and Carpenter to authorize request for proposals for employee assistance program. Motion carried. (committee only)

10. Matter of rearrangement of finance department workstations.
Sherrie Stavin presented proposed design for rearrangement of work stations in the finance department to make more convenient for the public and budget amendment in the amount of $1,867.00. Moved by Babinchak and Carpenter to approve budget amendment in the amount of $1,867.00 for office remodeling. Motion carried.

11. Matter of plans and specs. for copier.
Mrs. Stavin presented copies of plans and specs. for copier to service first floor of City Hall (finance, assessing, human resources) which were reviewed by the committee. Moved by Carpenter and Babinchak to approve specs. and call for bids. Motion carried. (comm. only)

12. Matter of leasing of third floor of City Hall to Children's
Science & Technology Education Foundation, Inc.
Mayor Polovitz introduced Vera Uyehara, The Children's Science & Technology Education Foundation, Inc. (The Brainy Bunch Science Club), who presented request for a 5-year lease from the City for $1/yr. for space on the third floor of the new City Hall. Mayor Polovitz stated he doesn't see any use for that space in next five years, but lease will provide for 30-day termination. It was noted that there is no air-conditioning nor heat in that area, that if they want to do anything with they will have to pay for it; this agreement only says they can use the space. He also stated that parking would not be provided, they would have to arrange for their own parking.

Vera Uyehara, 923 Almonte Avenue, stated they were here about year ago and requested space in the Bill Larson Co. building,
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which was approved; same purpose as this year, to use for match for grant they are proposing to the Dept. of Education, and in that grant need to have significant match from all the partners and hoping that the City of Grand Forks will join as a partner to encourage development of the Children's Museum and if funded, there would be 10 new highly skilled positions to the city.

Mr. Swanson reported he would draft lease, with some type of early termination clause, etc. doesn't see lease as problem.

Mrs. Uyehara stated that they would have erratic hours and didn't know what provisions are for access into building after hours; Mayor Polovitz stated that building be used evenings more and more and City Hall has full janitorial service who are on duty until 11:00 p.m. (except Saturday and Sunday) Mrs. Uyehara stated they have some concerns with cost for utilities (pro-rated share) for that space, and will have bearing on what they can arrange; that they want space even without grant, but if heat not adequate and they have to put in some sort of heat, that will have to be taken into consideration also.

Moved by Carpenter that we authorize City to enter into lease with The Children's Science & Technology Education Foundations, Inc. for use of third floor office space in City Hall, and direct city attorney to draft the lease; Babinchak seconded the motion.
Motion carried.

The committee stated that if terms cannot be worked out that it come back to committee.

13. Matter of Growth Fund monies for Minn-Dak application
There was some discussion re. transfer of $500,000 to the Growth Fund for Cirrus, and that in talking with John O'Leary he feels that with that transfer there are adequate funds to do Minn-Dak application. Mr. Carpenter questions whether there was still $600,000 in Loan and Stabilization Fund or excess sales tax, that Minn-Dak application approved contingent upon avail- ability of funds; so no further action needed. Mr. O'Leary reviewed Growth Fund budget; and after further discussion committee asked Mrs. Jerath to check and let committee know before Monday night, and if not taken care of, will bring up under new business.

Meeting adjourned at 6:00 p.m.

Alice Fontaine
City Clerk

Dated: 6/11/96.