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	MINUTES/FINANCE COMMITTEE Tuesday, November 12, 1996 - 3:45 p.m. Members present: Carpenter, Babinchak, Bakken, Hamerlik. 1. Matter of request from Community Violence Intervention Center for waiver of rental for location in City Center Mall. Kimberly Wooten, rep. Kristi Hall-Jiran, CVIC, who was unable to attend today's meeting. because of prior commitment. Ms. Wooten reported that of rent and utilities reimbursement from the City, $450.00 was rent and $150 utilities for total of $600/mo. She stated she was available to answer committee's questions, as well as several of their clients who were also present to tell committee how services of CVIC have impacted their lives. Several individuals spoke to the committee: 1) individual who was disabled stated she unable to climb stairs and would have to ask someone to use their office), that without the services of CVIC she would not be alive today but would be a headline; 2) another individual who stated that CVIC has been able to increase client load and wouldn't want to see them reduce that because of lack of space causing limitation of services. Mr. Schmisek reported his office had worksheets giving revenue and expenses for 1994, 1995 and 1996 for the old NSP building located at 25 S. 3rd Street showing loss of $54,882.85 (incl. bldg. renovation), $18,116.91 and through Sept. of 1996 $22,000 in revenue and $13,000 expenditures (two small rooms on this floor being rented and figures exclusive of that). He reported that potential rental income from the second floor of that building was included in a letter from Mel Carsen, city assessor, stating est. potential income loss of $21,219.00/yr. He stated that in 1988 when this organization moved from the police bldg. to current site, the Highway Patrol was taking over that space and paying $7200 rent which was used to off-set the rent waiver given to this organization at the time. He stated that if approve this, there is no income to off-set that amount and would continue to have the expenses. He also noted that the City has five other buildings in the downtown area, and Mr. Jackson working to rent those buildings to put on income producing basis so perhaps City can get out of business of being landlord. Mr. Schmisek reported that in reviewing the minutes from 1988 finance committee, the item was approved as an amendment to the budget with recommendation for review each year. Mr. Carsen reported that Mr. Jackson being paid for management cost $1,120/yr, building maintenance of $1,000/year (these figures may vary); and special assessments ($8,254 to be paid in next two years). He noted that building not actively listed for sale (market value approx. $130,000) Mr. Bakken stated he doesn't doubt need for this organization, but questioned whether City should be involved in this, that MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 2 intent of City to provide basic services; and that City should participate less in this as time goes on rather than more; and should be taken care of through other sources of revenue. An individual in the audience stated reason getting bigger and bigger is because of word of mouth from victims, that there is now someplace you can go for help, cannot afford to pay for counseling, and asked how they could operate without City's support. Ms. Wooten stated that foundations requesting that organizations request grant monies for specific positions (victim witness advocate, etc.) and that organization go back to its own com- munity for operational support, because they want to fund people to help people. She stated they try to write in operational costs in all of their grants but more and more are stopping that. Mr. Hamerlik asked if they were receiving any State assistance, NE Human Service Center? Ms. Wooten stated there are 19 different domestic violence programs throughout the State, Fargo has large program funded similarly to Grand Forks. She stated she didn't know specifics of other program and how funded. She stated they also serve East Grand Forks, some clients from smaller towns, or anyone who walks through their door. She stated that they received $10,000 from Grand Forks County in 1995, they do not receive any funding from East Grand Forks. Mrs. Babinchak asked what they would do if the City sold the building. Ms. Wooten stated their grant funding, etc. not certain from year to year, nor their jobs, etc. but would try to obtain waiver for another location, look for funding, etc. all the time. Tom Hagness, 1423 11th Avenue South, stated this is such a worthy organization he would encourage committee to help this organiza- tion; he suggested CVIC apply to various local service clubs for assistance, but would also suggest that perhaps organization should be put on notice that within the three years they will have to find other assistance. Moved by Hamerlik that after three-year lease expired, and if lease extended that one-third of the rent be paid first year, two-thirds second year and full rent after that. Carpenter suggested that copy of the minutes be attached to the lease containing those suggestions when it comes up for renegotiation. Brent Jiran, 410 Hamline, stated he would like to remind com- mittee that this isn't a business and very little money that can be generated internally, there's not a way to have clients pay for coming in, that's one of the services that City could provide even more, sad thing that federal government pulling out, looks very dim for state government to pick up any more of the slack, MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 3 feels that there's some ways city government could take ownership and make this a major service. He stated that CVIC runs on a very lean budget, but well-trained professional counselors who spend lot of time trying to find funding and not providing help that's needed, double work-force without adding any more people by making more consistent plan of generating income. Mr. Hamerlik stated that lease could terminate at the end of three years and if another agreement reached, some intention that rent would be paid. It was noted that there is no motion on the table. Moved by Hamerlik to approve a three-year lease with a 90-day notice period if the City sells the building or a paying tenant is found for the building, tenant is responsible for utilities and Mall operating expense and City will continue the $7200.00 payment for 1997, that in future years that will be subject to budget allocations, and lease specifically to state that at the end of three years the free rent will be discontinued and there will be a dollar amount of rent paid in future years as a direc- tion to those negotiating a future lease. Bakken seconded the motion. Motion carried. 2. Plans for remodeling of kitchen area at Senior Center, 620 4th Avenue South. Mr. Schmisek reported his office had received drawings from Kent Anderson, Architect, and forwarded by Martha Torkelson, Senior Citizens Center, requesting that they be allowed to re- model kitchen at the Center; they will be paying costs themselves but lease agreement requires council approval prior to any modi- fications being made. Mr. Anderson was present. Moved by Babinchak to authorize the remodeling of the kitchen of the Senior Center to be paid with funds privately raised by the Senior Center; seconded by Bakken. Motion carried. 3. Matter of GGF Convention & Visitors Bureau 1995 Audit. Mr. Schmisek reported copies forwarded to the committee, that under the Code they are required to submit to the council an annual audit for review. There were no questions. Moved by Hamerlik and Babinchak to receive and file the audit for the Convention & Visitors Bureau. Motion carried. 4. Matter of copier bids. Held in committee. 5. Matter of Grand Forks Varmints. Jack Geller, rep. Grand Forks Varmints, stated that a group of investors bought a majority of stock and inherited 100% of the debt, at that time the debt was $130,000, today the debt is about MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 4 $75-80,000 after paying off debt to local banks and debt is moving its way down. He stated that they have small amounts of debt and would like to consolidate that debt, that he approached Mr. O'Leary about possibility of a Growth Fund loan, that Varmints probably do not qualify for a Growth Fund loan as they are not a primary sector industry, but Mr. O'Leary suggested approaching this committee about a $40,000 grant/loan from the City to help consolidate the debt they have. He stated they are a for-profit corporation, also public-spirited corporation, that they provide employment for the youth in the city, provide cultural alternative, social amenities and other kinds of promotional value to the city; are hoping that City would look favorably on a modest sized, $40,000 loan. He submitted figures re. 1996 expenses and projected 1997 expenses. Committee questioned why not securing loan from lending institution, Mr. Geller stated their corporation has little in terms of tangible assets, banks not interested in using franchise as collateral (uniforms, etc.) and based on promotional value, City might be small partner in that, asking for a loan to allow them to consolidate existing debt. He stated he was hoping for interest rate equal to that which the City borrows money from the State Revolving Fund. Mr. Schmisek noted that City has applica- tion in to State Revolving Fund for the lagoon project and that would be at about a 3% rate, other borrowings are bond invest- ments, his only concern whether legal statute allowing City to become a borrower to private business. Mr. Swanson stated they could only use sales tax money if believed it was economic development. Mr. Geller stated length of loan would be up to City - 24-36 months, whatever reasonable; they believe this next year will turn it around. There was some discussion re. City buying tickets, advertise, give tickets for various purposes (after school programs, summer youth programs, etc.) and Club donate tickets in the future. Mr. Geller stated they have been considering this through their promotional budget. It was also noted that the City had donated funds to the Park District for bleachers. Mr. Geller stated they would be willing to sign personal guarantees. Committee held the matter of 2 weeks. 6. Matter of financing for Cirrus Industries. Wally Dornfeld, Springsted, Inc., reviewed preliminary official statement for the $3,795,000 Sales Tax Reserve Revenue Bonds (Cirrus Project), Series 1996A. He stated that the $3,795,000 is for financing of the facility for Cirrus Industries in the Industrial Park and structured so that the lease could pay off the bonds in a timely manner. He stated that the purpose is MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 5 for the City-owned building in the Industrial Park, the project costs are $3,253,786 based on the bids that were received in August, they are capitalizing some interest during construction because situation is that rent will not start until April of next year, they are creating capital reserve fund of $365,700 so that if there were is problem with lease or sales tax revenue, that reserve fund can be tapped into to pay debt service. He stated that the security for the bonds will be lease rentals between the City and Cirrus, pledged revenues in addition to the lease would be the sales tax from the economic development allocation, City holds back the amount from economic development sufficient to pay rentals on this facility, so economic development doesn't get that money (TAG operation handled same way). He noted that the first two years are to be paid by the City in lieu of stock that going to be received. He stated that rental structure such that the City will end up in 10 years with $950,000 of excess earnings and can help fund things in economic development, and at end of term about $2 million. He stated that he will be back with official bond purchase agreement with interest rate next Monday. He also reported that all the accounts on page six of the state- ment pretty well guarantees or protects the City as far as flow of funds concerned. Held until Monday, November 18, at 7:15 p.m. 7. Matter of designation of polling places, appointment of election officials and setting of polling hours for December 3 special city election. Mr. Schmisek reported that listing of inspectors of election and polling places had been submitted for their review, and would need motion to designate polling places and appoint election officials and set polling hours as 7:00 a.m. to 8:00 p.m. on December 3. It was so moved by Hamerlik and Bakken. Motion carried. 8. Matter of implementation cost material and pay band structure for reclassification/wage study. Mr. Schmisek reported that there were some changes in starting pay grades that had to be made, those updates have been made and would concur with figures as far as total annual costs. Dan Gordon, Human Resources director, reported they received information from Ralph Anderson Friday evening and they finished their personal audit, etc. this morning, and copies of their Wage Study Implementation considerations had been placed in their mail boxes today. He reviewed considerations from their office: 1) 35% open range using median value for market positioning; 2) no guarantee for future progression increases (negotiated on annual basis); 3) implementation date 1/1/97; 4) all employees hired from 1/1/96 to 12/31/96 will be placed at a minimum of 6% above minimum range; 5) all employees hired before 1/1/96 will be placed at a minimum of 12% above minimum range; 6) the $75,000 budgeted for implementation will be distributed to all classified MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 6 employees as a one-time offer; this amount is approx. $190.00 per employee, subject to employee reps. approval; 7) the $120,000 budgeted for step increase in 1997 less remaining cost to imple- ment the study will be added to the negotiated 2.6% cost of living increase for 1/1/97; 8) the first year for potential pro- gression increases would be 1998. He noted that 70% of the employees are the top range and would not get any more step increases, but would receive cost of living increases. He reported that graph in the packet shows that only 9.9% of the employees are at top range, but does show that employees from 25% to 35% of the top range is majority of the employees, so significant cost in progression increases will be within 2 to 3 years because from 25% to 35% is 82.8% of the total employees. He reviewed percentage of payroll cost, and showing factors used in determining 2% or 4% progression increase for future years, and only thing with fixed amount are those employees in 35% category. He stated that he wanted to remind employees that about 60% of the employees were advantaged by the study because would have more progression increases in their future. He reviewed summary of implementation costs: Tab #1 will show implementation cost of $116,000 (using 12% and 6% that all current employees would be guaranteed up to that range and 2% progression increases); Tab #2 shows a 12% and 6% using 4% Progression increases; (showing impact for first three years) Option #3 shows a 10% and 5% guarantee and 2% progression increase; and Option #4 shows 10% and 5% with 4% progression increase; (not much difference in those two options). He stated he feels that options before committee are probably best compromise they can come up with from the study. It was noted that the $120,000 budgeted for step increases in 1997, and $116,000 to implement in 1997, that there is $75,000 budgeted in 1996 and built into 1997 as well, with $41,658 as amount which would have to be deducted from the $120,000 for step increase, leaving remaining $78-79,000 to be used for cost of living increase (0.6%). It was stated that the idea behind making it effective 1/1/97 and then doing one time for 1996 because it has gotten so late in the year and task of going back and figuring what each employee would get is very intensive task. Mr. Hamerlik expressed concern re. those employees in step progression, they were of understanding there would be step increases and now being taken away, about 23% of employees in step progression (talking about commitment to employees who started at first level). Mr. Carpenter stated that there is $78-79,000 and they can either increase cost of living for everyone or target specifically to those people who would have received step increase; only have so much money budgeted and it's question of how you allocate it. MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 7 C.T. Marhula asked how $75,000 distributed, and Mr. Carpenter stated would go to all employees equally (one-time payment), amount of progression increase - which could be 0%, 4%, etc. Mr. Hagness, wage study committee, stated that he wasn't sure that merit increases was direction he wanted to see them go, percent would depend on cost, that with 80% of employees at top, employees within range never get step increase and cause greater inequity; they need to know final figures. Mr. Carpenter stated that with open range, council controls amount. Mr. Hagness also suggested skipping a year and implementing full plan in 1998. There were some questions/concerns by employees/employee reps. re. how they would determine starting pay if within range, and progression increases, or promotional increases. There was some discussion re. percentage of progression increase and whether up to discretion of department head; Mr. Carpenter stated would be up to council to determine percentage of pro- gression increase and any variation to different individuals, and to negotiate with employees; or whether to turn over to depart- ment heads; not making decision to turn over to department heads today and that may never occur. Mr. Carpenter stated no one guaranteed automatic raise, that it's highly unlikely that there's not going to be progression increases. Ron Grande stated that it seems like City has fairly straight-forward system now, and asked if goal is to lower salaries of City employees through progression. Mr. Carpenter stated goal is to give council flexibility, and to put into one consideration and look at where market is, pension expense, health care, etc. He stated that in the past because of automatic steps, have limited what they can do at various times for cost of living; now talking about whole package. Mr. Carpenter stated no one guaranteed automatic raise because there are circumstances that happen within city and within economy; pay plan subject to adoption by council each and every year. After further discussion the committee held the matter for 2 weeks. 9. Matter of payment to Ralph Andersen Assoc. for wage study. Mr. Schmisek reported they have been holding final invoice and looking for direction from committee whether to make final payment - $15,655.00. Committee questioned whether any reason to hold; Mr. Schmisek stated there was some missing information at time submitted, but now have gone through and council has accepted job descriptions and pay plan as they have submitted. Moved by Hamerlik and Babinchak to approve final pay in the amount of $15,655.00. Motion carried. 10. Matter of review of sick leave transfer policy. MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 8 Mr. Schmisek reported that back in 1993 when going through wage negotiation, council approved sick leave transfer from one employee to another in cases of emergency through December 31, 1996, and now bringing back for review, along with some addi- tional information. He reported that United Hospital looked at starting program and asked Brady Martz to look at and in looking at IRS regs. need to either revise how plan set up. He stated that presently employee can upon submittal to Human Resources transfer part of his sick leave to an employee who used up all his sick leave and has emergency situation. The IRS regs. are set up in such a way that if an employee earns that money, it is put into his bank even if contributed to another employee and taxable to employee giving it and not to employee receiving it, and also employee receiving it may have some responsibility for gift tax; so other thing allowable is if wish to establish such a policy, the bank can be set up and employee states he will con- tribute to the bank a certain number of hours and not attribu- table to them, and if process set up for review of requests, become taxable to recipient of the donation. He also noted that there hasn't been much use of this; and Mr. Gordon stated there has been some problem - employee leaving before 5 years and has some accumulated sick leave stated he wants to give it to specific employee - should be demonstrated emergency. He stated they have honored some requests (ie., maternity leave), and has only seen use by the police department. Mr. Gordon stated that in the City Code there is provision for mayor and council to grant extended leave with pay in special circumstances. After some discussion the committee asked staff to check with State to see how they handle this. Held in committee. 11. Matter of five-year special assessment cancellation for streets, sidewalks, etc. Mr. Schmisek reported that policy City has in CIP program is probably duplication of plan already established in the State Code, and initial recommendation is to delete that policy and to refer to State Code section, which is more restrictive as far as revenue requirements but more liberal in the forgiveness of assessment or ability to have it forgiven, but under State plan if you qualify for Homestead Credit you can apply at the County and they will submit that the State who will in turn pay the City those special assessments and puts a lien on the property so really no loss of that expense to any of the governmental entities but waiting until property sold and recovering that amount. He stated that if they wish to retain current policy both he and Mr. Hamerlik have some concerns they would need to administer that policy the same way for sidewalks, street maint., and street reconstruction projects as well. He reported that information had been forwarded to the committee. Mr. Hamerlik stated that under City's current policy, someone (ie., student) could apply and receive full five-year exemption for sidewalk. MINUTES/FINANCE COMMITTEE November 12, 1996 - Page 9 It was noted to apply under State regs. would have to be 65 or disabled. Mr. Schmisek stated he tried to go back to find out why put in, and it was to protect elderly, etc. Mr. Carpenter stated one reason was because they were having so many problems with residents protesting street projects out. After further discussion it was moved by Hamerlik and Babinchak that we delete the policy under Section 8 as stated on page 18 of the six-year Capital Improvements budget and replace it with reference to the appropriate sections of the North Dakota Century Code. Motion carried. 12. Communication from Sherman Associates, Inc. re. financing low/moderate income housing. Mr. Schmisek reported his office had sent out information on Housing Revenue Bonds for committee to review (processes to be used for housing revenue bonds, they are not a liability of the City. Mr. O'Leary was unable to be here today. (Committee didn't receive info.) He reported he had received call from George Sherman and his comment was that if TIF financing not available, it wasn't viable project for them. Mr. Carpenter stated not interested in giving TIF for housing, Mr. Hamerlik agreed but should draft letter of denial. Mr. Schmisek stated they could receive and file with direction to his office to send letter explaining why committee not comfortable with TIF's. Mr. Carpenter stated they could do that and say they were willing to consider HR bonds. Held in committee for 2 weeks with Mr. Schmisek and Mr. Carpenter to draft letter to Sherman Associates, Inc. and bring back to committee. Moved by Hamerlik and Babinchak to adjourn; meeting adjourned at 6:10 p.m. Alice Fontaine City Clerk Dated: 11/13/96.