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MINUTES/GROWTH FUND AUTHORITY
Monday, April 6, 1998 - 7:00 p.m.

The city council of the city of Grand Forks sitting as the Growth Fund Authority met at the council chambers at City Hall on Monday, April 6, 1998 at the hour of 7:00 p.m. with Chairman Carpenter presiding. Present at roll call were Council Members Beach, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness and Mayor Owens - 14; absent: Council Member Polovitz - 1.

Chairman Carpenter asked for a motion to suspend rules to include an additional item to the agenda. It was so moved by Council Members Beach and Bakken to include the following item: to authorize staff to request proposals for telephone system for the Noah's Ark building. Carried 14 votes affirmative.

HOLD PUBLIC HEARINGS ON APPLICATIONS FOR
FUNDING ASSISTANCE

a) Conte Luna Foods.

The city auditor read the recommendation from the Growth Fund Sub-committee as follows:
1) That PACE participation be approved in an amount up to $134,600, to be provided in the form of a zero percent interest loan to be repaid starting at the time the PACE loan is paid in full at the same payment rate as the PACE loan until the balance of the Growth Fund loan is paid in full.
2) A $500,000 loan at 4.75% be used for either equipment for a term of 7 years or for the construction of a building at a term of 15 years upon meeting applicable federal regulations.
3) The Growth Fund committee is recommending to the City Finance Committee that they approve property tax exemptions of 50% per year for a period of 10 years.

Chairman Carpenter called for the public hearing on the application and asked for comments. There were no comments and the public hearing was closed.

It was moved by Council Member Bouley and seconded by Council Member Hafner to approve the motion of the Growth Fund Committee. Upon call roll call the following voted "aye": Council Members
Beach, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Babinchak, Bakken, Hafner, Hagness and Mayor Owens - 14. Chairman Carpenter declared the motion carried.

b) Dahl Brothers Specialty Foods

The city auditor read the recommendation from the Growth Fund Sub-committee as follows:
1) That construction of a facility which would be leased to the Dahl Brothers with a triple net lease, the cost of the facility and financing structure not to exceed $5 million, the initial lease to
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the tenant will be cost plus minimal administrative overhead with an escalator over the term of the lease of 20 years.
2) That Dahl Brothers Specialty Foods will provide funds for the reserve requirement of the bond.
3) That PACE participation be approved in an amount up to $134,600. This participation will be in the form of a zero percent interest loan. The rate of payment would equal that of the monthly payment made on the PACE loan beginning upon payoff of PACE loan.
4) That the Growth Fund Committee is recommending to the City Finance Committee that the approve property tax exemptions for the first three years of 100%, 80% and 60% respectively and that the company be fully taxable in year four.
5) That approval be contingent upon all equity and bank participa-tion being in place by June 30, 1998.

Chairman Carpenter called for the public hearing on the application and asked for comments. There were no comments and the public hearing was closed.

It was moved by Council Member Beach and seconded by Council Member Hagness to approve the motion of the Growth Fund Committee.

Council Member Bakken questioned number of jobs this will create and how is City secured on the $5 million. It was noted that there are 49 jobs to be created within two years of opening of the facility, and that the City would own and lease the building.

Terry Dahl, 4300 Dartmouth Drive, Rural Tech. Center, reported that when they started this process one of the stipulations was that they would design building in such a way that it was suitable for other use, that they have complied with that. He reported that originally they were to build on site now being used for FEMA trailers because it met their needs and had access to the railroad siding but that site tied up for a couple years; and since that time have secured an option on a site between 11th Avenue South and 10th Avenue and that also allows access to the railroad if need that, that he met with Ray LeClerc and Vaughn Hess and understands that the City wants to put 52nd Street through and compromised and orientated building in a north/south fashion which accommodates the needs of the City in designing that portion of the Industrial Park.
Council Member Babinchak questioned if there was any other infra-structure for the City to put in for this building to be con-structed. Mr. Dahl reported that there is no infrastructure there at the present time along 11th Avenue south and serves the FEMA trailer area, but doesn't appear that it would be big job to move the water across the street to that facility. Dick Olson, Grand Forks Development Corporation, reported that the Dahl Brothers pasta plant will make specialty pasta that other plants don't make, that we grow 80% of the nation's durum in North Dakota. Mr. Dahl reported that the size of their equipment is quite a bit smaller
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than what is used in Grand Forks (ie., Conte Luna and at Dakota Growers); that their equipment (smallest line is a 1,000 lb. line and will do about 5 million lbs. year (and Dakota Growers doing about 500 million lbs./year.

The city auditor addressed how City will pay for the building - that this will be a lease/revenue bond similar to what they've done for a portion of the corporate center, bonds sold based on lease payments they will receive, and part of the recommendation is that the debt service reserve ($560,000) will be put up by the indi-viduals involved so that's an amount that doesn't have to be sold within the bond issue and have that money set aside for one year's lag to give a little protection, that it's a $5 million project.

It was noted that infrastructure would be financed as any normal city policy - special assessed against the property. Council Member Beyer moved to include the infrastructure costs in the not to exceed $5 million; Council Member Babinchak seconded the motion. The question was raised as to how much infrastructure they were discussing. Pat Downs, Development Corporation, reported that infrastructure is within a quarter of a mile and maybe closer if some of the infrastructure in the FEMA trailers is useable because they will run adjacent to the properties to the south, shouldn't be a costly deal and would say no more than half a million and should be far less than that. There were questions raised if higher and don't know cost of building; Mr. Downs stated that there was some room for negotiation on what lease-hold improvements are, some of the specialties of the pasta plant are the humidification and heating/cooling system and if becomes a problem that can be nego-tiated with the tenant whether that's lease-hold improvement or something City owns in the building and upfront have talked about those being lease-hold improvements so building should come in far less than the $5 million.

Doug Christensen stated he wasn't speaking to discourage economic development but wants council to understand that they are at a definite point in our City's history, that there's lots of dis-sention in the city, that City making a $5 million loan, that it's a real estate loan, but when clients borrow money from a bank one of the first things they ask are personal guarantees and how good are they, and hope's these people get their loan but he's saying that the city council is reviewing a loan, this loan will create probably 49 jobs, that's $100,000 job and this project, if successfull, will require $550,000 year, principal and interest amortization if his numbers are right, that he thinks that this isn't enough information for city council to make a business decision - don't know shelf space, market, financial structure, projections, etc., that they don't have to make decision tonight and perhaps include other conditions, and meet at special meeting. Chairman Carpenter reported that there is a subcommittee of the Growth Fund that has reviewed and looked at all the information
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and are recommending to the council. Chairman Carpenter also noted that this is not a loan and that the City will be owning the building, and if business not successful still have space to lease to other businesses.

Curtis Braierd, 314 N. 4th St., asked council why they haven't done anything about apartment tenants, never said at anytime that people who live in apartments live in homes, only that people living in homes they own have homes, that there's large part of the popula-tion that live in apartments and asked why they don't address that.

Mr. Olson questioned whether the extension of 10th or 11th to the plant, would they bill the plant on one side for part of the infrastructure and tapping fees on the other side; Council Member Beyer stated yes.

Upon call for the question on the amendment and upon voice vote, the motion carried 14 votes affirmative.

Upon call for the question on the motion, as amended, and upon roll call the following voted "aye": Council Members Beach, Lucke, Hamerlik, Bouley, Glassheim, Carpenter, Sande, Klave, Beyer, Bakken, Hafner, Hagness and Mayor Owens - 13; voting "nay": Babinchak - 1. Chairman Carpenter declared the motion carried.

APPROVE REQUEST TO AUTHORIZE STAFF TO DO
REQUEST FOR PROPOSALS FOR A TELEPHONE
SYSTEM AT NOAH'S ARK

Terry Hanson, Urban Development, reported that with the completion of the Noah's Ark building coming closer to an end, they would like to propose soliciting a telephone system in the building that would be vendor owned and leased to the tenants of the facility, and are requesting council's authorization to solicit an RFP from the local vendors and publicly solicit for providing of this system, and to appoint a committee of one member of the Authority, one member from the Grand Forks Regional Economic Development Corp. and one member of the tenants that are currently slated to be in that building. It was moved by Council Members Hafner and Sande to authorize staff to request for proposals. Carried 14 votes affirmative.

ADJOURN

It was moved by Mayor Owens and seconded by Council Member Hamerlik that we do now adjourn. Carried 14 votes affirmative.

Respectfully submitted,



John M. Schmisek, City Auditor