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MINUTES-FINANCE/DEVELOPMENT COMMITTEE
Tuesday, October 22, 2002 - 7:30 a.m.__________________

Members present: Christensen, chair; Glassheim, Hamerlik, Gershman.

Others attending: Terry Hanson, Keith Lund, John Schmisek, Rick Duquette, Charlie Bunce, Duaine Espegard, Connie Triplett, Mark Krauseneck, Jim Melland, Karl Bollingberg, John Snustad, and Dennis Reisnour.

1. Urban Development director/JDA.
Chairman Christensen stated they've had a chance to visit with some of the council persons after the last meeting and want to make sure they stay a bit focused in the reason that calling for the first meeting was to discuss the job description for our economic development director, went to market and advertised for it, there were a number of candidates and when Mr. Duquette arrives he can share some of his insight as to what he saw as far as candidates but want to go back and advertise for our economic development director and get the process moving. He stated that some discussion had come up among the council persons and various persons on the EDC board as to whether the urban development director should have as part of his/her job description an economic development component and whether or not the urban development office should be involved in economic development - there are lots of ideas that evolve into opinions some of which have merit. He stated with that background want to get back to the focus of the meeting, which is, should the urban development director have in his job description an economic development component.

Glassheim stated that a significant amount of city dollars are involved in deal making and there has to be city presence in this process, the issue is how to describe it, and what is exact function that we serve as opposed to the private sector and there has to be a strong component of managing both properties that the City owns, JDA owns and over a decade tens of millions of dollars both administrative and deal making money. He stated second reason is that Urban Development has always been strong in its connections to the federal government, that is where some of its support comes from, during flood EDA money, etc.. both personal connections and structural connections came into play and brought significant economic development, into the city and need to nurture that strength and those are two important reasons - the management of properties that is owned by the JDA and has always been the strength of urban development in bringing in federal money, accounting for it and think we have extremely good reputation nationally with federal agencies as how we manage money and the projects we complete when urban development staff does things it's often done right and is a good linkage that needs to be maintained.

Gershman stated that a huge component of the position will be the ability to not only have those contacts but increase the contacts in Washington and Denver - lot of creativity that can be done that needs to be part of this job description, and his concern with economic development inside of urban development is that it needs to be a component of the job but not running a parallel path, doing economic development while EDC is doing economic development and that's maybe part of why we are sitting here - we need an urban development director that will be a partner with EDC to do things Glassheim is talking about but does not want to see the dual path and the butting of heads between urban development and EDC.

Charlie Bunce, HR director, stated the Housing Authority had their interviews a few weeks ago and they are holding off their decision on a hire based upon talking again and approaching the idea of having a Housing Authority and Urban Development in one group as it used to be - more monies available if done as a combined unit. Mr. Hanson stated HUD is looking for agencies that resemble Housing and Redevelopment Authorities rather than just Housing Authorities and involves a lot of economic development funds - HUD is pushing towards economic development - previously only interested in creating affordable housing for tenants, now more concerned about finding jobs and getting those people self-sufficient and getting them out of housing - they did that by revitalizing or restructuring their housing programs through quality housing - redevelopment act and that's the direction they are going - and what they proposed the other day when they met when interviewing directors was that agency should be more in tune to be a housing and redevelopment agency rather than just a housing agency/authority, and that spurred some thought in the minds that were interviewing and had discussions after. Mr. Bunce stated that discussions were that if it combines again, what happens to the entire picture as HA would like to have a director of urban development, and if there is a way to look at it again is more of a single source if get more funds by doing that way and didn't think there is a territorial thing between HA and Urban Development but it allows you to bring in economic development at a different level, maybe not director level under this agency - maybe not HA but expand it out to where it may include parts of this body and end product was they are holding back, they did have a selection but holding that back until they can discuss this further - have a minor meeting between several individuals to see what direction it could take having in mind that you are looking for an urban development director at the same time and maybe this could be a combined process.

Gershman stated concern he would have is that he is not in favor of filling the economic development position under urban development, his concern is that when you do that, now you have somebody whose job is economic development and whatever you make the job description, setting ourselves up for some conflict and would rather not see that position but have that in the urban development director position. He stated this is the first he's heard about coming back with the HA, if the EDC does their job well and the urban development office does their job, which is to monitor funds and any contacts coordinated with economic development, doesn't see where there is a tremendous amount of time that the urban development director would have to spend on economic development because he/she would have staff that would actually track the money and do that. Mr. Bunce stated that brainstorming what the organization would look like, not calling HA but maybe as an agency now with more bodies involved but that there is someone at the top, an executive director, and then two lines coming out - Urban Development/Housing and where economic piece fill in was not even discussed at that point - not to have executive director UD and executive director HA - sharing assets which they have to do with staff, etc. instead of having sharing that one structure and one of the selling points was to be able to get more money and that's what looked like what was going to happen in the future. Gershman asked if this information just come out - Mr. Bunce stated two weekends, that it wasn't an official HA meeting, it came as a part of the interviews, had 4 candidates (3 interviewed) and as a result of the topics that came up during discussion about waiting and reason was to get together with some other people to see if there was possibility of something else. Gershman asked when information came out that either combining the two that more dollars would be available, and if that just happened. Mr. Hanson stated that has been in the works and started implementing since 1998 when legislation was passed. Mr. Bunce stated his impression was that the HA did not know this until they met with the consultant and that's when this started to generate. Gershman stated that somebody should have known.

Mr. Hanson stated that two years ago they started to formulate the restructuring of their office and at that time were proposing that there be one director for the entire office and that the economic development arm of it would have a manager and that community development would have a manager and HA would have a manager but one director and reason was they were looking at the entire office but not trying to create another agency but that all of these components do work together and should stay together as it has been in the past, and one of the reasons was because of the new direction that HUD is going with economic development and encouraging that CDBG funds be used for economic development and were trying to put that all together two years ago. Gershman stated he didn't remember anybody saying that keeping it together meant more money, and that was critical piece of information. Glassheim stated that consultants report praised us as one of the models of the country and urged that it stay together with just a little more authority in the Housing Office but they were not trying to break it apart. Gershman asked why did the HA come forward and say that they wanted to be separate. Glassheim stated they never wanted to be separated and was a misunderstanding - wanted their own director because they felt they had some responsibilities that they weren't fulfilling and didn't have a staff person that was primarily theirs. Gershman asked why were they suspending the search, that there are a lot of inconsistencies - sorry we wasted a lot of time.

Chairman Christensen stated trying to get back on the task - that one of the crucial components that exists at some level in the city and currently resides in the UD office, that someone has to act as our underwriter, our loan review committee and be our agent before it comes to the Growth Fund, that Growth Fund is very public and people who engage in the process don't care to have a lot of their information publicized and our agents of the City have to be charged with what our policy is - and as part of the job description or as part of the charge of the urban development office that it serve as our arm for oversight of economic development activities that are brought to the city by the EDC so that the policies that we articulate are what they review the deals against - incumbent upon us to be sure that we articulate that policy so that staff can deliver and work with EDC.

Mr. Espegard stated he probably wouldn't agree that there should be an oversight at the urban development office of a project brought forward by EDC, that more effectively that our underwriting after good established rules and objectives is done at the Economic Development Office - that is who has to be up to date and knows what goes on in different kinds of programs,
we have to have a good strong understanding of what our goals are, know what kind of money we have and programs we have but a well thought out underwritten loan application coming from the Economic Development is best way to practice that - wouldn't like to see another level in there. Chairman Christensen stated what frustrates some of the members on the Growth Fund is when something comes forward from the EDC it's like it is a finished deal - because then you don't need a Growth Fund for review but that the Growth Fund has to answer for the dollars that we collect and spend - there is accountability and there have been times where some of the Growth Funds activity has been politicized highly and questioned and those questioned should be able to say how they based their decisions.

Mr. Espegard asked if it was a communication problem that they see it coming from EDC to the Growth Fund, maybe there should be more communication there or more understanding at the EDC level as to what is proper to offer. Mr. Bollingberg stated that was why he wanted to hand out the strategy work that has been done, is if everyone agrees on the strategy and everyone understands loan policies as far as what's acceptable and how you put deals together, generally there's not a lot of disagreement, but makes sense to have some discussions before you get together so people are up to speed and feel like they've had a chance to have some input.

Gershman stated that the piece that seems to be missing is the communication with some of the Growth Fund informally, running the same as you do with the State or Terry Hanson use communication as a check as to what the client said, no decisions made but check the process as you go through and don't get this put on your table without having any input or knowing where its coming from. Mr. Krauseneck stated they do that with the State, not citizen committees or elected officials but strictly with the professional counterpart. Glassheim stated the way it has worked in the past and should work is that our professional staff person and EDC's professionals and if in good communication, then urban development director will know when they have to chat with the committee. Mr. Krauseneck stated in terms of what's going on and in terms of discussion about a project for 9 mos. or 12 mos. deal with a client, have two council people on their board that are privy to those discussions all the time (Gershman and Christensen) and Doug is the mayor's designee and the thought was to ferment that kind of communication for that continuity. Gershman stated that those discussions of the deal do not take place at that level.

Mr. Hanson stated that a pre-ap is developed so that a prospective client could come to the City with a very minimal input to see if JDA is interested in this project - to determine whether primary sector business. Hamerlik stated that have to be cautious that there aren't too many public bodies and people involved early on for the confidentiality of the information.

Mr. Bollingberg stated if a pre-ap. is done, it can certainly qualify for whether it's primary sector and meets the basic things we need to see, and also can be that communication piece to the rest of the Growth Fund until final application is done and approved. Mr. Krauseneck asked if they could protect the confidentiality of the company in the pre.ap. state, there are some basic threshold discussions with a client several mos. before - and have to insure that there is no public discussion or visibility into their plans to potentially come to the town - and might be one of those exercises where would have some general generic info. but wouldn't be able to tell anybody at least in writing in the ap.

Mr. Snustad asked if the EDC staff meet with Mr. Christensen and Mr. Gershman about what the potentials were and how many dollars it might take - or maybe one on one with some of the key people that before a deal comes in rather than whole Growth Fund that's subject to public notice - can check some ideas and how much commitment the City could make for those kind of jobs. Gershman stated they visited about SEI but never saw the package until presented to Growth Fund; Mr. Christensen stated neither did he and had another one that none of them saw until laid on their desks.

Mr. Krauseneck, stated there was a clearly articulated comprehensive memo that put the whole project in the context, talked about the exact City terms and ended up 6 weeks later going over to the UD Office and attempt to communication and basically that Growth Fund ap. is perfectly consistent with that communication that went to every council person - and went to delegation and to the Governor because it was also an attempt to get the best leverage out of the delegation and out of the State as possible and in the process of putting a package together there is a lot of complex give and take that people don't realize and if City incentives are led with, then have less chance to get concession out of a bank in point, less of chance to get concession out of utilities, less chance to get higher participation out of other parties - could have a series of council meetings where somebody comes and presents things that are very proprietary that you never want to discuss in public, but is open for suggestions, but have definitely tried to communicate.

Connie Triplett - stated that if you start having too many in these conversations too public or too early in the process, going to send people away, companies are not going to consider Grand Forks if understand that the process requires public discussion early in the process that seems to be suggested.

Chairman Christensen stated that when companies come to a community and asking for community support - and what trying to do in having conversations and trying to redefine the job position and whether or not that person should have in his/her portfolio an economic development component , but have turned over to the private sector the securing of jobs, securing of new companies - that was turned over years ago to the EDC, not taking it back into the finance office, only issue is what level of accountability should they have as a Growth Fund in review or oversight before a deal is approved. Glassheim stated he agrees but he wants the two staffs to be in good communication about significant portions and if one of the things is, want them to know about this but can't say anything, that's fine, understands private sector, but doesn't want to hear from anybody that some company moving here, and council doesn't know anything about that - that communication is significant to him and how the elected officials are informed is up to our staff and if they keep stuff secret from us, that they shouldn't have, that's between us and them - if they tell us there is something going on but can't talk about it , that's our relationship with them, he doesn't have to be briefed by EDC staff but wants his staff to know what's going on.

Gershman stated the direct link and enough confidence in EDC and staff to keep council or Growth Fund members informed without going that extra step of staff - and that is the only way that there will be better relationships developing because of that, rather not add steps but if need to go directly to the chair of the Growth Fund, that should be done - Glassheim stated that staff is not a barrier - that staff knows more than he does, but wants to make sure that staff is on board with details.

Mr. Espegard stated with help of our HR department, would like to see a schematic or chart that lays the two departments along side each other and see what the organization looks like, and then discuss so everyone knows what we are talking about. Mr. Bunce stated he would like to see as part of that what kind of decisions they want made at this level. Chairman Christensen said he would like Mr. Bunce, Hanson, Krauseneck and either Mr. Bollingberg or Snustad work on what Mr. Espegard was saying because he hopes that the executives of the EDC now have a sense of the council as far as Growth Fund as far as review, underwriting or oversight and at what level and if get this within the next two weeks, and asked when they would like to start advertising for the UD director. Mr. Duquette stated in about a month - want to make sure when go to the market that have a clear definition of what they are looking for, how intertwine as we move forward with our director of economic development. Mr. Hanson asked if they were looking for a flow chart of responsibilities or an actual form of the responsibilities between their two agencies or an org. chart of UD Office. Gershman stated keeping in mind what discussed today.

Terry Hanson stated that the ultimate decision of any economic development financial assistance rests in the body of the Growth Fund, which is the JDA, which is the 8 members that sit up front in the council chambers and are ultimate people that pass the financial assistance, and that some of that authority could be passed down to the Growth Fund Committee at a limit and approved - have a lending committee sitting within the Growth Fund Comm. and could make the chairman or the president of the Growth Fund a loan officer with some level of authority to approve a loan - but thinks that the Growth Fund Comm. is the underwriter for the City on behalf of the City and has the fiscal responsibility to approve a deal based on the information provided to them - sees Urban Development Office as being the contact between the EDC, marketing arm of economic development for the City, and the JDA and Growth Fund, what they should do is be in constant contact, that he and Mr. Krauseneck should be in constant contact after Mr. Krauseneck determines that a deal looks pretty positive it might end up in Grand Forks, working together, Mr. Krauseneck should present an ap. on behalf of the client or client present an application to the Urban Development for review and if it's not complete and not what the Growth Fund Comm can underwrite the loan, then goes back to Mr. Krauseneck and client to make sure the application is complete - and that is what his office does - reviews the applications, based on mutual discussion - and his office makes sure that before they call a Growth Fund meeting, that the application is complete, and information there for the Growth Fund Committee to make a decision - sent application to the Growth Fund, they hold their meeting, ask questions of the client and of EDC and at this time EDC is representing the client and make recommendation.

Gershman stated that is fine but left out the critical piece, and that is that there is some communication with the chair in that process - policy or no policy, that's been the problem is that there is no communication at that pre-placing on the table, and the chair of the Growth Fund should be part of that discussion, but to let that person know - Mr. Hanson stated that comes about and is part of the normal process - Gershman stated it is not part of the normal process - and should be Growth Fund Committee because that's where that initial decision is made - JDA has never gone against the Growth Fund (once) but should go to the Growth Fund chair, not JDA chair. Mr. Bunce stated maybe better work this as a matrix, all players, activities, and start plotting in who is responsible for what, where overlap, etc. and see it easier as doing it that way vs. coming out with a chart - sees they have all sorts of players or people and all sorts of activities, and start filling in the blank about who does what and would like to see something visual.

Mr. Krauseneck stated we are trying to simplify sometimes, and matrix oversight and management - that their projects are service driven more than marketing or sales-driven and part of that component is finance - in looking at the City as likely to call Al Grasser and ask about location of an interceptor, driving apron over it, etc. or Mr. Potter or issuing authority for bonds for the city with Mr. Schmisek - don't just work with growth fund financing through UD but work through other departments and even more complex when talk about matrixes because it's a lot more than just the city Growth Fund that comes in those packages.

Connie Triplett stated her only concern about the process is getting the Growth Fund involved earlier, talk about propriety information and keeping things closed until a certain point in the process but all seem to want to be in the know and if personal conversations or phone conversations and not pass things back and forth in writing - that these deals take 7 - 9 or 12 months and if process includes lots of chats that are not adequately documented, then people misremember what has been said and get into arguments and recrimination, etc.; the thing about doing it through staff which you might think is a barrier and service, at least there is that kind of formal documentation. Gershman stated he said keeping in touch with the chair of the Growth Fund, seen 2 1/2 years of problems because of a lack of that.

Chairman Christensen stated they will move towards the matrix, that if staff has a better sense of policy and that there's respect trust and responsibility - the other thing we need to deal with is to keep the communication and dialogue going, have to have at a minimum quarterly meetings of the executive group of the EDC and the council, and council can be at this level because we have 4 members here today and if interested they will come and there will be minutes and the council can read the minutes, but have to have that type of communication because we are a smaller body and higher level of responsibility and communication develops trust. Gershman stated there should be a quarterly report in front of council by EDC, no proprietary information but this is what we're doing and what has happened and if do that quarterly, thinks that will inform the citizens and council also but important from public relations standpoint also for EDC to be marketing themselves. Mr. Espegard stated there seems to be communication because this is large organization but every two weeks or every month on a regulate basis that EDC (Carl and Mark), UD (Terry and whoever else in charge there) and Chairman Christensen and Gershman would get together in a meeting and talk about what's going on and what's happening and that every month is not a bad idea, but get the communication and that's time to say it, have your discussion there and forces communication and will also force better relationship among the group that's working here, that probably haven't practiced the trust and respect that we should, and asked what would be wrong with that kind of communication meeting and talk about the deals that are out there now - that purpose here is to talk about what Mr. Krauseneck's got on the table; Gershman stated that perhaps it should be at the executive committee and include the director and chair of the Growth Fund, bring Mr. Hanson into that meeting and Mr. Duquette as conduit to the mayor. Chairman Christensen stated they've got such a good idea because it forces communication because you have keeper of the purse, and executive, etc. good idea.

Mr. Bollingberg stated they should get the loan policy out - Chairman Christensen stated that has to be done soon.

Glassheim stated we're going to need 3-4 sentences that define what we want to see in the next urban development director relative to economic development, and need to start with different efforts at what that would be, level of involvement, and that is still to be fought out among city officials to see what we want with your input as to what makes sense for the best relations. Chairman Christensen stated we are moving toward the beginning of those four sentences because a lot of things have been aired - and suggested developing an agenda for the next meeting which will be your preliminary flow chart, proposed job description (level of involvement), review draft Mr. Hanson handed out; and asked if anyone had anything else to add to that - and also noted periodic meetings or reports. It was suggested the meeting not be set at this time but to wait for information and then call the meeting and have goal in two weeks.

The meeting adjourned.

Alice Fontaine, City Clerk