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MINUTES/GROWTH FUND AUTHORITY (JDA)
Monday, March 18, 2002 - 7:00 p.m._____________

The city council of the City of Grand Forks sitting as the Growth Fund Authority met in the council chambers in City Hall on Monday, March 18, 2002 at the hour of 7:00 p.m. with President Gershman presiding. Present at roll call were council Members Brooks, Bjerke, Stevens, Hamerlik, Burke, (teleconference), Glassheim, Gershman, Christensen, Klave, Kerian, Kreun, Martinson, Mayor Brown - 13; absent: Council Members Lunak, Bakken - 2.

HOLD PUBLIC HEARING ON CIRRUS DESIGN CORPORATION
MECHANICAL UPGRADES AND APPROVE RECOMMENDATION

President Gershman opened the public hearing on the Cirrus Design Corporation mechanical upgrades.

Council Member Martinson raised questions on several items: how many confirmed orders does Cirrus Design have for aircraft in 2002; that he would like to see an operating statement prior to the decision making process because we are looking at a three-quarter million dollar loan, and also year-end financial statement; and for the salary range of their employees from start-up to management.

Terry Hanson, Interim Executive Director, Office of Urban Development, stated they made the financial statements available to the Growth Fund Committee for their review, and as customary, that is usually as far as those statements go, they have not brought that to the full Jobs Development Authority body but they are available for review. Council Member Martinson stated he felt the Jobs Development Authority should have those statements going forward.

Bill King, Vice President of Cirrus Design Corporation, Administration and Business, and also acting chief national officer for the company, stated the number of orders they have is in the range of about 500 aircraft that are back-ordered now, usually between 450 and 550 most of the time, depending on the economy. He stated that at some point during the year they would like that backlog to come down and are hoping to do as part of their ramp up for production to get their backlog down to a three to six-month window, now looking at year to year and a half of a backlog and delivery demand cycle is too long - that they need to get ramped up and get production up to a higher level so that the demand cycle comes down as that does affect the orders; and expect that at some point during the year they would like to see that come down more in the range of 250 to 300 airplanes. He stated they have not had an operating profit for about 4 or 5 years, that they have been through a series of funding cycles and part of their business plan and knew they weren't going to be in a profitable mode until this year; and anticipate that will be profitable in May or June depending on how the last half of the year goes, they will be pretty close to zero net year end and is their expectation.

Mr. King reviewed salary range - entry level position would start at approx. $9 to $10/hr. and would go up to or middle teens depending on what their function was within the organization, if in engineering or quality control they may go appreciably higher than that, that their philosophy at Cirrus is that they are big on promoting from within and people that understand their system are very valuable to them and that they are envy in the industry because of their staff but no real ceiling. He stated they also have a very competitive fringe benefit package in everything from terms of vacation, 401K, health insurance, dental insurance, life insurance and have to be competitive or won't keep the force, and once spent the time, energy and the money to train their staff they do not want them to leave.


GROWTH FUND AUTHORITY - 3/18/02 - Page 2

Mr. King stated he wanted to take the opportunity to again to say thank you, that regardless of what they do tonight, they are honored to be here and honored to be part of the community and appreciate what the City has done for them and look forward to a lot of future growth here. Mr. King stated in answer to the question re. anticipated future growth of the plant in the foreseeable couple years in terms of employment - that they were about 120 people a couple months ago when they made the decision to shift a significant part of their composites manufacturing to Grand Forks, this was set up to be a composite center of excellence and that is what they have come full circle back to, bringing vast majority of their parts back here, that the Grand Forks plant is significantly out-producing their Duluth plant at the moment and expect to be doing about a 50% increase in parts manufacturing between now and the end of this calendar year, and expect to double that during the year that follows, could be yet another 50 to 75 employees between now and the end of the year or early into next and doesn't think that is an unreasonable expectation, they went from 120 to 192 in anticipation of making this investment into the facility and have already made in the range of about $400,000 or $500,000 in improvements this year, and that this is the next phase of it, Phase I is essentially done.

President Gershman closed the public hearing.

The city auditor read the recommended Growth Fund action: To approve the leasehold improvements associated with the mechanical upgrades to the Cirrus Design Corporation facility; to accept the financing arrangements and the terms and conditions made by the North Dakota Development Fund (NDDF) between the Grand Forks Growth Fund and NDDF; to approve the loan to Cirrus Design Corporation under the terms and conditions summarized in this report and those terms are a loan amount of $1,000,000 from the Grand Forks Growth Fund to Cirrus Design Corporation, with a lending rate of 3.5% (blended), repayment terms, a 7-year amortization on NDDF funds, a 15-year amortization on JDA funds with a balloon payment after 84 months or 7 years; the funding sources are $750,000 from the Grand Forks Growth Fund, $250,000 from the North Dakota Development Fund, the use of the proceeds for the renovation cost to the facility for leasehold improvements, security will be a first purchase security lien position in the HVAC system to be installed; and to authorize the president and vice president of the Grand Forks Growth Fund to sign required documents with the NDDF.

It was moved by Council Member Kerian and seconded by Council Member Klave that this recommendation be and is hereby approved. Upon roll call the following voted "aye": Council Members Brooks, Stevens, Hamerlik, Burke, Glassheim, Gershman, Christensen, Klave, Kerian, Kreun, Martinson, Brown - 12; voting "nay": Council Member Bjerke - 1. President Gershman declared the motion carried.

ADJOURN

It was moved by Council Member Brooks and seconded by Council Member Hamerlik that we adjourn. Carried 13 votes affirmative.

Respectfully submitted,


John M. Schmisek
City Auditor