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Growth Fund Committee
Thursday, April 27, 2006; 7:30 a.m.
Urban Development Conference Room
1405 1st Avenue North, Grand Forks, ND 58203


Chair Doug Christensen called the meeting to order.

Roll Call:

Present were: Eliot Glassheim, Terry Smith, Doug Christensen, Gerald Hamerlik, Jon Ramsey.
Also present were: Keith Lund, Klaus Thiessen, Peggy Kurtz, Greg Hoover, Jonathan Fu, Jim Satrom (PS Doors), Bob Sween (MNDAK Concrete Inc.) and Brian Osowski (Bremer).

Approval of Minutes from 4/18/06 Meeting:

Eliot Glassheim moved and Jon Ramsey seconded to approve the minutes of the 4/18/06 meeting. Voting “Aye”: Eliot Glassheim, Terry Smith, Doug Christensen, Gerald Hamerlik, and Jon Ramsey. Voting “Nay”: None. MOTION CARRIED.

Full Application – PS Doors:

Keith reintroduced Jim Satrom. Doug asked that Keith’s e-mail dated 4/26/06 regarding PS Doors soil issues be attached as part of the minutes. Keith stated PS Doors is looking for a motion to approve a $135,000 pace to buy the interest down on a 15- year real estate loan, as well as a recommendation for a five-year declining property tax exemption as per policy. PS Doors would also like the Growth Fund Committee to recommend that the JDA approve the purchase of 5½ acres at 1150 South 48th Street for $143,748 which is 60¢ a square foot, and that the Growth Fund compensate PS Doors for actual costs of soil remediation for the initial 32,000 square foot building not to exceed $90,000. Doug asked if we could sell them the dirt less the $90,000. Greg stated the reason we added this recommendation was because we wanted to keep the price up for market purposes. Eliot asked if there was an understanding that any further building on that site would not be remediated and Jim Satrom agreed. Mr. Hamerlik asked if there was a five-year option on the remaining portion and Keith replied that they were buying the entire 5½ acres for 60¢ a square foot. Mr. Hamerlik added that PS Doors would not then approach the Growth Fund for compensation on any expansion on that site. Greg added that Jim needs to start construction ASAP and since we won’t get the title transferred and replatting done for awhile, we will start work on some type of legal agreement that would allow them to begin construction prior to the property transfer. Eliot Glassheim moved and Jon Ramsey seconded to recuse Terry Smith from voting. Voting “Aye”: Eliot Glassheim, Doug Christensen, Gerald Hamerlik, and Jon Ramsey. Voting “Nay”: None. MOTION CARRIED.

Eliot Glassheim moved and Jon Ramsey seconded to recommend to the JDA to approve (1) a $135,000 PACE loan, (2) a five-year declining property tax exemption, (3) the sale of 5½ acres at 1150 South 48th Street for $143,748 (60¢/sq. ft.), and (4) to compensate PS Doors for actual costs of soil remediation for the initial 32,000 square foot building not to exceed $90,000. Voting “Aye”: Eliot Glassheim, Doug Christensen, Gerald Hamerlik, and Jon Ramsey. Voting “Nay”: None. MOTION CARRIED.

Full Application – MNDAK Concrete Inc.:

Keith introduced Bob Sween. Mr. Hamerlik stated that committee members had discussed this item at the last meeting. Keith said that MNDAK Concrete Inc. would like to construct a 7,000 square foot batching facility, which will use the latest technology in concrete manufacturing and which will replace their current out-of-date batching system and allow them to compete in additional markets. They are looking to increase employment by 48 FTE’s at a pay range of $11-$19 per hour. The entire $3.65 million project is being financed by Bremer Bank. They are seeking a $133,000 PACE loan that will leverage a $250,000 PACE grant from the BND. They are also seeking a five-year declining property tax exemption. An attractive thing about this proposal is the bank loan will be repaid in five years so the Growth Fund would receive its $132,000 PACE loan back rather quickly. The EDC is in support of this project and has given a favorable recommendation. Bob Sween and Brian Osowski (Bremer) are here to answer any questions. Doug felt this goes with the policy we adopted two years ago to grow our own. Eliot asked how MNDAK arrived at 48 employees. Mr. Sween stated that part of it was based on the requirement that, for every $75,000 of bank loan, we need to come up with 1 job. Eliot asked if Mr. Sween felt that 48 would be close to what they would need to hire for the new facility. Mr. Sween stated it was a guess but that it was very achievable. Greg stated we will also put a claw-back in the agreement, per State law. Eliot asked what we would get back – a certain amount per job? Greg agreed, but at the same time, if they fail to meet the goal, we could come back and reconsider. Keith stated that one of the nice things about the PACE program is that it’s “self- governing”. If jobs aren’t created, then subsidy is reduced. The Growth Fund gives the money up front at present value and if the jobs aren’t produced, the BND actually refunds the Growth Fund. This is reflected in the Growth Fund agreement, which was recently redrafted by the City Attorney’s office. Keith stated there is a year to achieve the jobs, then they grant another year if the goal is not met, and then, if it is not achieved after two years, they have a public hearing and determine whether the community received sufficient benefits and decide whether to waive any additional job numbers. Bob stated this project alone would not create those jobs, but this project in conjunction with their last project will create the jobs. With the last project, they have already exceeded their job requirements. $2.7 of this expansion is in equipment alone. This will allow them to explore other markets and create further jobs that way. Eliot asked if we have usually financed buildings rather than equipment. Keith replied, through the PACE program, we have supported buildings and equipment, and even working capital loans. Eliot noticed that the PACE subsidy is not included in Uses and Sources. Keith replied that it doesn’t add money because it is a subsidy against interest that reduces the cost. Greg asked if they will dismantle the old plant and Mr. Sween replied eventually. Jon Ramsey moved and Eliot Glassheim seconded to recommend that the JDA approve a $133,000 PACE loan and a five-year declining property tax exemption. Voting “Aye”: Eliot Glassheim, Terry Smith, Doug Christensen, Gerald Hamerlik, and Jon Ramsey. Voting “Nay”: None. MOTION CARRIED.

Other Business:

Jon stated that the question had been brought up again whether we really need to have the pre-applications brought here. Doug stated we spent a lot of time on this. Eliot stated the minutes provided by Ms. Kurtz are contradictory. Doug said it appears from the minutes that the pre-app process was our conclusion and that’s the policy we wrote. Jon added that, as you can see from the minutes, there was obviously a lot of back and forth discussion. Eliot said it concluded in the EDC first reviewing and recommending and then it comes here before inviting a full app. Mr. Hamerlik added that we see it under Project Update. Keith stated we will try to do something similar to the last meeting and provide some narrative so you can have it in advance for review. Jon added that this is probably why we are now receiving the EDC minutes, to see what’s coming down the road. Doug stated he made the call to get that going for the Committee. He pointed out that the EDC must have the agenda and, if you are going to go into Executive Session, they can do that but they have to have on the agenda what was going to be discussed. So then there is a gap in those minutes, which Attorney General Stenehjem does not care for. They would have to then “reconstruct” that gap, which is hard to do. And you must give notice to the press. Mr. Hamerlik added that you have to state intent and then follow only that intent in the meeting.

Mr. Hamerlik asked about the date of the next meeting. Greg replied it will be Tuesday, May 16th.

Doug asked what’s happening on the Amazon project. Klaus replied that would come forward in May. Doug asked to be kept in the loop of the bio lab project, adding that we haven’t gotten our agreement worked out as to how to govern that land. Klaus said the process is that they responded to a request for a letter of interest. They will then respond to a request for proposal, if asked. At that time, we need to get involved. Doug stated, in the meantime, you should be working on the governance of that ground.

Greg stated that Connie has been working with GSA on a lease for Social Security Admin. to occupy the third floor of Corporate Center II. They are sending us a letter regarding our final and best offer.

Adjournment:

As there was no further business, Mr. Hamerlik moved to adjourn.

Respectfully submitted,


Peggy Kurtz
Urban Development


Doug Christensen
Chair