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Minutes
Growth Fund Committee Meeting
Tuesday, January 16, 2007, 4:00 p.m.
Urban Development Conference Room




Chair Doug Christensen called the meeting to order. Greg introduced Pam Evenson who will be taking over the duties of agendas and minutes from Peggy Kurtz.

Roll Call:

Present: Doug Christensen, Terry Smith, and Jon Ramsey. Also present: Greg Hoover, Pam Evenson, Klaus Thiessen, Meredith Richards, Connie Mangan, Maureen Storstad, and Peggy Kurtz.

Approval of Minutes (11/14/06):

It was moved by Jon Ramsey and seconded by Terry Smith to approve the minutes of the November 14, 2006 meeting. Voting AYE: Doug Christensen, Terry Smith, and Jon Ramsey. Voting NAY: None. MOTION CARRIED.

Monthly Financial Report – December 2006:

Connie distributed revision #3 of the December 2006 financial report. Doug introduced Maureen Storstad, who is here representing John Schmisek in the Finance office. Doug said the City has two funds (2163 and 5996) available for economic development. He asked what the source of the EDA number of $932,384.82 was and Connie said this was derived between Tina Hoffart, Maureen, and John Schmisek. Maureen said there are two EDA cash accounts open and Connie added that one of the EDA accounts which was set up previously because we hadn’t spent the funds, will soon be closed. Terry said this is our EDA revolving loan fund and Doug added that this money ($932,384) is restricted (to be used for projects up to $500,000 at 4%). Doug said, right now, we have cash available of $1.082 million in 2163 plus $1.861 million in 5996, but we will have to make an adjustment in 2163 by a decrease of $544,000. Connie said this report already reflects that adjustment. Doug said this is important to review for Klaus’ benefit so the EDC knows what they have available for deals. Connie explained that the dollar amounts listed under the Obligated Funds line item were projects that the JDA has approved that we haven’t funded yet so we have this money set aside. Doug asked why Cirrus owes us $1 million. Connie said, when we did the Cirrus project, the last million was to come from Cirrus and the jobs creation grant for how many employees they have hired. The last Connie heard is this has been valued at $970,000 and it’s still waiting to be executed. Before Bremer will give us this money, they expect that there be some security on the loan other than just the jobs money coming back. Connie said she is expecting that we will work this out and get the $1 million. Doug said, adding in all the money due us and subtracting out the obligated funds, there is about $4.3 million available in both funds, plus we’ll be getting sales tax money each month. The EDC will have about $1 million out of 2163 for deals but will need about $800,000 to fund operations, which is not on the financial report but in the City’s budget book. The City has a project set up in capital improvements for $1.5 million that we expect to get in 2008, for purchase of the right-of-way at 48th in the Industrial Park. Then, in 2010, we expect to get $700,000 to build the road. Doug said that what wasn’t set up was the money to build the road north of the road from 17th to DeMers, which is another $7 million plus. As EDC is thinking of expanding the Industrial Park, they should realize what we have for money, which isn’t very much. Our cash contribution as a city to buy the right-of-way is 20% ($300,000) and the only sources for that is 2163, 5996, or the $2 million/year coming from the gas tax, although the Engineering Department has projects already for this amount. This means that we’ll have to get the City Council to prioritize some of these things. Even after we buy the right-of-way, there’s no money with which to build the road until 2010. This will cost about $7 million and our match will be 20% or $1.4 million. It would take about three quarters of our money for one year to build that road. Connie asked if the $1.5 million to purchase the right-of-way and the $7 million to build the road also included purchase of the land and Doug said it did not.

Doug said, based on Mel Carsen’s figures, land value is estimated at about $22,000/acre and referred to Mel’s map of the area. We have to think hard about how we can expand in that area provided what we have for assets starting south on the Amazon.com land and going north. He added we already have infrastructure in this area. Doug said, so the EDC knows, they will have about $1 to $1.5 million per year. He added the City has also obligated about $900,000 over next three years for Canad Inn.

Curt Kreun came to the meeting at this time. Meredith distributed color copies of Doug’s map for discussion. Curt discussed land that is potentially available in the location of where 48th Street would extend. Doug said we don’t have the power to condemn anymore except for the rights-of-way and land would still have to be acquired at fair market value, but the problem here is comparable value. Doug said the road will cost us about $9.5 million, which is in our transportation plan that we just sent to Bismarck. That leaves us with the option of dropping down on parcel #16, which we own and have access to. We could do an EDA grant to put in the infrastructure. Jon asked what we are forecasting as our need for land in the Industrial Park. Klaus said the whole premise of the presentation to the Council was what the absorption rate was over the last 10 years for information purposes, and to ask the Council to start considering what options we have in terms of acquiring more land. We have a potentially short term need for land with LM for further expansion. Doug said, in looking at the 16.1 acres reserved for LM, which they are currently using to store their blades, maybe they could store their blades to the south and Greg said, to do that, we will have to connect the end of the road and run it across the drainage ditch at 17th to provide access. Greg said since the EDC’s presentation to Council, he, Keith, John Schmisek, and Al Grasser have been working on pinning down the costs better and looking for other sources of financing such as EDA or BRAC. We expect to bring a report back to the Council within the next 45-60 days. Doug said, theoretically, we will get $1.5 million from State of ND in 2008, which was approved by our Council and now has been forwarded to the State to buy the right-of-way. We have programmed $7.9 million to construct the road in 2010 so we’re still going to have to buy the land next to it. It’s a good community project. The source of revenue would be EDA and 2163 because there won’t be an appetite to pay for it out of general funds. Jon asked if it would be better to negotiate the land before putting the road in. Greg said these are scenarios we are looking at as we evaluate this whole thing and we’ll bring that to the Council. Doug said, if we set up a bond, that’s about a $600,000 payment a year. This will require a team effort as we prioritize our capital improvement projects in 2008. Klaus said, at the last meeting, they were charged to talk with the landowners to see what the interest level was in selling; they have one more landowner to visit with. They are coming back to the Council with a report. Doug said we may have to set up a committee and go into executive session for a negotiating strategy.

Project Update:

Greg said he is working with LM on getting the last of their space built. An official from the Amazon.com headquarters will be in town within the next two weeks for a walk-through of the Civic Auditorium. Doug asked, if they were interested, what the City’s contribution would be. Greg said they submitted a cost analysis of $3 million for renovations. We went to local firm who got it down to $2 million. Historically, we have funded improvements and recouped our costs through a lease. Another option would be to roll it into a bond, but at this point, we don’t know if they are interested. Doug said this will also impact our available cash for deals. Klaus said he had no other updates.


Other Business:

Greg said he would like the committee’s feedback about possible changes on both the City ordinances for the JDA and this committee. One issue is the term of office. Right now, the code says members have to be elected each year and Greg wants feedback on whether we should extend this to a two-year basis. The second issue is that we don’t have anything in the Policies and Procedures on how officers are selected for this body. He asked if anyone had an interest in tightening this up or to just continue as we are. Another issue is a name change so there’s not confusion between the Grand Forks Growth Fund, Jobs Development Authority, and the Growth Fund Committee. Doug felt there was no reason to change. Jon asked if it impacted staff and Greg said it did not, but these were just loose ends. Doug said the name was put into place 18 years ago before the open records law, so it’s not an issue right now.

Doug said we should think about putting together a group that will work with the EDC so that they have a better understanding of available funds. Greg suggested bringing it to this Committee and Doug said to include Curt. Jon and Terry agreed that we need to be involved if the money is coming from our fund. Greg said that staff will bring information back as we approach these issues. Greg said we will get this committee’s feedback and then go to the JDA. Doug said the Committee needs to know what the staffs needs are in order to make decisions. Greg said, hopefully, we will have this report on the February agenda. Doug asked Greg to invite the rest of the Council to come and listen.

Adjournment:

It was moved by Terry Smith and seconded by Jon Ramsey to adjourn the meeting. Voting AYE: Doug Christensen, Terry Smith, and Jon Ramsey. Voting NAY: None. MOTION CARRIED.

Respectfully submitted,


Peggy Kurtz
Urban Development


Doug Christensen
Chair