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	Minutes of Grand Forks City Council/Growth Fund Authority (JDA) - Monday, May 7, 2007 - 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, May 7, 2007 at the hour of 7:00 p.m. with Chairman Gershman presiding. Present at roll call were Council Members Brooks, McNamara, Glassheim, Christensen, Bakken (teleconference), Kreun, Gershman and Mayor Brown - 8; absent: none. HOLD PUBLIC HEARING AND APPROVE EDA RLF LOAN TO DATACOM INTERNATIONAL, INC. The staff report from the urban development director relating to EDA RLF loan to Datacom International, Inc., with recommendation to 1) hold public hearing, and 2) approve a $150,000 EDA RLF loan to Datacom International, Inc. according to the terms described in the staff report. Keith Lund, Grand Forks Region Economic Development Corporation, stated the project is the expansion of a Minneapolis based software development company to Grand Forks, they are a 7-year old Minnesota C corporation privately held that develops , markets and supports web-based enterprise software for the custom manufacturing industry; that in 2005 the company completed a nearly $6 million development and field testing of its core software suite that combines engineering, manufacturing, materials, warehouse, financial and sales software function of a business in one product. The product is designed for small to mid-sized manufacturers and the company has identified through SIC codes 475,000 manufacturing sites in the United States as its target market. He stated that Datacom has developed a relationship with Cooperstown, ND and initial employment of the DataSIGN Division is to be shared by the two communities and additional employment in Grand Forks will occur in late 2007 with the launch of DataFAB - employment in Grand Forks by the end of this year is projected to be 7 with an average salary of $51,000, by the end of 2008 16 positions in Grand Forks with an average salary of $55,000; and in 5 years an excess of 40 positions at an average salary of $60,000; the company also provides health insurance, paid vacation and sick leave. He noted the Growth Fund Committee has recommended $150,000 EDA revolving loan to the company at 4% interest for a 5-year term, with quarterly interest only payment for the first 24 months, with the balance amortized over the final 36 months; the loan is to be convertible to common shares of equity at the discretion of the Growth Fund; and is to be secured by third position on all assets of the company. It was moved by Council Member Christensen to approve the recommendation and fund it when Datacom International, Inc. has the commitment for the other $400,000 in the banks. The motion was seconded by Mayor Brown. Mr. Christensen stated that if they don't get the bank financing, nothing comes to Grand Forks, so not release funds until we know that they will be here with the next 5 jobs. There was considerable discussion relative to the financing arrangements for the loan for the project. Council Members Brooks and McNamara suggested why not take this back to committee for discussion and to sort this out, or if there is time sensitivity to this tonight?. Mr. Lund stated that there is a meeting on the 15th of May that could consider it but if want to move forward and then if the company wants to come back they can do that as well. Christensen moved an amendment to his motion to move forward with $50,000 and balance of the funds held in reserve until they get their bank financing The motion was seconded by Mayor Brown to release the $50,000 and was a friendly amendment to the motion.. The motion reads as follows: To approve the full funding of $150,000 with $50,000 to be released if needed to proceed immediately, and the balance of $100,000 to be released upon approval of the loans from the banks. It was moved by Mayor Brown and seconded by Council Member Brooks that this recommendation be approved. Upon roll call the following voted "aye": Council Members Brooks, McNamara, Glassheim, Mayor Brown, Christensen, Bakken, Kreun, Gershman - 8; voting "nay": none. Chairman Gershman declared the motion carried. ADJOURN It was moved by Mayor Brown and seconded by Council Member Brooks that we adjourn. Carried 8 votes affirmative. Respectfully submitted, John M. Schmisek City Auditor Mr. Lund stated that the other funding entities are placing a $1 million requirement to release funding, the Bank of North Dakota, the Griggs-Steele Empowerment Zone, the Valley Angel Investment Fund is in already for the $150,000 and would ask consideration for release of the funding, employment will begin in Grand Forks immediately and if the funding is approved for it the company raises $1 million. Mr. Christensen stated the Growth Fund reviewed the application based upon presentation for $1.6 million, and there maybe some entities, such as Griggs that choose to pre-fund it but it wouldn't be prudent to fund it until such time as they have the full $1.6 million. Mr. Christensen stated that if we put in our $150,000 and the balance put in their monies, $1,050,000, there will be $1.2 million plus they will be looking for $400,000 from the banks. He stated it was represented to him by a member of the EDC that we should approve this subject to their getting the rest of the money and that is why making this motion. Council Member Brooks stated that bringing this in at the last minute and should have discussed this at the Growth Fund meeting where had committee present. and If put this stipulation in, they will get back to us, but would have been nice to have that discussed there. Mr. Lund stated they have been in discussion with 3 banks in the Cooperstown area and 2 banks in Grand Forks; that $1 million gets the first division and the other $600,000 gets the second. When the first $1 million is spent and released Cooperstown comes on line, nothing happens here until they get the other $600,000 of which is $400,000 bank financing, and that is why he is saying they are good to go to come here then we pull the trigger on the balance of our money, otherwise nothing comes here. The first $1 million goes to Cooperstown, next $600,000 of which $150,000 is ours, then the come here, that we are in the business of participating if the whole thing comes together. Mr. Lund stated the initial employment and the dataSign division will be shared by Cooperstown and by Grand Forks, Sales and Marketing will be in Cooperstown and Customer Support and Implementation staff will be in Grand Forks and by the end of 2007 the majority of the employees in Grand Forks, if not all the employees, will be DataSIGN Divisional employees; 13 or 14 divisional employees split between the two communities; when DataFAB launches at the end of the end of this year positions will transfer to Cooperstown as the DataFAB division is stood up in Grand Forks; that something does happen in Grand Forks immediately with this investment. Mr. Christensen stated that when ready to fund in Grand Forks, we release our money. Council Member Glassheim asked what the status is of the loan application with the banks in Cooperstown , do we sense they are favorable or not known. Mr. Lund stated the banks seem to be interested in terms of the specific negotiations and where they are at. Mr. Glassheim stated that if he understands Mr. Christensen is looking at a contingency, our $150,000, upon raising $3 or $400,000 from Cooperstown and Grand Forks banks, and that our loan would be contingent upon that, and that they can't fully go ahead with their operation unless the full amount of money, and what difference does it make if we wait. Mr. Lund stated the only vocation that would have short term is the delay of launching anything because they have the $1 million internal requirement of raising funds in order for them to really start any operations in ND in Cooperstown or Grand Forks. Glassheim stated what is approved equity funding they have $950,000 approve in equity funding according to the list. Mr. Christensen stated that if they don't get the bank financing they may not get up here, and if don't get the bank financing nothing comes to Grand Forks, so not release funds until we know that they will be here with the next 5 jobs. There was considerable discussion relative to the financing arrangements for the loan for the project. Council Member McNamara suggested why not take this back to committee and sort this out, or if there is time sensitivity to this tonight. Mr. Lund stated that there is a meeting on the 15th of May that could consider it but if want to move forward and then if the company wants to come back they can do that as well. Christensen sated his motion is to approve the application and the request, fund it and can move forward with $50,000 and balance of the funds held in reserve until they get their bank financing and until such time as they are ready to roll out here. The motion was so amended by Council Member Christensen and seconded by Mayor Brown to release the $50,000.. The amendment is to release $50,000 initially . The motion reads as follows: To approve the full funding of $150,000 with $50,000 to be released if needed to proceed immediately, and the balance of $100,000 to be released upon approval of the loans from the banks. It was moved by Mayor Brown and seconded by Council Member Brooks that this recommendation be approved. Upon roll call the following voted "aye": Council Members Brooks, McNamara, Glassheim, Mayor Brown, Christensen, Bakken, Kreun, Gershman - 8; voting "nay": none. Chairman Gershman declared the motion carried. ADJOURN It was moved by Mayor Brown and seconded by Council Member Brooks that we adjourn. Carried 8 votes affirmative. Respectfully submitted, John M. Schmisek City Auditor