City of Grand Forks, North Dakota

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COMMITTEE OF THE WHOLE
Monday, May 13, 2002 - 7:00 p.m.

The city council met as the Committee of the Whole on Monday, May 13, 2002 at 7:00 p.m. in the council chambers in City Hall with Mayor Brown presiding. Present at roll call were: Council Members Brooks, Bjerke, Stevens, Hamerlik, Burke, Gershman, Christensen, Klave, Kerian (teleconference system), Bakken, Kreun, Martinson - 12; absent: Council Member Lunak - 1.

Mayor Brown announced that when addressing the committee to please come forward to use the microphone for the record, and advised that the meeting is being televised live and taped for later broadcast.

Mayor Brown announced that he attended the 4th Grade Essay Contest winners presentation where the 4th graders in Grand Forks read their essays about their favorite older person and reinforces how important our grandparents or older people are in the lives of our children and what a positive role model they can have, and emphasized those children to keep writing and communicating and invited the ones who could to come here tonight and presented to the city council: Samantha Ackerland, Ben Franklin School; Stephan Swatlowski, Lewis & Clark School; and Seth Lang, St. Michael's School.

Mayor Brown thanked Senator Dorgan and Senator Dodd, CT for their discussion on border security this past weekend; it was well attended by local law enforcement, policy makers, Border Patrol, INS, Customs and Rep. Pomeroy. He stated they took Senator Dorgan on a tour of our flood protection project and thanked Senators and Rep. Pomeroy for being here.

He stated the unofficial meeting this afternoon with UND and the Park Board re. Springfest, agreed that behavior was appalling and acting to make sure it doesn't happen again; the government has the role of protecting the citizens and are looking at measures to balance community needs and that includes zero tolerance for offenders, must keep the parks open for the whole community and have to be careful not to condemn all young people and UND students in that tone. He stated they are working on that and plan to bring forward a report in about 4 weeks.

He congratulated UND graduates and got to see the achievement and promise of our UND students; the first graduating class of the Skin & Body Works Institute and this is one of the renaissance zone projects and is a testament to the program and its success; Melanie Parvey-Biby and the greenway staff - that the Grand Forks and East Grand Forks greenway project won an honor award for their planning of the greenway project, the judges cited the extensive cooperation between the cities, states and federal entities and were impressed with the spirit of innovation and creative solutions. He also invited the council and others to attend the luncheon with the Canadian Counsel General Susan Thompson. She will discuss the importance of trade between Canada and our region (she was mayor of Winnipeg during the 1997 flood) and she is responsible for promoting trade, investment and bilateral relations between Canada and 8 US states; that what she has to say is very important to the economic development of our area and asked council members to please try to attend.

He congratulated Scott Hennen and his new bride, Maria, and to the blushing father in law, Gerry Hamerlik, who looked great in his tuxedo.

He stated they have a card from former Mayor Pat Owens who came back for the dedication of the Park, thanking them for inviting her back to Grand Forks for the presentation, and stating that our city has come a long way since April 19, 1997, it is amazing what determination, hard work and team work can produce; and her best as you continue to work to make the city bigger, better, stronger.

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2.1 Protest of assessor's 2002 values by Wal-Mart on the Wal-Mart Store at 2551 32nd Avenue
South and Sam's Club at 2501 32nd Avenue South.___________________________________
Mel Carsen, city assessor, stated he has a written report, which the council has before them. Jeannie Allen, Region 3 Tax Manager for Wal-Mart, was present.

COUNCIL MEMBER GLASSHEIM REPORTED PRESENT

Ms. Allen stated she and Mr. Carsen had a stand-still at their assessments and presented copies of her information to the council members, and stated that her job is to insure that Wal-Mart is not only treated fairly and equitable on their property but also to try to establish some camaraderie and a relationship with the different municipalities that they venture into. She stated she visited with Mr. Carsen in February and was her intention to leave this information and try for an interaction and a reduction on both the Wal-Mart and the Sam's Club.

Ms. Allen reviewed the documentation for Sam's Club because the same information is pertinent to the Wal-Mart Stores. She stated there are three approaches to value: cost approach, sales or market approach and the income approach; cost approach is what it says coming up with different components for a new value and applying depreciation according to age and other depreciation factors; sales or market approach is an arm's length sales of like properties; and income is basic tool for the valuation of income producing properties and is related to investor thinking and motivation; that they analyze the property's capacity to generate benefits or rents and convert these into an indication of present value or capitalization. She stated she has compiled three of these approaches for this hearing and reviewed information with the committee.

She stated if use sales approach and the income approach they are both indicating somewhere around $40 to $45 sq.ft.; the sales are indicating much less and when reconcile these she's saying the two strongest approaches would be the income and the cost approach which are coming in very close. She stated she would like to have the council go through this, and if need additional information that she can send she would do that; the reason she didn't go into the Wal-Mart Store that she was in error when she talked to Mr. Carsen and didn't realize that they had added a seasonal box which added about 4,000 sq.ft., and if take the 119,000 sq.ft. and take it by the same rent, apply the same applications and still coming up with $42.75 sq.ft. She stated she tried to give them several different approaches and let council see how close they are coming in together, that if used the sales of the stores would be coming in a lot less, somewhere around $20-30 sq.ft. and is asking somewhere between $40 and $45.

Council Member Gershman stated he is concerned about using the income approach because it is the vagaries of people who run the business, and this is a classic case of income approach to the cost approach and the concern he has is that if go to the income approach that we could take other big box retailers in town and could get one in Chapter 11 and through no fault of the city, taking in much less income, and ours is a city that is very prone to floods and building a $390 million dike for protection and not looking for more income but looking for equitable income from all of the businesses, and his question to Mr. Carsen is it our policy with big box retailers or shopping centers to use the cost approach or the income approach.

Mr. Carsen stated they typically value retail stores based on the cost approach and do that for several reasons; that typically retail stores like this do not rent, but has some rents on stores that are similar to this which supports $5 to $5.50 sq.ft. triple net - triple net means the owner pays everything (taxes, insurance, maintenance, etc.) and the tenant pays $5.50 sq.ft. on an annual basis for the right to use that store. Wal-Mart typically owns their own stores, they will build a store, sell it to an investor and rent it back from the investor to give the investor a return, and asked if that is economic rent, that is not economic rent, economic rent is when unrelated people negotiate a deal on rent, and that's the kind of rent he has here -
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rents at $5.00 sq.ft., one at $5.50 sq.ft. and one at $6.75 sq.ft. all triple net; that he has used a $5.00 sq.ft. to make this comparison; second part is the capitalization rate, to assume the capitalization rate based on some sort of mathematical formula is totally improper, you go to the market and see what investors are paying and find a relationship between net rent and value. According to publication of a group of people that do this study on a quarterly basis, in the first quarter of the year 2002, there were 88 retail store sales nationally, average sale price $14 million, average cap rate 9.6 and when you apply that to the $5.00 sq.ft. it supports his value plus a little change. Ms. Allen disagreed with him that that's the proper way of getting a cap rate, because on the income approach it would be. Mr. Carsen stated that the cap rate is relationship between the net operating income and the sale price based on actual sales transactions, anything else is a mathematical way of trying to get at that and try to anticipate that.

Council Member Martinson proposed that Ms. Allen and Mr. Carsen try to iron this out, and doesn't see how the council body can act intelligently on this tonight. Mr. Carsen stated the problem with that is there is no referee; he stated he thinks he is being asked to compromise or negotiate the value, that taxation cannot be compromised or negotiated, taxation is based on valuation which is a matter of fact; and if asked them to get together can guarantee that it's going to be an impasse and somebody is going to have to decide who is more right. Mr. Swanson stated that under ND law the property owner has the right to appeal a determination by the assessor's office to the Board of Equalization, and the city council acts in that capacity, the property owner who is appealing from a determination of the assessor carries the burden of proof and the burden of persuasion, and Board acts as a judge of fact, whether you wish to make the decision or not, isn't the question, under ND law you must make the decision, arrive at a decision that one or the other is correct or arrive at an opinion of value different but has to be based upon the evidence presented to you.

Mr. Carsen stated he presented some of the information, some verbally and some in writing, and suggested that a group of the council sit down and review all the figures with him and Ms. Allen and maybe come to some conclusion, but Board of Equalization is due to close next Monday, perhaps could be extended some, the County Board meets the first Tuesday in June.

Council Member Klave asked Mr. Carsen to go back and review the 100% textured face block wall which can make a difference and Wal-Mart is only saying 30%, and maybe legitimate concerns that need to be addressed and reworked.

Council Member Christensen stated that if Mr. Carsen feels that he would like some of the council members to review, he would be willing to review that.

2.2 Protest of assessor's 2002 value by Moine Gates, 4998 South Pines Court.
2.3 Protest of assessor's 2002 value by W. Gene Theroux, 4994 South Pines Court.
2.4 Protest of assessor's 2002 value by Harvey Gabbert, 5056 South Pines Court.

Moine Gates, 4998 South Pines Court, stated that the original protest was made between himself and his two neighbors, who were also at the meeting, and since the original protest was made Mr. Carsen and he have had some discussions and they are satisfied with the recommendation that Mr. Carsen made on all three properties and asked the council to go forward with his recommendation.

He stated he has listened to the council and committee of whole over the past several weeks where they have talked about substandard buildings, he stated there is a building at the corner of 47th Avenue and Cherry Street (block building), the Christian School, been there for about 4 years with nothing being done to it, that it is becoming a problem in the neighborhood and will affect property values and would ask that
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someone look at that building to see if anything can be done with it. Mayor Brown stated that Ms. Collings should note that complaint.

2.5 Protest of assessor's 2002 value by Paul Eggebraaten, All Reasons Self-Storage, 3000 S. 38th Street._________________________________________________________________________
Mr. Carsen reported that Mr. Eggebraaten called him after they had met and indicated that he would accept our values.

2.6 Protest of assessor's 2002 value by James Hawley, Ogier Properties, L.L.C., 322 DeMers Ave.
Mr. Carsen stated this is the former First National Bank building, that building was extensively remodeled by Mr. Hawley, and prior to that remodeling he sought a partial exemption through the City of Grand Forks, that the City granted that exemption for a 6-year period, with first 3 of those years 100% exemption, then 20% exemption, and next year scheduled to go to a 40% exemption for 2 years and then 100% taxable starting 2005. Due to the high vacancy in the building Mr. Hawley thought that he would like to readdress the council and revisit the terms of that exemption. He stated he visited with the city attorney, it seems that the city council would have the authority to revisit the terms of that exemption and extend it. The City Board of Equalization could not make that determination, the city council would have to make that determination, after proper hearings, etc. and would be a period of time before you could do that. He stated that no matter what they did with the exemption extension, the 2002 value couldn't be upset because any agreement you make now couldn't be made retroactive, and his recommendation is to uphold the assessor's 2002 value but possibly consider talking about the terms of that exemption.

Mr. Hawley, 924 South 30th Street, stated this is not a protest but with respect to the fact that it's a tough market in Grand Forks and has an expensive building, and asked that they consider his request, that he has less than 5% of the building leased makes it difficult for his group to come up with $80,000+ in the next year or two, and only asking an extension of 2002 and appreciates consideration.

Council Member Gershman asked what the amount of money would be to extend the exemption one year, and what would be the process to extend the TIF Mr. Swanson stated the general process would be notice to be published in the paper, notice given to any known competitors, notice to other governmental entities that share, and a public hearing held; there is no process under the ND Statutes for a TIF on how you renew or how reconsider, but would be within the boundaries by literally treating it as if it were an original application, and cannot retroactively apply that decision, but would have the ability to address any remaining terms of the TIF Mr. Carsen stated the current taxes for 2002 are scheduled to be about $21,500, that is the base value of $287,000 approx. and 20% of the added value due to the extensive remodeling; next year it goes to 40% taxable for 2 years and then 100% fully taxable in 2005.

Council Member Christensen stated the value that is anticipated for the year 2003 and 2004, which is $1.5 million, why wouldn't you consider reassessing the fair market value in light of the location and the comparable rents that are being derived downtown rather than using $1.5, why stay with that number if back in 1999 you assumed it might go to that value, but it hasn't so maybe Mr. Hawley want to think about a reassessment of the project in light of its actual rent and maybe revalue the property in its entirety and eliminate the tax exempt status.

2.7 Resolution of the Grand Forks City Council requesting an Attorney General's opinion of the
matter of conflict of interest by a member of the Grand Forks City Council.______________
Council Member Gershman reviewed some of the information relating to this matter where Mr. Burke asked that Mr. Swanson look at this issue - that during the time that Mr. Swanson was researching this issue, Council Member Burke decided to circumvent the process and go directly to the Attorney
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General, and at the same time Mr. Burke submitted a resolution to the council to send to the Attorney General, and finds curious why he requested Mr. Swanson to do some work, that Mr. Swanson noted that it would take some time, and then resolution appears before the city council and then contacted the Attorney General himself, and tells him that the resolution is moot because process circumvented. Mr. Swanson stated he hasn't given a specific time line when his opinion would be complete. It was also noted that Council Member Burke went to the States Attorney's Office and they mentioned that it would be 5 or 6 weeks for them to give a determination, and that usually the Attorney General takes 5 or 6 weeks to render an opinion It was also noted that on the radio this morning Mr. Burke talked about fellow council people (in addition to Council Member Kreun), Mr. Christensen and Mr. Klave that they had a conflict of interest; that Mr. Swanson rendered opinions: that Mr. Swanson stated that there was not a conflict of interest on Mr. Christensen's part re. landfill, and on the attack on Mr. Klave with his conflict of interest, Mr. Swanson stated that in 1998 or 1999 he rendered an opinion with regard to a transaction involving property owned by Grand Forks Homes and no conflict of interest as it did not involve the City of Grand Forks; that Mr. Christensen and Mr. Klave according to our city attorney, did not have a conflict of interest as they were accused of by Mr. Burke, and a simple phone call to the city attorney would have answered those questions - we have tremendous issues facing the city, have flood control, Air Base retention, have success of tourism, the Alerus Center, wastewater, an impending water plant, many things that are of import to the citizens, and suggested that as soon as possible get back to addressing the issues that are important to the city, and stop attacking each other and if one has a question, to ask our city attorney if there has been a decision rendered.

Council Member Kreun stated that quite a bit of this has been directed at him, that Mr. Burke made allegations that he has a conflict of interest because of his business dealings which involve his agreeing to act as a subcontractor for an individual who was a general contractor for Urban Development, the individual who was awarded the contract came to him and said they had too much work to do and asked if he would assist them in mowing some of that area that they had agreed to mow. That apparently his agreeing to act as a subcontractor for an individual who made a contract with Urban Development is perceived by Mr. Burke and other members of this council to be a violation of certain ND statutes, neither he nor Mr. Burke or other people are trained to interpret the laws of the State of North Dakota or to render legal opinions. The Mayor had directed the city attorney to render an opinion and Mr. Swanson has not rendered that opinion; that he doesn't know if the attorney general will entertain a council member's request for a written opinion, knows that Mr. Swanson is continuing to work on this issue; that whatever decision is reached by the attorney general or Mr. Swanson will be the decision that he and other members of this council and future councils will abide by. That in the meantime we have 3 council meetings left which require the members of the council to attend and make decisions on behalf of the citizens of Grand Forks, and intends to focus his efforts to represent the citizens of his ward and the citizens of Grand Forks.

Council Member Burke stated that despite what some people think and have said tonight, he doesn't do
this for personal reasons nor to attack individuals, that most of the people who don't like this activity won't
believe that but that's what's in his heart. He stated some have questioned the timing - that he raised this
issue before the council 4 weeks ago a few weeks after he learned about it and had an opportunity to do a
little research at the Urban Development Department to find out about the contract, and after he learned
about the situation he raised it - that 4 week ago when he raised it Mr. Swanson stated he would work to
determine what the applicability of the NDCC was with regard to this situation; that last week he had a
conversation with him and he said he thought he was nearing the end of his work and might have
something to tell us either last week or this week - that with regard to conflict of interest, that one of the
things was from the document prepared by the city attorney entitled 1994 primer on conflict of interest -
and it says in part that the interest need not be a direct prospect of gain but merely enough to raise
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a reasonable suspicion as to the member's ability to avoid the temptation of acting for some other
reason than to promote the interest of the public good faith, good faith is not enough to overcome a
conflict of interest because the purpose of disqualification and disclosure is to protect the public
confidence in their government. The issues here are not great with regard to the potential violation
but what is important is that we have a state law and it says that there will be no direct or indirect
benefit to a member of a body from the payment of public funds controlled by that body, and also
says there is a mechanism for that brought before the body so they can determine whether there are
extenuating circumstances and the relationship between that member and the City can go forward
and if there is a unanimous vote of the council and the council determines that, and also provides
that the person involved should bring this matter to the body so that the body can be informed of it
and make that determination, that they never had that opportunity, it was never brought to them. He
stated that Mr. Swanson is going to tell them in legal ramifications and it seems fairly plain that there is a
direct or indirect benefit to the city council member with regard to that and the question really is
are we going to ignore the state law or not. He stated that going back a couple weeks he started
thinking about Mr. Swanson's role in this, and the reason for asking for the Attorney general's
opinion was to relieve Mr. Swanson of any problems that he might have as someone who serves at
the pleasure of the mayor and council, most of whom whose opinions are well known on this matter,
allowing him to not be involved in that and preserve his good offices here in the community and
have it go to the Attorney General and have the opinion which would have more standing coming
from the Attorney General. In talking with the Attorney General's Office he was aware that a
request for an opinion from him as an individual would not be honored and understood that when
he wrote the letter, but wanted to have that on the record that he had asked for it so when he came
here with the resolution it would be clear that he explored that avenue, and has the letter from the
Attorney General's Office saying that they would not be able to render an opinion on the question
that he posed and that letter would be sent to the council members.

Mr. Burke stated that if they want the A.G. to make a determination on this, how do that - either the city
council to request an opinion or for the city attorney to request an opinion; that he drafted a resolution and
asked that it be on the agenda tonight - earlier today he suggested to the mayor that they might be able to
circumvent this whole situation if he would simply direct the city attorney to go ahead and ask for the
opinion, and that he understood that the A.G. got involved it would probably be a month or more before
they received the opinion - satisfied with that - and suggested that to the mayor and he decided that
wasn't something that he wanted to do and now talking about the resolution which serves them all -
in terms of acknowledging that there is a state law and a question about whether we are in conflict
with that law and have it determined - the penalties are not great - that the legislature some years ago took
out any penalties, and that the penalty could be that the person would be guilty of an infraction and the
penalties could be and up to and including removal from office, and doesn't think that would be
appropriate, what he thinks is appropriate is to acknowledge that we have law, that it applies to all of us,
and acknowledge it and get on with it. He stated he would like to know who on the council thinks we
should ignore state law and have a show of hands; who thinks we should observe the law only when it is
convenient, who thinks the law should apply to everyone except themselves and their friends but no one
thinks that.

Council Member Burke stated the point of this is that there is a lot of talk in this town, it didn't start 4
weeks ago, started months and years ago and we would be served if we moved on more directly
with the debate about conflict of interest ordinance and dealt with some of the specific issues that
people are talking about but council has never seen fit to address, and if seems like he is rushing
this, he is because in 4 weeks after he is gone and a couple other people are gone, this issue won't be
addressed.
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Council Member Bjerke stated the process being circumvented and believes in organization
and plan but results are more important that process, agrees there is a violation of all and need to
have an answer because as long as he sits up here and as long as he lives in this town, he'll be
asking tough questions - when he brought this code of ethics up on April 8 the intent was to have a
discussion on this but it's been 35 days and we can't get a meeting scheduled, but never had a
chance to debate that - that they tried to have this debate, discussion and every time told that they are
not going to have it -

Mayor Brown stated there is a code of ethics for U.S. Government Service which was passed by the
Congress and also applies to the Senate and feels should be adhered to by all government employees
including office holders and that is available on the web and will make copies for the council and is
a code of ethics and says will uphold the constitution of law, put loyalty to the highest moral
principals, code they could live by and talks about ways to find more economical ways of getting the
task accomplished, never discriminate unfairly by dispensing special favors, make no private promises of
any kind re. use of public money, engage in no business for the government which is inconsistent with the
conscientious performance of governmental duties, never use information given confidentially in the
performance of his duties as a means for making profit, expose corruption wherever discovered, uphold
these principals every conscious that public service is a trust, results warrant bypassing the process and
that's why thought we had this nation of laws where we followed the process. Council Member Bjerke
called point of order, that he did not say that; he stated that the process is very important but results
important also. Mayor Brown stated he feels we have a process in place to address this and important that
we follow that, and that Mr. Swanson was asked to render an opinion as a department head, expects him to
give an honest and unbiased opinion and does not think that he fears for his job based on what he tells him
because he doesn't surround himself with yes men, but surrounds himself with people who will give him
honest answers to the questions we have facing the city and trust that they will do that.

Mr. Swanson stated he is somewhat bewildered as to what he is asked to do or not do; that he has
done this job for 18 years and that he has not rendered opinions based upon his personal opinion
but rather based upon what the research is, and in those 18+ years and 4 different mayors that not
always have the mayors agreed with his conclusions, but will stand on his principals - doesn't know if
the questions here is to his abilities to research and render an opinion but the question is not as
crystal clear as you might think it is - Statute that he was originally asked to review dates back to
1887 and been amended 8 different time, last time in 1973, subsequent to that the new statute which
was referred to by Mr. Burke, 4404.22 was adopted in 1995 and in fact there are inconsistencies
between the two conflict of interest provisions - there is no ND Supreme Court decision on either
statute and no ND District Court opinion on either statute, no direct A.G. opinions issued by the
State of ND on either statute, there are opinions that reference or discuss the application, the closest
law is a 1956 opinion; as a result of not finding much in ND and realizing that this body didn't
really particularly care what Howard Swanson's thought of the statute as his opinion is no better
than any of yours, then started reviewing all 50 states, and in that research we find that there are 16
states that have reasonably similar statutes and of those 16 there are 4 that have language that is
nearly identical or identical with the State of ND and of those 4 states none of their highest courts
ever entered an opinion, that what they are in the process of doing now are trying to determine if
there are unreported lower court (either appellate or district court) decisions in those jurisdictions
- also reviewing the A.G. reports from those states, and that is as comprehensive a research project
as he can provide you; he has had communication with the States Attorney's Office, communication
with the A.G.s Office and both instances requested that they provide me any information that they
find, and not prepared to release his opinion at this point and will not give a preliminary opinion,
you will receive from his office a reasoned decision based upon supportable law from either the
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State of North Dakota or other jurisdictions that have similar provisions. He stated if this body
wishes an A.G.'s opinion he wouldn't have a problem with that but don't conclude that he is afraid
of facing a difficult decision, and some have had some disagreement with a ruling or opinion or
comment that he has made - and also know that he is up to the challenge to sit down and debate
that issue with you, discuss it with you and admit mistake if he makes one and if attempting to
appease him by taking him out of it, don't feel you need to do that; if however you think it warrants
an A.G.'s opinion for some other reason, he has no problem with that. He stated his experience with
the A.G.'s Office is that they do take about 4 to 6 weeks. He stated he thinks this is an issue that
taken upon it a life of its own, separate and apart from his office can provide it, he will move
forward as their office can in providing you with a reasonable opinion without regard as to who it
affects or doesn't affect.

Council Member Gershman stated that the mayor formed a task force to look at a code of ethics
and they will come forward this council or the new council when they finish their work in a
reasoned way and there will be a code of ethics. He stated that nobody here is going to ignore State
law, and when the code of ethics was first brought forward and were told to vote for that, and
what's wrong if you don't vote for that - in there was that the city attorney would need to investigate
any councilperson within 30 days of an allegation by a fellow councilperson or citizen, but now
hear from Mr. Burke that Mr. Swanson is not qualified to give an opinion of other council people
because he's beholden to us of his job; that there are a lot of inconsistencies here.

Council Member Hamerlik stated he believes in a code of ethics and shouldn't have a conflict of interest and been accused and praised for trying to keep us on track - we have before us the topic of a resolution, whether pass it and send to the A.G. and have heard just about everything except working towards that item; we are bringing out our pet peeves, etc. and rises to a point of order, let's be on the issue.

Council Member Kreun stated there have been many interpretations prior to Mr. Swanson's actual opinion, and before we render an opinion or come to judgment we should listen to that opinion and act upon it accordingly, that it bothers him that they have to name names, individuals that talk about other individuals and should let this sit and let Mr. Swanson come with his opinion and bring forth the decision.

Don Dietrich, 5198 West Lanark, stated he was a little angry, that he has never seen so much waste
of time by personal attacks, that he has know many council members for many years, worked with
Mr. Swanson and city auditor, etc. and been attending council meetings since 1969, that the committee
has been on this issue for 48 minutes, we have people's business on here and have two more pages of
agenda items to discuss; never had a problem with Mr. Swanson's opinions, always been by the book
and been through 8 mayors and they need to move on and no more personal attacks, let's be civil;
the posturing we have up here, need to get on with city's business - no room for personal attacks -
let's get on with the peoples business, that we're tired of this.

Council Member Burke stated we've been aware of this law and has moved it forward and is sorry if people
think these are personal attacks, they are not personal attacks. He stated there are other people on the
council who didn't want to have discussion about things that may or may not put them in a good light,
not deal with those issues and the motion was made to table the ordinance; that this council has worked
in certain ways to cut off debate about things they didn't want to deal with or at least discuss and left
some of them with no other mechanisms to air their grievances than to do an end run and bring things up
this way.

Council Member Hamerlik requested that they go to item 2.8.
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Council Member Kreun stated a lot of the facts are true and are questions, but you cannot
prejudice anybody by interpreting the law in your own way - have to let the law do what its
supposed to do and then come forward with it, not bring the information forward first and then
come back and ask for an interpretation.

Council Member Christensen stated that the contract that Mr. Burke is referring to that Mr. Jay
Fiedler in his office has was formulated back in 1998, that Mr. Swanson called Mr. Fiedler and
asked him if he would represent the City of Grand Forks in the landfill issue, Mr. Fiedler said he
would, and that he wasn't even thinking about running for city council in 1998, that in 1999 the
City hired an attorney, Jay Fiedler, to represent its interest in the landfill, did not hire the firm of
Pearson & Christensen, and that it didn't hire him. That after Mr. Swanson and Mr. Fiedler met
with Mayor Owens on March 14, 2000 and that he was out circulating petitions to get his name on
the ballot about that time; that Mr. Fiedler appeared at a meeting on May 15 at Township and on
May 30, 2000 and received Twp. decision and order on June 4, 2000; apparently when Mr. Fiedler
appeared before this council on July 17, 2000, that peaked the interest of Mr. Hoff and he wrote a
letter to Mr. Swanson inquiring as to whether he (Mr. Christensen) would have a conflict in that
issue; that he didn't believe he did and no financial remuneration was coming his way direct or
indirect as the statute says and didn't bring it before this body; this body had Mr. Fiedler appear
before it on one occasion or more, and this body knew he practices law with Jay Fiedler along with
others; Mr. Swanson then wrote an opinion to Mr. Hoff that there was no conflict. Mr. Swanson
has not had time to retrieve that opinion. He stated the task force on code of ethics on which he is
sitting and upon which they will meet (if elected) the task force will continue and render a report
and that task force will address these issues and other issues.

Council Member Hamerlik asked to get on with item 2.8.

2.8 Economic Development policy.
Council Member Gershman stated the issue with property tax exemptions that are given to businesses that are expanding or relocating in Grand Forks is taxes that we are not collecting at this time and is not as if on the books, that we have property tax exemptions of $l.25 million, those were monies that were never collected but will be, that was an incentive for business to locate or expand in Grand Forks, and to say that we should take the economic development money and replenish the fund for $1.25 million every year doesn't make sense because we never had that money but that money will start rolling onto the tax rolls; cannot say that is cash we had that we're using.

The city auditor stated that he and the city assessor have provided a synopsis of state statutes relative to discretionary tax exemptions that are provided and that this doesn't contain all the detail in State Statute and highlighted what the allowable incentives are under each of the exemption areas:

1) under NDCC 40-57.1 tax exemptions for new and expanding businesses: that the type of allowable incentives are a complete or partial exemption from ad valorem taxation throughout the five years following commencement of project operation or up to 10 years for a project that produces or manufactures a product from agricultural commodities or do a payment in lieu of taxes that may be used or a combination with the property tax exemption for qualifying projects and that maybe no longer than 20 years from the date the project operations began.

2) under 40-58 Urban Renewal Law (tax increment financing or exemptions) the type of allowable
incentives are basically a financing option where the City would do a sale of bonds to provide money upfront for eligible project cost with the taxes generated by the incremental value obligated to pay the debt
COMMITTEE OF THE WHOLE/5-13-02/Page 10

for a period not to exceed 20 years; or may do an exemption of total or partial tax exemption of the incremental value for a period not to exceed 15 years; and will want to read these because there is a lot of other information and detail in those.

3) under NDCC 57-02-08.37 Definitions of tax exemptions, there is one for day care where the governing body of the city for property within city limits or of the county for property outside the city limits may grant a property tax exemption with a portion of the fixtures, buildings and improvements, used primarily to provide early childhood services by a corporation, limited liability company, or organization licensed under Chapter 50-11.1 or used primarily as an adult day care center; this exemption is not available for property used as a residence.

4) He stated there is a 3-year property tax exemption of certain improvements to commercial and residential buildings that is also allowed by State Statute and is discretionary by the council, and again have submitted some of the background on that as to what types of improvements will qualify, the application process.

5) Also enclosed in your documents are two policies, one adopted in 1988 that is the City of Grand Forks policy on 5-year property and income tax exemptions that has some other specific requirements that past council's have approved and considerations that we go through in reviewing those, also a policy adopted in 1994 for tax increment financing that was had certain provisions and other enhancements to what the City would look at when somebody applies for that type of financing.

Council Member Bjerke asked if the tax and entities be reimbursed, and for this to happen it would require honest budgeting and cooperation among all the taxing entities, and should the City portion be reimbursed and out of that money, the figures rounded off at $304,000 is what the City loses; his point was a lot of people come up to him and say what do I have to do to get my property taxes exempted for 5-years, that if want to give tax cuts out, give them to all; and if taxes not high, nobody should get tax breaks. He stated the motion he will make next week is that approx. $304,000 to take that from Fund 2163 and reimburse the General Fund. He stated should we have a cap on how much - that grown tremendously in the last several years - in 1997 it was less than $500,000 and now over $1.2 million, do we have a policy and how high do we have to go, how much exempt out and we are carrying it to a certain degree; we could spend up to $1.3 year and also exempt out that money - doesn't know if we have a coherent policy and should look at some type of what is our policy for economic development, how much willing to expend and how willing to exempt out.

Council Member Brooks stated how to get tax exemption, is to invest capital investment in the community and that is where this starts from- if you have a tax base in the city and spread the property taxes among that - when we look at businesses and a business expands, a new business comes in or one of our existing businesses expands they can come and request this - that tax base expands, and that there are no taxes that someone needs to be reimbursed for because paying for new business and no increase in taxes but in the tax base and as a result of the exemption for 5-years, it's a delay in that business's expansion in paying taxes, and delay because made a capital investment in our community and created additional jobs; and in terms of economic development function, the City's economic development corporation, if they are going to pay for those taxes that would be paid on that once it comes off the exemption which is usually 5 years - if that happens then you have to carry that forward and if economic development is going to do that for 5 years, then shouldn't they get those dollars from thereon and come back to them for the taxes that are paid in an on-going TIF - he stated this has grown and if sits at zero we're not going anywhere as a city and have no expansion and tax base isn't expanding and then our taxes will go up.

COMMITTEE OF THE WHOLE/5-13-02/Page 11

Council Member Kreun asked what gives us the measuring stick to indicate that we are growing. The city auditor stated that is a benchmark you have yet to set and part of the information you will need to review is the information that will come from Urban Development and Economic Development Corporation as to jobs created each year, salaries that are generated by those jobs and get some comfort level in your mind as to what trade-offs are and where that comfort level is, and don't know that we have one established at this point and good question for review.

Terry Hanson, Urban Development, stated that benchmarks in the growth fund policies and procedures manual - Program Evaluation and the Office of Urban Development will be responsible for gathering appropriate evaluation data and publishing an annual report, evaluation will be completed and distributed annually and will be based upon the following criteria, number of primary and secondary jobs created or saved, the economic impact of the program to include the tax base, new wealth created, the payroll, the cost of jobs, private sector dollars and the community impact with subsections impact of municipal services and impacts on the environment; and there has been established a program of evaluation for the economic development policy of Grand Forks.

Mr. Hanson stated he would like to add one thing on this issue - that he did some research on this and the specific item that Mr. Bjerke is addressing is the exemption of taxes, and read from Chapter 57-02.2 which is also an exemption of taxes, but if read 40-57.1, and what is going to read is inferred in that regulation as well - that the Legislative Assembly declares and finds that the present method of assessments and taxation of real property discourages the investment of private capital; such conditions have resulted in a decreased tax base; in the public interest and the welfare of the State of North Dakota, its political subdivision and its citizens to encourage the investment of private capital and thereby encouraging the production of wealth, improving the volume of employment and enhancing the living conditions and preserving an increase in the property tax base. He stated the reason he paraphrased that is that is the intent of the ND Legislature when they passed this law, was to increase the tax base, give incentives to increasing the tax base for the State of ND and not necessarily for the city of Grand Forks, but when the City is doing it, they are doing it, they are offering that incentive to a local industry for its own benefit but also for the benefit of ND, and that's why we shouldn't be utilizing local dollars to pay for a State law that authorizes us to give tax exemptions.

Council Member Gershman stated that our policy is for primary sector jobs, which means manufacturing, not for retail, and would be interesting to know, that we have the exemptions up to 2001 but interesting to know over the next 6 to 10 years what will roll onto the tax rolls and would be interesting figure if we could see that and see how it will add to our taxes. Mr. Carsen stated he does not have a complete report on that but there are some that are coming off the exemption, in part, and number for 2002 is less than what it was for 2001.

Council Member Christensen stated if approve this would redirect the economic development dollars, Fund 2163, and have allocated 53% to property tax relief and using it to defer your property taxes; we have about 21 to 23% that we use for economic development and gets into 2163 that we have discussion over, sales tax dollars; Mr. Bjerke wants us to take out some, if not all of that money, and add it to property tax relief to the extent that we're deferring taxes based upon the exemptions previously granted; that we have a group on the council that wants to reexamine our economic development policy and how things work, but if don't have any money once you develop a policy, there's no sense in having a policy.

Council Member Burke when we talk about what we spend and allocate towards economic development, we talk about that portion of the sales tax which is earmarked for economic development and a lot of people point to that number and say it's too small, but we spend a lot more money or forego revenue from
COMMITTEE OF THE WHOLE/5-13-02/Page 12

other sources in the name of economic development and that is never counted towards our effort in economic development, we have a screwed up bookkeeping system on how we keep track, use a small number when people come in here and try and shame us into spending more money on economic development, but we are spending money from the general fund or other funds aside from the money that we generate from sales tax, specifically earmarked for economic development, we spend $1 million on infrastructure for the mall on the southend a couple years ago and not from the economic development fund, but wasn't sales tax money and not for primary sector work but was for retail, it was going to bring people into the community, but we need to be more upfront about how we account for the money that we put towards economic development and if forego revenue or spend money from other funds or the general fund, we should do that and so the citizens know what it is we're spending or foregoing in the name of economic development. He stated we have given tax abatements in the name of economic development for deals after we knew the deals were going to happen, and wasn't a deal maker or breaker; and that money, the tax abatements are there to help make the deal, not for having done a project in Grand Forks.

2.9 Engineering services agreement with CPS, Ltd. for Project No. 5347, Intersection Improve-
ments at Gateway Drive (U.S. 2) and Columbia Road.________________________________
Council Member Hamerlik asked if the street light on 10th Avenue included in this project, and thinks it is really needed since we have a lot of traffic coming from the west. Cindy Voigt, asst. city engineer, stated the light is not in this project but have a plan for the near future, is in the CIP in next couple years. Council Member Christensen stated when they have the CIP meeting they will discuss it.

2.10 Bids for City Project No. 5328, District No. 384, Linden Court paving from 10th Avenue
to 15th Avenue South.________________________________________________________
James Sperle, 1222 Linden Court, stated he was against the paving of Linden Court, that he and his wife purchased their house when they were in college for approx. $51,000 and now end up paying almost $7500 for the road out front, it is a unique situation, its an alley but also a road, that they don't use the road and no vehicle access to and from the road. This petition was put forward to go ahead with the project by many of the residents of Cottonwood Street, and over two-thirds of the people who voted for this project or petitioned to go for this project are from Cottonwood; he stated they have a lot of elderly people in the area, families just starting up and can't afford this; that it sounds like they are going to be in the 100-year flood plain and dike assessments and now a third assessment with the paving. He stated that only several houses on Linden Court actually use the road for vehicle access, majority of people for the project live on Cottonwood and use Linden Court as a road for garages; and had some concerns about the petition process, that they received most of the information re. this petition on April 17 when received est. assessment, and had until May 2 to protest the project and wasn't enough time and didn't allow the residents of the area to get enough information re. the project, more people have come forward that they didn't have enough information and would like to change their petition and urging council not to go ahead with this project.

Mr. Swanson, city attorney, stated that a 50% protest if received automatically kills the project, what is before council tonight is the award of the contract, if you decide, for whatever reason, regardless of the lack of a 50% protest, not to award the contract, you may do that; the protest period has expired but whether or not you award a contract to the low bidder, Opp Construction, at $212,406. He stated that the question tonight is not with respect to the assessment, issues re. individual property owner's assessments are determined by the Special Assessment Commission and questions raised in front of that Commission at their hearing, those assessments will come back to council in the fall for final certification, at that time assuming you forward the project and it is special assessed, council cannot change any individual assessment without changing an equal amount on another assessment, must assess the total value. If the

COMMITTEE OF THE WHOLE/5-13-02/Page 13

protest is about the project, it is still before the council until next Monday when you act upon the contract,
and must know that the bids are only good for a certain period of time - 60 days from date of opening.

Council Member Hamerlik stated that some of the questions raised here that the benefits derived didn't seem to be fair or if that is available to them. Mr. Swanson stated the issue as to benefits received on any property from a special assessment project lie within the jurisdiction of the Special Assessment Commission, they will hold hearings and property owners who feel aggrieved by the preliminary decision by the Special Assessment Commission can appear before them and raise the issues they have, written notice will be given to those affected by the assessments.

It was noted that the protest is by land area, and that someone with little benefit and a small assessment they would have a disproportionate impact on the protest as it relates to what it would cost them. Mr. Swanson stated all property within the special assessment district, whether determined that they benefit or not or benefit to a greater degree than another, have an equal right to protest based upon the sq. footage or the area of the district. Council Member Burke stated its to the city's benefit to have these streets paved, but need to find a way that places less of a burden on those people on that street.

Terry Hanson, Urban Development, reported on a street in Riverside area where they used CDBG entitlement funds and to make the area eligible, they made a survey of the owners of the property and found that excess of the owners were of low or moderate income, and were able to use the CDBG funds to put the street in under low and moderate benefit - in this case that is what they would have to do there is survey each property owner and determine that over 51% are LMI, that they cannot do that with this bid in that they have to determine that and have bidding requirements in the documentation so they could not go in and use CDBG funds in this project with this bid.

Council Member Klave stated that to some of the property owners it is a primary street and for others no more than an alley access, and would like to see on the protest sheet if it is their primary road as opposed to those that it becomes a paved alley; that the protest is close (42.8%) and how close LMI would be on allowable project or not make a CDBG list. Mr. Hanson stated they did at previous meetings and there are two ways they can do it - either have to have over 51% of the benefits go to LMI families and could fund the entire project utilizing CDBG funds or can pay the special assessments for the individual families that are of low income (80% or less of median income) but would have to verify the income of each individual family to do that. The city auditor stated they could provide a map showing the properties in the district that protested and would be able to see those that directly face Linden Court with their addresses and highlight the protested properties. Mr. Sperle stated that two-thirds of the people who pushed for the project don't live on Linden Court, they would be the ones who benefit most from the project but the people on Linden Court will get the brunt of the cost - that notification didn't allow people to make an educated decision on this. The city auditor stated that the protest period expired on May 2 and far more community meetings and more letters on this project than we have on others, plus the publications of notice for the protest period and actually waited until the bids were in on this to give an exact dollar amount rather than an est. amount a month in advance. Ms. Voigt stated they waited until bids received so could give real numbers, and consequence of that was not allowing the public to have a more exact dollar amount earlier on and shorter time to respond. She stated she has a map showing protested properties, original petition showed more people on Cottonwood petitioning for the project, and when look at protest, Cottonwood people protested and Linden Ct. that pay the most only 3 or 4 properties; and will provide copy of the map to the council.

2.11 Create special assessment district for City Project No. 5379, District No. 587, paving
Phoenix Court.__________________________________________________________
COMMITTEE OF THE WHOLE/5-13-02/Page 14

There were no comments.

2.12 Create special assessment district for City Project No. 5274, District No. 585, paving
North 52nd Street.________________________________________________________
There were no comments.

2.13 Special assessment district for City Project No. 5366, District No. 586, paving South 25th
Street from 45th Avenue South to 44th Avenue South and 44th Avenue South from South
25th Street to South 20th Street._________________________________________________
There were no comments.

2.14 Special assessment district for City Project No. 5374, District No. 413, storm sewer along
South 20th Street from 135' south of 4th Avenue South to Southend Drainway._________
There were no comments.

2.15 Consideration of bids for construction of City Project No. 5245, University Avenue mill and
overlay.______________________________________________________________________
There were no comments.

2.16 Three-way construction engineering services agreement for City Project No. 5245, Uni-
versity Avenue mill and overlay._______________________________________________
There were no comments.

2.17 R/W encroachment agreement along South 42nd Street.
There were no comments.

2.18 Appointment to the Alerus Commission.
There were no comments.

2.19 Resolution approving sale of real property located in Red Lake County, Minnesota.
There were no comments.

2.20 Homebuyer Incentive ProgramTax Exemption Program
Council Member Bjerke questioned an item under Homeownership Program, where it stated that the City of Grand Forks will need to provide funding in the approx. amount of $180,000 over the 10-year program period. Mr. Hanson stated that the $180,000 is what this program over the 19-year period would cost the City and those funds would come out of the initial $200,000 that they seeking from the sale of the lots upfront.

Council Member Hamerlik asked if there was a completion date on the building of the homes, once started; and asked if they couldn't move it along at a reasonable pace; Mr. Hanson stated they could include in the policy that initiation would have to begin within 4 to 6 months, with completion within 18 months, but doesn't know what enforcement would be. Council Member Hamerlik asked if they could consider that.

Mr. Hanson stated that most of the properties were actually acquired through tax delinquencies, given back to the City from the County; monies would be a loan at a 4% interest rate and have sent this out to the local lenders but have discussed with secondary mortgage market and all of the primary, secondary mortgage market purchasers have agreed that program all right.

COMMITTEE OF THE WHOLE/5-13-02/Page 15

Council Member Kreun stated this is not a give-away program, deferred loan program; that he met with the Board of Realtors today to review this and one of the questions that came up under payment terms, one of the concerns was that you wind up with a negative amortization, and one of the suggestions was that we can bring it to that secondary market or to the bank so that it can be sold easier to give them two ways to start paying back right away or if want to wait 5 years for the deferment.

Mr. Hanson stated that when they are talking about the 4 lots they are requesting to be declared surplus and sell on South 40th Street, 1164, 1200 and 1234, there are actually 4 lots adj. lots and would like to have the council declare all 4 lots surplus; there is a question of whether or not the fourth lot wants to be used by the City at a future date as a location for a lift station, and have asked engineering to check into that or whether there is a better location for the lift station, and if that lot were to be used as a lift station, they would notify any potential purchasers of adj. lot Council Member Kreun stated that the lift station should go north across the street, that property has been in litigation for severally years and won't come to any conclusion for a while yet and that's the reason for holding that piece of property on the corner, but if include with this group and if litigation comes to completion, the lift station could be moved north and we could sell this lot.

Council Member Christensen stated that if the council passes the program, how much money will the City have to authorize to spend or to borrow from FMHA on these houses, proposing to be built. Mr. Hanson stated they were proposing to spend $190,000 on the 5 homes in the in-fill program, and funds would come out of the HOME Program funding that the city council has already approved and totally separate from the previous agenda item. Council Member Christensen stated that in the Program they are suggesting, we may have to borrow up to $1 million; and suggested if we shouldn't get this into the Housing Authority where they have more assets - Mr. Hanson stated he liked that idea.

Ms. deMontigny asked if this project - that 3 individuals living in motels since what happened to their homes last August in the windstorm, and need to get out of the motel by certain date, and if this program has for LMI to get assistance - Mr. Hanson stated this program does not deal with LMI families.
Council Member Kreun stated there are other programs with LMI that we have available through HOME funds that offsets some rental income or purchases and would have to go to Urban Development, complete information, etc. and if program of benefit to her.

Council Member Kreun stated that proceeds from these particular lot when sell them will go into revolving loan fund and did want this program to be run through the Housing Authority so could monitor it and administer it; almost all the lots are from tax delinquent forfeited lots, don't want to put any tax dollars in, revolving loan fund that could continue on for long period of time and help people with LMI level.

2.21 Affordable In-fill Housing Development request for proposals.
There were no comments.

2.22 (First reading) Request for approval of an ordinance to annex Lots 1 through 15 and a portion of Lot 16, Block 1, and Lots 1 through 15 and a portion of Lot 16, Block 2, Southern Estates Third Addition and an unplatted portion of the SW Quarter of the SW Quarter (SW 1/4 SW 1/4) of Section 20, T151N, R50W of the 5th P.M. being a strip of land 140 feet in with lying west of and adjoining the westerly right of way line of South 25th Street as platted in said Southern Estates Third Addition less the portion previously annexed as Resolution No. 7777 and recorded as Document No. 564965. This property is located west of S. 20th Street and north of 4th Avenue of 45th Avenue South .___
There were no comments.

COMMITTEE OF THE WHOLE/5-13-02/Page 16

2.23 Request to vacate a 10-foot wide east-west utility easement lying south of and adjoining the north
line of Block 1, Perkins Third Addition and Block 1, Perkins Fourth Addition to the city of Grand
Forks, ND, excluding the easterly 10 feet of said Perkins Third Addition and the westerly 10 ft. of
said Perkins Fourth Addition (loc. north of 36th Avenue South between South 31st Street and
South 34th Street.___________________________________________________________________
There were no comments.

2.24 Final approval (fast track) of the Replat of Perkins Seventh Resubdivision to the city of Grand Forks, ND, being a replat of all of Block 1, Perkins Third Addition and all of Block 1, Perkins Fourth Addition and including a variance to the definition of a minor subdivision as it relates to the number of lots permitted. Said resolution is located north of 36th Avenue South between South 31st and South 34th Streets._____________________________-______________________________________
There were no comments.

2.25 Final approval (fast track) of a Replat of Blocks 17 and 18, Cox's Addition, Grand Forks, ND
including a variance to the definition of a minor subdivision as it relates to dedicated utility ease-
ments loc. between 22nd and 24th Ave. S. and between Oak Street and South 10th Street.
There were no comments.

2.26 Request a variance to the Land Development Code, Article 9, Subdivision Regulations; Sec-
tion 18-0907; Subsection (2) Rights of way; Paragraph (L) Right of Way Access; Subpara-
graph 3, Arterials (loc. at the property described as the rear 60 feet to Lot 11, Block 14,
Traill's Addition (512 4th Avenue South).__________________________________________
There were no comments.

2.27 (First reading) Request from Planning and Zoning to amend the Land Development Code
for the purpose of establishing regulations governing the use of A-Frame signs.__________
There were no comments.

2.28 (First reading) Request from the Planning Department to amend the Land Development
Code for the purpose of establishing regulations governing outdoor seating in the central
business district.______________________________________________________________
Mr. Potter stated on item 2.28 they will not have a number by next Monday night for preliminary introduction but will have a number for final.

2.29 (First reading) Approval of an ordinance to amend the zoning map to exclude from Meadowland PUD (Planned Unit Development) Concept Development Plan and to include within Meadowland PUD (Planned Unit Development) Concept Development Plan, Amendment No. 1, all of Blocks 6, 7, 8 and 10, Adams-Dobmeier 2nd Subdivision and Lot 1, Block 1, Adams-Dobmeier 3rd Resubdivision, Grand Forks, ND, with substantial change lying in the northerly 389.82 feet of the easterly 90 feet of Lot 1, Block 1, currently being replatted as Lot C, Block 1, Adams-Dobmeier 3rd Resubdivision (loc. between 6th Avenue North and DeMers Avenue and between North 55th and North 62nd Streets).__________________________________________
There were no comments.

2.30 Final approval of a Replat of Lots 3, 4 and 5, Block 1, Shady Ridge Estates Second Addition
to the city of Grand Forks, North Dakota (located between Adams Drive and the Coulee
and between Adams Court (south segment) and Adams Court (north segment).___________
There were no comments.
COMMITTEE OF THE WHOLE/5-13-02/Page 17

2.31 Devils Lake resolution.
Mr. Duquette reported he will have a copy of the resolution adopted by the Chamber and the County in the packet on Monday. Council Member Kreun stated that Joe Belford was at the County Commission meeting and did endorse that resolution that came from the Chamber and from the County; and that Mr. Belford was very appreciative and fits into his program very well. Mayor Brown asked Mr. Duquette if we could get a cover letter from Mr. Belford for this resolution showing his support. Council Member Hamerlik stated he had a concern about protection along the way and it was fairly generically spelled out in the original resolution - Council Member Kreun stated new resolution does address the downstream concerns.

3.1 Southend Tieback Levee alignment.
There were no comments. Information only.

ADMINISTRATIVE COORDINATOR COMMENTS

There were no comments.

MAYOR AND COUNCIL MEMBER COMMENTS

1) Council Member Brooks asked for status on Human Resources director position. Mr. Duquette
stated the process started last Thursday evening introducing and meeting the candidates, on Friday went through an assessment process and on Saturday went through oral presentation process and interview; that he is reviewing the scoring sheets of the evaluators and will be returning that information to the Civil Service Commission; and will be asking the Civil Service Commission to hold a special meeting to certify the register.

2) Council Member Kerian expressed appreciation and congratulations to Mr. Hanson and Council Member Kreun for the housing programs. She commented on conversation tonight, that we want openness and things looked into, that sometimes things take time and need to take that time and doesn't help to use the press and the media to the extent to set different tones and directions - and would expect that we would work together as a body and try to work out some of those differences.

3) Mr. Swanson stated that he will not be in attendance at the meeting next Monday, will be in Washington, D.C., Mr. Warcup was here tonight and he will be taking his position; there were two items that were acted upon at the last council meeting that he is not confident his office will have back to the council - both final drafts of the ordinance redefining junk and the ordinance dealing with the parking of accessory vehicles/recreational vehicles, will try to have those completed this week, but wanted to take a close look at those, both had particular concerns in drafting. Council Member Christensen stated that he would like Mr. Swanson or Mr. Warcup to contact him as he has some concerns re. pads and parking that Mr. Bjerke was commenting on and would like to have an ordinance with and without that.

4) Council Member Brooks stated that the mayor was to appoint a task force on the Airport Authority and he mentioned his interest to Mr. Duquette, and asked when the Mayor might appoint those. Mayor Brown stated they have had two people who have volunteered to be on that task force - Mr. Brooks and Mr. Gershman and that's a reasonable body for that job and that is his intent.

5) Council Member Brooks stated with re. to task force on the code of ethics, asked Mayor Brown to reconsider placing himself as chairman of that task force, that is a council committee and should have been

COMMITTEE OF THE WHOLE/5-13-02/Page 18

put together by the council, however, motion was for the mayor to select those members, but thinks it needs to be made up of city council members and not the mayor.

6) Council Member Bjerke commented on tour Mayor took, and asked if there have been any discussion with the Park District in using city tax paying dollars to fund a multi-million dollar water park. Mr. Swanson stated that the City has committed in the acquisition of Riverside Park that is allocated and limited to water type projects. Council Member Bjerke asked if beyond that, there have been conversations or plans now or in the future to take city money to assist the Park District in building a park district function. Mr. Duquette stated he and the mayor are aware of some discussions from staff on adm. standpoint of some different ideas being looked at, potential ideas for the Park District in the future; we're not aware of any specifics on that and the mayor has not made any specific commitments with city dollars and that he has been present with the mayor during those discussions and idea-think type things. Council Member Bjerke stated that the Park District is a separate taxing entity and not the role of the City, that State has chosen to make these issues separate.

7) Council Member Bjerke stated that a week ago we voted concerning the Alerus sales tax and should we go to super-majority, and someone involved the Park District in making the suggestion that when the Alerus Center is paid up, could take that money and use it to build another entity in town - not close to pay for that and discussion is beginning to take that money to use for something else - what he was trying to decide was to let the citizens decide what their level of taxation is but council decided not to let the citizens do that.

8) Council Member Bjerke brought up the matter of the visit of Ms. Thompson to Grand Forks re. trade, and in her bio it showed that while she was in office she initiated a fundamental restructuring of city government, transformed the city's budget process and kept her promise to deliver the first zero percent tax increase in 25 years (Winnipeg) and finds it interesting that a mayor in a liberal city of a socialist country could do that, perhaps one day in Grand Forks based on limited government and the free market society could look at restructuring city government, transforming the city's budget process and delivering a zero percent tax increase.

9) Council Member Bjerke stated his next item has to do with comments re. his personal agenda; that he made it clear when he ran what he wanted to do, made it clear to people that if they don't like what he has to say, don't vote for him; that there is nothing hidden and to say that what he wants to do is a personal agenda, you are commenting on the hundreds of people who contact him in person, phone and e-mail that appreciate what he does - there are a lot of people concerned about how the City does business and are in agreement with some of them in some things they want to do.

10) Council Member Stevens reported that one of the junk collectors in his area wanted to know about the ordinance - we have to spell it out and make clear for the people in our neighborhoods what we expect.

11) Council Member Hamerlik reminded citizens of the city that the vote on the Alerus facility sunsets the taxes for that structure and cannot go on to anything else unless there is a vote of the people.

12) Council Member Burke stated that he has attended council meetings re. via the phone and in the interest of those who would do that in the future, he would ask staff to look into some kind of system that does a better job of making it possible for people to be able to hear what people are saying, and make it possible for the person on the phone to hear what's going at the table because it's virtually impossible to understand the debate that's going on.

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13) Council Member Burke asked if there is a requirement for the city auditor to read the entire title on items that are long, etc. and if it would require a motion to dispense with the reading. Mr. Swanson stated they addressed that in the ordinance that was adopted and does not require a motion to waive that and not
necessary to read the entire title. Mayor Brown stated that the public doesn't have the agenda before them so wouldn't know what we are discussing. Mr. Swanson stated that the Code allows that the reading be waived unless requested by any individual member of the body.

Council Member Burke stated he was reading set of minutes from the Grand Forks Housing Authority, from the retreat on February 23, and some of their discussion with regard to the notes that they have due with Fannie Mae, there seems to be some concern about their ability to pay those off in a timely manner, some discussion getting the City of Grand Forks involved in paying for this if they are not able to work out a payment schedule or refinance; and asked staff if they could prepare a memo outlining where we are with Congressional and what Grand Forks Homes, Grand Forks Housing Authority's plans are and what involvement they may be contemplating for the City of Grand Forks, City put money up for development, money to bail out later and in incentives and maybe doing it again and would be helpful to know where we are with this.

Mr. Hanson stated that all 197 homes in Congressional I and II have been sold, remaining today are 27 unplatted acres on west half of Congressional I and 14 lots in Selkirk Circle and 59 lots remaining in Congressional II. Grand Forks Homes has entered into a letter of support for the 8 acre development on the north end of Congressional and when the tax credits come through, that group will purchase the property and that leaves 20 acres in the undeveloped land, and the 14 lots in Selkirk, 6 lots in the southend of the undeveloped land that Grand Forks Homes is working with the School District on a program where the School District will build a home on site rather than at the school; and Grand Forks Homes is attempting to market the lots and the vacant land. Council Member Burke stated he was more concerned with the disposition of the debt and whether there is an anticipation that Grand Forks Homes or Housing Authority will come to the city council to asked for help with that - that seemed to be the indication from the discussion that was reported in the minutes of February 23. Mr. Hanson stated it would not be his intent as the Housing Director, hasn't discussed with HA Board re. that debt or whether to come to city council to ask for any assistance - that the Grand Forks Housing Authority is a co-signer on the debt with Fannie Mae, the balance of the debt is still $2 million and the Housing Authority is still relying on the sale of all the property to cover that debt, which he believes cash flows show that it can, provided they can get the prices that they anticipate. The debt comes due December 1 of this year, do have some resources to service that debt through that period of time and it is anticipated they will have to go back to Fannie Mae and asked them to give an extension of that debt to a future date and has already had discussion with reps. of Fannie Mae and they have been receptive to that discussion. He stated that today Fannie Mae does not have a security interest or real estate mortgage on that property, that loan is to the Housing Authority and Grand Forks Homes is unsecured, and if we were to renegotiate whether it be Housing Authority or Grand Forks Homes or both, Fannie Mae will not take a mortgage on the property but would require under the program that he is anticipating they will utilize is a letter of credit or 20% of the value of the loan, that letter of credit would have to be obtained from a local lending institution utilizing the property as security for the letter of credit. Council Member Burke asked if there was any intention of the part of either Grand Forks Homes or the Housing Authority to come to the City of Grand Forks for further assistance; Mr. Hanson stated that has not been discussed.

14) Council Member Glassheim stated that Mr. Kreun and Mr. Hanson deserve a lot of credit, they put together an extremely complex program.

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15) Council Member Glassheim stated he was recently appointed to an ethics committee and asked when that meeting was going to start meeting - Mayor Brown stated they will come up with a time this week when they will meet.

16) Council Member Gershman echoed comments re. Mr. Kreun and Mr. Hanson's work, really comprehensive and good program.

17) Mayor Brown reviewed congratulations to various groups, etc. as at beginning of the meeting.

ADJOURN

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

Respectfully submitted,

John M. Schmisek
City Auditor