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PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
August 14, 2003

The city council of the city of Grand Forks, North Dakota met in special session in the council chambers in City Hall on Thursday, August 14, 2003 at the hour of 7:00 o’clock p.m. with Mayor Brown presiding. Present at roll call were Council Members Brooks, Hamerlik, Glassheim, Gershman (teleconference), Christensen, Kerian, Kreun - 7; absent: none.

Mayor Brown announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter, and that the meeting is being televised.

SET SPECIAL ELECTION FOR SALES TAX ISSUE

Mayor Brown stated we need to look at the cost of construction and operation, the cost of admission and review everything including the size of the aquatics center, that what they need tonight is to set the parameters and guidelines that put that into ballot language and now time discussion turns to decision by the council and then by the people, for the development of 42nd Street, the water park, the hotel bolstering the Alerus, the next investment like a hockey hall of fame, automobile museum, aviation museum and Omniplex theatres, these are some of the things they are talking about, not just the water park or aquatics center, and not to forget foresight to prepare funds for the coming of bills for greenway maintenance and infrastructure repairs. That we need to put this to a vote so the citizens can either validate this direction or tell us to consider a new one. He stated if the council feels they can't move forward then citizens may move forward on their own with their own initiative but doesn't think that is necessary, believes the council will trust in the people's voice and that our community will continue to move forward and believes the council will make the best decision for the community.

Council Member Glassheim moved a motion which has six parts to it and to get all the items on the table and divide them and go through one at a time and once before us can be amended: 1) that we adopt the Notice and Proposal to amend the Home Rule Charter; 2) that we set the date of the special election on October 28, 2003; 3) that we approve the Home Rule Charter amendment dated 8/13/03 4) that we approve an up or down vote on the aquatics center, and 5) that within three weeks the council adopt a resolution making clear its intentions on the financial plan for operating the water park. Council Member Kreun seconded the motion.

Council Member Glassheim asked to divide the question into its component parts and discuss them individually. Council Member Kerian seconded the motion. Carried 7 votes affirmative.

Discussion on Item 1)
Council Member Glassheim stated that the changes establish the 1/4% sales tax and dedicates them to the construction, equipping and furnishing of an aquatics center, levee construction and maintenance, greenway maintenance and/or street repair; this does not have the operation and maintenance in it and this is an announcement that would be placed in the newspaper and also extends the 1/4% use tax which we have in place now but adds the 1/4% also for the use tax so that it is the same as the sales tax; that money is dedicated and continues to be dedicated to flood control project, flood abatement, flood protection projects and related improvements, including greenway development and maintenance. He noted that 1/4% brings about $500,000 and that would add an additional $500,000 to the use tax fund for the flood control and greenway projects, that there is a sunset on them pursuant to the motion adopted at the last meeting and does sunset at the expiration of the aquatics center bonds, both the 1/4% sales and 1/4% use tax.

Council Member Gershman questioned whether the 1/4 cent increase in use tax is going to generate, and the general tax would be about $1.7 million. The city auditor stated previously the 1/4% were only talking about all items that weren't covered by the use tax and that generated the $1.7 million but this also raises the use tax 1/4% from where it is to a 1/2% and would then generate an additional $500,000 and total with these two would be bringing in $2.2 million ($1.7 for the sale tax and another half million for the use tax).

Council Member Gershman questioned how much would be used for street repair, dike and greenway maintenance. Council Member Glassheim stated that would be adopted in the resolution within three weeks and has been going under the assumption that somewhere between $900,000 and $1.1 million would be for the aquatics center construction, $300,000 for the greenway operation and maintenance, $300,000 for street repair, and $500,000 of the use tax would be available for reducing the bonds on the dike project or operation and maintenance or little bit of greenway; and those are his understanding of the numbers that would be generated and how applied but the council has to speak on that and would hope they would do that in the resolution. Council Member Gershman stated we are not sure what the total cost of the aquatics center because of the potential shortfall and because of the subsidy we don't know exactly where or how much is going to go to these other things. Council Member Glassheim stated we don't know for sure and that he has been saying that if there is some shortfall it should properly be taken out of existing economic development funds so as to not shortchange those two infrastructure needs in the quarter cent sales tax but that is for the council to decide. Council Member Gershman stated we don't want to shortchange economic development either. Council Member Glassheim stated that part of this project is a leisure swimming project for residents and part of this project is for economic development different from what we have done in the past but nevertheless a very real and bringing in a significant new people and dollars into town. Council Member Gershman stated he would agree that it is a part of our economic development efforts and in that agrees with him.

that if there is some shortfall it should be taken out of existing economic development funds so as not to shortchange those two infrastructure needs in the quarter cent sales tax but that is for the council to decide; and part of this is a leisure swimming project for residents and part of this project is in fact for economic development, different from what we have done in the past but very real and brining in a significant new people and dollars into town. Council Member Gershman stated that it is part of our economic development efforts and would agree.

Council Member Hamerlik stated what is new to him is a $300,000, $300,000 plus something and has never heard those figures, has heard $13 million and that quarter percent would bring in $1.7 million and doesn't have any problems with that but this is new but if we have three weeks before we do that in a resolution, he is good to go.

Council Member Christensen stated he and the city attorney had worked up a new notice and proposal to amend the Home Rule Charter, Document V, and before they work on the 8/13/03 draft, would ask if they would look at Draft V, paragraph P1 no change to the language, paragraph P3 minor change and have more clearly defined the sunset provision and as want to bring this to a vote of the people and a separate up or down, they worked on paragraph 3 so that if the citizens were to vote down the water park, still would have the ability to use the 1/4 percent for the other items articulated, and if the water park were to be voted down and citizens believed we needed 1/4% for other needs, that paragraph would give them the ability to do that. He noted that they worked on the use tax aspect of this measure because it has to be uniform according to State Statute, and have added to the utilization of the use tax greenway development, construction, operation and maintenance (formerly for construction of dike) and this would give us additional monies to fund the greenway if the 1/4% was short. He stated we would now have 1/4% to fund the greenway if the 1/4% wasn't enough to do what was included in Council Member Glassheim's motion.

Mr. Swanson reviewed differences between Draft of 8/13/03 and Draft V - that on the 8/13/03 Draft P3 is new language that is being proposed and that does not include any dollars potentially used for operation or maintenance; in V Draft language has been added to allow the use of those dollars for maintenance and operation of an aquatics center. He noted the second change if look at 8/13/03 Draft, only refers to an addition to the aquatics center, levee construction and maintenance, greenway maintenance and/or street repair; and will find in V Draft that the language for other infrastructure improvements has been added, that addresses a concern he addressed two weeks ago with respect to the language that is already existing in the Home Rule Charter. The other change in V Draft is a slight change in the sunset clause, if you look at the 8/13/03 Draft and if he understood the sunset clause, the sunset clause was tied to the cost of the aquatics center, and it is his opinion if you do not incur costs for the aquatics center (if don't build it) you do not have an additional sales tax and could not use those revenues for any other use, and without the aquatics center being approved under the 8/13/03 Draft there are not additional dollars to be used for any other purpose. He stated per Draft V the sunset clause is a limitation on the length of bonding, it prohibits any bond or other contract or indebtedness for the aquatics center to exceed 20 years; in that case if you do not build the aquatics center you would still have the 1/4% tax in place to be used for levee construction, maintenance, greenway maintenance, street repair or infrastructure improvements; under this draft that tax continues assuming it is implemented by ordinance.

Council Member Christensen moved to amend Council Member Glassheim's motion rather than the 8/13/03 Draft and asked that it be substituted with the 8/14/03 V Draft. Council Member Brooks seconded the motion.

Mr. Swanson stated that on the 8/13/03 Draft the use tax also carried the same type of sunset provision (tied to the cost of the aquatics center) and it would be his opinion that if they did not approve the aquatics center and did not incur any costs for the aquatics center, you would have no use tax. The V Draft simplifies it by increasing the use tax by 1/4% and allows the use of that use tax to be for flood control, flood abatement, flood protection, including greenway development, construction, operation and maintenance. He spoke with Council Member Christensen after this draft was e-mailed this afternoon that you may wish to include in this language the same phrase that appears in the sales tax, that would be "other infrastructure improvements" (at the end of subsection 1 on the use tax; so new language would be including "greenway development, construction, operation, maintenance and other infrastructure improvements." Council Member Christensen stated his motion should include that language/ Council Member Brooks agreed.

Mr. Swanson stated if you look at your present sales tax in P1, that is the exact phrase that appears there; attempting to be consistent throughout. He stated those are the significant differences that appear between the 8/13/03 Draft and V Draft.

Mr. Swanson stated there is no sunset under Draft V but a limitation on debt, tax would continue on both sales tax and use tax and would be allowed to be allocated for the greenway, levee, etc. and that is a major distinction between the two drafts. He stated if the amendment were passed and the motion, as amended, passed, the language that appears in V Draft would be the language placed for consideration on a ballot for an amendment to the Home Rule Charter, the other items remain to be acted upon. He stated the exact language will be placed in a published notice and proposal, the ballot language which they have not considered as yet will not recite specific, the language, rather a summary reflecting what the Home Rule Charter amendment will be.

Council Member Hamerlik stated he liked 8/13/03 Draft, P3, and that sets a sunset clause for the tax, and what is on V Draft sunset for the aquatics center but keeps the 1/4% tax on it and that inhibits one of the objectives he has as a council person to build a water facility and there is a more positive approach if put a sunset clause on there rather than to quit funding one portion of it, the water facility, but rest of it goes on for the rest of your lives, and also in paragraph 3 the clarification that Mr. Swanson advised on rather than using street repair, include that but also include infrastructure improvements, and, moved that we use the 8/13/03 Draft, paragraph P3, which was what Council Member Glassheim presented instead of what was on V Draft, except to include after street repair "and/or other infrastructure improvements". Council Member Kerian seconded the motion.

The city auditor asked for clarification from Mr. Swanson what their intent is, that his understanding of the original language is written that if it sunsets everything sunsets, including the money that goes for street and other infrastructure, etc.; his concern with the amendment is that you have on-going needs that aren't going to disappear but money is going to go away. Council Member Christensen stated that is what he was trying to do, that 1/4% may not be sufficient for a water facility but if the allocation were to bear fruition and in 20 years out if sales tax were to go up, future councils are going to rely on that money and if you take it away, that a million, million and half dollars that future councils will have to replace, and would rather have it in place so 20 years from now, if passed, that future councils know it is coming.

Council Member Hamerlik stated he understands the need for infrastructure and the greenway and monies to come in the future that are needed; however, is very concerned that a sunset clause and if water facility passes and that is the main reason for the motion.

Mr. Swanson stated as opposed to a limitation on debt which V Draft presents, and another thought that they may wish to consider on a sunset is to define it by a given term of years - if intent is to generate dollars for an aquatics center, levee construction, greenway, street repair and infrastructure, etc., and assuming you didn't build an aquatics center but still wanted to have tax generated for the other uses but still wanted to have sunset provision, you may wish to consider imposing a sunset by term of years (20 years upon imposition of a sales tax by ordinance or something of that nature), you don't necessarily have to tie it to indebtedness, that has not been discussed but hears on one hand if aquatics center isn't built, still want to have funding for other purposes but with the sunset clause as drafted now, but it is his opinion that you have no tax because you have no cost (sunset is tied to the cost of the aquatics center).

Council Members Hamerlik agreed and if withdrew his motion and the second agrees, they could incorporate that compromise; he withdrew his motion and Council Member Kerian withdrew her second.

Council Member Glassheim moved that we amend V Draft by adding to it what Mr. Swanson suggested, that a sunset that occurs after 20 years from the date of imposition of the sales tax and do the same with the use tax so that they be in tandem; the use tax provision goes up to 2% but if lower the sales tax then would have to lower the use tax in 20 years and they remain in tandem. Council Member Kerian seconded the motion.
Mr. Swanson stated what he understood the amendment was, referring to V Draft, on P3, the last sentence which now refers to bonded indebtedness would be removed, and in its place language imposing an expiration date for the Authority to tax would occur 20 years from the effective date of the imposition of a sales tax; similar language would appear on page 3 and may have to redraft the use tax to break out the quarter percent as opposed to combining - but the effect of the amendment would be to have a 1/4% of the use tax again sunsetting 20 years from the effective date of the imposition of that use tax. He stated that both the sales tax and the use tax would expire 20 years after its imposition. Council Member Glassheim stated that would be his amendment - and that the city auditor's concern is have 20 years to collect the sales tax and use tax, and if tried to sell bond in year 5, could not sell a 20-year bond in year 5 for any purpose, whether flood control or greenway, because you're outside the 20-year scope of your tax; most bonds are sold on terms of 20 years, and would need to determine in year 1 (before the clock started to tick) what bonds you will need or revenues need if you were bonding for that 20-year period and that would include whether it's for the aquatics center or greenway or levee maintenance, etc. and if your intent was to issue 20-year bond, you've created a beginning and an end for your tax revenue and your bond has to fit within that beginning and end, cannot overlap.

Mr. Swanson stated they would be limited in the length of time that your bond could extend and that in term will limit the level of bonding capacity you would have. The city auditor stated his concern is that we have very limited funds in Highway Users Fund to the extent that we can't match any of the federal funds to do major street repairs, we have a concern on some projects and may have to special assess this coming year rather than pay what would be normally City's Share; and if set it up this way and if aquatics center didn't pass and had funding to do infrastructure you wanted to do, and his opinion is going to have to we're going to be able to do $1.2 million of infrastructure each year and that's it; that he is looking to the future and knows in CIP and talked about this, have projects such as S. 42nd Street development for the underpass and that is significant dollar amount that one year's amount from here isn't going to give you the money you need to do a project and may wish to bond for it and if that is a $5 million share and is half million each year but is going to be considerably more than that if we have to back off and do it ten years out - that you are really limiting your flexibility to do any major projects of infrastructure that we have needs for.

Upon call for the question on the amended motion (which deals with replacing a debt limitation in Draft V and the effect of the amendment, if passed, would establish a sunset clause for both the sales tax and the use tax to terminate 20 years after the effective date of the imposition of both the sales and use tax). (This language amends Draft V which is not limited to the aquatics center) and upon roll call vote, the following voted "aye": Glassheim, Kerian, Hamerlik - 3; and the following voted "nay": Council Members Gershman, Christensen, Kreun, Brooks - 4. Mayor Brown declared the amendment failed.

Council Member Glassheim moved to amend Draft V, P3, to delete as one of the permitted uses of the 1/4% sales tax the maintenance and operation of an aquatics center. Council Member Kreun seconded the amendment.

Council Member Glassheim stated what he is seeing is if put maintenance and operation of the aquatics center here, it uses this 1/4 cent tax as a subsidy and doesn't want them to pay for the maintenance and operation while also paying for the capital construction, want to limit it to the capital construction of the aquatics center and the more you put maintenance and operation in addition to capital construction, you start to impinge on greenway maintenance and street repairs - there is a limited amount of dollars and shouldn't take a limited amount of dollars for subsidizing the operation and maintenance of the aquatics center; his proposal is that if there is some shortfall that it be taken out of economic development monies which we already have and already expend but that we protect the portion of the $1.7 million that we would like to give to the greenway maintenance and street repair and not impinge upon those items by adding in a maintenance and operation subsidy for the aquatics center. He stated the $13 million was for construction and then you add on maintenance and operation above the $13 million.

Council Member Gershman stated he heard that as we increase the 1/4% on the use tax we're going from what we thought was a $1.7 million revenue from 1/4% sales tax to a $2.2 million; the city auditor stated that was correct. Council Member Gershman stated there is substantially more money because of the use tax increase for the things that many of us feel we need to maintain going forward, and that there is going to be further negotiation with Canad as to what their contribution will be towards the operation and maintenance of the aquatics center. Mayor Brown stated his understanding was that Canad Inn people have signed a lease agreement and had letter of intent before that discussing their contribution to the water park and doesn't believe that is negotiable because based on the hotel negotiation group that was what was presented and signed letter of intent and further cemented with the lease agreement and $50,000 contribution to the aquatics facility.

Council Member Glassheim stated that he doesn't believe that the additional money from the use tax goes to the aquatics center, either construction or operation, but is limited to flood control and greenway and other infrastructure improvements. Mr. Swanson stated that is correct, the original motion with respect to the use tax only had the permitted use of flood control, greenway and today has been amended to include infrastructure; there is no provision in use tax dollars for either the cost of construction of an aquatics center or maintenance or operation. Council Member Gershman stated his concern is that if the aquatics center does throw off a deficit where it will need a subsidy, then it starts to be taken from economic development and understands that a facility such as this, as stated earlier, is part of what makes a city have an economic development plan or atmosphere, is part of it, and is on the record pretty seriously on how quality of life impacts economic development, however, at what point does it start to take, if it doesn't work the way we hope it does, to infringe upon our efforts for economic development in attracting additional business.

Council Member Christensen reported that when he and the city attorney were drafting the ordinance this afternoon he added the words "maintenance and operation of the aquatics center" because at this point it appeared there was an operational requisite of $2.5 million and appeared there was $1.850 million expected to come from the hotel and the 1/4 percent generates $1.7 million and will have $1.1 million if take this language out to pay for the bonds and have $700,000 left but still be faced with the operation and maintenance of the facility going on, and the letter of intent has been replaced by a lease agreement, and there is no agreement between the City and Canad Inn regarding any type of water facility, all we have is an agreement with Canad Inns re. the leasing of the ground to construct their hotel and also have a marketing agreement for five years where we contribute $300,000 to a joint marketing effort for two years, that he is not aware of any written agreement between the City and Canad Inns as to how much money, if any, they are going to contribute towards their use or operation of the water park. He stated it is his understanding that that may have been a figure that was tossed out during initial conversations between the City, the Park District, etc. but haven't embraced that as a figure that we are going to accept from them for the use of a water facility, if constructed; and if we were to delete this language, then the only source of revenue to finance the maintenance and operation would be from people coming in for whatever we charge them and what do we charge other hotels, the difference would have to be made up out of 2163, economic development, and by doing this would force future councils to use 2163 to fund the shortfall; and would be better off to have the source of money, the 1/4% plus excess revenues in the Alerus so that all councils in the future have the sales tax revenues to fund the facilities that the City owns and operates.

Mr. Duquette stated to clarify history of discussions that led up to the eventual lease agreement, there was a letter of understanding signed on December 16, 2002, by representatives of Canad Inns, the Park District and the City of Grand Forks, within the content of that discussion there was - "Canad Inns contribution to the water park, an annual fee of $50,000 U.S. will be assessed to Canad for use of the water park facility by hotel guests, said fees to be reviewed annually and adjusted according to use and rate, not greater than the CPI"; that subsequent letter of understanding was not included in the ultimate lease agreement that was endorsed by the city council but that was the initial discussion that took place. Council Member Christensen stated that the document has specific language that it is non-binding agreement, but letter of understanding to engage in negotiations, nothing contractual that says they are going to get the use of a water facility for $50,000. Mr. Duquette stated the $50,000 was part of the discussion in the letter of understanding, the water park matter is not in the lease agreement at this point.

Council Member Glassheim commented on concerns and that there are limits to what can be done and have to make choices within limits and this is economic development activity, being done to complete the activity of the Alerus Center, to attract more people to town because of the economic impact they will have, to bring several other private enterprises, this is economic development and if subsidy needed or shortfall then that should come from economic development.

Council Member Kreun stated that when they discussed this in some of their budget hearings that focused on a lot of the sale tax issue and water facility and infrastructure, they did have in the 1/4% or 1/2% or 3/4% of 1%, did have a portion of that for funding maintenance and upkeep, asked what would happen if put maintenance and operation of the aquatics center before the $13 million and limited the $13 million with the maintenance and operation. Mr. Swanson stated he didn't know how you could do that, how would you be able to project the life of the aquatics center and to cap it of operations and maintenance and construction of $13 million, that the way this is drafted the limitation of $13 million applies to construction, equipping and furnishing.

The city auditor clarified what they will get from the use tax, the $600,000 we get from the use tax is generated by the 1 3/4% tax and reduce the wild $500,000 number by about $400,000 and total available to you will be a total of $1.8 million rather than the $2.2 million (will have $1.7 million plus $85,000 to $100,000 from the use tax).

Mayor Brown asked what was the explanation to Canad Inns as to why the $50,000 was not in the lease agreement. Council Member Christensen stated he only met with the Canad Inns people twice, never spoke with those gentlemen again about any of the figures or the language until they met to negotiate the lease agreement that Mr. Duquette was speaking about. He stated the drafting of the documents was done by Mr. Swanson in conjunction with Mr. Duquette; that generally a letter of understanding or letter of intent says they will agree in good faith as to these terms, try to come to agreement, but as the negotiations moved along, the agreement was reached as to the leasing of the ground for the construction of the facility, that during that period in December they learned in early January or February that the Park District was not in a position to finance a water facility, that negotiations continued and the arrangement for the water facility was taken out of the negotiations because initially when letter of intent was signed they thought the Park District was going to finance this, and weren't in a position then to discuss the water facility and that is why it was removed.

Council Member Christensen stated he understands Council Member Glassheim's suggestion that this is a form of economic development and that the word subsidy is sensitive word but would ask council to think long and hard if they were to adopt his amendment and to remove this language from this portion of the proposed ordinance because that will become a substantial shift in direction for this community as far as what they perceived to be economic development, doesn't think that primary sector jobs are jobs in a water park, primary sector jobs are beyond services, and doesn't think it is what the growth fund is about and by doing what proposed, change the focus of development of this community because force future councils to use this money to fund and subsidize if this passes, but shouldn't have that type of shift.

Council Member Christensen stated his concern could be addressed in the resolution that it has to make money, has to be profitable, and have to understand what is going on from Canad Inns, and address those issues in the resolution.
The amendment before the council is to delete the phrase "maintenance and operation of an aquatics center" in subsection 3P on Draft V.

Upon call for the question and upon roll call vote, the following voted "aye": Council Members Kerian, Kreun, Brooks Hamerlik, Glassheim - 5; voting "nay": Council Members Gershman, Christensen - 2. Mayor Brown declared the amendment to the motion carried.

The matter on the floor would be amendment no. 1, which is to substitute the language from Draft V for that dated 8/13/03, including the deletion of the phrase "maintenance and operation of an aquatics center".

Council Member Glassheim stated this includes the suggested language on page 3 in the use tax amounts and other infrastructure improvements, and moved to delete those (greenway development, construction and operation and maintenance of the greenway and other infrastructure improvements as a permitted use of the use tax income) and wants other infrastructure deleted. Council Member Kerian seconded the motion.

Council Member Glassheim stated that the use tax when originally imposed was dedicated completely to the flood protection, dike system, and pay for flood protection and that was why it was sold and that was what it was for, that he doesn't object to adding greenway development, which is close to the flood protection project, but have quite a lot of expenses with the flood protection project and shouldn't dilute the fund and we will need the money to pay for flood protection.

Council Member Christensen stated that the city attorney suggested that in his opinion we should add the language "and other infrastructure improvements" to be consistent and the city auditor endorsed that and he included that as part of the ordinance, that we're putting an ordinance in place that the money will be used for dike construction and today added the words "including greenway development, construction, operation and maintenance" so would have some additional money in case we didn't have enough money from the 1/4% for greenway and added "or other infrastructure improvements" in case we needed that language and now saying take it away, this is what our professionals are telling us what to do and would hope to keep this language in so have flexibility going forward if the ordinance passes but the water park fails.

The amendment before council is to delete the reference in the use tax " and or other infrastructure improvements" and what would remain, if that passed, would be acquisition, construction, repair, maintenance and financing of flood control, flood abatement and flood protection projects and related improvements including greenway development, construction, operation and maintenance. It would appear exactly as it is printed in your draft.

Upon call for the question and upon roll call vote, the following voted "aye": Council Members Kerian, Brooks, Hamerlik, Glassheim - 4; voting "nay": Council Members Christensen, Kreun, Gershman - 3. Mayor Brown declared the motion carried.

The motion now before the city council is the initial amendment to substitute the language of Draft V for that dated 8/13/03 with two amendments that were passed would be deletion of maintenance and operation of aquatics center in P3 dealing with the sales tax and the deletion from section R relating to use tax reference to "and or other infrastructure improvements".

Council Member Hamerlik and Christensen called for the question. Carried 7 votes affirmative.

Upon call for the amendment and upon voice vote, the motion carried 7 votes affirmative.

The motion before council is the notice and proposal to amend Home Rule Charter, as amended.

Council Member Hamerlik and Christensen called for the ques6tion. Carried 7 votes affirmative.

Upon call for the question and upon voice vote, the motion carried 7 votes affirmative.

Mr. Swanson stated that the notice of proposal is not quite complete because are calling for a special election and if so, when, and those should precede any action on a resolution addressing the election.

Discussion on Item 2)
The next two items to be considered and can take them separately or together: 1) whether or not you wish to call a special election and if so, when.

Council Member Glassheim moved that we call a special election on October 28, 2003. Council Member Kreun seconded the motion.

Council Member Christensen stated the issue is that within three weeks we adopt a resolution as to how we're going to operate the water park. Mr. Swanson stated he has advised before to use approximately 63 to 65 days and have identified if held an election as soon as possible, when were dates likely and suggested three possibilities and assuming using historic date of Tuesday - October 21, October 28 and November 4 and with October 21 date that publication would have to occur in the Grand Forks Herald no later than Monday, August 18 and gives no opportunity for any errors, using October 28 gives some time to insure that proper publication occurs and is doable.

Upon call for the question and upon voice vote, the motion carried 7 votes affirmative.

Discussion on Item 3)
The next item on the agenda is to adopt the Home Rule ballot language.

Council Member Glassheim moved approval of the adoption of the Home Rule Charter amendment ballot; Council Member Christensen seconded the motion.

Mr. Swanson noted that the appropriate document was distributed to council tonight, however, that will need modification or amendment to reflect the changes that were made, in particular, you will have to delete the references to maintenance and operation of an aquatics center.

Council Member Christensen suggested as part of the motion that we use the Home Rule Charter amendment ballot language as modified by Mr. Swanson.

Mr. Swanson stated in reference to that draft which was dated 8/13/03, the one specific change is that it includes the 20-year limitation on debt and again removing the maintenance and operation of the aquatics center, other than that they are essentially the same except that the language in the use tax is expanded slightly for greenway; the 8/13/03 Draft says greenway and 8/14/03 Draft says "greenway development, construction, operation and maintenance". Council Member Glassheim stated he will second the 8/14/03 Draft with the deletion of the maintenance and operation of an aquatics center. Council Member Christensen seconded the motion.

Upon call for the question and upon voice vote, the motion carried 7 votes affirmative.

Discussion on Item 4)
The matter before council is to adopt an up or down vote on the aquatics center. Mr. Swanson stated the language appears in what is labeled on bottom of page Draft 8/13/03, and has not drafted any other language.

Council Member Glassheim moved adoption of a call for an advisory vote to be placed on the ballot regarding the wishes of the citizens as to whether an aquatics center should be funded. Council Member Christensen seconded the motion.

Council Member Hamerlik stated that the motion simply asks for an advisory vote for the construction, and equipping of an aquatics center, and if they indicate no on that but yes on the Home Rule Charter ballot, which one supercedes. Mr. Swanson stated in light of the action taken on your proposal to amend the Home Rule Charter the council would still have before it the Home Rule Charter that taxes would be imposed assuming you pass the subsequent ordinance and you would be able to use those revenues for the purposes stated which would include "greenway maintenance, street repair, other infrastructure improvements, levee construction and maintenance", it does not preclude the council from potentially considering an aquatics center, it is an advisory vote, and not a vote on the Home Rule Charter.

It was stated that if the aquatics center is specifically included in the Home Rule Charter, does not mandate then if there is a yes vote, that it be used for the aquatics center. Mr. Swanson stated it would not, it is an advisory vote; that if the Home Rule Charter is amended that gives the council the authority to impose or enact subsequent ordinances, you could choose even if the Home Rule Charter were adopted to only implement a portion of the tax or only allocate the tax for a portion of the use - it is permissive or empowerment and not action. He stated that he also drafted for you and it is not intended for adoption or action tonight, a proposed ordinance and that would need to be acted upon sometime in the future after an election, assuming this were passed and assuming that you did want to impose a use tax and a sales tax; without further action by the city council the tax is not in place even though a vote may be favorable. He also stated that if the amendment to the Home Rule Charter is adopted, it would be up to this council to decide what authority, if any, you wished to impose or undertake. He stated the council would not be able to impose a sales tax and under this language the proceeds for an aquatics center are limited to dedicated sales tax. He stated if the advisory vote passes but the amendment to the Home Rule Charter fails, the city council does not have the authority to use any sales tax for the construction of an aquatics center.

In answer to Council Member Gershman's question why this is an advisory vote rather than a biding vote, Mr. Swanson stated it is an advisory vote because it changes no organic law of the city of Grand Forks, it does not change the Home Rule Charter, it does not change an ordinance, it is advisory to the extent that the council wishes to acknowledge and follow the vote. If they wanted to propose a Home Rule Charter amendment that was not bundled as you have done to this point, and the only Home Rule Charter amendment dealt solely with the use of the sales or use tax for an aquatics center, a no vote or a yes vote would truly be an up or down vote only on an aquatics center and on that sales tax but the manner in which it has moved forward, the aquatics center is bundled with other potential uses and those uses include levee construction and maintenance, greenway maintenance, street repair and other infrastructure, there is no way to amend the Home Rule Charter by breaking that out.
Council Member Glassheim stated he wanted to make sure it was clear to the public - this is an advisory vote and has been asked for by a lot of people who felt that we were bundling and trying to put something over on them or sneak something through - he believes after 60 days of discussion when the merits, the economic benefits of the water park and the fun things described in the water park, people who now think they are against it are going to vote for it. He stated if the people of Grand Forks vote no on this up or down on the water park and if they don't want it after they have full knowledge about it, then let's say no and we'll move on and do something else.

Mr. Swanson stated the council should also be aware with respect to the advisory vote that any action taken following an advisory vote is subject to referral, and if you were to take an action that was contrary to the advisory vote, not only may there be repercussions in an election but also need to be clearly aware that your Home Rule Charter provides a right of referral for that specific act.

Mr. Swanson stated that he is knowledgeable enough about Home Rule Charters to know that it only gives the council the ability to act and doesn't know what the council might do in the future, that is why he prepared the ordinance, and at some point the council would have to dictate the percentage of allocation to those various uses; and that if you were going to do an aquatics center and were going to sell bonds and those would be sales tax revenue bonds, among the documents to be signed will be bond covenants and that those bond covenants would require you to dedicate 100% of the revenues of the sales tax to the retirement of the bonds until such time as each payment can be made - the balance would then be available to be allocated to your other purposes.

The motion before the council is to approve the language of the advisory ballot is should the city council for the city of Grand Forks authorize the construction, equipping and furnishing of an aquatics center with the cost of construction, equipping and furnishing not to exceed $13 million to be funded by dedicated sales tax revenues, yes or no.

Upon call for the question and upon roll call vote the following voted "aye": Council Members Kreun, Brooks, Glassheim, Gershman, Christensen - 5; voting "nay": Council Members Kerian, Hamerlik - 2. Mayor Brown declared the motion carried.

Discussion on Item 5)
The next motion before the city council is that within three week the council would adopt a resolution regarding the financial plan for the operation of the aquatics center. It was so moved by Council Member Glassheim and seconded by Council Member Kreun.
Council Member Glassheim stated there is some work for the city council to explain to the public how this will operate, there was such a resolution passed on the Alerus and it may clear the council's intent on funding, processes and what was being proposed, size, etc. make clear the intent of the council on a number of issues and would like us to do that and still working through some items to be done and might be an economic impact review and further conversations with Canad Inns, and has paragraph in mind that he would need time to draft as to how the operation would be funded and managed and what we are proposing to do and might be description of the 5 or 7 or 10 programs that have been discussed, and a more detailed review of what it is going to be and how it will work that we will present to the voters and if get it done in three weeks and will be time for public to see how the city council views this operating
Council Member Kreun stated we don't have all the income numbers in the performa and still a lot of questions, and that for the people that weren't on the committee and if it wouldn't be helpful for the rest of the council and perhaps Park District people to get together with one of the members of the committee and maybe Mr. Bollingberg would be willing to do a synopsis with the council people and the Park Board people that haven't been involved with this to get an idea of what they did and why they did it and how they came up with some of these numbers because a lot of things have been said and sometimes they're over reacted to and if we shouldn't put that together if the council would be willing to do that and Park District as well and Mr. Bollingberg might be up to doing that so that everybody gets same idea and background and history of what they have done. He asked if Mr. Duquette would find out from the council members and the Park Board people if they want to get together and do that. Mayor Brown stated he would request from the consultant that we get the minutes from the meetings in Fargo because he mentioned two meetings with consultants with business people in Fargo and those minutes are not contained in this document.

Council Member Brooks stated he was going to hang a lot on terms of what he supports because of having two separate political entities involved in this and know how this fits together, Park Board with expertise in the recreation area and City with finances, and have to be specific and this document is going a long ways towards where he stands in terms of support for the water park vote and need to get that put forward and people need to see it.

Mayor Brown stated he would hopefully reserve the right to call the task force back together for advice or opinions.

Council Member Christensen stated that at meeting last night a question was asked of Mayor Brown re. Canad Inns' position on the $1.8 million+ that is in the water park presentation, that there isn't a plan yet as far as how it is going to be operated or how break even. It was his understanding yesterday that there has not been a lot of conversations with Canad Inns folks as the task force went forward and we planned the water facility, that is unfortunate, and hopes the resolution can be done in three weeks because what asking to get done is to develop a business plan, an operation plan this is going to address issues of where is the revenue coming from, and every time they talked to these people they kept coming back to the $50 ft. and task force continually challenged the $50 ft. and every time challenged it was lineal, and $50 foot is pretty consistent based upon the size to bring the cost of operation down you might be able to take and reduce the size of the facility, but the professionals and the Park District told us they wanted a 48,000 sq.ft. facility, and in these three weeks we are going to have to deal the 48,500 sq.ft. facility, because we can't go back and redesign that and that he is not going to oppose a three week period to come up with resolution but whomever works on that is going to have to find out exactly what kind of revenues we're going to get from Canad Inns, how we plan on pricing the armbands or wrist bands to the rest of the community and which model we are going to adopt and it's going to be a full-time three week task and not three meetings of the task force, someone is going to have to be staff to spend time on this and give us input on weekly basis. Mayor Brown stated he has no problems with that because need accurate information to base your decision on, and will form group with staff to get information for the resolution.

Mr. Duquette stated it might be helpful as moving forward, what kind of rooms are they going to build and what will facility look like, and should have reached out further and got more information from Canad Inns; and would like to suggest in the language of the motion that you consider specifically directing himself and necessary city staff, Park District staff, needed financial consultants to begin working on this immediately to meet the three-week timeline, and asked if it would be appropriate to include Canad staff in that financial preparation - council agreed. Council Member Glassheim stated he would want to include them as staff, but rather that they instruct Mr. Duquette and that he take whomever else he needs on City staff to do this including financial consultants and if he wants to consult with Canad Inns.
Council Member Christensen suggested that the city council negotiating committee continue and advise as needed. Mr. Duquette stated that the original negotiating committee was Council Members Christensen, Kreun, and Hamerlik, Mr. Everson and Mr. Conneran from Alerus Commission, and asked that that group bring two members forward to work with staff a process bearing in mind it is a three week crunch. Council Member Glassheim stated he would like to task Mr. Duquette to do it, not sure want to have committees, but as need people knows who to call and doesn't want to have committee meetings, and that perhaps want a special council meeting on the Committee of the Whole in three and half weeks from today, followed by adoption by the council four and a half weeks. Council Member Glassheim stated he didn't want to mandate a weekly report, but certainly can ask and Mr. Duquette will be available.

Upon call for the question and upon voice vote, the motion carried 7 votes affirmative.

MAYOR AND COUNCIL MEMBER COMMENTS

1) Council Member Kerian stated there has been some word about this body being slow at this but would ask people to remember that they did put a task force together and they are just now getting the information and are doing their duty to evaluate this and have done in fairly timely manner.

2) Council Member Gershman stated it is taking time and is done thoughtfully, this is an important issue;

ADJOURN

It was moved by Council Member Christensen and seconded by Council Member Hamerlik to adjourn. Carried 7 votes affirmative.

Respectfully submitted,



John M. Schmisek
City Auditor