Print VersionStay Informed
Minutes/Committee of the Whole
Monday, October 13, 2008 – 5:30 p.m.(following JDA)
The City Council met as the Committee of the Whole on Monday, October 13, 2008 at 5:30 p.m., following the JDA Meeting, in the Council Chambers in City Hall with Mayor Brown presiding. Present: Council Members Bjerke, McNamara, Glassheim, Gershman, Christensen, Kreun - 5; Absent: Bakken - 1.

Mayor Brown made the following announcements:

1) City wide vacuum leaf pickup will begin this week weather permitting and crews will make two full passes through the City.
2) Congratulations to Don Zhorela, 44 year Public Works Employee in the Water Distribution Department for receiving the Operators Meritorious Service Award at the Water Pollution Control Conference in Bismarck. Zhorela was present with his wife Linda and received the award. Zhorela thanked his leadership, coworkers and the American Waterworks Association for recognizing him for this prestigious award.
3) The County will again conduct early voting for the November 4 General Election at the Alerus Center beginning October 27 at 11:00 a.m. and encouraged all to get out and vote.
4) 3 meetings this week to make citizens aware of – Sen. Conrad will hold a community roundtable leadership discussion, with items to include financial crisis and energy, tomorrow at the Coroporate Center 2 at 1:15 p.m.; Legislative discussion with the School District, Legislators and Candidates Wednesday at 4:30 p.m. in Council Chambers; and semi-annual meeting between the UND Student Senate and City Council this Sunday.
5) Mayor Brown announced that flu shot time is here and received his flu shot from Public Health Nurse Betty Otteson, while Debbie Swanson, Nursing & Nutrition Supervisor, provided information on flu shots, clinic schedules, and statistics related to flu shots, including that over 70% of city employees did choose to receive a flu shot last year, and thanked Mayor Brown for setting a good leadership example by getting vaccinated.

1.3 Airport Terminal Presentation.

Steve Johnson, Executive Director of the Airport, provided a presentation to the Council detailing the needs for the new terminal, proposed design of the new terminal and the proposed financing plan. The presentation noted that discussions related to construction of a new terminal have been ongoing since 2003 and are supported by the FAA. In comparison to our peers, Minot’s terminal was built in 1991 and is 40,000 sq. ft., Bismarck was built in 2005 and is 80,000 sq. ft., and Fargo was built in 1986 and improved in 2008, 118,380 sq. ft.; while our terminal was built in 1964, and added on to in 1974, 1985, and 1993, with only 24,820 sq. ft. Johnson reviewed a floor plan of the existing terminal as well as facility issues that were found in the 2004 Terminal Area Study which included Security, Infrastructure, and Traffic related items. Johnson showed the location of the proposed new terminal as well as architects renderings of the terminal and described how some of the flaws in the existing terminal would be alleviated in the new design. The presentation showed letters of support for the project from our senators and the Chamber of Commerce.

Johnson stated that the airport has met with the County and secured their concurrence and are now at the stage of looking for the same concurrence from the City. Assuming that is obtained, the next step would take about six months and would involve the architects completing the design, followed by Phase 1 construction June to October 2009, Phase 2 construction June 2010 to May 2011, Phase 3 construction June to September 2011, and occupancy occurring in August 2011. Johnson explained that occupancy would take place in August and the last part of the project would be the demolition of the existing terminal building in September 2011.

Johnson explained the financing of the project would be federal share $16,150,000 and local share $4,500,000 which would be funded through a bond. He stated that in the packet there is a financial projection that shows the Airport’s ability to cover the cost of the project including a $2.5 million contingency. He noted that relative to the funding, the FAA will only confirm the total project allocation, but will not guarantee a per year amount and have heard that this project may be front funded which would be best scenario for us.

McNamara inquired what research had concluded relative to the options that the Council had suggested be added back into the project at the work session. Johnson stated that all Council suggested options were added as well as a couple that were authority preferences and still kept the estimated cost of the project to $20.65 million, and that the initial bare bones project had been in the $18 million range. He added that the spreadsheet does show ability to handle financing of up to $22.5 million just in case of cost changes. Bjerke inquired if the $2.5 million would be spent for sure or if it would only be spent if necessary. Johnson stated that from staff perspective would be a contingency and only used if needed, but would be under authority of the board to make final decision on that. Gershman stated that on behalf of the Authority Board would concur and intent is to keep the project costs as low as possible, while still delivering a terminal that meets the needs of the City and would only use extra if something unforeseen came up.

Bjerke asked whether there would be one bond sold or split into two smaller bonds. Johnson replied that they had initially planned for two smaller bonds, but in working with Springsted, their financial advisor, the recommendation was made that combining into one bond would give increased investor security and also be less costly.

Bjerke inquired whether the FAA had approached us about this project or if we had approached them and just like to be clear on who is pushing for this. Johnson stated that they had approached the delegation for support, and got $300,000 this year for planning purposes, but in discussions with the district FAA office in Bismarck was apparent that any earmarks would not be in an amount by themselves to get this project done and they concurred that it is a necessary project.

Bjerke suggested that it be researched to see whether costs for ADA accommodations would be eligible for CDBG funding as a way to keep the project cost down and also suggested that consideration still be given to some of the funding coming from a low or no interest loan of JDA funds as another cost saving measure.

McNamara asked that Johnson touch on whether the financing of this project will in anyway impact the tax levy on citizens. Johnson replied that state law limits the levy the airport can impose to 4 mills, and they already levy that and have for as long as he can remember, so therefore would not be legally able to increase the levy even if they needed to. He continued that the levy that the airport imposes is part of the overall city budget and a dedicated allocation that goes to the airport. He stated that the airport also collects a PFC on each ticket that is sold for travel from the airport and that revenue in the amount of $4.50 per ticket has been dedicated to fund the repayment of the bonds that will be issued. He stated that given historical pattern it is likely that at sometime those PFC charges will be increased. He also noted that based on the financial project spreadsheet included in the packet the airport should have sufficient cash to pay off the bond within 10 years as opposed to the 25 year term of the bond.

Christensen stated that for the audience knowledge, the City is being asked to act as a guarantor on payment of these bonds and that should conditions change and the airport be unable to pay back the bonds the City and County would step in and repay them.

Gershman stated that citizens should be comfortable that this project can be accomplished without the need to raise the tax levy and that the projections show there will not only be sufficient cash to pay bond, but to pay it off early and will also not affect the tenants of the airport and will see no increase in lease rates or fee charges simply to fund this project, but may be subject to normal cost of living adjustments to their rates.

2.1 Establish election officials (inspectors) and polling sites for November 4, 2008 general election.

Bjerke stated that his wife is serving as election official for Precinct 1.2 and asked whether that would require him to recuse himself from voting on this item. Swanson replied that a Council Member should not vote on any item that would be of a pecuniary benefit to that Council Member, but that can also choose to not vote at any time feel uncomfortable and as if may have a conflict of interest. Bjerke stated that at the meeting next week he will be asking to recuse himself from this item.

2.2 Authorize call for bids and set sale date for $3,455,000 Refunding Improvement Bodns, Series 2008D.

Paul Steinman, Springsted, was present to discuss the bond sale with the Council. He stated that the bids will be received November 17 at 10:30 a.m. and noted that there has been some concern from all clients given the current market conditions. He continued that they have been in contact with bidders on prior City issues and that there is interest in this offering and have determined that competitive bids is the best environment to sell this issue.

McNamara inquired as to whether the market volatility has impacted the bond arena. Steinman stated that there have been a handful of their clients that have pulled their offerings, mainly due to size, as some were over $50 million, which is a very specific target market. He continued that there is interest in the market for our issue and that is still their recommendation to offer competitively.

Christensen clarified that the award of bids is still up to the Council and that they will see those bids prior to the decision to sell being made. Steinman stated that once the bids are opened they will be brought to the Council meeting that evening and Council then will be able to award the bonds. Christensen asked whether closer to the sale date Sprinsted could analyze the market and make an estimate as to where the bids may come in, possibly in the next couple of weeks. Steinman stated that last year the City sold a similar bond for 4.05% and estimate at this time would be about 4.55%, but that Christensen is correct in that estimate could change, dependent on market, etc. and change could be 20-30 basis points and that it is part of their plan to do sensitivity analysis closer to sale date.

2.3 Bids for Project No. 6262, Lift Station 22 Pump Replacement, Phase 2.

Bjerke inquired whether the timing was appropriate for completing not only this item, but also item 2.6. Feland replied that it is and that this is the lift station that serves Simplot.

2.4 Engineering Services Agreement for Project No. 6380, PCCP Forcemain Inspection Services and Report.

There were no comments.

2.5 Request to sole source purchase portable alarm system – police department.

There were no comments.

2.6 Engineering services agreement for Grand Forks Wastewater Pretreatment Evaluation.

Feland stated that in the 1990’s as the wastewater treatment plant was being constructed and began operations, became aware of some problems with it and throughout the 2000’s have been working on these including having ongoing conversation with Simplot our largest user on issues and improvements that are needed at the plant. He continued that as these conversations have progressed, Simplot has begun to explore whether construction of their own lagoon would be a cost effective measure to reduce their costs and we also propose to work with them to determine if it may be a better investment to make modifications to our plant and this proposal will allow us to work parallel to Simplot in arriving at the best alternative for both parties.

Steve Burian, Advanced Engineering, reviewed a flow chart of how the study will proceed with the Council Members. Feland commented that there is potential for both sides to benefit by sharing results of their studies with each other and also makes each side aware of the costs to the other of the alternative that they select.

Christensen stated that if Simplot wants their own lagoon and builds it and gets down to a level they don’t pay surcharge fees seems to be able to recapture the capital cost fairly quickly. Feland stated that there are a number of different charges that make up the wastewater portion of an industrial customer and two surcharges are BOD and TSS and Simplot pays about $900,000 per year, which is about 1/8 of the wastewater department budget and this is not inclusive of the fee that they pay for flow. He continued that regardless of whether they can decrease their BOD and TSS charges, their flow will not change and still have that charge plus if they don’t pay the surcharge, will still need same amount of revenue so will just increase the base charge and flow charges for all customers to make up for lost BOD and TSS charges, so overall may not be a very large change in the overall wastewater bill that they get each month. Feland continued that the cost of services study that is a part of the overall study will look at the savings for not only Simplot, but also the impact on all rate classes for scenarios being considered.

Christensen inquired as to the return on investment for the City on entire project. Feland replied that estimate less than $10 million, but more than $1 million. Christensen stated that he understands being cooperative with largest user, but also understands that they will be working with their consultant to get their costs as low as possible and that will be their main concern. Feland stated that we have met with Simplot and their consultant and they are also interested in what the change in cost will be for them if they make this large investment and whether it is worth it. He acknowledged that Simplot has been a good customer and has also been very understanding of the City in the past when out estimated costs have actually come in significantly more than planned and have always paid those higher fees. Burian added that there are other considerations, that the lagoon will not be able to change the flow that Simplot generates, may only impact the amount of solids in the wastewater that they discharge, as well as potential for odor problem if get a north wind on days that they are dredging the solids and need to be mindful of that impact on the City.

Kreun stated that this study gives us the opportunity to evaluate different options and determine the best course of action. Burian restated that the cost of service study will also look at all rate classes, not just industrial, so assist in making sure on track to cover costs.

Bjerke commented that he hoped a part of this would also be a long-term agreement with Simplot that would give assurance to the City that even if they decide to leave once the City has made any upgrades to accommodate their usage level that we would still be able to recoup those costs and have revenue to pay off the bonds. Feland stated that will be looked at and in past did not include such agreement and have worked well with Simplot. Christensen agreed that it would be preferable to have some type of agreement to protect the City in case Simplot would decide to relocate before costs for any upgrades have been fully paid.

2.7 Special Events Program.

Bjerke commented that to him if this program is continued that it means we all believe that economic times are good and that this is a program that we do not have to do, that these are sales tax dollars that could be used for other needs of the City and would encourage review of this.

Christensen replied that the role of Council is to be cognizant of projects and needs of the community which includes quality of life and that the events typically funded through this program do benefit large numbers in the community and many rely on the City for funding and do not see reason to cut these services that benefit the community as a whole and use that small amount to fund operations.

2.8 Request from Jeffrey and Shirley Hussey on behalf of Carlene and Joanne King for approval of a conditional use permit for a commercial kennel facility (Wag ‘N Train) in the A-1 (Agricultural Preservation) Dist. (located at 1662 15th Ave NE (part of the SE Quarter of the SW Quarter of Sec. 16, T151 N, R 51W. Brenna Twp.)

There were no comments.

2.9 Request from Kelly Faller on behalf of Zion Methodist Church for approval of conditional use permit for a childcare center (Sunflake Preschool and Daycare) in the R-2 (One and Two Family Residence) Dist. (loc. at 1001 24th Ave. S.)

Kreun stated that next week he will be moving to make the issuance of the permit contingent on the paving being completed, as was supposed to have been done several years ago and still not in compliance. Brooks stated that staff is working with the church and pursuing both items independently and do not believe that the church will be able to get the paving done this fall, but will be following up to get it accomplished as soon as possible. Gershman suggested perhaps issue the permit and condition it on paving being completed by end of July 2009. Brooks restated that regardless of the action on this conditional use permit staff is pursuing the paving issue and it will be completed whether this is approved or not and realize it was a mistake and lost track of by both church and City and should have been completed before now.

McNamara asked whether the paving would be a show stopper for this permit. Brooks replied that is shouldn’t be, as will be done whether this permit is approved or not. Bjerke requested that staff work with the church and report back next week on timeline for completing the paving and can then include that in motion on permit and sees giving them until end of next construction season as being reasonable.

Christensen stated that for the record he is in favor of daycare, and Sunflake, and understands that this is a matter that slipped through the cracks and now trying to get it taken care of, that Sunflake was forced to find a new location and try to keep in the same neighborhood where need is and would suggest grant it now and put in for review in a year, that is aware that the paving may be difficult for the church to fund and perhaps will take them more than a year to finance, but need to talk with them and see where they are at and what reasonable timeline is for getting the paving done.

Glassheim questioned making this a permanent conditional use permit and whether that is wise. Brooks responded that merely means that if Sunflake were to close, then another daycare could be established there and not have to come back to us prior to opening. Christensen commented that there usually are term limits to permits. Brooks replied that this recommendation basically lets them operate until they close or something changes how they are doing business and that have done this in the past with some other permits.

2.10 Request from Branden Bartholomew on behalf of City of Grand Forks, ND for final approval (fast track) of the Replat of Lot A, Block 1 of the Replat of Lots 1 and 4, Blk. 1, Perkins 1st Addn. (loc. at 32nd Ave. S. and Columbia Road).

Kreun commented that he would like to see Item 3 reinstated, as without it we have no access to our site and that allows for a curb cut from 32nd Ave and if concern is people turning in there could put up removable barrier or chain to prevent and will move for the addition at next week’s meeting. Christensen stated that he agreed with the addition and that without it would have to pay to be able to access from an adjacent property and could be costly so better for City to have direct access.

2.11 Request from Planning Department on behalf of City of Grand Forks, ND for preliminary approval of an ordinance to amend the text of the Land Development Code, Chapter XVIII of the Grand Forks City Code of 1987, as amended, amending Article 2, Zoning, Section 18-0204, Rules and Definitions, Subsection (2) Definitions; Section 18-0206, A-1 (Agricultural Preservation) Dist. and A-2 (Agricultural Urban Reserve) Dist., Subsection (3), Uses permitted, limited, conditional and prohibited; all relating to a Conditional Use Permit for a guest house in the A-1 and A-2 Dists.

Bjerke inquired whether this would apply to the entire 0-4 mile extraterritorial area. Brooks responded that it would apply to any parcels zoned A-1 or A-2, which is most of that area. He added that this is only one of several options that were looked at, but that this specifically was brought forth by an individual with a desire to build a guest house on their farmstead and that without this there is no provision for a secondary living unit on a single farmstead. Kreun added that there were some proposals for two permanent family units on a farmstead.

2.12 Request from Gateway Storage, LLP and Britton Transport on behalf of Gateway Storage, LLP, Britton Transport and Violet Korynta, for preliminary approval of an ordinance to amend the zoning map to exclude from the B-3 (General Business) Dist. and include within the I-2 (Heavy Industrial) Dist. Lots 1, 2, 3 and 4, Blk. 1, Korynta-Lemm 2nd Addn. To the City of Grand Forks, ND (loc. west of N. 48th St. and south of 17th Ave. N.)

There were no comments.

3.1 Statement of Changes in Cash Balances of September 30, 2008.

There were no comments.

3.2 Portfolio Management/Summary as of September 30, 2008.

Jerath stated that due to internal control structure, she is not involved with the management of investments for the City and that function along with the budgeting are handled by Schmisek, however that she can provide basic information on the types of investments that the City is allowed to invest in under State Statute. She continued that City funds can only be invested in Bonds, treasury bills and notes, or other securities that are a direct obligation, insured or guaranteed by the treasury of the United States, or its agencies, instrumentalities, or organizations created by an act of Congress; securities sold under agreements to repurchase written by a financial institution in which the underlying securities for the agreement to repurchase are of the type listed above; Certificates of Deposit fully insured by the Federal Deposit Insurance Corporation of the state; or Obligations of the State. As such, they are very safe investments and the City’s funds are not at risk. She stated that Nick Melbye with Wells Fargo Public Finance, who assists the City with its investments is willing to come to a future meeting and give a short presentation on the investments if the Council would like.

Christensen stated that on a related note, the City does have pension funds which do have some equity investment, and that have in the last two weeks received a report from Deloitte & Touche addressing allocations of funds and for the old plan have passed a recommendation that will be coming to Council shortly to change the rate of return assumption to 7.75% and that since that meeting have seen market declines as well which will create a need for additional funding in 2010 from what is budgeted. He continued that while reports will show that the pension is underfunded that is only of concern at the point where you have to pay everyone today; that we have a plan in place that was developed in collaboration of City staff with Deloitte & Touche to fully fund the pension. He noted that there are news reports related to the City of Duluth and that they have just decided to sell a bond to fund their pension plan, and that this was suggested by one of our council members several years ago, but not adopted at that time, but that perhaps dependent on where these issues go in the future, may need to start looking for funding sources to cover obligations and would like to see perhaps discussion on excess sales tax revenue being designated to fund pension shortfall, or in future could have possibility of needing to increase property tax, bond sale or new sales tax to fund it.

4. Citizen Requests

There were none.

5. City Administrator Comments.

There were none.

6. Mayor and Council Member Comments

Gershman reminded Council Members to get their list of discussion issues to Duquette for the planning meeting next week.


7. Adjournment.

Motion by Bjerke, Second by Christensen to adjourn meeting at 8:00 p.m.

Respectfully submitted,


Saroj Jerath, CPA
Deputy City Auditor

SLL