City Council Agendas & Packets

AGENDA OF THE SPECIAL MEETING CITY OF EAST GRAND FORKS TUESDAY, OCTOBER 8, 2024 – 5:00 PM CALL TO ORDER: CALL OF ROLL: DETERMINATION OF A QUORUM: 1. Consider adopting Resolution No. 24-10-77 approving the hiring of Jayden Hagl as a truck driver starting at a salary of $21.48 per hour. ADJOURN: AGENDA OF THE WORK SESSION CITY OF EAST GRAND FORKS TUESDAY, OCTOBER 8, 2024 – FOLLOWING THE SPECIAL MEETING CALL TO ORDER: CALL OF ROLL: DETERMINATION OF A QUORUM: 1. Updated Assistance & Lending Policies – Paul Gorte 2. Consider Approving the Change Order from Equity Builders for Roof Project – Nancy Ellis 3. Review of Cannabis Plan – Reid Huttunen ADJOURN: Upcoming Meetings Council Meeting – Tuesday, October 15, 2024 – Council Chambers – 5:00 PM Work Session – Tuesday, October 22, 2024 – Training Room – 5:00 PM Council Meeting – Wednesday, November 6, 2024 – Council Chambers – 5:00 PM Work Session – Tuesday, November 12, 2024 – Training Room – 5:00 PM Individuals with disabilities, language barriers or other needs who plan to attend the meeting and will need special accommodations should contact Nancy Ellis, ADA Coordinator at (218)-773-2208. Please contact us at least 48 hours before the meeting to give our staff adequate time to make arrangements. Also, materials can be provided in alternative formats for people with disabilities or with limited English proficiency (LEP) by contacting the ADA Coordinator (218)-773-2208 five (5) days prior to the meeting. 1  Special Meeting AGENDA ITEM #_1______ Request for Council Action Date: 10/3/2024 To: East Grand Forks City Council Mayor Steve Gander, Council President Mark Olstad, Council Vice-President Tim Riopelle, Council members Clarence Vetter, Ben Pokrzywinski, Dale Helms, Brian Larson, and Karen Peterson. Cc: File From: Jason Stordahl/Public Works Director RE: Hiring-Truck Driver Background: City Council approved Public Works to start the hiring process to fill the vacant Truck Driver position. After Civil Service and Public Works Staff interviewed potential candidates, our recommendation is to hire Jayden Hagl as Truck Driver starting at Grade 10 and Step 1 $21.48/hour. Recommendation: Hire Jayden Hagl as Public Works Truck Driver starting at Grade 10 & Step 1 $21.48/hour. -1- 2  RESOLUTION NO. 24 – 10 - 77 Council Member ________, supported by Council Member _______, introduced the following resolution and moved its adoption: WHEREAS, the City of East Grand Forks has advertised externally for the position of “Truck Driver”, and WHEREAS, candidates were interviewed by the Civil Service Commission and by City Staff, and WHEREAS, City Staff has recommended the hiring of Jayden Hagl as Truck Driver, and WHEREAS, Mr. Hagl would be placed on the current Grade 10 Step 1 which is $21.48 per hour; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF EAST GRAND FORKS, MINNESOTA: 1. Jayden Hagl be hired as a Truck Driver at a salary of $21.48 per hour. Voting Aye: Voting Nay: Absent: The President declared the resolution passed. Attest: Passed: October 8, 2024 City Administrator/Clerk-Treasurer President of Council I hereby approve the foregoing resolution this 8th day of October, 2024. Mayor 3  Work Session AGENDA ITEM #_1______ Request for Council Action Date: October 15, 2024 To: East Grand Forks City Council Mayor Steve Gander, Council President Mark Olstad, Council Vice-President Tim Riopelle, Council members Clarence Vetter, Ben Pokrzywinski, Dale Helms, Brian Larson, and Karen Peterson. Cc: File From: Economic Development Director RE: Policy Update NOTE: This is a PUBLIC HEARING item The Business Subsidy Policy, Revolving Loan Fund Guidelines, and Border Cities Tax Credit Policy and not undergone an overall review in will over 10 years. With a new Director and changes to laws and the economy, it seemed appropriate to review and update the policies. The new Director was kept apprised of the process and participated in the October 1 Loan Committee meeting that reviewed the policies. The updated policies have been reviewed by Kennedy and Graven. The firm provided comments to make sure the policies conformed with legal requirements and is performing a final review that should be completed prior to this meeting. This is the first time that all of these policies will be considered as a complete and complementary package. All of the policies have been applied in the past but have not been considered together as a package. The polices generally remain unchanged except for some exceptions to update them. The EDA Loan Committee met several times to discuss the policies. The EDA is a gap lender, not a primary lender. There was extensive conversation about the maximum loan amount, the maximum percentage of City/EDA participation in a loan, and whether owner/business participation should be required. In short, the final Committee recommendation sets a maximum loan amount of $300,000 for primary businesses and $149,999 for all other businesses to maximize the resources available and recognize the impact of primary businesses upon the City. The Committee retained a maximum 33 1/3% public participation percentage. The Committee decided not to require owner/business participation because the lender will likely do so and because the limited percentage of public participation requires that most of the investment come from other sources. Business Subsidy Policy The policy clarifies when the City/EDA will provide assistance. Assistance may be in the form of loans, Border Cities tax credits, tax abatements, or other types of assistance. It clarifies jobs and wages goals in -1- 4  May 2, 2002 Request for Council Action accordance with State law. The revisions clearly set forth the consequences of failing to meet the goals; these consequences were contained in State law but not in the local policies per se. Revolving Loan Fund Guidelines Policies regarding the identification of businesses eligible for defined loan interest rates and origination fees were included in the policy. The policy increases the maximum loan amount for primary businesses to $300,000 but decreases the maximum loan amount from $150,000 to $149,999 because of the reporting requirements associated with the higher amount. The $149,999 has been the effective amount for some time now. Border Cities Tax Credit Policy The policy defines the amount and duration of the Border Cities tax credit program. The term is limited to 5 years for any approval. The policy defines the investment and other justifications needed for additional years. The policies have been referred to Kennedy and Graven for a final review prior to approval. The response is anticipated prior to the EDA meeting. The EDA is scheduled to review and take action on October 8. The City Council will be apprised of its action. Recommendation That the recommend that the City Council approve the policies as submitted. 2 5  RESOLUTION NO. 24 – 10 - 77 Council Member ________, supported by Council Member _______, introduced the following resolution and moved its adoption: WHEREAS, the City of East Grand Forks has advertised externally for the position of “Truck Driver”, and WHEREAS, candidates were interviewed by the Civil Service Commission and by City Staff, and WHEREAS, City Staff has recommended the hiring of Jayden Hagl as Truck Driver, and WHEREAS, Mr. Hagl would be placed on the current Grade 10 Step 1 which is $21.48 per hour; and NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF EAST GRAND FORKS, MINNESOTA: 1. Jayden Hagl be hired as a Truck Driver at a salary of $21.48 per hour. Voting Aye: Voting Nay: Absent: The President declared the resolution passed. Attest: Passed: October 8, 2024 City Administrator/Clerk-Treasurer President of Council I hereby approve the foregoing resolution this 8th day of October, 2024. Mayor 6  CITY OF EAST GRAND FORKS & ECONOMIC DEVELOPMENT AUTHORITY BUSINESS SUBSIDY POLICY A. PURPOSE The purpose of the East Grand Forks Business Subsidy Policy is to establish criteria for the granting of business subsidies, including assistance through Tax Increment Financing, Tax Abatement, Border City Enterprise Zone Credits, Border City Development Zone Credits, EDA Loan Programs and other incentive and assistance programs that may become available through the City of East Grand Forks, Minnesota (the “City”); the Economic Development Authority, (the “Authority”); or the State of Minnesota (the “State”). The City and Authority’s ability to grant certain subsidies is governed by Minnesota Statutes, Sections 116J.993 through 116J.995, as amended (the “Business Subsidy Act”). The criteria set forth in this Business Subsidy Policy shall be used as a guide in processing and reviewing applications requesting business subsidy assistance and shall be used in conjunction with other relevant policies of the City and the Authority. The requirements of this policy shall be met for all assistance considered a business subsidy under the Business Subsidy Act. The City may amend this Business Subsidy Policy at any time. Amendments to this Plan are subject to public hearing requirements contained in the Business Subsidy Act. B. MANDATORY CRITERIA All projects must comply with the following criteria: 1. Public Purpose. The business subsidy must meet a public purpose which may include, but may not be limited to, increasing the tax base. Job retention may only be used as a public purpose in cases where job loss is specific and demonstrable. Suggestions for business subsidy public purposes are set forth in Exhibit A. 2. Jobs and Wages Goals. Projects provided a business subsidy must create at least 0 full-time equivalent jobs. Where job loss is specific and demonstrable, the project may meet the jobs and wages goals by retaining jobs at the project. If retaining jobs is a goal of the project, the project must retain at a minimum 75 % of the existing full-time equivalent jobs. After a public hearing, if the creation or retention of jobs is determined not to be a goal, the wage and job goals may be set at zero. The wage floor for wages to be paid for the jobs created or retained shall be greater of the minimum wage rate for assistance established by MnDEED under its MIF lending guidelines or 100% of the State minimum wage in effect at the time the subsidy is granted. The City will seek to create jobs with higher wages as appropriate for the overall public purpose of the subsidy. Wage goals may also be set to enhance existing jobs through increased wages, which increase must result in wages higher than the minimum under this Section. 3. Economic Feasibility. Upon application for a business subsidy, the City will require the requesting entity to provide certain information regarding the proposed project, including but not limited to proposed sources and uses of funds to pay for project costs, estimated revenues, estimated number of jobs created and the expected wages. The City will review the requested materials to determine if the proposed project 483966v2 GAF EA175-15 7 is economically feasible in its sole judgment and discretion. 4. Compliance With Act. The business subsidy from the City must satisfy all requirements of the Act as set forth in Section E below. C. PROJECT REVIEW AND EVALUATION POLICY 1. The City recognizes that the creation and retention of good paying jobs is a desirable goal which benefits the community. Nevertheless, not all projects assisted with subsidies derive their public purposes and importance solely by virtue of job creation. In addition, the imposition of high job creation requirements and high wage level requirements may be unrealistic and counter-productive in the face of larger economic forces, and the financial and competitive circumstances of an individual business. In determining the requirements for a project under consideration for a business subsidy, the determination of the number of jobs to be created and the wage levels therefor will be guided by the following principles and criteria: a. Each project will be evaluated on a case by case basis. The evaluation will take into consideration the project's importance in and benefit to the community from all perspectives, including created or retained jobs. b. If a particular project does not involve the creation of jobs, but is nonetheless found to be worthy of support and subsidy, assistance may be approved without any specific job or wage goals provided the City documents in writing the reasons for deviating from the jobs and wage goals set forth in Section B. c. In cases where the objective is the retention of existing jobs, the recipient of the subsidy will be required to provide evidence acceptable to the City demonstrating that the loss of those jobs is imminent. 2. Because it is not possible to anticipate all the needs and requirements of every type of project and the ever-changing needs of the community and in order to retain the flexibility necessary to respond to all proposed projects, the City retains the right to approve projects and business subsidies which may vary from the principles and criteria set forth herein. The reasons for deviations from the business subsidy criteria set forth herein shall be documented in writing. 3. Certain financial assistance provided by the City may be exempted from this policy pursuant to Section 116J.993, subd 3 of the Act, as amended. D. PROJECT REVIEW AND EVALUATION PROCEDURE 1. The City will consider one or more of the criteria listed in this Section D in determining whether to provide financial or other assistance to a project as a business subsidy. In applying the criteria to a specific project, the following will apply: a. The City may consider the requirements of any other business subsidy received, or to be received, from a grantor other than the City. b. If the business subsidy involves the conveyance of real or personal property at a write- down, the amount of the subsidy will be difference between the conveyance price and the fair market value of the property as determined by the City. 2 483966v2 GAF EA175-15 8  c. If the business subsidy is received over time, the City may value the subsidy at its present value using a discount rate equal to an interest rate which the City determines is fair and reasonable under the circumstances. 2. When deciding whether to grant a business subsidy, the City will consider the following: a. Land Use. The City will consider: i. Compliance with Comprehensive or other Plans. Whether, apart from any needed services to the community described in Section D.2.d, the project is more compatible with the comprehensive plan than other permitted uses for the property. For example, the project may involve a "clean" industry such as a technology or service business which is preferred over other permitted uses. ii. Compliance with Zoning and Land Use Regulations. Whether the proposed use of the site complies with the regulations of the City Zoning Ordinance and Land Use Regulations. ii. Marginal Property. Whether the project is located on property which needs but is not likely to be developed or redeveloped because of blight or other adverse conditions of the property. For example, property may be so blighted that the cost of making land ready for redevelopment exceeds the property fair market value. iii. Design and/or Other Amenities. Whether, as a result of the business subsidy, the project will include design and/or amenity features not otherwise required by law. For example, the project may, at the request of the City, include landscaping, open space, public trails, employee work out facilities or day care facilities which serve a public purpose but are not required by law. iv. Highest and Best Use. Whether the project will encourage and promote the highest and best use of land. v. Appropriateness. Whether the project is an appropriate land use for the location. b. Impact on Existing and Future Public Investment. The City will consider: i. Utilization of Existing Infrastructure Investment. Whether and to what extent (i) the project will utilize existing public infrastructure capacity and (ii) the project will require additional publicly funded infrastructure investments. ii. Direct Monetary Return on Public Investment. Arrangements made or to be made for the City to receive a direct monetary return on its investment in the project. For example, the business subsidy may be in the form of an interest bearing loan or may involve a project sharing arrangement. c. Economic Development. The City will consider: i. Leveraged Funds. The amount of the business subsidy to be provided for the project as compared to the amount of private funds which will be applied towards the capital cost of the project. 3 483966v2 GAF EA175-15 9  ii. Spin Off Development. The dollar amount of nonsubsidized development the project is expected to generate in the surrounding area and the need for and likelihood of such spin off development. iii. Growth Potential. Based on the recipient's market studies and plans for expansion, whether and to what extent the project will produce a net increase of full-time equivalent jobs and of payroll, over and above the minimum number of jobs and wages set forth in Section B above. d. Quality of Life. The City will consider: i. Community Services. Whether the project will provide services in the community and the need for such services. For example, the project may provide health services, retail convenience services such as a nearby grocery store, or social services needed in the community. ii. Unmet Housing Needs. Whether the project will provide housing the City currently needs but which is not available. e. Other. i. Other Factors. Depending on the nature of the project, the City will consider such other factors as the City may deem relevant in evaluating the project and the business subsidy proposed for it. E. COMPLIANCE WITH BUSINESS SUBSIDY ACT. 1. Jobs and Wages. Each project granted a business subsidy must meet the jobs and wages goals set forth in Section B within two years of the benefit. As used herein "benefit date" means the date the business subsidy is received. If the business subsidy involves the purchase, lease, or donation of physical equipment, then the benefit date occurs when the recipient puts the equipment into service. If the business subsidy is for improvements to property, then the benefit date refers to the earlier of (i) when the improvements are finished for the entire project, or (ii) when a business occupies the property (upon receipt of a certificate of occupancy). 2. Continued Operation of Project. Each project granted a business subsidy must continue its operations at the site of the project for at least five years following the benefit date. 3. Business Subsidy Agreements. Each subsidy recipient must enter into a Business Subsidy Agreement with the City that includes: a. a description of the subsidy, including the amount and type of subsidy, and type of tax increment district if the subsidy is tax increment financing; b. a statement of the public purposes for the subsidy; c. measurable, specific, and tangible goals for the subsidy; d. a description of the financial obligation of the recipient if the goals are not met; e. a statement of why the subsidy is needed; f. a commitment to continue operations in the jurisdiction where the subsidy is used for at least five years after the benefit date; g. the name and address of the parent corporation of the recipient, if any; and h. a list of all financial assistance by all grantors for the project. 4 483966v2 GAF EA175-15 10  i. wage and job goals Subsidies in the form of grants shall be structured as forgivable loans. For other types of subsidies, the agreement shall state the fair market value of the subsidy to the recipient, including the value of conveying property at less than a fair market price, or other in-kind benefits to the recipient. If a subsidy benefits more than one recipient, the City must assign a proportion of the subsidy to each recipient that signs the agreement. The proportion assessed to each recipient must reflect a reasonable estimate of the recipient’s share of the total benefits of the project. 4. Failure to Meet Goals. The Business Subsidy Agreement must specify the recipient’s obligation if the recipient does not fulfill the agreement. At a minimum, the Business Subsidy Agreement must require a recipient failing to meet subsidy agreement goals to pay back the assistance plus interest to the City pursuant to the terms of the Business Subsidy Act. The interest rate must be set equal to 4.0% or the implicit price deflator for government consumption expenditures and gross investment for state and local governments prepared by the Bureau of Economic Analysis of the United States Department of Commerce for the 12-month period ending March 31 of the previous year, whichever is greater. The City, after a public hearing, may extend for up to one year the period for meeting the wage and job goals provided in the Business Subsidy Agreement. The City may extend the period for meeting other goals by documenting in writing the reason for the extension and attaching a copy of the document to its next annual report to the Department of Employment and Economic Development. 5. Reports by Recipients to City. The City must monitor the progress by the recipient of a business subsidy in achieving agreement goals. The Business Subsidy Act requires annual reports from recipients of Business Subsidies, including wage and job goal information. The information must be submitted on forms developed by the Department of Employment and Economic Development. Copies of the completed forms must be sent to the City annually no later than March 1 of each year for the previous year. Recipients who fail to submit annual reports to the City may face financial penalties. Adopted by the City Council of the City of East Grand Forks on __________, 2024 Date of Public Hearing of City Council _____________, 2024 Adopted by the Board of Commissioners of the Economic Development Authority on _______________, 2024 Date of Public Hearing of Economic Development Authority: __________________, 2024 5 483966v2 GAF EA175-15 11  EXHIBIT A SUGGESTIONS FOR SUBSIDY PUBLIC PURPOSES Grantors may wish to consider any of the following public purposes, among others, when considering an applicant’s request: 1. Increasing the tax base may be used as a public purpose as long as it is not the only public purpose. 2. Job retention may only be used in cases where job loss is specific and demonstrable. 3. The project provides a service or meets a consumer need not currently addressed in the City. 4. The project represents a significant investment in an area of the City that is economically depressed. 5. The project will remove blighting influences or rehabilitate an area of the City in need of revitalization. 6. The project will stimulate additional capital investment in a geographic area of the City and act as a catalyst for future (re)development. 7. The project will cause surrounding property values to increase and will stabilize the area. 8. The project will anchor a needed commercial center for the City. 9. The project will enhance the viability of other businesses in the City. 10. The project will assist in the processing, packaging, distribution, or marketing of agricultural products grown in the region. 11. The project will assist in the orderly growth of the City and generate significant economic spin off. 12. The project will prevent the closure of business needed in the community due to merger, physical expansion, change in market or economic factors, downsizing, and other factors. 13. The project will employ a classification of people in the community at large who are not fully employed. 14. A business subsidy will permit the project to employ more people, pay higher wages, be of better quality, or in some way be of more value to the City. 15. The proposed subsidy will facilitate other business activities deemed important and valuable to the City if so determined by the EDA and City Council. A-1 483966v2 GAF EA175-15 12  B-1 483966v2 GAF EA175-15 13  CITY OF EAST GRAND FORKS ECONOMIC DEVELOPMENT AUTHORITY REVOLVING LOAN FUND LENDING GUIDELINES Background The City of East Grand Forks Revolving Loan Program (the “Revolving Loan Program”) was established with proceeds from several sources, including a grant of funds from the Minnesota Investment Fund (“MIF”) for the purpose of providing financial assistance to businesses which suffered physical and economic losses as a direct result of the flooding of April 1997, the Intermediary Relending Program of USDA Rural Development, Community Development Block Grant, and other sources. It is important to remember that the dollars generally remain subject to the original statutory, regulatory, and grant restrictions. The purpose for the establishment of the Revolving Loan Program was partly to assist existing, formerly healthy businesses in meeting their financial needs, related to business re-establishment, brought about by physical losses and adverse economic impacts resulting from the April 1997 Red River Valley flooding and partly to provide assistance to businesses expanding within East Grand Forks and locating into the City, particularly in a highly competitive local market. The aim of the program is the retention and/or expansion of businesses which provide essential services and employment to the East Grand Forks community and the attraction of new businesses into the business community of the City of East of Grand Forks (the “City”). The City program is a gap financing program, not a primary financing program. As a gap financing program, it provides funding when other sources are inadequate. I. Purpose and Goals The purpose of the Revolving Loan Program is to provide financial and technical assistance for the creation and retention of employment and capital investment in the business. These objectives may be accomplished through the following means: A. creation or retention of regular private-sector jobs in order to create above-average economic growth consistent with environmental protection, which includes investments in technology and equipment that increase productivity and provide for a higher wage; B. stimulation or leverage of private investment to ensure economic renewal and competitiveness; C. increasing the local tax base, based on demonstrated measurable outcomes, to guarantee a diversified industry mix; D. improving the quality of existing jobs, based on increases in wages or improvements in the job duties, training, or education associated with those jobs; 484334v3 GAF EA175-15 14  E. improvement of employment and economic opportunity for citizens in the region to create a reasonable standard of living, consistent with federal and state guidelines on low- to moderate-income persons; and F. stimulation of productivity growth through improved manufacturing or new technologies, including cold weather testing. II. Eligible Projects Assistance must be evaluated on the existence of the following conditions: A. creation of new jobs, retention of existing jobs, or improvements in the quality of existing jobs as measured by the wages, skills, or education associated with those jobs; B. increase in the tax base; C. the project can demonstrate that investment of public dollars induces the investment of private funds; D. the project can demonstrate an excessive public infrastructure or improvement cost beyond the means of the affected community and private participants in the project; E. the project provides higher wage levels to the community or will add value to current workforce skills; F. the project supports the development of microenterprises, as defined by federal statutes, through financial assistance, technical assistance, advice, or business services; G. whether assistance is necessary to retain existing business; H. whether assistance is necessary to attract out-of-state business; I. the project promotes or advances the green economy as defined in section 116J.437; J. the project is located within the city limits of the City of East Grand Forks; and K. the project would not happen “but for” the provision of public assistance. A grant or loan cannot be made based solely on a finding that the conditions in clause (G), (H), or (J) exist. A finding must be made that a condition in clause (A), (B), (C), (D), (E), or (F) also exists. Funding will not be provided unless there is a finding that the condition in clause (K) has been met. III. Eligible Borrowers 2 15  A. Existing or new businesses in the City of East Grand Forks. B. Borrower must demonstrate that funds from the Revolving Loan Program will not exceed a portion of the total cost of the project for which financing is sought as per Paragraph VIII.A.1.a. C. Businesses shall pay each employee total compensation, including benefits not mandated by law, that on an annualized basis is equal to at least 110% of the federal poverty level for a family of four or the minimum compensation set by the Minnesota Department of Employment and Economic Development, whichever is greater. D. Revolving Loan Program funds shall not be used for sports facilities or casinos. Assistance may be provided for firms engaged in retailing merchandise, provided such assistance is not prohibited by State law or regulations. IV. Eligible Activities: Loans may be provided for the following activities: A. Acquisition of Land B. Construction or Rehabilitation of Facilities C. Site Improvements D. Utilities or Infrastructure E. Machinery and Equipment F. Training G. Working Capital, not to exceed $20,000 V. Terms of Loan: A. No loan shall be extended for a period exceeding 11 years. Principal payments on loans shall be made monthly. The initial principal payment may, if approved by the EDA, be deferred for not more than 1 year. 1. Loans used for machinery and/or equipment purchases will generally not be extended for a period exceeding 10 years (11 years if the initial payment is deferred for a year). 2. Loans used for working capital will generally not be extended for a period exceeding 5 years (6 years if the initial payment is deferred for a year). B. The terms of loan repayment shall be those stipulated in the loan agreement and/or promissory note. In the event of conflict between the documents, the terms of the loan agreement shall govern. VI. Interest on Loans: 3 16  A. Interest rates will be in accordance with the EDA’s Loan Interest Rate Policy adopted by the EDA on September 1, 2015, as amended, as follows: 1. Loans to manufacturing businesses which function as “primary” industries shall be 1% per annum. 2. Loans to firms who combine manufacturing and non-manufacturing and serve a regional or larger market shall be 2.5% per annum. 3. All other eligible loans shall be 4% per annum. 4. The EDA shall maintain a list of the firms eligible for 1% and 2.5% loans. B. Loans may be deferred for a period of no longer than one year with no interest. C. Once the deferral period, if any, has lapsed monthly payments are required. D. Each payment by the recipient will be applied first to accrued interest and the balance of the payment, if any, will be applied to the principal balance. VII. Security: A. Adequate security shall be required for all loans, including but not limited to, corporate guaranties, personal guaranties, mortgage and/or a security agreement. Purchase for deed is not considered to be adequate security. B. All loans shall be secured with the best collateral available. Where necessary the EDA loan may take a subordinate collateral position to other lending sources upon approval by the Board of the EDA. VIII. Loan Agreements and Requirements: A. Each loan shall be supported by a loan agreement. The loan agreement shall specify the following : 1. Amount of the loan. a. The amount of the loan shall not exceed the following amounts: 1. Industrial Projects for primary businesses: not more than the lesser of $300,000 or thirty-three and one-third per centum (33 and 1/3%) of total project costs. 2. Other projects: not more than the lesser of $149,999 or thirty- three and one-third per centum (33 and 1/3%) of total project costs. b. The amount of funding from the Revolving Loan Program shall not exceed the amount necessary to fill the "gap" between the actual total funds needed and the amount of other funds which are available. This determination will be made at the sole discretion of 4 17  the EDA. c. The loan amount is at the sole discretion of the EDA, subject to approval by the City Council. 2. Terms and Repayment Schedule. a. The loan will be repaid according1 to the lending guidelines. b. The recipient will pay a late charge of 10 percent of the payment due if the payment is not received within 45 calendar days following the due date. The late charge will be considered unpaid if not received within 60 calendar days of the missed due date for which it is imposed. Any unpaid late charge shall be added to principal and be due as an extra payment at the end of the term. Acceptance of a late charge does not constitute a waiver of default. 3. Disbursement Procedures. a. Disbursement of loan funds shall take place after the loan agreement and the promissory note are executed, payment of the loan origination fee and other applicable fees and costs, and any other conditions precedent to disbursement of funds have been fully satisfied. b. All required documentation shall have been received before any funds can be disbursed. c. Recipient shall apply their funds before loan funds are disbursed. d. In the event of interim disbursements, said disbursements shall be limited to not more than eighty per centum (80%) of work completed and shall be substantiated by contractor bills and supported by lien waivers prior to any disbursement. e. Final disbursement will be made only upon completion of all work and inspection(s) by a representative(s) of the lender. The owner or contractor shall submit a final bill certifying that all work has been completed and submit a final lien waiver. 4. Insurance Requirements. a. The recipient shall provide evidence of hazard insurance (fire and windstorm and extended coverage) in an amount sufficient to cover the amount of the loan. 5 18  b. The recipient shall provide evidence of flood insurance coverage or evidence that the project is not in a flood plain. c. Workers Compensation insurance, if required by the State of Minnesota. d. The City of East Grand Forks and the EDA shall be named as additional insured on all insurance policies. 5. Other Required Documentation. a. The applicant shall document that property taxes are current. b. For existing businesses (corporate and non-corporate) 1. 3 years of prior year’s profit and loss statements (all borrowers) 2. 3 years of prior year’s financial statements (all borrowers) 3. A 3 year projection (all borrowers) 4. 2 years personal tax returns 5. Articles of incorporation for corporations or other organizational documents for other business entities 6. Copy of Corporate Charter (corporations) or comparable business formation documents (non—corporations) 7. Employer Identification Number (EIN) 8. Minnesota State Tax Number 9. Corporation or entity resolution approving the financing and identifying who is authorized to sign documents and agreements IX. Other Conditions A. Cost Reasonableness Applicants for funding from the Revolving Loan Program shall be required to submit a breakdown of all project costs to the EDA, including quotes from vendors, contracts, subcontractors, etc. The EDA will then use this breakdown as a basis on which the reasonableness of the cost is determined. The EDA may, in its discretion, compare any cost element which exceeds $10,000 6 19  with a third party fair market price quotation to determine reasonableness. If the EDA cannot use third-party price quotations to verify cost elements, then the City may conduct its own cost analysis using appropriate cost estimating manuals or services. B. Commitment of all Project Sources of Financing: The EDA shall verify, prior to committing Revolving Loan Program funds, that: 1. Sufficient sources of other funds have been identified to finance the project. 2. All participating parties have affirmed their intention to make funds available. 3. All the participating parties have the financial capacity to make the funds available. 4. For loan applications in which there are participating lenders as part of the project financing package, the participating lenders shall supply to the EDA a letter of intent to participate in the project funding along with copies of any supporting documents generated by the participating lender. C. Financial Feasibility of Project. The EDA shall, as part of the loan process, evaluate the financial viability of each project to determine if there is a reasonable chance for the project's success. A project will be considered financially viable if all of the assumptions about the- project's market share, sales levels, growth potential, projections of revenue, project expenses and debt service (are determined to be realistic and met the project's breakeven point (which is generally the point at which all revenues are equal to all expenses). Generally speaking, an economic development project that does not reach this breakeven point over time is not financially feasible. X. Fees and Costs A. Applicants shall pay any required legal fees, loan origination fees, loan closing fees, and/or application fees at the time of loan closing. B. The applicant is responsible for all hard loan costs, including by not limited to, title opinions, appraisals, recording fees and mortgage registration tax and shall pay the same at the time of loan closing. XI. Data Practices Act The information provided in an application to the EDA will be used to assess eligibility for financial assistance. The EDA will not be able to process your application without this 7 20 information. The Minnesota Government Data Practices Act (Minnesota Statutes, Chapter 13) governs whether the information that you are providing to the EDA is public or private. If financial assistance is provided for the project, the information submitted in connection with your application will become public, except for those items protected under Minnesota Statutes, Section 13.59, Subdivision 3(b) or Section 13.591, Subdivision 2. XII. Business Subsidy All businesses receiving financial assistance from the EDA shall be subject to the EDA’s Business Subsidy Policy, as amended, and Minnesota Statutes, Section 116J.993 to 116J.994, as amended (the “Minnesota Business Subsidy Act”). XIII. Conflict of Interest The applicant shall submit the name(s) or the owner(s), shareholder(s), partner(s), sole proprietor, corporation member(s), or other person(s) or business(es) with any financial interest in the project and its financing in order to preclude any conflict of interest in the RLF loan review and approval process. XIV. Right of Refusal The EDA may deny any project which it deems inappropriate according to the guidelines established in this document and in accordance with the EDA’s Application Evaluation Criteria attached to the loan application. 8 21  Appendix A ORIGINATION FEE POLICY Approved May 2017 The following shall apply to all loans: • The fee shall be 1% of the loan amount • The minimum fee shall be $500 • Legal expenses shall be billed separately • Mortgage registration tax to be paid by City/EDA • The City/EDA shall only loan the net amount 9 22  Appendix B LOAN INTEREST RATE POLICY Approved July 2020 There shall be three levels of interest applied to loans. • Loans to manufacturing businesses which function as “primary” industries shall be 1% per annum. • Loans to firms who combine manufacturing and non-manufacturing and serve a regional or larger market shall be 2.5% per annum. • All other eligible loans shall be 4% per annum. The EDA may apply reduced rates to non-manufacturing businesses provided that said businesses are primary or anchor or because of exceptional circumstances, with the reasons for the reduced rate documented and made a part of the file. 10 23  Border Cities Tax Credit Policy for Businesses City of East Grand Forks, Minnesota Adopted: June 5, 2018 Amended: 24 Policy Goals The City of East Grand Forks (the “City”) has established this Border City Tax Credit Policy (the “Policy”) to help promote Minnesota investment and economic development, increase the local tax base, and promote job retention and creation in the City. Funding for the program will be provided through the City’s Border City Development Zone established under Minn. Stat. Sections 469.166 through 469.1735, as amended (the “Act”). Assistance Provided A new business in the City or an expanding business in the City may receive a one-year tax reduction or tax credit. The City may extend the tax reduction or credit for a period not to exceed five years, provided that the additional term of the benefit is appropriate to the particular needs of the business and benefits the community. The assistance shall be provided in one of the following forms: A. For newly constructed facilities, a partial property tax reduction for property taxes based on the portion of the property taxes created by a new business in the City; B. For expanded business, a partial property tax reduction for additional property taxes created by an expansion to an existing business in the City; or C. A sales tax exemption for sales tax on construction materials or new machinery and equipment to be used at the newly constructed or expanded facility to be located within the City. The assistance to be provided by this program, if any, is limited by the amount of credits remaining in the City’s existing Border City Enterprise Zone allocation from the State. Funds for this program are limited and will be awarded to qualifying applicants on a first-come, first-served basis. Qualifying Businesses/Criteria for Assistance To receive assistance under this policy, an applicant must be a new business in the City, a business expanding within the City, or a business being retained by the City. For an existing business, a qualifying business must either (i) make a minimum $30,000 investment towards physical improvements to its property in the City; or (ii) make a minimum $25,000 investment towards physical improvements to its property in the City, or (iii) make at least $25,000 investment in equipment and to other assets and create one new full-time equivalent job in the City. The wage floor for wages to be paid for the jobs created or retained shall be greater of the minimum wage rate for assistance established by MnDEED under its MIF lending guidelines or 100% of the State minimum wage in effect at the time the subsidy is granted. The City will seek to create jobs with higher wages as appropriate for the overall public purpose of the subsidy. Wage goals may also be set to enhance existing jobs through increased wages, which increase must result in wages higher than the minimum under this Section. 523855v2 GAF EA175-15 25 One additional year of tax credits may be approved for each $500,000 of capital investment, to retain one or more full-time equivalent job(s) that meet the above criteria, or to retain a primary or secondary business. Prior to consideration of this application by the City, a business must request and receive a tax clearance letter from the Minnesota Department of Revenue. The tax clearance letter received from the Minnesota Department of Revenue must affirmatively establish that, as of the date of the application, the business owner does not owe delinquent income or sales tax pursuant to Minnesota Statutes, Chapters 290, 296A, 297A, 297B, 197For 297G. In addition, qualifying businesses and their owners and principals shall not owe property taxes to the City or to Polk County. Required Findings The business must declare that it could have invested the money outside the state of Minnesota but chose to invest in the City. Granting of the tax credit is subject to approval by the City Council after a finding that the granting of the tax reduction or offset is necessary to retain a business within the City or attract a business to the City. Tax reductions must be approved by the Commissioner of the Minnesota Department of Employment and Economic Development. Process The business must submit an application to the City. The application shall become the property of the City and is subject to Minnesota Statutes, Chapter 13 (the Government Data Practices Statute). Upon submittal of an application to the City, the applicant shall pay the City an application fee of $100.00 for each year of tax credits sought. The business must meet all qualifications set forth in Minnesota Statutes, Sections 469.1731 through 469.1735, as amended. In accordance with Minnesota Statutes, Section 469.1734, subdivision 7, as amended, before any assistance is provided pursuant to this policy, notice must be provided to competitors of the applicant. To meet this requirement, two notices regarding the assistance must be published in the official newspaper of the City at least one week apart not less than 15 days nor more than 30 days prior to the date the City Council will consider approving the assistance. The assistance must be approved by the Minnesota Department of Employment and Economic Development and the City Council. Business relocating to the City from within Polk County are subject to the requirements of Minnesota Statutes, Section 469.1733, subdivision 2, as amended. Business relocating to the City from a location within Minnesota but outside of Polk County are subject to the requirements of Minnesota Statutes, Section 469.1733, subdivision 3, as amended. 26 If obtaining a sales tax exemption under Minnesota Statutes, Section 469.1734, subdivision 5, the business must apply to the City for a tax credit certificate in accordance with Minnesota Statutes, Section 469.1735, subdivision 1. The City reserves the right to approve or reject projects on a case-by-case basis, taking into consideration established policies. Meeting policy criteria does not guarantee the award of business assistance to the project. Approval or denial of one project is not intended to set precedent for approval or denial of another project. The City can deviate from this policy for projects that supersede the objectives identified herein. Repayment A business receiving the tax credit must maintain its operations in the City for 5 years. If the business leaves the City before the expiration of the 5-year period, it must repay the full amount of assistance provided pursuant to this policy. This policy replaces the City’s prior Enterprise Zone Credit Criteria policy. 27  #2 Request for Council Action Date: October 8, 2024 To: East Grand Forks City Council Mayor Steve Gander, Council President Mark Olstad, Council Vice-President Tim Riopelle, Council members Clarence Vetter, Ben Pokrzywinski, Dale Helms, Brian Larson, and Karen Peterson. From: Nancy Ellis, Community Development Director RE: Approve the Change Order from Equity Builders to complete the Roof project RECOMMENDATION: Approve the change order from Equity Builders for $46,866.45, which includes the replacement of the damaged/wet insulation under the old roof minus the water and concrete damage to City Hall we had during the project. BACKGROUND INFORMATION: At the beginning of May, Equity Builders started the roof replacement job for City Hall. They were awarded the replacement base bid of $375,000.00 for the rubber roof and the alternate bid of $435,190 (deduct $174,630 dome roof) for the metal roofing replacement. Additional charges listed under the contract were $10.00 per board foot for wood blocking and $5.25 per board foot to replace damaged insulation under the old roof. There was a lot of damaged insulation under the roofing that needed to be replaced, and a change order was going to be coming for said insulation. However, with the damages to City Hall from water inside the building and landscaping and concrete damages outside the building due to the contractors; we are deducting the cost of the damage repair from the insulation replacement. The Change Order explanation is as follows: Wet insulation replacement - 81,732.00 Water Damage – 5,477.55 Landscaping – 3,900.00 Concrete repair – 31,860.00 X .80 = 25,488 Total = 34,865.55 81,732.00 -34,865.55 $46,866.45 Net add to contract. SUPPORT MATERIALS: • Change order • Contract pricing page -1- 28 29 30  AGENDA ITEM #_3______ Request for Council Action Date: October 8, 2024 To: East Grand Forks City Council Mayor Steve Gander, Council President Mark Olstad, Council Vice-President Tim Riopelle, Council members Clarence Vetter, Ben Pokrzywinski, Dale Helms, Brian Larson, and Karen Peterson. Cc: File From: Reid Huttunen, City Administrator RE: Cannabis Planning: Seeking input for Ordinance writing guidance Background: The States Office of Cannabis Management (OCM) has released a Guide for Local Governments on Adult-Use Cannabis, as well as a Model Ordinance for local governments. That Guide can be found at this link: A Guide for Local Minnesota Governments on Adult-Use Cannabis (mn.gov) City Staff have continued to review and discuss Zoning and Ordinance amendment recommendations to prepare for cannabis business licensing, which is expected to begin in early 2025. cannabis work group to review the above areas and have reached a point where we would like to check in with the City Council as a whole, to gather feedback on some of the proposed rules we are discussing. Below is a summary of areas that are within local control and questions that we’d like City Council and public input on. It has become clearer what the role of Local Governments is through the Cannabis rule making process. The following are areas that Local Government can set rules for cannabis by ordinance. 1. Ordinances pertaining to: a. Zoning: to set place of permitted business operation by license type b. Time, Place, Manner of business operations 2. Local Approval review process for MN State Licensing a. Certification of compliance with zoning ordinances b. Retail Business Registration 3. Compliance Checks – age verification and compliance with local ordinances. ZONING: MN State Law for Cannabis does not restrict how a Local Government sets its zoning designations for cannabis businesses, except that the municipality may prohibit the operation of a cannabis business within 1,000 feet of a school, or 500 feet of a day care, residential treatment facility, or an attraction within a public park that is regularly used by minors, including playgrounds and athletic fields. 1. At the July 23rd City Council Work Session, the City Council provided feedback and direction to set zoning buffers that would allow retail businesses locate on both the East & West side of Demers Ave in our Downtown Commercial District. In order to achieve that, the following buffer zones will need to be followed: a. All Business types would be prohibited within all Zoning Districts if they are located: i. within 550 Feet of a School 31  AGENDA ITEM #_______ ii. Within 300 feet of a Licensed Childcare Center/Facility, Residential Treatment facility, or public park, playground, or athletic field. NOTE: Zoning a buffer of 1,000 feet from a school could essentially prohibit sales within the City’s available commercial zones. This would be forbidden by State Statute. ZONING BUFFER MAPS ARE INCLUDED AS AN ATTACHMENT FOR REVIEW 1. Does the City Council support the proposed restriction that no Cannabis business shall be located within 550 feet of a school? 2. Do the City Council support the proposed restriction that no Cannabis business shall be located within 300 feet of a Licensed Childcare Center/Facility, Residential Treatment facility, or public park, playground, or athletic field? BUSINESS LICENSE TYPES & ZONING: The State will offer 16 cannabis license types. The general approach City Staff is proposing is to locate retail type business locations within our commercial districts and local all cultivation, manufacturing, and all other business types within our industrial districts. Attached to the RCA is chart detailing the 16 business license types offered by the State, and where we propose permitting their operation within our zoning code. - Note: No business license types will be permitted to operate within a residential district. - Note: City Staff recommend that we allow indoor only cultivation within the City. No outdoor growing/cultivation would be allowed within our City limits. NUMBER OF RETAIL LOCATIONS: 1. By Ordinance, the City may limit the number of licensed cannabis retailers to no fewer than One (1) per every 12,500 residents. This means the City of East Grand Forks will be required to allow at least one (1) retail business license. It can set limitations to the total number of retail licenses allowed. 2. In follow up discussion since the July 23rd City Council Work Session. City staff are recommending we allow a maximum of two (2) retail locations within the City. a. One Location within the C-1 Downtown Commercial district b. One location within the C-2 Highway Commercial District 3. Note: If we place this limitation on the number of retailers within the City, we will need to define a process in our Retail Registration procedure for determining how we will select the retail holder, in the event we receive more than 2 Retail business type applications from the State of MN. a. Recommended approach would be: 1. First Come/First Serve in receiving licensee applications from the Office of Cannabis Management (OCM) 2. Lottery system; to be used in the event we receive more than two licensee applications from OCM at the same time. BUSINESS REGISTRATION FEE: The municipality shall require a Cannabis Business Registration, by ordinance. Fees for these registrations are set by State Law as listed below. b. An initial retail registration fee shall not exceed $500 or half the amount of an initial state license fee under Minn. Stat. 342.11, whichever is less 32  AGENDA ITEM #_______ c. A renewal retail registration fee shall not exceed $1,000 or half the amount of a renewal state license fee under Minn. Stat. 342.11, whichever is less RETAIL BUSINESS HOURS OF OPERATION: By State Law, the municipality may adopt an ordinance limiting hours of operation to the hours between 10 a.m. and 9 p.m., seven days a week. State statute prohibits the sale of cannabis between 2 a.m. and 8 a.m., Monday through Saturday, and between 2 a.m. and 10 a.m. on Sundays Recommendation for the allowed retail business hours of operation: - Monday through Saturday: 8:00 a.m. to 9:00 p.m. - Sundays: 10:00 a.m. to 9:00 p.m. LOWER POTENTCY HEMP EDIBLES: The proposed ordinance will include a definition and section for Lower-Potency Hemp Edible Retail. Lower- Potency Hemp Edibles were legalized in MN prior to the legalization of adult-use cannabis and the City of EGF doesn’t currently have any zoning code or ordinances in effect for this business type. The City currently has five (5) Lower-Potency Hemp Edible businesses registered with the State. In reviewing the list of current businesses, they are all located within our commercial districts. The proposed zoning would continue to permit the lower-potency hemp edibles within our commercial districts, and this license type would not be subject to the proposed buffer restrictions of the Adult-Use Cannabis business types. Recommendation & Next Steps: We are bringing this update to City Council and the public for input on the above-described zoning and business regulations. Our next step will be to formalize the recommendations into ordinance form and in November we’ll present the ordinance to Planning & Zoning and City Council for recommendation and approval. Enclosures: Cannabis – Proposed Zoning List Maps showing impact of proposed buffer zones 33  C-1 C-2 L-1 L-2 Downtown Highway General State of MN Business License Type Definition Commercial Commercial Light Industrial Industrial Retail location Retail location Yes; non-retail Yes; non-retail 1 Microbusiness Cultivate & Package for resale. May Operate one retail location only only operations operations Retail location retail location Yes; non-retail Yes; non-retail 2 Mezzobusiness Cultivate & Package for resale. May Operate up to three retail locations only only operations operations 3 Retailer Sell Cannabis and hemp prodcuts to customers & patients Yes Yes No No 4 Medical Cannabis Retailer Sell medical grade cannabis products Yes Yes No No Retail location Retail location Yes; non-retail yes; non-retail 5 Medical Cannabis Combination Business Cultivate and manufacture medical cannabis. Operate one retail location only only operations operations 6 Lower Potency Hemp Edible Retailer sell lower potency edibles to customers Yes Yes No No 7 Cultivator Cultivate and Package for sale to another retail business. No No Yes Yes 8 Manufacturer manufacture products for sale to another retail business No No Yes Yes 9 Wholesaler Purchase & sell immature cannabis products to/from another cannabis license No No Yes Yes 10 Transporter Transport plants/seedlings to licensed business No No Yes Yes 11 Testing Facility obtain and test immature plants/seedlings from licensed cannabis businesses No No Yes Yes 12 Delivery Service purchase from retailers with retail endorsement to deliver to customers No Yes Yes Yes 13 Low Potency Hemp Edible Manufacturer Manufacture low potency edibles for consumer sale No No Yes Yes 14 Medical Cannabis Cultivator Grow/Cultivate Medical Cannabis products No No Yes Yes 15 Medical Cannabis Processor Process/manufacture medical cannabis products No No Yes Yes 16 Event Organizer Organize a temporary event lasting no more than 4 days; Special Event permit required Yes = Permitted Zone & Land Use *Zoning District buffers for all business types. No = Prohibited Zone & Land Use No closer than 550 Feet from any school No closer than 300 feet from any childcare center/facility, residential treatment facility or public park, playground, or athletic field regularly used by minors. Cultivation: We are recommending that we allow Indoor cultivation only within our Industrial districts. No outdoor growing/cultivation would be allowed within city limits. 34  Sherlock Park Sacred Heart School ³ These data are provided on an "AS-IS" C-1 550' schools and 300' parks basis, without warranty of any type, expressed or implied, including but not limited to any warranty as to their 35 performance, merchantability, or fitness 9/19/2024 for any particular purpose.  Tri-Valley Head Start Civic Center & Itt's WIlliams Park Senior High ³ These data are provided on an "AS-IS" C-2 with 550' schools and 300' parks/daycare basis, without warranty of any type, expressed or implied, including but not limited to any warranty as to their 36 performance, merchantability, or fitness 9/19/2024 for any particular purpose.  Great Expectations Childcare Park ³ These data are provided on an "AS-IS" South C-2 300' Buffer from Park and Daycare basis, without warranty of any type, expressed or implied, including but not limited to any warranty as to their 37 performance, merchantability, or fitness 10/4/2024 for any particular purpose.  Douglas Place Residential Treatment Facility ³ These data are provided on an "AS-IS" Industrial Zoning I-1 and I-2 with res facility buffer basis, without warranty of any type, expressed or implied, including but not limited to any warranty as to their 38 performance, merchantability, or fitness 7/1/2024 for any particular purpose.