Board of City Commissioners - January 2, 2019 Minutes

The Regular Meeting of the Board of City Commissioners of the City of Fargo, North Dakota, was held in the City Commission Room at City Hall at 5:00 o'clock p.m., Wednesday, January 2, 2019.

The Commissioners present or absent were as shown following:
Present: Gehrig, Grindberg, Piepkorn, Strand, Mahoney.
Absent: None.
Mayor Mahoney presiding.

The Mayor read a message with the following information: Fargo Cass Public Health is participating in “The People Project” with Clay County Public Health to bring about positive change in the workplace; the Library’s Winter Read-a-Thon program starts January 7th and runs through March 3rd; Chief Todd attended the ND Sheriffs and Deputies Association and Police Chiefs Association joint meeting in Bismarck, and the Police Department received a number of good bids from contractors for Phase 2 of the BSE building project, which may allow for some of the alternative projects.

The Mayor said he will be leaving Friday for Frisco, Texas, to take in the FCS Championship football game on Saturday between the North Dakota State University Bison and the Eastern Washington Eagles. He said he and Spokane Mayor David Condon have decided on a friendly wager: that the losing team’s Mayor will wear the winning team’s T-shirt and post a picture on social media.

Order of Agenda Approved:
Commissioner Piepkorn moved the Order of the Agenda be approved.
Second by Grindberg. All the Commissioners voted aye and the motion was declared carried.

Minutes Approved:
Commissioner Gehrig moved that the Minutes of the Regular Meeting of the Board held on December 17, 2018 be approved as read.
Second by Strand. All the Commissioners voted aye and the motion was declared carried.

Consent Agenda Approved:
Commissioner Strand moved the Consent Agenda be approved as follows:

1. Receive and file an Ordinance Amending Section 2-0203 and Enacting Section 2-0205 of Article 2-02 of Chapter 2 of the Fargo Municipal Code Relating to Elections.

2. Waive requirement to receive and file an Ordinance one week prior to 1st reading and 1st reading of an Ordinance Amending Section 7-0302 of Article 7-03 of Chapter 7 of the Fargo Municipal Code Relating to the Fire Department.

3. 1st reading of the following Ordinances:
a. Amending Section 8-0305 and Enacting Section 8-0323 of Article 8-03 of Chapter 8 of the Fargo Municipal Code Relating to Regulations Governing Operators.
b. Amending Section 1-0305 of Article 1-03 of Chapter 1 of the Fargo Municipal Code Relating to Penalties for Non-Criminal Violations.

4. Applications for property tax exemptions for improvements made to buildings:
a. Steven T. and Eileen A. Carroll, 43 18th Avenue North (5 year).
b. Vicki A. Fredrikson, 1551 32nd Street South, Unit 201E (3 year).
c. James L. Alsop, 1607 8th Street South (5 year).
d. Joel D. Swanson, 617 9th Avenue North (5 year).
e. Eric K. Johnson, 3713 12th Street South (5 year).
f. Dennis and Beverly Sumwalt, 14401 Broadway North Unit 103 (5 year).
g. Jeffrey E. and Michelle Vanyo, 1514 14th Avenue South (5 year).
h. Jason J. and Angela J. Lech, 2609 34th Avenue South (3 year).
i. Joshua A. Boschee, 517 1st Street North (5 year).
j. AHWA Realty LLC, 3301 13th Avenue South (5 year).
k. Paula J. Sebelius and Scott M. Hekman, 324 22nd Street South (5 year).
l. Douglas Anderson, 209 Linden Avenue (5 year).
m. Michael P. and Casinda Langseth, 2402 33rd Avenue South (3 year).
n. David M. and Renee L. Olson, 2824 38th Avenue South (3 year).
o. Cynthia L. Crary Trust, 4110 18th Street South (3 year).
p. Jeanette Rehkamp, 1409 9th Street South (5 year).

5. Receive and file complaint filed by Scot Kelsh in U.S. District Court District of North Dakota Eastern Division.

6. Applications for Games of Chance:
a. El Zagal 57 Director’s Staff for a raffle on 9/21/19.
b. The Outdoor Adventure Foundation for a raffle and raffle board on 3/17/19.
c. Red River Fraternal Order of Police Lodge No. 1 for a raffle board on 1/19/19.
d. Atonement Lutheran Church for a raffle on 2/7/19.

7. Resolution Authorizing Officers to Make Deposits and Withdrawals and approval of the designated depositories (Attachment “A”).

8. Purchase Agreement for property located at 173 South Woodcrest Drive North in the amount of $762,000.00.

9. Purchase of Service Agreement with Cass County Social Services for in-home services.

10. Amendments to the Community Development Block Grant (CBDG) 5-Year Consolidated Plan and Annual Action Plan.

11. Purchase one aerial lift truck from ABM Truck Equipment in the amount of $115,950.00 (RFP18352).

12. Agreements for Tree and Stump Removal Services – 2019 with Cougar Tree Care, Inc. (RFP181090) and Landscape Maintenance Services – 2019 with
All-Terrain Grounds Maintenance (RFP17025).

13. Purchase one negotiations truck from Herr Display Vans in the amount of $159,965.00 (RFP18311).

14. Negative Final Balancing Change Order No. 2 in the amount of -$85.10 for Project No. TM-18-A1.

15. Bid award to Graymont LLC for lime chemical for $173.00/ton for the Water Treatment Plant for 2019.

16. Contract and bond for Project No. WW1701(mechanical).

17. Bills in the amount of $9,445,577.07.

Second by Gehrig. On call of the roll Commissioners Strand, Gehrig, Grindberg, Piepkorn and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Temporary Easement Across a Portion of City-owned Property at 501 Main Avenue for Improvement District No. BR-18-A Approved:
The Board received a communication from Land Acquisition Specialist Shawn Bullinger requesting review and approval of a Memorandum of Offer to Landowner form, Memorandum Agreement form, Agreement for Entry and Construction (no compensation) form, original Temporary Easement form and Notification and Appraisal Waiver form associated with ND DOT Project No. CPU-NHU-8-010(041)939, Temporary Easement Parcel 5-1, Main Avenue Construction Project - 2nd Street to Broadway Improvement District No. BR-18-A. He said the City Engineers office is requesting approval of and the donation of a temporary easement across a portion of the property at 501 Main Avenue to assist in the reconstruction of Main Avenue.

Commissioner Strand moved a temporary easement across a portion of City-owned property located at 501 Main Avenue for Improvement District No. BR-18-A be approved.

Second by Gehrig. On call of the roll Commissioners Strand, Gehrig, Grindberg, Piepkorn and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Temporary Easement Across a Portion of City-owned Property at 1 2nd Street North for Improvement District No. BR-18-A Approved:
The Board received a communication from Land Acquisition Specialist Shawn Bullinger requesting review and approval of a Memorandum of Offer to Landowner form, Memorandum Agreement form, Agreement for Entry and Construction (no compensation) form, original Temporary Easement form and Notification and Appraisal Waiver form associated with ND DOT Project No. CPU-NHU-8-010(041)939, Temporary Easement Parcel 6-8, Main Avenue Construction Project – 2nd Street to Broadway Improvement District No. BR-18-A. He said the City Engineers office is requesting approval of and the donation of a temporary easement across a portion of the property at 1 2nd Street North to assist in the reconstruction of Main Avenue.

Commissioner Strand moved a temporary easement across a portion of City-owned property located at 1 2nd Street North for Improvement District No. BR-18-A be approved.

Second by Gehrig. On call of the roll Commissioners Strand, Gehrig, Grindberg, Piepkorn and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Access Agreement and Easement, and Memorandum of Offer to Landowner with Lake Agassiz Regional Development Corporation for Improvement District
No. BR-18-A Approved:
Commissioner Strand moved the Access Agreement and Easement and Memorandum of Offer to Landowner with Lake Agassiz Regional Corporation in association with Improvement District No. BR-18-A be approved.

Second by Gehrig. On call of the roll Commissioners Strand, Gehrig, Grindberg, Piepkorn and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Amended Engineer’s Report for Improvement District No. BN-19-A Approved:
The Board received an Amended Engineer’s Report from Transportation Engineer Jeremy Gorden for Grading, Salvaged Base, P.C. Concrete Pavement, Hot Mix Asphalt, Storm Drain, Street Lighting, Traffic Signals, Pavement Marking, Shared Use Path, Sidewalk, Bridge, Water Main and Incidentals Improvement District No. BN-19-A.

Commissioner Strand moved the Amended Engineer’s Report for Improvement District No. BN-19-A be approved.

Second by Gehrig. On call of the roll Commissioners Strand, Gehrig, Grindberg, Piepkorn and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Ground Transportation Center (GTC) Capital Improvements Presentation: North Dakota Department of Transportation Section 5339 Transit Grant Agreement Approved: Appropriate Staff Directed to Conduct an RFP for Improvements at the GTC:
The Board received a communication from Assistant City Administrator Michael Redlinger stating approval of the FTA/NDDOT Grant for GTC Improvements was delayed from the December 17, 2018 meeting for a presentation at this meeting.

Wade Kline, KLJ Engineering, gave a PowerPoint presentation focusing on the Ground Transportation Center elements of the MAT Transit Feasibility Study. He said the facility does have some life left in it, and with the proper investments, the stakeholders felt comfortable that it is feasible to move forward. A number of preliminary options were looked at, he said, and as far as sites, he reminded the Board that this is a metropolitan transit system so the ability to move it too far in any one direction is limited by the cooperative system with Moorhead and the Minnesota Department of Transportation. He said the study indicated the need to stay with the hub and spoke system. He said GTC renovations bring the facility back to what the public expects for a major transit terminal and addresses safety, security and operational needs. He said it also accommodates Jefferson Lines coming back Downtown. The $2.5 million addresses the estimated line item costs for internal remodeling and includes costs for deck modifications, he said, which would allow buses to move forward at all times, rather than backing up.

In response to a question from Mayor Mahoney about the cost to buy land and rebuild the facility, Mr. Kline said, while they did not do a detailed estimate on that cost, starting over could be three times the cost.

Commissioner Grindberg said his basis for requesting the presentation was that it is beneficial for the entire Board to be aware of the overall picture and what Downtown will look like down the road. He said spending this grant money locks things in.

In response to a question from Commissioner Grindberg on whether any spots in Moorhead were considered, Mr. Kline said Moorhead was not looked at. Where there are three or four buses coming from Moorhead into Fargo, there would be seven or eight Fargo buses going into Moorhead, he said, making that a more difficult proposition.

Finance Director Kent Costin reviewed the timeline, funding sources and the documentation previously submitted and approved by the Board. He said a pre-grant application was approved on October 18, 2018 which had a $400,000.00 local share and that is in the 2019 budget. There is an open obligation for the land purchase by 2020, he stated, and the amount of the TIF has been increased to reserve funds for an approximate 22% contingency on the land price. In all, he said, there is about $2.34 million available for above grade and $674,000.00 below grade, for a total of about $3 million. An $800,000.00 local reinvestment, required due to the Municipal Court Building conversion in 2009, has an estimated $500,000.00 in remaining obligations, he said. He is seeking approval of the FTA/NDDOT grant and project budget for above grade improvements, he said, and the project budget for below grade improvements, as well as the Board’s authorization of the January 2019 RFP process for professional services/bidding.

In response to a question from Commissioner Strand about what the future of transit looks like now with autonomous vehicles and growing smart technology, Assistant Transit Director Matthew Peterson said there is a push for more electric technology. He said ridership is growing, there were two million rides in Fargo Moorhead last year, so the number of buses will grow.

Commissioner Piepkorn said funding is based on census data which means that likely after the 2020 census, the formula will change to a regional transportation system.

Commissioner Strand moved the NDDOT Section 5339 Transit Grant Agreement be approved and appropriate staff be directed to conduct an RFP process in January 2019 for various above and below-grade improvement projects at the GTC for transit and the parking authority, respectively.

Second by Piepkorn. On call of the roll Commissioners Strand, Piepkorn, Gehrig, Grindberg and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Application for Abatement or Refund of Taxes #4478 submitted by Mike and Linda Bergh for Property at 6568 Christianson Parkway South Approved:
The Board received a communication from City Assessor Ben Hushka stating Mike and Linda Bergh have submitted an application for Abatement or Refund of Taxes #4478 for the property at 6568 Christianson Parkway South requesting the valuation for 2018 be reduced from $539,800.00 to $525,576.00. He said the current valuation is the result of an informal review conducted at the request of the property owner after they purchased the property in January 2018. He said the contract purchase price was $513,000.00 and the buyer assumed unpaid special assessments of $19,800.00 making the adjusted price $532,800.00. He said the City’s current valuation of $539,800.00 is within 1.3% of the actual consideration obligated to acquire the property. Mr. Hushka shared a list of comparable properties and a list of how the subject is valued compared to sales of comparable properties. He said both lists indicate that the subject property is somewhat under-valued compared to assessed values and sales of similar properties. No appraisal or valuation analysis was provided to support the value requested by the applicant.

Mike Bergh, 6568 Christianson Parkway South, said the home was purchased in January 2018 for $513,000.00 and had been on the market for nine and a half months. The previous owners reduced the price of the home several times while it was on the market, he said, starting at $585,000.00 and selling at $513,000.00, which he feels was a fair price. His position is the mass appraisal system used by the City was inadequate on this property, he said, and he requested a recheck. Prior to that being done, the appraised value of the home increased from $575,000.00 to $616,400.00, or an amount $103,000.00 greater than the home’s purchase price. An assessor worked with them to recheck the home, he said; however, he is requesting a reduction in value because he does not agree with the final valuation. Sales value should be used as a basis in establishing valuation, he said, and while a portion of special assessments should be included in a valuation due to some adding to the value of the home, some assessments strictly maintain value, not increase it. He said he feels that in his case, approximately a third of the special assessments on the home appear to be maintenance, and he requests they be excluded from the valuation.

Mr. Hushka said property assessments are not an exact science. The appraisal is within 1.3% of what the property actually sold for, he said.

In response to a question from Commissioner Gehrig about how many dollars would not be taken in if the value were reduced to $525,500.00, Mr. Hushka said approximately $160.00 per year on roughly $6,400.00 in taxes.

Commissioner Gehrig said that if a house sold during a year and the City is assessing it, the assessment needs to be as close to the actual value as possible. Nothing more accurately tells what the value of something is than when it sells, he said, and the market will buy it when it is the right price, which is exactly what happened here.

Commissioner Strand said 1% is remarkably close. It is not so much the revenue per year, he said, as honoring a system that if someone buys a house, that is what it is worth. He is concerned that it seems like the housing market is stabilizing or decreasing, he said, and he is leaning towards honoring the purchase price of this house.

Commissioner Gehrig moved the application #4478 filed by Mike and Linda Bergh for Abatement of 2018 real estate taxes on property located at 6568 Christianson Parkway South be reduced from $539,800.00 to $530,000.00.

Second by Strand. On call of the roll Commissioners Gehrig, Strand and Mahoney voted aye.
Commissioners Piepkorn and Grindberg voted nay.
The motion was declared carried.

Parcels of Land in Egbert, O’Neil and Haggart’s Subdivision Rezoned (404 25th Street South):
At a Hearing held on December 4, 2018, the Fargo Planning Commission recommended approval of a change in zoning from SR-4, Single-Dwelling Residential and GC, General Commercial to GC, General Commercial on all of Lots 5A, 5B, 6A, 6B, 8A, 8B, part of 7B, and half the vacated alley adjacent to Lot 5A, Block 16, all of Lots 1, 2A, 2B, 3A, 3B, 6, and part of Lot 4, Block 21, and the vacated alley adjacent to Block 16 and Block 21, Egbert, O’Neil, and Haggart’s Subdivision.
The City Auditor's Office published a Notice of Hearing stating this is the time and date set for said Hearing at which time all interested persons could appear and would be heard.

Current Planning Coordinator Donald Kress said the applicant acquired neighboring property zoned SR-4, Single-Dwelling Residential and the request is to consistently zone across the applicant’s entire property. He said he believes the applicant plans to pave the area as an adjunct for commercial development of his auto body repair business.

Commissioner Grindberg offered the following Resolution and moved its adoption:
WHEREAS, All legal requirements in connection with the above-described request for rezoning have been complied with; and
WHEREAS, There have been no written or verbal protests to the request for rezoning and no one is present to protest thereto.
NOW, THEREFORE, BE IT RESOLVED, That the findings of staff be accepted and the rezoning be approved on the basis that the proposal satisfactorily complies with the Comprehensive Plan, Standards of Section 20-0906.F (1-4) and all other applicable requirements of the LDC.

Second by Gehrig. On the vote being taken on the question of the adoption of the Resolution Commissioners Grindberg, Gehrig, Strand, Piepkorn and Mahoney voted aye.
No Commissioner being absent and none voting nay, the Resolution was adopted.

First Reading of an Ordinance Rezoning Certain Parcels of Land Lying in Egbert, O’Neil and Haggart’s Addition to the City of Fargo, Cass County, North Dakota:
Commissioner Grindberg moved the requirement relating to receipt of the Ordinance by the Commission one week prior to first reading be waived and that the Ordinance Rezoning Certain Parcels of Land Lying in Egbert, O’Neil and Haggart’s Addition to the City of Fargo, Cass County, North Dakota be placed on first reading.

Second by Gehrig. On call of the roll Commissioners Grindberg, Gehrig, Strand, Piepkorn and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Hearing on a Dangerous Building Located at 703 10th Avenue North: Findings of Fact and Order Approved: Appropriate Staff Directed to Secure Removal of the Building Should the Owner Fail to Do So:
A Hearing had been set for December 3, 2018 on a dangerous building located at 703 10th Avenue North.
At the December 3, 2018 meeting the Hearing was continued to this day and hour.

Inspections Administrator Bruce Taralson said the property owner of 703 10th Avenue North has failed to comply with his order to remove a heavily damaged structure at that location within the time allowed for that removal.

Contract for Deed Owner Terry Tegtmeier said he was directed at the meeting last month to ascertain financing for the project; however, he learned that applications for low interest revitalization loans through Gate City Bank will not be accepted until spring. He said he intends to apply for a loan for between $50,000.00 to $100,000.00.

Planning Director Nicole Crutchfield said the NRI has a cycle that opens in the spring and typically closes in October. The loan amounts are typically between the bank and applicant, she said, and the City processes paperwork. She said typically the loans are for owner-occupied properties.

In response to a question from Mayor Mahoney about the requested engineer’s report, Mr. Tegtmeier said he wanted to be sure financing was secured before asking contractors to bid on a project that may or may not happen. He said he would like an opportunity to see what type of financing can be obtained when the low interest loans are available again.

Brandon Raboin, a neighboring property owner, said the property looks terrible and really affects values. He said he believes the house is more of a tear down and he does not believe that $50,000.00 to $100,000.00 would do anything considering the current condition of the property. He said a house adjacent to this house was in similar condition and was torn down this summer.

Mr. Taralson said there was discussion on financing; however, it was not part of the criteria for this action.

Commissioner Strand said his sense was that the owner was to come to this meeting with a plan showing what can be done and a timeline and he does not see that. He said unless there is a plan now to fix it up to habitable standards, he cannot support it.

Commissioner Piepkorn pointed out a photo in the agenda packet showing a crack in the main sewer pipe and serious foundation damage. He said the property owners were given an opportunity and have an excuse once again.

Commissioner Gehrig said he believes in property rights; however, at this point the property in question is affecting neighboring properties. He said he does not like it; however, something has to be done.

Commissioner Strand moved the building located at 703 10th Avenue North be determined a dangerous building, the Findings of Fact and Order and Notice of Entry of Order be approved, and appropriate staff be directed to secure removal of the building should the owner fail to do so.

Second by Grindberg. On call of the roll Commissioners Strand, Grindberg, Piepkorn, Gehrig and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Hearing on an Application to Transfer the Class “C” Alcoholic Beverage License from Men’s Hair World LLC d/b/a Hair Salon to Men’s Hair World LLC d/b/a Men’s Hair World at 1801 45th Street South, Suite L1 Continued to January 14, 2019:
A Hearing had been set for this day and hour on the transfer of a Class “C” Alcoholic Beverage License from Men’s Hair World LLC d/b/a Hair Salon to Men’s Hair World LLC d/b/a Men’s Hair World at 1801 45th Street South, Suite L1.

City Auditor Steve Sprague said there are significant credit history concerns with the application and due to this factor the Liquor Control Board voted to deny the transfer of the license.

Heidi Marie Kroetch said she purchased the salon on December 1, 2018 and just received the denial on December 31, 2018. She said she has not had time to find out more information on the Liquor Control Board’s vote to deny the application.

Commissioner Gehrig said if the City Commission were to deny the application, Ms. Kroetch could apply again if she is able to state the problems found in the background check have been fixed.

Commissioner Strand moved the hearing be continued to 5:15 o’clock p.m. Monday, January 14, 2019.

Second by Piepkorn. On call of the roll Commissioners Strand, Piepkorn, Grindberg, Gehrig and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Application Filed by Touchmark at Harwood Groves, LLC d/b/a Touchmark for an Alcoholic Beverage License Approved:
A Hearing had been set for this day and hour on the application filed by Touchmark at Harwood Groves, LLC d/b/a Touchmark for a Class "F" Alcoholic Beverage License at 1200 Harwood Drive South, notice of which had been duly published in the official newspaper for the City of Fargo.
No written protest or objection to the granting of the application has been received or filed in the office of the City Auditor, and said application has been approved by the Police Department as to the character of the applicant.
The Board determined that no person is present at this Hearing to protest or offer objection to the granting of the application.

City Auditor Steve Sprague said the applicant wants to sell alcohol to guests who are there visiting residents and the route deemed best for the situation was to have them apply for a liquor license. He said the cost of a Class “F” Alcoholic Beverage License is $3,000.00 initial fee and $1,500.00 per year.

Commissioner Strand moved the application be approved.

Second by Gehrig. On call of the roll Commissioners Strand, Gehrig, Piepkorn, Grindberg and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Dean Bresciani Reappointed to the Renaissance Zone Authority:
The Board received a communication from Mayor Mahoney recommending that Dean Bresciani be reappointed to the Renaissance Zone Authority.

Commissioner Grindberg moved Dean Bresciani be reappointed to the Renaissance Zone Authority for a three-year term ending January 1, 2022.

Second by Piepkorn. On call of the roll Commissioners Grindberg, Piepkorn, Strand, Gehrig and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

State Water Commission Request for Cost Reimbursement for FM Diversion Project Costs Approved:
The Board received a communication from Finance Director Kent Costin stating the State Water Commission is requesting $255,691.15 for cost reimbursement for the FM Area Flood Risk Management Project for November 2018. He said the request is for expenses related to projects in the Oxbow/Hickson/Bakke component of the project.

Commissioner Grindberg moved the cost reimbursement request in the amount of $255,691.15 for the FM Diversion Flood Project for expenses related to projects in the Oxbow/Hickson/Bakke component of the project be approved.

Second by Gehrig. On call of the roll Grindberg, Gehrig, Piepkorn, Strand and Mahoney voted aye.
No Commissioner being absent and none voting nay, the motion was declared carried.

Update on the FM Area Diversion Project:
Mayor Mahoney said the Diversion Authority has been granted a permit from the Minnesota Department of Natural Resources (DNR). He said he has asked Diversion Division Engineer Nathan Boerboom to explain the conditions in the permit and answer questions the Commissioners may have.

Diversion Division Engineer Nathan Boerboom said the Diversion Authority has received approval from the Minnesota DNR. He said the permit has 54 conditions and after reviewing it, there is nothing too concerning or unexpected with the conditions and conditions were expected. As a point of reference, he said, the Minnesota DNR recently permitted two dam projects for Poly Met Mining in northern Minnesota and there are 46 and 51 conditions with these two permits; therefore, the 54 conditions for the Diversion permit are not out of the ordinary. The first condition is the completion date, he said, which is 2023 due to the fact that the Diversion permit is a dam safety and public waters permit. and Minnesota law for a public safety or public waters permits, states the permit is only for five years. He said the DNR was very upfront from the beginning that they know the Diversion project is going take longer, so they are expecting the Authority will be submitting an extension. Another part of the permit is the phases permitting, he said, and this is actually great news for the Authority. He said the DNR is taking a similar approach to the State Water Commission and is going to be permitting this project in phases, so there are a lot of aspects that will be constructed for the project in multiple phases. The Corps is going to be constructing the Southern Embankment in many segments, he said, so instead of having the entire project designed and finalized up front, as a segments get finalized and designed and plan specs are ready to go for bid, they can be submitted to the DNR for the approval one piece at a time. Written consent centers around the property rights conditions, he said, and that is what was expected as well. The land in fee title for where the project footprint is actually going to be constructed must be in place prior to starting construction; therefore, that would have been done anyway, prior to beginning new construction on that phase of the Southern Embankment. He said it also requires the Authority to have all flowage easements secured prior to the operation of the project, which means there is some time to secure those, which is good due to the fact that there are a lot of flowage easements to acquire. That is how the Authority has been operating to date, he said, which is similar to how the State Water Commission is handling their permit. With the cemetery impacts, he said, the DNR is requiring the Authority to submit a mutually agreed-upon plan between the cemeteries and the Authority. He said a Committee was formed a couple years ago to start looking at mitigation requirements for cemeteries and that Committee was put on hold. He said he fully expects that Committee to start meeting again and will meet individually to develop the mitigation requirements for the individual cemeteries. One thing he would like to note, he said, is the previous plan had 11 cemeteries impacted and now there are five, therefore the number of impacted cemeteries was reduced quite a bit with Plan B. He said various reporting will be required, such as operation and maintenance, debt management plans, construction reporting and year-end which are nothing unexpected. Many of those report requirements are the same with the Corps, FEMA and the State Water Commission and the Authority will continue to develop those required reports as the project proceeds and to include the DNR on all of those items to make sure that they are in the development phase of those plans as well. He said the Authority is very pleased to have the permit and excited to start moving forward. He said the 54 conditions are not unexpected and are helpful in providing clarity to make sure that the Authority builds the project to the standards that the Minnesota DNR wants and allows the Authority to be able to make sure the project operates to DNR standards.

Commissioner Strand said the Authority is closer to having this project than ever; however, financing has to be finalized and in place. He said his advice to everyone is to be proactive, reach out to the impacted areas immediately and communicate. He said to lay everything on the table in order to get away from litigation and to get to a mindset of how to make this work for everybody’s benefit. He said the Diversion Authority has misstepped in communicating with the people impacted and it is time to put that in the past, reach out and, be upfront about the impacts and meditations. He said his question is regarding the financing of this project long term and in today's dollars, what will the actual cost implementation dollars be when the project is completed and what will the implications be to the cities, to the feds, Minnesota, North Dakota and locals for financing and the challenges.

Mr. Boerboom said Eric Dodds of AE2S is part of the Land Management Committee and they are actively formulating a plan to start that outreach. He said the Authority knows fully that is a key issue that needs to be worked on immediately.

Commissioner Grindberg said he is Chair of the Diversion Authority Finance Committee and a person buying a house today with a mortgage pays interest at whatever the current rates are, and the rate is locked in. He said one is going to pay more than the purchase price; however, the way the trend lines are, waiting until September would see interest rates are higher and the result would be paying more. He said with this massive of a project the impact on the budget largely was due to delays at $150 million, Plan B changes to $210 million and some different utility work at $50 million, and a built-in additional contingency. He said it is incumbent to be united to work forward to get this done due to the fact that if it drags on another year or two, it is only going to go up in cost. He said once the P-3 is bid, the Authority will know the actual cost and to Mr. Boerboom’s credit and Moorhead City Engineer Bob Zimmerman and the other technical experts, the Authority feels confident that everything has been built in if this goes forward; therefore, this is being based on 2018 dollars. If something changes, he said, the whole thing changes and it costs $50 million a year for delays. He said those are real numbers being used in estimates and the finance modeling is key. The sales tax impact was down, he said; however, that is starting to round up which has had an impact on overall financing. Short-term borrowing rates are on the upturn, he said and so that is the plan that the Authority accepted. He said it is $300 million additional from the state, $300 million from the federal government, a $250 million loan on a local share due to the cash flow needs with construction based on 2019 and 2020 acceleration. The Authority has a lot of work to do, he said; however, this is the plan to move forward and that plan is going to change.

In response to a question from Commissioner Gehrig about the completion date, Mr. Boerboom said 2025 or 2026.

Mayor Mahoney said some of the P3 contractors have said they may be able to do it in less than six and a half years.

In response to a question from Commissioner Gehrig on how long is the process for asking for an extension, Mr. Boerboom said he did not know that answer; however, the DNR has said it is not a big deal to ask for an extension and it is not uncommon for them to grant extensions.

Commissioner Gehrig said with the ring consent, the way he read it was that any property that the Diversion damages or uses there has to be written consent and asked if that includes Wilkin and Richland Counties, the people who are suing; Mr. Boerboom said the Authority will have to acquire flowage easements on areas within Richland and Wilkin Counties.

Commissioner Gehrig said as far as financing, when using 2018 dollars the assumption is obvious; however, not spoken to a lot, is that the project is complete in 2018; however, it is 2019 and while the number in 2019 is known, it is not being used and the cost estimate is known for 2020, 2021 and all the way up to 2030. He said if assuming it is to be done in 2026, why is the $3.1 billion number not used. He said if it takes two years to build a home, one does not get a loan for what it would cost in 2018, it is a loan for costs in 2020; therefore, the $3.1 billion number should be used.

Mayor Mahoney said when the P3 contract comes out for bid in November, that bid is firm and that is half the project. The second half of the project, he said, is the Corps project on the Southern Embankment. He said they do accelerate and have interest added to that; therefore, they have $450 million and it will migrate up due to the fact that it will add inflationaries. It is a 30-year contract, he said, and does not change and the reality is the City has to deal with it as best the City can today and when the City goes to the legislative body. The lesson, he said, is the quicker the Diversion is built the better, as it will keep the price down.

Commissioner Gehrig said he is not making up the number, he was given the $2.75 billion number and the same person gave him $3.1 billion dollars in 2027; if the goal is 2026, let’s talk in those number. He said if the State Legislature the Feds and Minnesota are asked for an increase and they are giving $2.75 billion, they will have to be asked for more money.

Commissioner Grindberg said there are different definitions of terminology. He said if the funding request gets locked down in 2019, the budget is intact with sufficient contingency to make this work. If delayed another year, he said, there will be a conversation about how to finance it and it is going to go up. He said the numbers have been baked into this with estimates on interest-rate charges, sales tax collections, a loan amount needed and on current modeling with moving this in the next six months.
Commissioner Gehrig said estimates for the 2027 number and the assumptions given to him were: begin in 2019, complete in 2027 and if that is done exactly, it is $3.1 billion, not $2.75 billion.

Commissioner Piepkorn said this is amazing. He said having the two Governors meeting was key; however, many people deserve credit. He said obviously this is arguing details, there will be lawyers, guns and money from now on, that is just part of the deal; however, the Authority has the DNR permit now, which is phenomenal. He said he hopes everyone here appreciates this because it is historic and he is very proud of everyone. There will be a lot more work as this goes on, he said; however, this is a great thing, life-changing for our City and the cities around us as there will be no more sandbagging. He agrees that the Authority has to spend the money carefully because it is the taxpayer’s money he said; however, this is historic.

Commissioner Grindberg moved that the Board adjourn to 5:00 o’clock p.m., Monday, January 14, 2019.

Second by Gehrig. All the Commissioners voted aye and the motion was declared carried.
The time at adjournment was 6:20 o’clock p.m.