JULY 17, Tracee Bruggeman with Brady Martz presented the 2011 Audit.

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1 COUNCIL PROCEEDINGS JULY 17, 2012 The City Council of Thief River Falls, Minnesota, met in regular session at 5:00 p.m. on in the Council Chambers of City Hall. The following Councilmembers were present: Cullen, Haj, Holten, Kajewski, Swanson, Schmalz and Mayor Nordhagen. Councilmember Erickson was absent. Mayor Nordhagen chaired the meeting. PRESENTATIONS Tracee Bruggeman with Brady Martz presented the 2011 Audit. APPROVAL OF AGENDA Councilmember Cullen motioned, being seconded by Councilmember Kajewski, to approve the agenda with the addition of two items. On vote being taken, the motion was unanimously approved. RESOLUTION NO : APPROVAL OF COUNCIL PROCEEDINGS Presented as part of the Consent Agenda, Councilmember Haj introduced Resolution No , being seconded by Councilmember Kajewski, that: RESOLVED, by the City Council, to approve the June 11, 2012 Special Council Proceedings, July 3, 2012 Council Proceedings and July 3, 2012 Hearing Proceedings. RESOLUTION NO : APPROVAL OF PAYMENT OF BILLS Presented as part of the Consent Agenda, Councilmember Haj introduced Resolution No , being seconded by Councilmember Kajewski, that: RESOLVED, by the City Council, to authorize payment of bills and disbursements in the total amount of $2,031, A printout of the approved payments and disbursements is attached hereto and made a part hereof. RESOLUTION NO : APPROVAL OF TEMPORARY 3.2% MALT LIQUOR LICENSE TO TRF CHAMBER OF COMMERCE

2 Presented as part of the Consent Agenda, Councilmember Haj introduced Resolution No , being seconded by Councilmember Kajewski, that: RESOLVED, by the City Council, to grant the TRF Chamber of Commerce a temporary 3.2% Malt Liquor License, effective September 8, 2012 at the 200 Block of North LaBree Avenue from 6 p.m. to midnight. RESOLUTION NO : APPROVAL OF BEER IN THE PARK PERMIT FOR CLASS OF 2002 Presented as part of the Consent Agenda, Councilmember Haj introduced Resolution No , being seconded by Councilmember Kajewski, that: RESOLVED, by the City Council, to grant the Class of 2002 a Beer in the Park Permit, effective July 21, 2012 at Oakland Park to allow for the consumption of 3.2% malt liquor in the park. RESOLUTION NO : APPROVAL OF PROGRESSION RAISE FOR SUSAN MOSBECK, CUSTOMER SERVICE REPRESENTATIVE Presented as part of the Consent Agenda, Councilmember Haj introduced Resolution No , being seconded by Councilmember Kajewski, that: RESOLVED, by the City Council, to accept a Public Utilities Committee recommendation and grant Susan Mosbeck, Customer Service Representative, a progression raise. Ms. Mosbeck shall progress to Step 4 of the Grade Level 6/Pay Range 6 Customer Service Representative salary schedule for a new hourly wage of $21.94, effective August 8, RESOLUTION NO : RESOLUTION ADOPTING A MODIFICATION TO THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND ESTABLISHING TAX INCREMENT FINANCING DISTRICT NO THEREIN AND ADOPTING A TAX INCREMENT FINANCING PLAN THEREFOR. Tim Benedict, Karl Bjorkman and Mr. Bjorkman s Attorney Mark Grainger addressed the Council. Community Development Director Mike Moore, Lynette Slater Grandall of Dorsey Whitney (Bond Counsel to the City) and Rebecca Kurtz of Ehlers (Municipal Financial Advisor to the City) provided information regarding TIF and presented a recommendation. Following discussion, Councilmember Haj, citing Exhibit A Findings as

3 the rationale, introduced Resolution No , being seconded by Councilmember Kajewski, that: BE IT RESOLVED by the City Council (the "Council") of the City of Thief River Falls, Minnesota (the "City"), as follows: Section 1. Recitals The City Council of the City of Thief River Falls (the "City") has heretofore established Development District No. 1 and adopted a Development Program therefor. It has been proposed by the City that the City adopt a Modification to the Development Program for Development District No. 1 (the "Development Program Modification") and establish Tax Increment Financing District No (the "District") therein and adopt a Tax Increment Financing Plan (the "TIF Plan") therefor (the Development Program Modification and the TIF Plan are referred to collectively herein as the "Program Modification and TIF Plan"); all pursuant to and in conformity with applicable law, including Minnesota Statutes, Sections to and Sections to , all inclusive, as amended, (the "Act") all as reflected in the Program Modification and TIF Plan, and presented for the Council's consideration The City has investigated the facts relating to the Program Modification and TIF Plan and has caused the Program Modification and TIF Plan to be prepared The City has performed all actions required by law to be performed prior to the establishment of the District and the adoption and approval of the proposed Program Modification and TIF Plan, including, but not limited to, notification of Pennington County and Independent School District No. 564 having taxing jurisdiction over the property to be included in the District, a review of and written comment on the Program Modification and TIF Plan by the City Planning Commission, and the holding of a public hearing upon published notice as required by law. Notice of the public hearing was duly published as required by law in the Thief River Falls Times, the official newspaper of the City, on June 13, Certain written reports (the ''Reports") relating to the Program Modification and TIF Plan and to the activities contemplated therein have heretofore been prepared by staff and consultants and submitted to the Council and/or made a part of the City files and proceedings on the Program Modification and TIF Plan. The Reports include data, information and/or substantiation constituting or relating to the basis for the other findings and determinations made in this resolution. The Council hereby confirms, ratifies and adopts the Reports, which are hereby incorporated into and made as fully a part of this resolution to the same extent as if set forth in full herein The City is not modifying the boundaries of Development District No. 1, but is however, modifying the Development Program therefor.

4 Section 2. Approval of the Development Program Modification The Council finds that the Development Program Modification will, in the judgment of this Council, provide an impetus for development in the public interest and accomplish certain objectives as specified in the Development Program Modification, which is hereby incorporated herein, and hereby adopts the Development Program Modification. Section 3. Findings for the Establishment of Tax Increment Financing District No The Council hereby finds that Tax Increment Financing District No is in the public interest and is a "housing district" under Minnesota Statutes, Section , Subd. 11 of the Act The Council further finds that (i) the proposed development would not occur solely through private investment within the reasonably foreseeable future, (ii) the Program Modification and TIF Plan conform to the general plan for the development or redevelopment of the City as a whole; and (iii) the Program Modification and TIF Plan will afford maximum opportunity consistent with the sound needs of the City as a whole, for the development or redevelopment of the District by private enterprise The Council further finds, declares and determines that the City made the above findings stated in this Section and has set forth the reasons and supporting facts for each determination in writing, attached hereto as Exhibit A. Section 4. Public Purpose The adoption of the Program Modification and TIF Plan conforms in all respects to the requirements of the Act and will help fulfill a need to develop an area of the City which is already built up, to provide housing opportunities, to improve the tax base and to improve the general economy of the State and thereby serves a public purpose. For the reasons described in Exhibit A, the City believes these benefits directly derive from the tax increment assistance provided under the TIF Plan. A private developer will receive only the assistance needed to make this development financially feasible. As such, any private benefits received by a developer are incidental and do not outweigh the primary public benefits. Section 5. Approval and Adoption of the Program Modification and TIF Plan The Program Modification and TIF Plan, as presented to the Council on this date, including without limitation the findings and statements of objectives contained therein, are hereby approved, ratified, established, and adopted and shall be placed on file in the office of the City Administrator The staff of the City, the City's advisors and legal counsel are authorized and directed to proceed with the implementation of the Program Modification and TIF Plan and to negotiate, draft, prepare and present to this Council for its consideration all further plans, resolutions, documents and contracts necessary for this purpose.

5 Page 5 of The Auditor of Pennington County is requested to certify the original net tax capacity of the District, as described in the Program Modification and TIF Plan, and to certify in each year thereafter the amount by which the original net tax capacity has increased or decreased; and the City of Thief River Falls is authorized and directed to forthwith transmit this request to the County Auditor in such form and content as the Auditor may specify, together with a list of all properties within the District, for which building permits have been issued during the 18 months immediately preceding the adoption of this resolution The City Administrator is further authorized and directed to file a copy of the Program Modification and TIF Plan with the Commissioner of the Minnesota Department of Revenue and the Office of the State Auditor pursuant to Minnesota Statutes , Subd. 4a. EXHIBIT A The reasons and facts supporting the findings for the adoption of the Tax Increment Financing Plan for Tax Increment Financing District No. 1-10, as required pursuant to Minnesota Statutes, Section , Subdivision 3 are as follows: 1. Finding that Tax Increment Financing District No is a housing district as defined in M.S., Section , Subd. 11. TIF District No consists of 1 parcel. The development will consist entirely of rental apartments, all or a portion of which will receive tax increment assistance and will meet income restrictions described in M.S At least 40 percent of the units/homes receiving assistance will have incomes at or below 60 percent of statewide median income as annually updated by Minnesota Housing Finance Agency. These restrictions will remain in place for the term of the TIF assistance and the housing district. Appendix E of the TIF Plan contains background for the above finding. 2. Finding that the proposed development, in the opinion of the City Council, would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. This finding is supported by the fact that the development proposed in this plan is a housing district that meets the City's objectives for development and redevelopment. The need for additional housing was documented in the City of Thief River Falls Housing Study Update dated February 2012, and employers expressed the need for housing at the public hearing on the TIF Plan on July 3, The Study states that the employment level in Thief River Falls has continued to grow, and is expected to keep growing The area does not have a surplus of housing op-

6 Page 6 of 14 tions, and job growth, household growth and housing unit construction will all be intertwined over the next several years. New rental housing will provide affordable housing for students, employees of the growing industry in the community, as well as seniors, which will make single-family housing options available. The cost of land acquisition, site and public improvements, utilities and other qualifying improvements makes this housing development infeasible without City assistance. Due to the high cost of building affordable new housing in the City and the cost of financing the proposed public improvements, this project is feasible only through assistance, in part, from tax increment financing. The tax increment will be used to write down the cost of land acquisition, improvements, and public infrastructure. The budget and preliminary expenses have been reviewed by the City s Financial Advisor and are found to be within the levels seen in the market for comparable work force housing developments. Providing assistance will decrease the rental costs to residents; and therefore, the development will be affordable. The developer was asked for and provided documentation to the City s Financial Advisor as justification that the developer would not have gone forward with the development without tax increment assistance; the developer also confirmed this statement at the public hearing on July 3, 2012 (see attachment in Appendix F of the TIF Plan). 3. Finding that the TIF Plan for Tax Increment Financing District No conforms to the general plan for the development or redevelopment of the municipality as a whole. The Planning Commission reviewed the TIF Plan on June 11, 2012, and adopted a resolution finding that the TIF Plan conforms to the general development plan of the City, consistent with housing studies which have been conducted. 4. Finding that the TIF Plan for Tax Increment Financing District No will afford maximum opportunity, consistent with the sound needs of the City as a whole, for the development or redevelopment of Development District No. 1 by private enterprise. Through the implementation of the TIF Plan, the City will provide an impetus for residential development, which is desirable or necessary for increased population and an increased need for life-cycle housing within the City. RESOLUTION NO : APPROVAL OF SUBORDINATION AGREEMENT WITH BORDER STATE BANK AND DONNA J. LARSON

7 Page 7 of 14 City Attorney Ihle presented a recommendation. Following discussion, Councilmember Cullen introduced Resolution No , being seconded by Councilmember Schmalz, that: This Agreement, Made and entered into this 17 TH day of July, 2012, by and between City of Thief River Falls, (hereafter "City"), Border State Bank, hereafter ("Border"), and Donna J. Larson, a single person, (hereafter "Larson ), WITNESSETH: WHEREAS, City did loan to Larson the sum of $10,000.00, which loan was represented by a promissory note dated June 29, 2009, (hereafter City Loan ), and WHEREAS the City Loan was secured by a mortgage from Larson dated June 29, 2009, and recorded as Document No in the office of the Pennington County Recorder (hereafter City Mortgage ), and WHEREAS, The City Mortgage concerned real property located in the County of Pennington and State of Minnesota described as: Lot Five (5), Block Two (2), Allwood Acres Addition to the City of Thief River Falls, according to the Official Plat thereof on record (hereafter Real Property), and WHEREAS, Larson desires to obtain a loan from Border in the sum of $101,600.00, and WHEREAS, Border is willing to make said loan to Larson in the sum of $101, should Larson deliver to Border a mortgage on the Real Property as security for this loan, and WHEREAS, Border will only make said Loan to Larson should it receive a first lien through its mortgage on the Real Property, and WHEREAS, City understands that Border will not make said loan to Larson unless it receives a first secured interest in the Real Property and City is willing to subordinate the City Mortgage to a mortgage to be obtained by Border from Larson concerning the Real Property in order to facilitate said loan from Border to Larson, NOW, THEREFORE, In consideration of the conditions and covenants expressed herein, the parties agree as follows: 1. SUBORDINATION. City hereby agrees to subordinate the City Mortgage as described above to a mortgage to be obtained by Border from Larson.

8 Page 8 of 14 This subordination is given upon consideration that the loan secured by the Border mortgage concerning the Real Property shall not exceed the sum of $101, EXTENT OF MORTGAGE. As Larson pays down her loan from Border, which loan is secured by a mortgage on the Real Property, that loan shall not be increased due to future advances of additional principal amounts nor shall principal be added back to the unpaid principal balance. Any additional debt that Border provides to Larson above the $101, loan shall be subordinate to the City Mortgage. 3. SECURED POSITION. The Real Property that secures the City Mortgage shall remain subject to Border s loan, but only to the extent of the unpaid principal balance as set forth in paragraphs 1 and 2 herein, and any accrued interest, and any costs of collection, including attorney s fees. To the extent that the collateral exceeds the unpaid principal balance of Border s loan as set forth in Paragraphs 1 and 2, and any accrued interest, and any costs of collection, including attorney s fees, it shall apply to the debt Larson owes City (subject to any valid third party claims as to which Border makes no representation). RESOLUTION NO : ACCEPTANCE OF EDWARD KRAEMER & SONS, INC. BID FOR THE GREENWOOD STREET UNDERPASS PROJECT Engineering Services Director Mark Borseth and Dave Kildahl with Widseth, Smith & Nolting presented a recommendation. Following discussion, Councilmember Haj thanked Mark Borseth for doing a great job and introduced Resolution No , being seconded by Councilmember Swanson, that: WHEREAS, pursuant to an advertisement for bids for the Greenwood Street Underpass Project; and, WHEREAS, the following bids were received, opened, and tabulated according to law and in compliance with the advertisement: Edward Kraemer & Sons, Inc. $4,613, Lunda Construction Co. $4,653, Industrial Builders, Inc. $5,169, WHEREAS, Edward Kraemer & Sons, Inc. of Burnsville, MN appears to be the lowest responsible bidder. THEREFORE, BE IT RESOLVED, by the City Council, that;

9 Page 9 of 14 1) The Mayor and City Administrator are hereby authorized and directed to enter into a contract with Edward Kraemer & Sons, Inc. of Burnsville, MN for the Greenwood Project according to the Plans and Specifications approved by the City Council and on file in the Office of the City Administrator. 2) The City Administrator is hereby authorized and directed to return forthwith to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. RESOLUTION NO : ACCEPTANCE OF BUILDING RESTORATION CORPORATION BID FOR THE CITY HALL EXTERIOR MASONRY RESTORATION PROJECT Mark Borseth, Engineering Services Director, presented a recommendation. Following discussion, Councilmember Kajewski introduced Resolution No , being seconded by Councilmember Haj, that: WHEREAS, pursuant to an advertisement for bids for the City Hall Exterior Masonry Restoration Project; and, WHEREAS, one bid was received, opened, and tabulated according to law and in compliance with the advertisement: Building Restoration Corporation $128, THEREFORE, BE IT RESOLVED, by the City Council, that the Mayor and City Administrator are hereby authorized and directed to enter into a contract with Building Restoration Corporation of Roseville, MN for the City Hall Exterior Masonry Restoration Project according to the Plans and Specifications approved by the City Council and on file in the Office of the City Administrator. RESOLUTION NO : APPROVAL OF QUOTE FOR THE FABRICATION AND INSTALLATION OF REPLICATED BOOKSHELVES AND RECEPTION DESK FOR THE CARNEGIE LIBRARY RESTORATION PROJECT Jodie Torkelson, City Administrator, presented a recommendation. Following discussion, Councilmember Cullen introduced Resolution No , being seconded by Councilmember Kajewski, that:

10 Page 10 of 14 WHEREAS, quotes were received and opened on Tuesday, July 3, 2012 at the office of the City Administrator for the fabrication and installation of replicated bookshelves and a Reception Desk for the Carnegie Library Restoration Project. WHEREAS, the following bids were received: Replicated Bookshelves Quotations: Northern Woodwork, Inc. - $10, FabCraft - $5, Reception Desk: Northern Woodwork, Inc. - $7, FabCraft - $4, THEREFORE, BE IT RESOLVED, by the City Council, to approve the low quotes submitted by FabCraft for the Carnegie Library bookshelves in the amount of $5, and $4, for the Reception Desk. It should be noted that all costs associated with Restoration of the Carnegie Library are being paid with donated funds. RESOLUTION NO : MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY AND THE MANAGEMENT, ADMINISTRATIVE, PROFESSIONAL AND SUPERVISORY (MAPS) EMPLOYEES Glen Kajewski, Personnel and Labor Committee Chair, presented a recommendation. Following discussion, Councilmember Kajewski introduced Resolution No , being seconded by Councilmember Schmalz, that: This Memorandum of Understanding (hereinafter MOU ) is made and entered into between City of Thief River Falls (hereinafter City ), and Management, Administrative, Professional and Supervisory Employees (hereinafter Union ). WHEREAS, Union is the exclusive representative for certain employees employed by City in an appropriate unit (hereinafter Bargaining Unit ); WHEREAS, City and Union are parties to a collective bargaining agreement (hereinafter CBA ); WHEREAS, the Union, on behalf of employee Steve Olson, initiated and pursued a grievance (hereinafter Grievance ) related to what the Union contends is the City s disallowance of Steve Olson s flexing of his schedule and the City s

11 Page 11 of 14 deduction from Steve Olson s vacation accrual for the time which Steve Olson contended he was taking as flex time. The Union contends in its Grievance that there is contract language and existing past practice establishing the right of the Bargaining Unit employees to flex their schedules. The City disputes that any such contract language or past practice exists. WHEREAS, Union and City enter into this Memorandum of Understanding for the purpose of settling and resolving the Grievance in its entirety, so as to avoid the time, uncertainty, risk and cost of having this dispute resolved through contested grievance arbitration proceedings. NOW, THEREFORE, the parties agree as follows: 1. That when each employee desires to take flex time off, he/she will notify the City Administrator by phone or as soon as reasonably possible in advance of taking the flex time. That any hours an employee takes as flex time off will be recorded as flex time on the employee s time card. 2. The parties also agree that, if the City Administrator challenges the flex time entry in the employee s time card, he/she will inform the employee about the nature of the challenge. The City Administrator must notify the employee of such challenge and the City Personnel and Labor Committee. After receiving notice of the City Administrator s challenge of flex time, the City Personnel and Labor Committee must consider the challenge taking into account the underlying facts and merits of the situation and whether or not the involved employee had worked sufficient extra hours to cover the flex time. If the City Personnel and Labor Committee affirms the City Administrator s challenge of the flex time, then the amount of flex time taken deemed invalid will be deducted from the employee s accrued, but unused vacation on a subsequent payroll. If the employee does not have sufficient accrued vacation for the entire amount of flex time recorded, then a dollar amount equivalent to the amount of flex time not covered by vacation will be deducted from a subsequent paycheck. 3. That Steve Olson will have reinstated to him two and a one-half (2 1/2) hours of the hours that he lost when he took time off on July 18, That the City will not include in Steve Olson s personnel file the letter signed by Mr. Glen Kajewski of the City Council s Personnel and Labor Committee. 5. This Memorandum of Understanding constitutes a full, final and complete settlement and resolution of the above-referenced Grievance and any related legal claims or causes of action arising specifically from the underlying event which gave

12 Page 12 of 14 rise to the grievance. This is a settlement and resolution of claims and causes of action existing up to the date of this MOU. This is not a settlement or resolution of any future grievances, claims or causes of action. RESOLUTION NO : ACCEPTANCE OF RESIGNATION OF JODIE TORKELSON, CITY ADMINISTRATOR The Council reviewed a letter of resignation. Following discussion, Councilmember Cullen introduced Resolution No , being seconded by Councilmember Kajewski, that: RESOLVED, by the City Council, to reluctantly accept the resignation of Jodie Torkelson, City Administrator, effective September 28, The City Council would like to thank Ms. Torkelson for her years of service to the City of Thief River Falls. RESOLUTION NO : APPROVAL OF ELECTRIC PUMP INC. BID FOR LIFT #9 DRY PIT SUBMERSIBLE PUMP AND INSTALLATION Wayne Johnson, Water Systems Superintendent, presented a recommendation. Following discussion, Councilmember Swanson introduced Resolution No , being seconded by Councilmember Holten, that: WHEREAS, pursuant to an advertisement for bids for Lift Station No. 9 dry pit submersible pump and incidentals; and WHEREAS, Electric Pump Inc. submitted the only quote for replacement of Lift Station #9 pump and incidentals. THEREFORE, BE IT RESOLVED, by the City Council, to accept the quote submitted by Electric Pump Inc. for a total amount of $67, for Lift Station #9 Dry Pit Submersible Pump and Installation. RESOLUTION NO : ACCEPTANCE OF TAP HOMES, LLC BIDS FOR RESIDENTIAL LOTS OF SOUTHTOWN ADDITION

13 Page 13 of 14 City Attorney Ihle presented a recommendation. Following discussion, Councilmember Kajewski introduced Resolution No , being seconded by Councilmember Haj, that: WHEREAS, the City of Thief River Falls is the owner of the following described real property, located in the County of Pennington and State of Minnesota, to-wit: The E of Lot One (1), Lot Two (2), Lot Five (5) and Lot Six (6), Block One (1), Southtown Addition, a Replat of Outlot "A", all in Noreen s First Addition to Thief River Falls, Minnesota; and WHEREAS, pursuant to an advertisement for bids for said property; and, WHEREAS, the following bids were received, opened, and tabulated according to law and in compliance with the advertisement: E Lot 1 & Lot 2 TAP Homes, LLC $12, Lot 5 TAP Homes, LLC $9, Lot 6 TAP Homes, LLC $9, WHEREAS, the City desires to sell said real property and TAP Homes, LLC desires to purchase said real property; and WHEREAS, the City Council has reviewed the terms and conditions of said sale. NOW, THEREFORE, BE IT RESOLVED, by the City Council of Thief River Falls, Minnesota, that the sale of said real property has no relationship to the Comprehensive Municipal Plan and the Thief River Falls Planning Commission is therefore not required to review said sale. BE IT FURTHER RESOLVED, that the Mayor and City Clerk are authorized and directed to sign a Warranty Deed conveying said real property to TAP Homes, LLC upon the terms and conditions set forth. UPCOMING MEETINGS/EVENTS City Council Meeting August 7, 2012 at 4:30 p.m. at Asphult Church at Pioneer Village INFORMATIONAL ITEMS

14 Page 14 of 14 Investment Summary dated 6/30/2012. Thief River Falls Tax Reform Town Hall Meeting Thursday, July 19 th at 10:00 a.m. Night to Unite August 7 th at Pioneer Village. Dale Narlock discussed the upcoming July 19th Power Outage to allow Minnkota to move poles on Greenwood Street. ADJOURNMENT There being no further discussion, Councilmember Cullen moved, being seconded by Councilmember Schmalz, to adjourn the meeting at 6:45 p.m. On vote being taken, the Chair declared the motion unanimously carried and the meeting adjourned until 4:30 p.m. on August 7, 2012 at Asphult Church. Steve Nordhagen, Mayor Attest: Jodie R. Torkelson, City Administrator