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01/24/00 SP City Council Minutes1566 A SPECIAL MEETING OF THE KALISPELL CITY COUNCIL WAS HELD AT 7:00 P.M. MONDAY, JANUARY 24, 2000, IN THE COUNCIL CHAMBERS AT CITY HALL IN KALISPELL, MONTANA. MAYOR WILLIAM E. BOHARSKI PRESIDED. COUNCIL MEMBERS JIM ATKINSON, DON COUNSELL, DALE HAARR, RANDY KENYON, DUANE LARSON, FRED LEISTIKO, DOUG SCARFF, RON VAN NATTA AND CITY MANAGER CHRIS KUKULSKI AND CITY ATTORNEY GLEN NEIER WERE PRESENT. Mayor Boharski called the meeting to order and led the Pledge of Allegiance. AGENDA APPROVAL Haarr moved approval of the Agenda as presented. The motion was seconded by Scarff. There was no discussion. The motion carried unanimously upon vote. HEAR THE PUBLIC None PUBLIC HEARING - WEST SIDE URBAN RENEWAL PLAN The purpose of this public hearing is to gather citizen input on several proposed modifications to the West Side Urban Renewal Plan, specifically Stream International's plans for the Gateway West Mall. Boharski explained Stream International has approached the City about locating a technical and customer support service in Kalispell which would employ approximately five hundred employees. He said in conjunction with the Flathead County Port Authority, the City has identified several different revenue sources as part of a four million dollar incentive package to Stream over the next ten years. Kukulski said the incentive package includes rent reduction equaling $2,750,000 over the next ten years; an EDA grant of $500,000; donations from CenturyTel and Flathead Electric in the amount of $250,000 each; and a CDBG Training Grant in the amount of $400, 000 for a total of $4, 150, 000. He said because of the 7.2 percent unemployment rate in the valley, the City and the County are very interested in Stream which plans to hire the majority of the employees from the area and has a starting wage of $7.50 with a full benefit package. Kukulski said the proposal includes selling $2.5 million in tax increment bonds through the Montana Board of Investment to buy 50,000 square feet of space at the Gateway West Mall from American Capital Property Management, Inc., the purchaser of the mall and the underlying real property. He said Stream has agreed to invest $3.5 million dollars in improvements to that section of the mall and has agreed to pay the City, at the minimum, $140,000 in taxes per year. He stated at the end of ten years, the City and the Port Authority will own property worth much more than the $2.5 million dollars. Kukulski said the debt retirement on the ten year, $2.5 million dollar loan at 6.9% interest would amount to $346,780 annually. He explained the Port Authority has agreed to dedicate $125,000 annually toward the debt, with the balance coming from tax increment funds. Don Bennett, Port Authority Chairman, said he truly feels this is a "good deal" for the City and Flathead County, and in terms of the amount of benefit, he doesn't feel there's much risk in the investment. Myrt Webb, Port District Manager, said the purpose of the Port District is to stimulate the economy and to help create good jobs. Kalispell City Council Minutes January 24, 2000 - Special Meeting 1567 He said the Board of Directors feels the Stream proposal does exactly that and the Port is excited about the partnership with the City. Warren McConkey, Flathead Electric General Manager, stated FEC had $300,000 in past due bills last year, which was then passed on to everyone. He said because of the 500 jobs promised, FEC has agreed to donate $125,000 to this project because they expect to see more than that in the reduction of unpaid bills over the next ten years. Craig Weinstein, Stream International, said Stream is based in Boston with six thousand employees worldwide, roughly forty five hundred of those in the United States. He said Stream assists hardware, software and internet companies with technical questions and customer support. Weinstein said employees receive between four and eight hours of technical training every week. He said Stream, if allowed to expand to Kalispell, will hire approximately five hundred people, most of which will be local, and bring in a payroll of between eight to ten million dollars annually. He stated at an open house held in Kalispell recently, about six hundred people submitted resumes and another two hundred resumes have been received since then. Weinstein said the response in the area to this type of employment has been overwhelming and he feels Stream would be very successful in Kalispell. Kathy Hughes, FVCC, said Stream values education and the college wants to express its strong support. Boharski opened the public hearing. Proponents Virginia Sloan, Job Service, stated she has been working closely to help bring Stream to the area and feels it's important to support the creation of 500 new jobs when 92.5% of the businesses in the valley employ fewer than 20 employees. Margaret Lekander, KDC President, said Stream is an excellent example of a clean and diversified industry that is perfect for the valley. Dale Williams, County Commissioner, stated many high school graduates have to move due to lack of jobs in the area and this would allow them an alternative to leaving. Joe Unterreiner, Chamber of Commerce Executive Vice President, stated he supports Stream because it's a clean industry, it provides excellent training opportunities and would be the start of urban renewal for the west side. Alex Hilton, Bigfork, asked how many of the 500 workers would qualify for the benefit package. Weinstein answered almost all of the employees will be full time because the training is so intense and costly that it wouldn't make sense for part time employees. Doug Rauthe, NW Montana Human Resources Executive Director, commented not only is Stream offering employees a liveable wage, it's not competing with any other industry in the valley. Doug Hahn, 1995 5th Avenue East, said he's been selling computers for a couple of years and would love to work for Stream. Jim Oliverson, Kalispell Regional Hospital, stated the core issue is progress and you can either go forward or backward. He said this is a good way to go forward. Kalispell City Council Minutes January 24, 2000 - Special Meeting Page 2 of 6 1568 Tom Marx, 401 Sylvan Drive, commented "Thank You!" He said it's time we stopped exporting our best products, the young people, and Stream is perfect for the area. Hap Peters, Whitefish, said with the multiplier effect, when all 500 employees are hired, it could conceivably add an additional 130 jobs in the area. Dick Griffin, 312 Northridge Drive, stated he works with 8th graders at a local middle school and the majority of their parents are out of work. He said the City needs to keep up its efforts to increase the job market. Cliff Van Ostin, Whitefish, said he supports Stream because he would love to break into the computer industry. Steve Geiszler, 134 Sherry Lane, stated he's a business owner and a member of the Chamber Board of Directors and said Stream is one of the best things to happen to the City. Joel Hardy, 118 4th Avenue West, said he spent 8 years as a network engineer for the Marine Corp. and said it's "mind boggling" what Stream is offering. He said the training will open up a lot of jobs for the employees. David Riddle, 2209 West Reserve Drive, commented it's because of diligent work from several people that has made this possible and their work has created a model for the state. Van Kirk Nelson, South Foys Lake Road, said 40% of the young people he sees as an obstetrician are covered by medicaid and this proposal will allow them to finally get off public assistance. Steve Van Helden, Glacier Bank President, applauded everyone who has been involved in trying to bring Stream to the area. Barry Roose, Regional Development Officer for Montana Department of Commerce, said he can't remember when a company has offered to bring 500 quality jobs into a Montana community and this opportunity should be taken very seriously. Jon Amkreutz, Somers, stated this is an unbelievable proposal and told Council members, "don't screw this up". Opponents Clare Hafferman, 1337 3rd Street West, said if incentives and taxes were not involved she would be in favor of the proposal, but she doesn't feel tax increment money should be used to entice businesses. Bob Domrose, 376 6th Avenue East North, asked Weinstein to explain the salary ranges. Weinstein stated there are three tiers involved with Stream. The first tier is the entry level position at $7.50 per hour, the second is hardware and software support which ranges from $8.50 to $10.00 per hour, and the third tier, called advanced services, carries a salary of between $10.00 to $16.00 per hour. He said the company starts with tier one positions, adds tier two as the site matures and then eventually tier three. Weinstein said it typically takes between 18 and 36 months to go from tier one to tier three and any employee is given the opportunity to move through those tiers. Howard Stockwell, 874 5th Avenue West North, said most small business owners won't be able to match the pay wage and benefit package and stated the issue should be voted on. Kalispell City Council Minutes January 24, 2000 - Special Meeting Page 3 of 6 1569 Roxanne Brothers, 786 4th Avenue West North, asked how people can live on $7.50 per hour and why a neutrality agreement hasn't been discussed. She said it looks like this is already a "done deal". Patricia Johnson, 714 4th Avenue East, agreed that $7.50 per hour isn't enough and said people "can't eat benefits". Henry Oldenburg, 119 2nd Avenue East, said he isn't pro or con but has concerns about tax increment funds being used. Mayre Flowers, Citizens for a Better Flathead, asked how many projects will be delayed with the use of the tax increment funds. Kukulski answered the projects already on line for the area will not be delayed, such as the Meridian Road reconstruction, and added it's proposals like this that will provide increment for future projects. Greg Stevens, 31 Lower Valley Road, said he isn't pro or con, but is concerned that nothing's being done to save the American Timber mill. He said Stream's jobs will not offset the loss of $15.00 per hour jobs. Council Questions Kenyon asked if the company plans on hiring any tier two employees in the beginning. Weinstein answered the first 150 people would all be tier one because the technical knowledge just won't be there yet. Kenyon said he wants to make sure the movement from $7.50 to higher wages becomes a reality. Weinstein said the business plan for Kalispell is no different than that of any other site, it just takes time for a site to mature and the quality level to be consistent. He said movement within the company depends on the employee's training and performance. Atkinson commented that even though $7.50 may not be considered a living wage, he feels that by moving through the tiers, employees could actually end up making one of the higher wages in the valley. Counsell asked what kind of community involvement does Stream normally offer to an area. Weinstein said Stream actually has some programs in mind that it would like to support, but he can't announce which ones they are right now. He said Stream also offers matching funds for programs employees choose to support. Leistiko asked if the Port Authority has agreed to buy the mall from Kalispell at the end of the ten years. Neier said the intent is to have the City dispose of its interest at the end of the lease, but the agreement isn't finalized yet. Jeffrey Funk, Bigfork, commented it's frustrating coming to a public hearing when so many details have been worked out and the public feels their input will have no impact. He said one of the opponents mentioned unionization and asked if there are any unions within Stream. Weinstein stated there are no unions at any of the sites. He said the philosophy of Stream is such that if the benefit package is Kalispell City Council Minutes January 24, 2000 - Special Meeting Page 4 of 6 1570 comparable or greater than the average, and if employees are allowed to grow within the company, then they will be satisfied. Boharski stated State and Federal Labor laws prohibit any company from taking hostile actions against employees attempting to form a union. Pam Kennedy, 1036 6th Avenue West, thanked Weinstein for his candor and said she feels $7.50 per hour is a living wage because the majority of jobs in this area start at minimum wage. She added that she believes "wholeheartedly" this is a proper use of tax increment money. Boharski complimented the media on their accurate reporting of the project, the audience for their attentiveness and Weinstein for being so candid and direct. Boharski closed the public hearing. ORDINANCE 1347 - 1ST READING This ordinance modifies the West Side Urban Renewal Plan by adding certain projects, such as Stream International, and to amend Ordinance 1259 regarding the procedure for approving projects. Atkinson moved Ordinance 1347, an ordinance relating to the modification of the Kalispell Montana Urban Renewal Plan (The Urban Renewal Plan) to approve certain projects as Urban Renewal Projects and to amend Ordinance No. 1259 regarding the procedure for approving projects. The motion was seconded by Atkinson. There was discussion. Haarr said the proposal offers an opportunity to many people in the community and he doesn't have any reservations this project is economically feasible. He suggested that very few restrictions be placed in the agreements to allow Stream to run the business the way they see best. Larson said he's also in favor of the proposal and quoted from a letter written by Melody Downs stating people want jobs with training, benefits, career potential, etc. He said this is a desirable project and the City should do everything it can to help it become a reality. Van Natta agreed, saying he feels there are far more pluses than minuses with the proposal. Leistiko complimented the staff and Mayor on keeping Council members informed every step of the way. The motion carried unanimously upon roll call vote. RESOLUTION 4533 This resolution calls for a public hearing to be held on February 7th to gather input on a proposal to appropriate loans for Stream and United Way. Atkinson moved Resolution 4533, a resolution calling for a public hearing to amend the annual appropriations of the City of Kalispell, Montana, as set forth in the 1999-2000 budget adopted by the City Council for the purpose of appropriating loans for Stream International, Inc. and United Way of Flathead County. The motion was seconded by Larson. There was no discussion. Kalispell City Council Minutes January 24, 2000 - Special Meeting Page 5 of 6 1571 The motion carried unanimously upon roll call vote. 1 PUBLIC HEARING - COMMUNITY DEVELOPMENT BLOCK GRANT The purpose of this public hearing is to gather citizen input to identify and prioritize community development needs for economic development, housing, community revitalization and public facilities. Susan Moyer, PECDD, explained over the past 21 years, the City has applied for grants through CDBG, the Community Development Block Grant. She said one source the City has never tapped into is a training grant through CDBG. She added on February 3rd, the decision will be made on whether training dollars will be added to the CDBG program. She said if successful, she would like the City to apply for a training grant for Stream. Moyer said this is the first of two public hearings, with the second planned for February 7th. Barry Roose, Department of Commerce, said this grant would equal $5,000 per employee, for low to moderate income people, to provide training for employees in positions such as Stream has proposed. Boharski opened the public hearing. Proponents Doug Rauthe, NW Montana Human Resources Executive Director, stated Montana has never had a pot of money to offer for training and this would be a wonderful addition to the CDBG program. He encouraged the Council to authorize staff to apply. Kathy Hughes, FVCC, said she supports the City in applying for these funds and added FVCC is committed in helping Stream with the training. Virginia Sloan, Job Service, said there has never before been training dollars available in Montana and this is a great opportunity. Opponents None Council Ouestions Leistiko asked who would handle the Moyer said if the grant is received, that the PECDD administer the funds. Boharski closed the public hearing. administration of the grant. it would be her recommendation ADJOURN The meeting was adjourned at 11:00 p.m. ATTES Theresa White City Clerk approved February 7, 2000 Lim-7 BfiD& a Wm. E. Boharski Mayor Kalispell City Council Minutes January 24, 2000 - Special Meeting Page 6 of 6