Grand Forks receives $2.5 million reimbursement for Fufeng expenses

GRAND FORKS – Funds covering the city’s expenses for the now-stopped wet corn mill project on the northern edge of Grand Forks have been received.

City Attorney Dan Gaustad informed City Council members at the end of their regularly scheduled City Council meeting on Monday that the city has received the full $2,528,134.29 demanded from MUFG Bank, a Japanese bank that backed a letter of credit for the deal. The funds came late last week.

The reimbursement comes after the city ended a standstill agreement with Fufeng Group on April 20. The end of the standstill agreement effectively put an end to the development agreement between the city and the Chinese-owned entity. At that time a demand, as beneficiary on the letter of credit, was sent to MUFG Bank. A notice of termination was sent to Fufeng USA COO Eric Chutorash, along with Fufeng’s attorney.

On Monday, City Council Vice President Bret Weber reiterated the benefit of the development agreement between the city and Fufeng.

“The development agreement crafted by Mr. Gaustad provided a way for the city to explore the potentially largest ever economic development project in our city’s history while protecting the city’s interest,” Weber said. “And ultimately the reason that the project didn’t go forward is because of the development agreement when we had those 21 contingency points. And one of those came up, we terminated the agreement.”

In February, council members voted 5-0 to stop the project after the Department of the U.S. Air Force declared the proposed mill a threat to national security due to its ownership ties to China.

The following month, the council approved entering into a standstill agreement with Fufeng Group. At the time, Gaustad told council members the standstill agreement would allow the city and Fufeng to determine if an agreement and termination could be reached.

During the citizen comment portion of the meeting, the council was asked whether the city is actively negotiating to purchase 300-plus acres of land from Fufeng, along the city's northern edge. City Council President Dana Sande said those negotiations aren’t taking place.

Additionally, Gaustad gave council members an update on an appeal to the North Dakota Supreme Court related to the city's decision to not allow a citywide vote on Fufeng.

The initial lawsuit against the city — brought by Ben Grzadzielewski, one of the leaders of a petition, and a group called People for the Vote — was filed in early May last year after the city rejected the petition. The city maintained that the issue was an “administrative matter” that couldn't be sent to the ballot.

In August 2022, Ramsey County Judge Donovan Foughty ruled in favor of the city and Maureen Storstad, city auditor/finance director. It was Storstad’s decision to dismiss the petition. The petitioners appealed to the Supreme Court in October.

At last week’s Committee of the Whole meeting, Gaustad told council members that attorneys representing the city had filed a motion to dismiss the appeal with the Supreme Court following the termination of the project. Gaustad said the court issued an order to dismiss the appeal last week.

Also Monday, during the meeting of the Jobs Development Authority, JDA members voted to terminate a lease agreement with Forum Communications Co., which owns the Grand Forks Herald. The lease will end 11 months early.

On April 17, JDA members had voted 5-1 to deny the early termination , citing questions about how much money the city would lose if the Herald were no longer a tenant of the city-owned HIVE building downtown. The council chose to reconsider the request, however.

During the April 24 Growth Fund Committee meeting , committee members recommended ending the lease early after being presented with six entities that have signed a letter of intent to lease a portion of the 4,254 square feet of office space. When the JDA reconsidered it Monday evening, the members of the board unanimously voted to end the lease early.

The Herald will move to an office in south Grand Forks by the end of the month.

In other news Monday, council members:

• Approved a cost participation, construction and maintenance agreement with the North Dakota Department of Transportation for a rehabilitation project on 32nd Avenue South from I-29 to South Washington Street. Of the estimated $2,285,345 total project cost, $1,849,530 will come from the 80.93% federal share, $196,854 will come from the 9.07% state share and $238,962 will come from the 10% local share.
• Approved reaffirming a four-way cost share with Grand Forks County, Polk County and the city of East Grand Forks for the scoping phase for the proposed inter-city and Merrifield bridges. While all four entities were originally set to each pay $37,793 of the total $151, 172, Polk County is paying $20,000 with East Grand Forks making up the difference by paying $55,586.
• At a prior Board of Equalization meeting, board members certified the 2023 annual assessments to the county auditor. The 2023 true and full value of agricultural land will increase by 34.62% compared to 2022’s value. Commercial land will see an increase of 14.86% and commercial buildings will have an increase of 5.63%. Residential land will have an increase of 2.2% and residential buildings will have an increase of 11.48%. Board members approved four protests received by residential property owners to reduce their 2023 true and full values. Board members approved reducing the 2023 true and full value for one commercial property owner of the total five protests received.