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City council discusses legal matters

By Sue Sitter - | Sep 12, 2020

Sue Sitter/PCT Rugby Convention and Visitors Bureau Director Laurie Odden makes notes as she presents her report before the Rugby City Council Sept. 3.

Ordinances and legal issues took up most of the discussion at the Rugby City Council’s regular meeting Thursday, Sept. 3.

Local business owners Dawn and David Laughridge appeared before the council to describe a problem created when a prospective buyer of their store, Gryphon Liquors, applied for a liquor license. Dawn Laughridge told the council the state approved a license application by Kate Halvorson, who sought to buy Gryphon Liquors. The liquor license issued to Halvorson voided the license held by the Laughridges, who still owned Gryphon Liquors.

“We never offered to surrender our liquor license. Ever,” Dawn Laughridge told the council. “You took it away from us when you granted her license, inadvertently. You didn’t know that by granting one, it cancels the other. I understand you didn’t know you were doing that, but you did do that.”

The council also heard from City Attorney William Hartl, who explained that the problem stemmed from a request by Halvorson to make the license valid as of Aug. 1 because she had apparently assumed the sale of the business would be completed by that date. However, delays prevented the sale from closing, and because the business address on both licenses was identical, the existing license for the Laughridges was canceled.

“It was the Attorney General’s office that canceled the license,” Hartl told the council. “The city can, without a new application or new fee, re-issue a license on the basis that was granted to Gryphon Liquors for the period of January 1 through December 31.”

Mayor Susan Steinke said to the Laughridges, “I think the city did what you asked us to do at that council meeting and the Attorney General’s office did what they were asked to do. Whether everyone knew of the consequences of what we were asked to do is unclear here tonight, but nevertheless, I think the city and Attorney General’s office followed through with what they were asked to do.”

Dawn Laughridge told the council Gryphon Liquors had lost two days of business due to the licensing error.

“I’ve been sitting in my store with the lights off watching car after car pull in and pull out of the parking lot and rattle the door, so I think the public of Rugby deserves (an apology). They’ve been counting on us for 15 years to be there for them. I feel bad that I wasn’t there for them,” she said.

The council voted to re-issue the liquor license to Gryphon Liquors, effective that day.

The council also heard from Laurie Odden, executive director of the Rugby Convention and Visitors Bureau. Odden presented the minutes and financials from the bureau’s monthly meeting and told the council the CVB made changes to its mission statement and bylaws to remove the word “incorporated” from its title.

Odden said the CVB had also changed its fiscal year to align with that of the city.

“Following those actions, our request to the city council is that we could have the same arrangement as the city does with the (Rugby Job Development Authority) regarding the payroll and insurance benefits,” Odden said.

“But if you’re a separate corporation, it isn’t the same as what the JDA is. The JDA is actually an arm of the city, so a separate non-profit corporation is not the same as what the JDA is,” Steinke said.

“In speaking with (City Auditor) Jennifer Stewart, I thought when we change our articles of incorporation, that was what we had to do (to request the same status as the JDA),” Odden said.

“But you would have to actually dissolve the corporation to become an arm of the city,” Steinke noted.

“They removed the ‘Inc.’ from the name, and non-profit corporations are not required to have ‘Inc.’ or ‘corporation,’ ‘CO,’ or other abbreviations that regular corporations are required to have, to designate the entity as a corporation, but the removal of ‘Inc’ from the convention and visitors bureau does not change their status as a nonprofit corporation,” Hartl told the council.

Council member Chuck Longie asked, “Why are they required to send us their minutes and everything if they’re not part of the city?”

“I think that was put in (city ordinances) because they’re spending the city money,” Steinke said.

“We were under the assumption that we are an arm of the city because of the monies we receive from the city and the fact we report as if we are an arm of the city,” Odden said.

Steinke asked Hartl if the CVB would be required to take one more step to dissolve the corporation.

Hartl said, “I’m not aware that a city would have a non-profit corporation (as a city entity).”

“As you pointed out, the JDA, to my knowledge, is not a non-profit corporation,” Hartl said to Steinke. “The JDA is actually the job development authority of the city but is not incorporated and is not a non-profit corporation. That is different than the CVB being a non-profit corporation that is not an entity of the city.”

“The Rugby JDA is funded by a percentage of city sales taxes, while the CVB operates on funds from a city lodging tax,” Steinke said to Odden. “I guess, if you want to become an employee of the city and get benefits, you would take one more step to actually dissolve the non-profit corporation, which, I think, the city’s open to – I don’t think anyone would deny that. I think we’re open to what you want to do.”

“I guess I wasn’t under the impression that the JDA (director) is considered an employee of the city, that your payroll just runs through the city,” Odden said.

“No, she’s an employee of the city,” Steinke said.

“But her board then reimburses you for her wages and all the benefits. That’s what we were at. Not to be an employee of the city, but just run (compensation) through (the city) payroll so it’s easier, being we are operating off city monies,” Odden said. “That’s why the request came from our board.”

“This was a topic before I even started,” Odden said of the status of the CVB and its employees. “I thought these were the steps we were told that we had to complete to make this happen. Every time I take one step, they need something else.”

The council discussed how Odden would be a part-time city employee if the CVB were to come under the umbrella of the city of Rugby. Odden would receive only part-time benefits.

“So, either way, I still have to follow all this stuff, and all these reports still need to be brought to you guys and I still have to operate as a city employee even though I’m not one?” Odden asked. “Do any other entities have to provide all this other information to you guys that aren’t an employee?”

“We don’t fund any other entity,” answered Steinke. “If we funded other entities 100 percent, I would say, yes, they had to be accountable for the money they get as well, but we don’t fund any entities besides the CVB and the JDA.”

“I’ll take that information back to my board,” Odden said.

Odden also reported the CVB had received a $2,000 donation from the Rugby Jaycees for the beautification of the Northern Lights Tower and the Geographical Center of North America monument.

In other business, the board heard proposal from Jim Olson of AE2S of Grand Forks for infrastructure improvements to sewer, water, storm and manholes in Rugby. Olson said the project would cover “an area extending from Third Avenue Southwest to Sixth Street Southwest, north to Fourth Street Southwest and then one block to Highway 3, where they will move the manhole from the highway to the residential street.”

The project would also cover 16-inch sewer pipes going toward lagoons north of the city to replace them as well. Olson showed the council slides of a collapsed manhole and damaged sections of sewer lines, most centering near 2 1/2 Avenue and Sixth Street Southeast.

“As you can see, it can go anytime. What blows me away is you can see how bad this is, but the water’s still running. The sewer’s still going north,” Olson said of a section of sewer line.

Olson proposed funding the project, estimated at $6.3 million through a USDA grant. Olson said AE2S would begin with what he called Task Order 5, which he said included “2 1/2 Avenue and Sixth Street funding services.”

Olson said application fees for the project would be “$7,500 to get a grant for $30,000 in grant funds, and that grant pays for a preliminary engineering report, which is necessary to apply for the USDA grant for the project.”

Council member Frank LaRocque asked Olson and Mayor Steinke how the project could benefit Rugby residents.

“This whole section, the streets we’re talking about, it’s not just to improve the area for people who live along (the sewer system),” Steinke said. “This feeds everything from the southeast part of town including Gooseneck (Implement) and all those businesses, and it all feeds out to the lagoon.”

“Good point,” Olson noted. “If you lose this, you lose everything.”

The board approved to accept the task order.

Olson and council member Joel Berg reported the Rugby Armory had received what Berg called a “walkthrough” by AE2S personnel to assess needed improvements and repairs during the presentation of the city building committee’s report.

The city Renaissance Zone committee reported denying an application for property improvements that did not meet program requirements.

The recreation committee reported on progress on maintenance on a building at recreation complex and congratulated the Rugby Panther Babe Ruth team for their regional league championship.

The Rugby public works committee reported success on the citywide cleanup and a project to paint the city swimming pool.

The public safety committee made recommendations to place signage in the city stating commercial vehicles were banned from parking in residential areas and made a suggestion to place a stop sign near First Lutheran Church.

The council also approved a second reading of Ordinance 426, which covered purchasing procedures for the city, and Ordinance 427, which had references to taxi services removed from its text. The council also approved a first reading of Ordinance 428, which covered annual appropriations.

The council approved permits from the Rugby CVB for its annual wine walk and an amended permit for the Rugby Sports Boosters, which provided an alternative to ticket book sales for NFL games if the football season ended early due to the global COVID-19 pandemic.

In other business, the council approved a request by Brosz Engineering to give McGuire’s Auto Sales 10 days to move vehicles on property related to the North Dakota Department of Transportation’s right of way for a future infrastructure project on N.D. Highway 3. Parked vehicles and other obstructions would be forbidden “within 45 feet of the existing roadway center line” upon completion of the project according to the Brosz request.

The council voted to restore the boulevard at 418 3rd St. SW at the corner of Highway 3 to its existing condition after the project was completed.

The council tabled a request to answer a question about paying for storm drain work involved in the project, saying cost estimates were made more than a year ago.

The Rugby City Council next met in the council chambers Sept. 8 for a budget hearing.

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