Boondoggle bridge lobby group says it will return illegal $80,000 donation to City of Stillwater

Mayor Ken Harycki vows to find money elsewhere to give to coalition he co-chairs

By Karl Bremer

Michael Wilhelmi

The Coalition for the St. Croix River Crossing will be sending back the City of Stillwater’s illegal $80,000 donation to the lobbying group following a determination by the Office of State Auditor (OSA) that the donation was an “unauthorized expenditure” and that the City “attempt to recover the money donated to the Coalition.”

The OSA’s opinion was in response to complaints filed by myself and Stillwater historian Don Empson with the OSA regarding the legality of the donation.

"This is a distraction," said Coalition Executive Director and registered lobbyist Michael Wilhelmi.

The Stillwater City Council will discuss the OSA’s recommendations and the City’s response to them at a special September 13 meeting. At the advice of City Attorney Dave Magnuson, the City Council held a closed-door meeting on a portion of the discussion involving the Tax Increment Financing source of the funds last week in a meeting that many citizens felt should have been held in the sunshine instead.

The City relied on the legal advice of Magnuson to support its contention that the donation to the bridge lobbying group was proper. The OSA strongly disagreed.

The OSA chastised the City for its sloppy contracting procedures with the Coalition and stated that “If the City decides to contract with the Coalition for services directly related to one of the City’s authorized functions, the City should use proper contract management procedures to protect public funds.”

The OSA also took issue with the contract between the City and The Conach Group, with whom the City has contracted for $1,500 a month for “legislative consulting” services. The OSA noted that “The Conach group’s attorney has admitted that the contract between the City and the consultant is “poorly drafted and significantly misrepresents the scope of what The Conach Group did and is doing for the City.” The OSA recommended that the City amend its contract with The Conach Group “to clearly define the roles, responsibilities, and performance expectations of The Conach Group and City staff.”

The OSA found during its investigation that the City not only donated $80,000 to the Coalition without authorization, but it also paid—at Stillwater Mayor Ken Harycki’s request—the Coalition’s $70 filing fee with the Secretary of State when it was formed. Harycki is co-chair of the Coalition. The OSA stated that the filing fee payment, along with any membership fees paid by the City to the Coalition, also were not authorized expenditures by the City.

The $80,000 the City donated to the Coalition was to come from a Tax Increment Financing fund for the downtown Stillwater district. The OSA stated that it “will handle any issues related to the use of tax increment for the $80,000 donation through the procedures required under the tax increment financing laws.”

Harycki appears determined to secure the $80,000 in city funds for the lobbying group he co-chairs one way or the other. Following the State Auditor’s initial report, according to the St. Paul Pioneer Press, “Harycki said if the city attorney says using TIF money is a problem, he would simply take the $80,000 from another city source.” Then upon the announcement that the Coalition was giving the money back to the City, the Pioneer Press reported, “Stillwater Mayor Ken Harycki said Friday that the contribution might come up again - as a payment to the same group, with a contract.”

City Council member Micky Cook, the lone dissenting vote against the original $80,000 donation and a critic of other less-than-transparent actions taken by Harycki and bridge supporters on the council, cautioned that the lack of a contract for the donation was only one of several legal questions raised in the OSA report.

“It's disturbing to me that the city of Stillwater would get an 11-page finding reprimanding us, basically slapping our hands,” Cook said, according to the Stillwater Gazette. “I think there's a lot more to this opinion than that we just need a contract.” Cook asked that Magnuson address all the legal issues raised in the auditor’s report.

The City Council will discuss its response to the auditor’s recommendations at a special meeting on Tuesday, September 13, at 4:30 p.m.