Stillwater votes to challenge State Auditor ruling on $80,000 TIF donation to bridge lobbyists

City Attorney creates novel definition of 'lobbyist' to prove he's right and State Auditor is wrong


Stillwater City Attorney Dave Magnuson

By Karl Bremer

The Stillwater City Council, relying once again on City Attorney Dave Magnuson’s legal and verbal gymnastics, voted 4-1 tonight to challenge the State Auditor’s contention that it cannot spend $80,000 in Tax Increment Financing (TIF) funds on a lobbyist for the proposed Boondoggle Bridge across the St. Croix River.

If that turns out to be a losing argument again, Stillwater Mayor Ken Harycki indicated that he would seek the money from another city fund.

Responding to complaints from myself and Stillwater historian Don Empson, the Office of State Auditor (OSA) last month determined that the City’s donation of $80,000 to the Coalition for the St. Croix RiverCrossing, a lobbying group that Harycki co-chairs, was illegal and recommended that the City get the money back.

The Coalition returned the money to the city today, but the Council found out in the past week that under state statutes governing the use of TIF funds, a large portion of the money would be diverted to the county and school district rather than back to the City’s TIF fund as a penalty for the City’s misappropriation of them. No one seemed certain how much the City would lose. Figures ranging from $40,000 to $60,000 were thrown around during the discussion.

At a special meeting of the City Council today, Magnuson still insisted he was right and the State Auditor was wrong in its determination that using TIF funds to hire a lobbyist is illegal.

“I think it’s worthwhile for the City to respond to the auditor,” Magnuson said. “I think they didn’t get it right.” If the City can convince the OSA that its use of TIF funds was in compliance with the law and simply draw up a contract for their services, Magnuson reasoned, the City would get to keep the entire $80,000 instead of losing a portion of it to the school district and county.

PRETZEL LOGIC

Magnuson’s argument hinges on yet another creative definition of “lobbyist” as determined by the City. It goes something like this, according to his draft response to the auditor that the Council tentatively approved:

The old bridge is in the City’s TIF District No. 1. State law grants to the City within the TIF district the power to “promote developments aimed at improving the physical facilities, quality of life and quality of transportation.”

Building a new bridge and taking the old one out of service would do all these things, Magnuson proposes, but a new bridge cannot be built without an exemption from the Wild and Scenic Rivers Act, and that takes an Act of Congress. “Acts of Congress require the aid and skill of professional lobbyists to assist in the promotion of the new bridge project” so, Magnuson reasons, a promoter is needed.

Turning to his trusty Black’s Law Dictionary, 4^th Addition (sic), Magnuson finds that “a promoter is practically synonymous with a lobbyist,” and cites a couple of legal definitions from his dictionary to prove it. Ergo, a lobbyist under Magnuson’s definition now becomes a promoter.

“Under those circumstances,” Magnuson concludes in his draft response, “the use of TIF funds from District No. 1 may be lawfully paid to lobbyists hired to promote the construction of a new bridge and the closing of the historic bridge to vehicular traffic.”

“The TIF allowed us to promote,” Magnuson told the Council, so the City can “hire a promoter.” At least twice during the discussion, Harycki suggested changing the term “lobbyist” to “promoter.”

Councilmember Doug Menikheim questioned whether it was wise to continue arguing with the State Auditor and risk “compounding the problem. If the auditor disapproves of us again, then what do we do—keep playing the game over and over again?” he asked.

Magnuson replied that the auditor’s final ruling after the City responds will be sent to the county attorney to either be resolved or pursued. At that point, the City would have to decide whether to give it up or go to court.

MORE AUDIT PROBLEMS


Councilmember Micky Cook

Regarding another problem the OSA found, Magnuson said the City’s contract with The Conach Group, a “legislative consultant” hired by the City, is being re-drawn to comply with the auditor’s recommendations. The auditor had 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.’” It recommended that the contract be re-written “to clearly define the roles, responsibilities, and performance expectations of The Conach Group and City staff.”

Upon questioning from Councilmember Micky Cook, Magnuson and Harycki assured the Council that Stillwater City Hall’s address would no longer be used as the registered address for the bridge Coalition.

The Council also voted 5-0 on a motion by Cook to revoke an earlier action authorizing the City to pay membership dues to the Coalition—another violation the auditor found—even though no one on the Council could recall voting on the matter last November.

A $70 filing fee the City paid for the Coalition’s registration with the Secretary of State also was found to be in violation of state law by the auditor. That was refunded by the Coalition today along with the $80,000 donation.

Finally, Cook, who cast the lone dissenting vote today and on the donation to the Coalition when it was first approved, wanted assurance that “We’re not going to try to find another $80,000.”

Harycki responded: “Not today.”

When Is a Lobbyist a Lobbyist?

City of Stillwater paying $1,500 a month for "legislative consultant" who isn't a legally registered lobbyist. Does it pass the smell test?

By Karl Bremer

Since April, the City of Stillwater has been paying $1,500 a month to what appears by any definition to be a lobbyist to secure state and federal funding and approval for the Bachmann Boondoggle Bridge and other projects. But neither the lobbyist, Mike Campbell, nor anyone else with his firm, the Conach Group, are registered with the Minnesota Campaign Finance and Public Disclosure Board (CFB).  In fact, there are no lobbyists representing the City of Stillwater registered with the state at this time.

On April 19, Stillwater entered into an agreement with Michael Campbell of the Conach Group in Stillwater for “Legislative support for the St Croix River Crossing extension of the State Trail system, support for the New Armory Project and Phase III of the Levee Wall project.”

IF IT WALKS LIKE A DUCK

According to the contract with the City, the Conach Group is “To secure the required support of the Federal Government State of Minnesota and any administrative Department of either entity for the approval and funding of the pending St. Croix River Crossing at Stillwater” and “To secure Minnesota Legislative funding for the State purchase of the MN Zephyr Railroad Right of Way as an extension of the State Trail system, support for the New Armory Project and Phase III of the Levy Wall Project." According to the contract, “Consultant services will be rendered largely at the Consultant office and the State of Minnesota Capitol.” 

That sounds a lot like lobbying.

According to the CFB’s Lobbyist Handbook, “You must register as a lobbyist within five days after you … are engaged for pay or other consideration and receive more than $3,000 from all sources in any year, for the purpose of attempting to influence legislative or administrative action or the official action of a metropolitan governmental unit by communicating or urging others to communicate with public officials or local officials in a metropolitan governmental unit.”

A penalty of up to $1,000 can be assessed for failure to file lobbyist registration.

The City of Stillwater has paid Campbell and his group $6,000 to date. 

However, according to the novel assessment of Stillwater Mayor Ken Harycki, Campbell isn’t a lobbyist at all, but a “legislative consultant.” There is a “fine line” between lobbying and legislative consulting, Harycki told the Stillwater Gazette. 

“Campbell is a well-connected person and has helped get two bills passed at the legislature, he is getting results,” Harycki says.

That sounds an awful lot like lobbying, too.

Campbell is a former director of intergovernmental affairs for the City of St. Paul, a job also once held by Michael Wilhelmi, co-chair and registered lobbyist for the Coalition for St. Croix River Crossing. Campbell was appointed to that position by Mayor Norm Coleman, He was director of governmental relations (lobbyist) for the Davis Family Holdings, and is former executive director of the Senate Republican Caucus.

According to Stillwater City Councilor Micky Cook, Campbell “advised” Harycki on his mayoral race and has “advised” other members of the council as well.

Harycki has been trying to get Campbell and his group on the city payroll since at least 2007. At Harycki’s request, according to City Council minutes, Campbell pitched the City of Stillwater on a lobbying proposal in February 2007, but the City balked at taking on a new lobbyist at the start of the legislative session.

Stillwater had contracted with local lobbyist Ed Cain in 2006 at a rate of $75/hour, to a maximum of $46,000 a year. Cain, who was also a lobbyist for the fraudster known as "Bobby Thompson,"  had been paid tens of thousands of dollars over the years to lobby on the city’s behalf, mostly for the Stillwater bridge. However, the city appears to have gotten little for Cain’s efforts. Cain last contracted with the City of Stillwater in 2008, according to CFB records.

Michele Bachmann and Stillwater lobbyist Ed Cain

Campbell’s 2007 proposal to the City for “State and Federal legislative services” stated they would “meet with all levels of elected officials their staffs and governmental officials to advocate for the listed and approved legislative agenda,” which included funding for the Stillwater bridge.

That also sounds a lot like a lobbyist.

In his 2007 proposal for “State and Federal legislative services,” Campbell lists himself, former state representative Tom Osthoff and former General Mills and Gelco executive Jack Bell as principals in the Conach group. However, there are no records of state lobbyist registrations for any of them on file with the CFB as far back as 2005. 

COOK GRILLS HARYCKI AND HANSEN

Campbell’s hiring didn’t come without considerable discussion, raised chiefly by Cook, the City Council’s lone Bachmann Boondoggle critic.

Cook questioned the qualifications of the group and suggested that due diligence be done before hiring them. But City Administrator Larry Hansen and Mayor Harycki rose to Campbell’s defense, citing Campbell’s past volunteer work on the Brown’s Creek project and the fact that Campbell has “lots of connections.”

Cook questioned the lack of competitive bidding for the position and, according to minutes from the April 19 Council meeting, Hansen “noted that the City did go through the interview and RFP process for lobbying services a number of years ago and he was not very impressed with many of the candidates and the costs considerably higher.”

Cook also challenged the transparency of the process and the position. She argued that the contract language describing the time devoted to work was vague and ambiguous and suggested that Campbell provide the City with monthly reports on what the group was working on. Cook was concerned that the bulk of the work would be done on the Bachmann Boondoggle at the expense of the armory, Zephyr trail and levee projects, which she supported.

But according to Council minutes, “Mayor Harycki suggested that any published reporting may impede some of the ongoing discussions,” so that was rejected. The contract states only that “The City will rely upon the Consultant to put forth such effort as is reasonably necessary to fulfill the spirit and purpose of the Contract” and that “the nature of the work done by consultant will be reviewed at least quarterly to determine whether work should be deleted or added based upon changed circumstances.”

In the end, the only change to Campbell’s contract was to adjust the time required to terminate the contract from 90 days to 60 days—a move that Harycki initially resisted. The contract sailed through the Council with Cook casting the only dissenting vote.

THE SMELL TEST

With no accountability or transparency, it’s difficult to determine exactly what Stillwater is getting for its $1,500 a month in “legislative support.” It’s even more difficult to figure out how one works “to secure the required support of the Federal Government, State of Minnesota and any administrative Department of either entity for the approval and funding of the pending St. Croix River Crossing at Stillwater” without lobbying.

Mayor Harycki says there is a “fine line” between lobbying and legislative consulting. It will be interesting to see what the Campaign Finance and Public Disclosure Board makes of Harycki’s balancing act.

Something smells rotten in Stillwater, and it ain’t dead sheepshead on the beach.

UPDATE, JULY 27, 2011:

Ripple in Stillwater author Karl Bremer has filed a formal complaint with the Minnesota Campaign Finance and Public Disclosure Board (CFB) over the alleged lobbying of unregistered lobbyist Mike Campbell on behalf of the City of Stillwater. After reviewing the complaint, the CFB will determine whether to proceed with an investigation of the matter. According to the CFB, within 30 days, the board will make a public finding of whether or not there is probable cause to believe a violation has occurred.

Also, a check of federal lobbyist records shows no record of lobbyist registration for Mike Campbell or The Conach Group at either the U.S. Senate or U.S. House of Representatives.

Top photo: Stillwater Mayor Ken Harycki, right, walks lockstep with Gov. Mark Dayton, Michele Bachmann, and husband and political strategist Marcus Bachmann on a tour of the Stillwater Lift Bridge.