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.”

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.

Bachmann skips 2012 House Intelligence budget vote to tailgate with Iowa football fans

Bachmann missed 50% of House votes in 2011 3Q

By Karl Bremer

On the weekend of the 10^th anniversary of 9/11, Michele Bachmann chose ‘rubbing shoulders with a rowdy crowd of beer-toting tailgaters’ in Iowa over voting to fund the nation’s intelligence agencies.

At Thursday night’s debate of GOP presidential candidates, as she’s done many times in the past, Bachmann bragged about how her service on the House Intelligence Committee gives her special insight into national security issues.

“I sit on the House Permanent Select Committee on Intelligence,” she said, responding to a question about Libya (go to 24:50 in this video). “We deal with the nation’s classified secrets, and I firmly believe that the President of the United States has weakened us militarily and put us more at risk than at any time.”

Yet the following day, Bachmann skipped the House vote on the 2012 Intelligence Authorization Act, which passed 384-14. That same day, Bachmann also missed the House’s solemn remembrance of 9/11 and passage of a resolution commemorating the terrorist attacks that day.

Instead, Bachmann was getting ready to party down with University of Iowa and Iowa State University football fans in her adopted home state bright and early at 9 the next morning.

The Des Moines Register reported that “As Bachmann weaved through the crowd she was met with football fans young and old, kissing babies, chatting up college students and warmly greeting older fans. From just beyond these personal embraces, she was asked, over and over again, whether she wanted a beer.”

“She danced with babies, flipped burgers for hungry tailgaters and hugged fans outside Jack Trice Stadium on Saturday morning,” the Omaha World-Herald reported. “Bachmann autographed footballs and nuzzled babies' cheeks amidst the thousands of sports fans who turned out to watch the rivals compete. She sported a custom-made jersey, No. 12, that incorporated the logos of the University of Iowa Hawkeyes and Iowa State University Cyclones and boasted to fans of both stripes that it was an ‘I-love-everybody’ look.

“She spun in circles, swarmed by a throng of reporters and some supporting state senators, smiling for the cameras of fans seeking a photo opportunity.”

Bachmann has missed an astounding 50 percent of House votes in the Third Quarter of 2011. Her voting absentee rate has skyrocketed since announcing her run for president.

Meanwhile, constituents of Minnesota’s 6^th Congressional District, which Bachmann allegedly represents, are waiting for the next Bachmann town hall meeting. She has held one in her district since her election to Congress in 2006, and that was in 2009.

Bachmann is paid an annual salary of $174,000 a year.

A Small-Town Rupert Murdoch

By Karl Bremer

Gene Johnson, the small-minded, government-bashing former publisher of Press Publications in White Bear Lake, spun a little yarn in his St. Croix Valley Press column a couple of weeks ago about a pleasant trip he took with his family down to southeastern Minnesota this summer. It was a “triple-header,” he beamed, describing the highlights of their journey: The Minnesota Marine Art Museum in Winona, the National Eagle Center in Wabasha, and the Great River Shakespeare Festival at Winona State University.

And then Johnson turned his little “Summer in Minnesota” yarn into a blatant political lie.

“All three were privately funded and maintained,” Johnson claimed.

Like the Teabagger above whose sign screams “Goverment keep yore hands of my Medicare,” Johnson would have his readers believe that government had nothing to do with the plethora of culture, arts and nature that made their trip so memorable. But like most Teabaggers’ facts, Johnson’s were dead wrong.

In fact, Johnson's itinerary sounds like he and his family took their trip during Winona's Legacy Weekend, a three-day series of events designed to “celebrate the ways that the Legacy funding preserved the local landscape and brought greater access to the arts.” That would be “Legacy funding,” as in the Clean Water,Land and Legacy Amendment’s dedicated portion of the state sales tax that funds the Minnesota Arts and Cultural Heritage Fund.

The Minnesota Marine Art Museum hosted Winona Legacy Weekend events that weekend—events sponsored in part by the Minnesota State Arts Board and National Endowment for the Arts (NEA), both government agencies. The museum also receives support from the Southeastern Minnesota Arts Council, another state-funded arts organization.

The Great River Shakespeare Festival also was a part of Winona Legacy Days. The production Johnson and his family enjoyed so much, “A Midsummer Night’s Dream,” also received funding from the State Arts Board and NEA and was performed on the taxpayer-supported stage at Winona State University.

Johnson swooned over the National Eagle Center, which he described as a “privately funded two-story facility on the banks of the Mississippi River.” Except that it’s not.

The Center is a public/private partnership between the nonprofit EagleWatch, Inc., the City of Wabasha and the Wabasha Port Authority. The public entities were instrumental in the construction of the $4.5 million National Eagle Center, which opened in 2007. The Prairie Island Indian Community also donated $500,000 toward the 14,000-square-foot building. And, the center receives funding from various state and federal sources.

Johnson went on to recommend checking out the Corps of Engineers’ lock-and-dam operations along the way—constructed, of course, with billions of dollars in taxpayer money. And, he added, the Corps has provided some nice beaches and protected lagoons (courtesy of its taxpayer-financed dredging operations).

So Johnson, who never misses an opportunity to take a swipe at government spending in his writings, had a splendid trip with his family down the river and was entertained, as it turns out, almost exclusively by publicly-supported events, venues and operations. But instead of acknowledging the ways in which government and shared sacrifice can enrich all of our lives in some way, he simply ignores the facts and pretends otherwise.

It’s pretty sad when a former newspaperman has to resort to making up facts to fit his opinions. But if it worked out so well for Rupert Murdoch, Gene Johnson must figure it works for him too.

Public funding of boondoggle bridge coalition gets further scrutiny from State Auditor

Office of State Auditor asks Washington County to explain its $10,000 donation to lobbying group

By Karl Bremer

The Minnesota Office of State Auditor (OSA) examination of the questionable public financial contributions to the Coalition for the St. Croix River Crossing lobbying group now has expanded to include Washington County.

Stillwater Mayor Ken Harycki

The OSA ruled in August that the $80,000 the City of Stillwater donated to the Coalition, which Stillwater Mayor Ken Harycki co-chairs, was an “unauthorized expenditure” and recommended that the City “attempt to recover the money donated to the Coalition.”

The OSA also recommended that the City of Stillwater address deficiencies in its contracting procedures with the Coalition and another pro-bridge consultant it hired this year. And it recommended that potential conflicts of interests—such as Harycki co-chairing a group the City gives $80,000 to—should be disclosed even if there is no financial compensation involved.

The OSA’s ruling was in response to complaints filed by myself and Stillwater historian Donald Empson over improper use of taxpayer dollars to promote the proposed $680 million freeway bridge across the St. Croix River. The City has until September 30 to inform the OSA how it intends to respond to its recommendations.

According to the St. Paul Pioneer Press, the State Auditor also has asked Washington County to explain its $10,000 donation to the Coalition last May. County administrator Jim Schug said the county had been asked for information about the donation a few weeks ago but had not heard back. 

The City of Hudson, WI, also donated $5,000 to the Coalition but it’s not known whether that donation is under investigation by that state’s auditor.

HARYCKI POINTS FINGER AT CITY ATTORNEY

Meanwhile, Harycki appears to have placed the blame for his city’s troubles with the State Auditor’s office squarely on City Attorney Dave Magnuson.

“The report was a surprise, because before we had undertaken this, we went through the city attorney to make sure everything was up to snuff on this,” Harycki told the Stillwater Gazette.

The OSA chastised the City for its sloppy contracting procedures.

“The City does not have a contract with the Coalition, and the City’s contract with The Conach Group apparently does not accurately describe the services provided under the contract,” OSA attorney Nancy Bode wrote in a letter to Harycki. “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 told Harycki.

The OSA took further 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.”

Harycki told the Gazette that “This was done with Dave Magnuson's advice, so right now we have to allow him to take the time to digest it and look at her letter and determine if it's accurate. Right now, it's in the hands of the city attorney and he'll advise us as far as what the steps are and we'll go from there. If we have to change it, we will. In the meantime, this doesn't do anything to diminish our resolve to get the bridge done.”

Harycki vowed to take the $80,000 out of some other municipal fund if the State Auditor determines that it’s not appropriate expenditure for Tax Increment Financing (TIF) funds, where the City took the money from originally.

“Basically, what we've done is asked our city attorney to reconsider his opinion that he had given us in light of the report from the state auditor,” Harycki told the Gazette. “We'll revisit his opinion and one of two things will happen: he will say he stands by my (his) opinion or upon further review the state auditor has something there ... If on further review and reflection the city attorney determines the state auditor has something, then we would finance it out of another source, probably out of the general reserves, but there are other sources out there too that would make up the difference.”

MAYOR AND COUNCIL 'HAVE RUN AMOK'

Empson railed at Harycki and four of the five Stillwater City Council members who have voted in support of the Coalition donation, the “legislative consultant” hiring and several other controversial issues.

“The Mayor and four members of the city council (excluding Ms. Micky Cook) have run amok. I thought we had elected fiscal conservatives who were dedicated to a transparent government … The $80,000 donation to the Coalition was disguised on the council agenda as an update to the activities of the Coalition,” Empson charged. “The city did no due diligence on either the Coalition or the Conach ‘legislative consultant.’ A legal request for the Mayor's correspondence with the Coalition—of which he is the co-chair—was met with a statement from the Mayor saying he had no correspondence or emails regarding the Coalition.

“Ms. Cook is the only council member who seems to be aware she is spending public money which requires due process,” Empson concluded.

The OSA agreed.

“In the future, the City should follow Minnesota law and refrain from making a donation to nonprofit organizations absent specific stautory or charter authority,” the OSA concluded in its recommendations to Harycki and the City.

Ripple in Stillwater, Dump Bachmann writers co-author book on Michele Bachmann

Ripple in Stillwater author Karl Bremer, along with Ken Avidor and Eva Young of DumpBachmann.com, are co-authors of a forthcoming book on Michele Bachmann scheduled for early December 2011 release. The publisher is John Wiley & Sons in New York.

Tentatively titled The Madness of Michele Bachmann, the book is a compilation of material written by the three co-authors over the past decade of covering Bachmann, which was routinely ignored by the mainstream media until her run for president.

The book will follow the release of Bachmann's own book, title and author unknown, scheduled for release in November.

State Auditor: City of Stillwater's $80K donation to St. Croix bridge lobbyists 'unauthorized'

Rep. Michele Bachmann and Stillwater Mayor Ken Harycki

Office of the State Auditor agrees with Ripple in Stillwater on legality of lobbying expenditures and recommends the city get its money back.

By Karl Bremer

The Minnesota Office of the State Auditor (OSA) has determined that the $80,000 the City of Stillwater donated to the lobbying group Coalition for the St. Croix River Crossing was an “unauthorized expenditure” and has recommended that the City “attempt to recover the money donated to the Coalition.”

The ruling was in response to a complaint filed by myself and other citizens with the OSA over improper use of taxpayer dollars to promote the proposed freeway bridge across the St. Croix River, aka the “Bachmann Boondoggle.”

The Office of State Auditor (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,” which it did not in this case.

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 under state law.

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.”

When the Minnesota Campaign Finance and Public Disclosure Board last month dismissed my complaint regarding the registration of The Conach Group’s “legislative consultant” as a lobbyist, Harycki sniffed that it was “much ado about nothing.” Perhaps Harycki and his legal advisors will listen to the OSA instead.

More to come on this story as it develops. You can read the entire Office of the State Auditor’s letter to Harycki here.