Monday, September 5, 2011

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.

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.”

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.


  1. It's obvious what's going here, the Conch group is owned by the mayor's campaign advisor and he is represented by the mayor's retained criminal attorney from his last conflict of interest crime as investigated by the Washington County Attorney.

    What's so hard to understand? The mayor is again doing exactly what he campaigned against, playing with the good old boys to his advantage and to the detriment of the taxpayers.

    This is only the latest of his apparent conflict of interests, what ever happened to the conflict he has with his business client that benefits from city contracts having to do with the docks and other financial arrangements? He claimed that only was .0025% of his business when in fact it is about 10% of his business.

    I guess it helps to have friends in high places?

  2. Thanks Karl. I am wondering how to start a historic preservation campaign to save the Buckhorn signs. They are still there - took a docu film crew there this summer and took some photos myself. Land is owned by the Wisdot, where I got permish to access. Any ideas?

  3. That amount could have been donated to far worthier causes like school funding but then again, there are tangible benefits to that as well so I hope the media and the politicians will get into a closure over these brouhaha.