Tuesday, September 13, 2011

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.

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, 4th 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.


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.”


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