Several people affiliated with the Cook County – Grand Marais Economic Development (EDA) attended the county board meeting Tuesday, May 19, 2009, where Director Matt Geretschlaeger requested an early disbursement of $35,000 in levy funds to support EDA operating costs. The funds would normally be disbursed in June.
The EDA has spent thousands of dollars in legal fees to help negotiate fines levied by the Minnesota Pollution Control Agency (MPCA) for storm water infractions when the Cedar Grove Business Park was built by KGM Construction. Geretschlaeger, at the meeting with attorney Mike Hero, EDA board member Hal Greenwood, and EDA/Superior National Golf Course board member Mark Sandbo, told the board, “Counsel [Mike Hero] and I are less than happy with some events that happened this morning.”
He did not state what those events were, but he did say a deal had been negotiated with the MPCA in which $80,000 of the $277,000 in fines would go back into the county. He and Hero then asked that the county board meeting be closed to the public to discuss the litigation strategy they intend to pursue. Hero said going public with their strategy could cost the taxpaying public. “We’re all ultimately trying to save money for the taxpayer,” he said.
Hero said the meeting had to be closed to discuss what they wanted to discuss because it involved litigation. County Attorney Tim Scannell stated he had been told the county could be involved in the litigation (it oversees the EDA along with the city). Commissioner Bob Fenwick questioned the legality of closing the meeting and asked Scannell to show him the statute that would allow the meeting to be closed.
Geretschlaeger, Hero, Greenwood, and Sandbo agreed to return at the end of the meeting to give Scannell time to find out whether the meeting could be closed. When they returned, Scannell reported his conclusion that the meeting could not be closed under these circumstances. Hero replied he would then only discuss what has occurred and where they are now rather than where they think they will go with the case.
Hero said the MPCA wanted to levy fines for Short, Elliott, Hendrickson’s (SEH’s) design of the storm water prevention plan and for KGM Construction’s implementation. “[The] EDA will not be paying any fines,” Hero reported. Neither will SEH, he said, but KGM will be assessed fines and has agreed to pay them. Theyare now trying to provide “a major benefit to this county” by trying to recover their attorney fees, he said.
Geretschlaeger remarked on the significance of spending $23,000 to be found innocent. “I’m very pleased with the way the negotiations seem to be ending,” he said.
Commissioner Jan Hall raised questions about the EDA’s finances, saying she would like Geretschlaeger to be accountable for a budget. “How do you pay out money for the golf course” and for a housing program “when you don’t have any money?” she asked. Geretschlaeger responded by saying he would submit any information she would like in whatever form she requests it.
Commissioner Bruce Martinson, on the EDA board, said they have reduced the director position to 4/5 time, the city has approved giving the EDA $500 a month in office support services, and he has been trying to keep County Auditor-Treasurer Braidy Powers informed of EDA financial issues. Their current priorities are selling Cedar Park lots and managing the golf course.
Geretschlaeger said the problem with the MPCA has kept the EDA from pursuing other projects. “This situation has hamstrung the EDA in that it has put us on the defense,” he said.
Community member Lloyd Speck recommended that the county find out how much money the EDA has cost the taxpayers over the years and compare that to how much good it has done the county. It has taken a lot of the county’s time, he said, and “if it isn’t producing, it should be done away with…. You can’t run your households this way.”
“I would welcome the study that Lloyd has presented,” Geretschlaeger said.
Has the EDA produced anything? Yes, Commissioner Martinson said. They created the Superior National Golf Course and the Cedar Grove Business Park and have facilitated housing rehabilitation business for the construction industry. He suggested the possibility of combining the EDA and golf course director positions.
The housing program “is like a shell game,” Hall said, that keeps costing money. “I think the EDA has gotten in way too deep with all kinds of irons in the fire.”
She asked why the EDA has budgeted $10,000 for golf course oversight. Geretschlaeger said coordinating golf course improvements such as the extension of the golf cart path takes a considerable amount of time. If the EDA is not benefitting the county, he said, it should not be in existence. He said the board is talking about “drastically” cutting EDA and golf course administrative costs.
Mark Sandbo said that the course has been losing less money each year since he has been on the golf course committee and that if they sell the number of rounds they expect this summer, they will come out even.
Thedecline of the real estate market in the last two years has affected the success of the Cedar Grove Business Park, Hal Greenwood said, although he agreed that accountability should be improved.
“It’s easy to just put the bills in the drawer because it’s depressing,” said Commissioner Hall.
Commissioner Fritz Sobanja said he supports looking beyond short-term issues and plans and analyzing what the EDA has done and what should be done with it. Geretschlaeger said he could prove that the benefits to the county as a result of the EDA are greater than the money that has been spent on it.
The board approved a loan of $35,000 to the EDA that will be repaid when levy funds are disbursed. The board also decided to compare the amount of money the EDA has cost the county with the amount it has brought to the county. Tim Scannell stated that the Carlson School of Management’s policy school might be willing to assign students to do a cost benefit analysis.
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