Since 2006, the Cook County/Grand Marais Economic Development Authority (EDA) has been involved in a dispute over construction work done at the 70-acre Cedar Grove Business Park in Grand Marais. At the Tuesday, December 9, 2014 EDA meeting, Board President Mark Sandbo and Treasurer Scott Harrison announced that a final agreement had finally been reached.
The legal wrangling began after citations were issued by Cook County Planning & Zoning staff, working on behalf of Minnesota Pollution Control Agency (MPCA), on December 14, 2006 for nine alleged violations of a permit issued by the MPCA that “authorizes the discharge of storm water associated with construction activity.”
Named in the MPCA documentation were the EDA, Short, Elliot, Hendrickson (SEH), the engineering firm that designed the Cedar Grove Business Park stormwater plan and KGM Contractors, Inc., which constructed the road and infrastructure in the business park.
Attempts to assign responsibility for paying potential MPCA fines were ongoing and in July 2009, at the recommendation of then-EDA Attorney Mike Hero, the EDA hired Ken Podpeskar of the Minneapolis firm Bloomberg & Podpeskar at a rate of $315 per hour to help fend off the potential MPCA fines.
In August 2010, then-Director Matt Geretschlaeger reported to the EDA board that the dispute had been settled. He said the MPCA had released the EDA from all complaints and confirmed that the business park was in compliance with MPCA regulations. At that time, Geretschlaeger told the board that KGM Construction paid the MPCA fines, which according to a letter from Lisa Thorvig of the MPCA totaled $40,000. KGM also completed projects at the business park totaling $80,000 and paid $14,000 of the EDA’s legal fees from environmental attorney Kenneth Podpeskar of Minneapolis.
Short, Elliot, Hendrickson (SEH), the engineering firm that designed the stormwater plan for the business park also paid $14,000 of the EDA’s attorney’s fees.
At that August 2010 meeting, Geretschlaeger said the EDA had ultimately spent $30,000 in attorney’s fees along with the time the director spent in negotiations. Geretschlaeger told the board it was good that it was over and the results were positive, as the original fines were approximately $100,000.
However, the dispute with KGM was apparently not completely resolved. Since 2006 the EDA has carried $40,000 in retainage for KGM for work the company completed while negotiations regarding the MPCA citations were under way. After the meeting, the Cook County News-Herald contacted EDA President Mark Sandbo and asked why this money was held so long. Sandbo replied, “Retainage is normally withheld until a punch list has been agreed upon. Then that money is released.”
Asked why the money was not released in 2010, Sandbo replied, “In 2006 the original work was done by KGM. That is when the retainage was withheld and the first of many negotiations took place.”
Noting that some details of the settlement may be confidential, Sandbo said only, “There was some dispute about the work.”
At the latest EDA meeting, Sandbo said he and Harrison had participated in negotiations with KGM and Minnesota Counties Insurance Trust Attorney Kim Kozar regarding payment to KGM for “work done at the Cedar Grove Business Park in 2006, 2008 and 2010.”
Sandbo said under the agreement, the EDA would pay KGM $30,000 of its retainage now. The EDA would make subsequent payments of $20,000 each year on July 1 for the next three years, for a total payment to KGM of $90,000.
Sandbo noted that KGM has not yet signed the agreement and there may be some slight modifications, but he said, “Both Scott and I were happy with the negotiations. It went well.”
Harrison added, “You just summed up five hours in 90 seconds.”
EDA Board Member Hal Greenwood moved, and Board Member Abby Tofte seconded, to approve the agreement and the payments, contingent on final modifications by the MCIT attorney and acceptance by KGM. In other business . Treasurer Harrison, in his role as acting manager at Superior National at Lutsen golf course, reported to the EDA board that budget discussion for the golf course would begin this week. Harrison, Golf Pro Logan Dahlke, Grounds Superintendent Mike Davies, and Mike Larson of the recently formed golf course management company CRMGC will meet and put together a proposed budget. Harrison said they would bring the proposal to the CRMGC board of governors for approval. The governors are Linda Kratt, Mike Larson, Scott Harrison, Karen Blackburn (for the county auditor’s office) and EDA President Mark Sandbo. Harrison said the governors would bring the budget to the EDA at the February or March meeting. . Small Business Development Center (SBDC) Representative Pat Campanaro presented a request from the Cook County Local Energy Project (CCLEP) for the EDA to sponsor a continuing education session for licensed contractors. Campanaro recommended that the EDA contribute $1,000 toward the CCLEP costs of $7,000 for the workshop. Campanaro said, “I think this comes back to us in spades. It keeps local contractors certified and it keeps people working in the community. It is economic development.” The EDA board agreed and passed a unanimous motion to fund the training. . The EDA agreed to reschedule its January 13 meeting to January 20, 2015 at 4 p.m. at the Grand Marais City Council Chambers.
Leave a Reply