consultants are sandburs

Tuesday, July 31, 2007

Prompt attention IS appreciated. Minnwest Bank answers the City's litigation claims.

Acting Interim City Administrator Heidi Nelson has responded to a public data request by providing an emailed copy of the Minnwest Bank's answer to the City in the litigation where the City has a lis pendens giving notice of the dispute to any purchaser from the bank.

Presumably Ramsey's lis pendens would apply to a purchase at a sheriff's sale or an assignment of the Bank's interest to a new and different real party in interest; occuring after suit was filed and lis pendens notice attached as perfected.

Presumably whether there has been an assignment would be an ongoing discovery matter between parties.

More may be posted, but on a quick reading, the bank says their interest was recorded first; the bank disclaims prior knowledge of any dealings the RTC LLC had with the city [despite taking a security interest in such a contract]; and the bank claims the city's position does not run with the land.

The pleading is dated July 19, 2007; and a City answer to the bank's counterclaim will be a final step, presumably, to close pleadings. It should be filed before the middle of next month - in the absence of a settlement of issues before it is due.

The bank said If Ramsey had wanted to nail down a superior position, it should have had the lender subordinate the mortgage but no such request was ever made [regardless of whether the bank would have subordinated, had there been a request]. That is an "academic" question, and moot, because it is hypothetical and not how things happened. The court must decide, given how things did happen, what are the abiding rights and burdens running with the land, regarding the City's actual position. A secondary question is whether the city's not expressly seeking a subordiantion or pushing for escrow instructions that its position be recorded before the lenders, etc., demonstrates a negligence that the City might recover upon, if it decides to sue advising and/or acting agents. But that question would be mooted by winning the litigation or possibly in settlement.

Same old, same old. Paths to the courthouse can get worn from the traffic, but with dueling banned, litigation is how disputes over rights and responsibilities are setted, if negotiation fails.

Sure, getting a subordination would have resolved things; as well as getting a covenant not to sue or defend; but "could have," and "should have" is 20-20 hindsight. Circumstances known only to insiders, including those deceased, may have mattered in ways someone not involved in dealings might not know of or understand.

Other public data responses from Ms. Nelson were given on other matters, but they do not merit mixing into this post dealing primarily with litigation court papers and related matters.

Again I am impressed with the turn-around attention that minutes and data requests achieve and have achieved since the start of this year. It is good for a city government to be responsive that way.

In only one recent instance have I been stonewalled entirely - and that is based on a point of law asserted by City Attorney Goodrich, where he and I differ but where I would have to sue to have any chance to see a purported item - which will not happen.

My understanding is a public official from outside of Ramsey [outside of Anoka County even] wrote to "Ramsey" [to someone or some group or official person or body], complaining of things that were alleged to have occured outside of Anoka County, and outside of Minnesota, but which, if true and if truly complained of in that fashion, could be interpreted as reflecting badly on the city and its regional and international goodwill. My guess is that a letter exists, and was sent via public mail [or internet email]. There might have been phone calls. I have no idea whether others not present at any closed session [besides the author of the item] might have discussed it or its reprecussions with councilmembers. Without seeing the item I cannot say whether it requested confidentiality or identified itself as personnel-related rather than being written as a matter of general interest, a general complaint, and a general notice.

It appears from the City Attorney's response a document does exist, and was reviewed in a closed council session where a personnel matter was the topic.

The city's contention is that documents reviewed in the closed session are all confidential, presumably acquiring that aura by attachment, from the circumstances of review and not based on the origination or history of any particular item - or that is how I read the Goodrich email statements.

Because I have no first hand knowledge that such a document actually exists, and can only infer it does from the response of the City Attorney, it is interesting to speculate what the purported item possibly said and what, if any, impact it had with city officials. But, I will not fund a lawsuit and motion for a judge to have the item produced for his/her examination to see if it is public data or not.

Again, my clear impression is that things have been far better for citizen requests for information since the beginning of this year - independent of that one instance, or including it. I hope the new Ramsey City Administrator, when hired, will not deviate from that praiseworthy approach set during Ms. Nelson's leadership.

Sunday, July 29, 2007


This is what it will be:

This is where it will be [City Hall in the red rectangle, not the ramp]:

This is our basic objective:

Don't they travel at least in pairs? Or flocks? Don't they roost in other places?

"They" being offshore anonymous accounts.

The lead Ramsey Town Center story in Pioneer Press, "From Dreams to Desolation," is still online, here, and it stated in a sub-headline and in the body of text:

From dreams to desolation

Questionable financing. Swiss bank accounts. Creditors out millions. Welcome to Ramsey Town Center. What was supposed to be a $1.3 billion gem now sits mostly vacant, the legacy of a dead developer.

[...] Nedegaard's reported wealth faded away with little explanation. Creditors searching for the money discovered deposits into Swiss banks and a trail of empty promises. As Nedegaard's health was failing, he hit up friends for hundreds of thousands of dollars with stories of can't-miss deals. Many never saw that money again.

[...] Nedegaard often told friends that his investment in a European pipeline was on the verge of coming through. Some say he told them the deal concerned oil in Bulgaria; others say diamond mines and natural gas via Swiss investors.

Creditors later discovered Nedegaard transferred $600,000 to Swiss bank accounts in two transactions, according to bankruptcy fillings. Why he did so remains unclear.

More recently, Pioneer Press reported (and in the most recent item about Jim Deal emerging as a potential purhcaser of remaining acreage at the distressed site reitered) that Heisel, the CFO of Ramsey Town Center LLC and other Nedegaard venturing was indicted for lying to federal investigators.

Among other things, Nedegaard had casino business ties.

There is a lot of cash business there. Two Swiss accounts. No, just accounts in the plural - two transactions making deposits. What about Cayman Islands or Aruba? Lichtenstein? Who else had anonymous number access to those "accounts?" Only Nedegaard? Others? What was the timing of other Nedegaard business when deposits of varying amounts were made? What, precisely, was going on in Ramsey at the time of the two discovered transactions?

Presumably the ongoing fed investigation is asking these questions too, and the investigators are better positioned than I am to get answers.

Town Center was not the only real estate deal of magnitude in Ramsey over the last few years - but apparently the only one involving Nedegaard. But, Town Center was, as was clearly and thoroughly reported, not the only iron Nedegaard had in the fire when he died.

Did anyone besides Nedegaard make deposits - or perhaps more interesting, withdrawals, from any of those [how many?] presently known Swiss accounts?

There was a lot more money lent out than the $600,000 attributed as going in those two transactions to those particular accounts. Where's the money? Jerry McGuire wants it shown to him, or did in the movie. Show us the money.

Often, when a single indictiment issues a cooperating witness pleading to one count will have sentencing postponed until after testimony of record is attained. Often not. Is Heisel such an individual? The investigating authorities have been tight-lipped with the Pioneer Press, with the original article having this to say:

Larsen said his clients, the bank and its CEO, have not been charged with anything and have done nothing wrong.

"I don't know what the federal law enforcement agents are investigating," Larsen said. "They have not shared that with us. But we remain open to a full and open discussion. The bank is fully cooperating.

"Should there be any indication of an intent to articulate offenses against the bank or any party of the bank, we look forward to being fully exonerated," Larsen said.

IRS Special Agent Janet Oakes would only say, "It's an ongoing investigation."

I have no reason to not take that attorney's claims at face value. Does any reader know cause to think otherwise. If so, eamil with details, see top of right-hand sidebar. I fully believe the bank individuals wish to be exonerated, and believe that will be the result. And I fully believe Ms. Oakes, "It's an ongoing investigation."

Will it be wrapped up and played-out in court before or after the 2008 Ramsey elections? Will it be BIG, BIG, BIG news? Or will it play out as a tempest in a teapot? Will it fit that extended statement by "Baron" Keynes, about how in the long-run the raging tempest will be over and the sea calm again (but that is irrelevant for now since in the long-run we all are dead)? Most probably when all dust has settled, the Einstein quote will apply, "Everything should be made as simple as possible, but not simpler." Simple to understand. Simple to assign blame. Simple to repair, and to then move on.

Above all: Will there be any relief in how things sort out, for taxpayers - now in hock for the super spiffy new City Hall and cop shop?

Will there be a final resolution favorable to taxpayers, who at least for now, have dodged the bullet of a "Pork Authority," or "Port Authority," or whatever it is to best be called, which was being prepared for doing to us before James Norman left City employment - but is, for now at least, back-burnered?

He will not be pointing at a map like that until the arm heals.

UPDATE - July 31. Difficulty with a photo - Ramsey's Mayor, Tom Gamec, pointing at a map of the Town Center area, earlier in time, with two citizens attentively watching (a photo which is not available via Blogger now) had been a lead-in to the post - pointing with his right hand. The above photo, from the city website, is substituted. For those who do not know what the mayor looks like.

Yes, it is the right arm, injured shoulder, operation and arm in a sling for the mayor. Like me, he is left-handed so he can still sign papers. We are a minority discriminated against - doors and appliances are designed and placed to favor the comfort of the right-handed majority. Look at words - Latin and French - for left and right. Left-handers -- sinister and gauche. Right handers -- dexterous and adroit. Left-handers have rights too, you know.

In any event, don't speculate the investigative feds were twisting arms.

I had a chance to speak with the mayor, and he says it was a slip and fall accident at his lakefront property up north - on the boat dock - that put his arm in a sling.

One of my most memorable recollections of the mayor at a council meeting - televised - was when a gentlement showed up at the back of the firehouse meeting room, and Tom called the two young ladies with him up to the citizens' microphone, not during citizens input, to briefly say hello. One, a young Russian woman with a pleasant accent, said she looked forward to becoming a citizen. It was perplexing, in a way, as such a pleasant exchange seemed to be disconcerting or discomforting to the City Administrator, while others simply were tolerant of the diversion from City business. Ostensibly without connection to any city business, it was - interesting.

Saturday, July 28, 2007

Just so everyone knows the third player.

Jim Deal's name has been floated as a person interested in possible acquisition of the Town Center boneyard, but not at $35 million, clearly, and with an effort to get the City to back down on its insistences, on threat of loosing interest and there being no "White Knight."

However, the original Dave Orrick "From Dreams to Desolation" article had this to say:

Among those left holding the bag are numerous contractors.

Blaine-based Glenn Rehbein Cos. claims it's owed nearly $4.7 million from Nedegaard. Its subcontractors, in turn, are suing Rehbein. Blake Drilling Co., for example, said it's owed nearly $263,000, and Lino Lakes-based EJM Pipe Services said it's owed $552,000, court records say. Lawyers for the companies say there are many smaller contractors without the resources to hire attorneys that are also out money.

So it is Deal sniffing around; Bank owed $35 wanting the best outcome possible but expecting well less than $35 million; the City being a complication with the risk of its contract terms binding any subsequent owner - or not - and Rehbine as the third player at the table with a $5 million stake - something hard to walk away from, to fold the cards and walk. Bank, Deal, and Rehbine. With the City only affecting the rules of the game, not the play. All the other contractors are not in at that level, and are spectators until the redemption games may be played.

Think it over, and figure how each, Deal and Rehbine, if Deal is sincerely interested and not just bluffing to help the bank deal with Rehbine, should best deal with the bank.

My guess, the bank has the most leverage holding off its foreclosure, and trying to play Rehbine and Deal against the other, for sale and assignment of the bank's position before any sheriff's sale happens. Think about it. Email if you think not, stating why you feel some other strategic posture is more productive for one or all of the three players. I say bargain over an assignment of the bank's position. Then after buying it, hold the sale as if the bank were doing it - in the shoes of the foreclosing party.

My guess is that the leverage situation attaching to having two parties to play off against the other is why the bank keeps postponing. So, is Deal real, or a bluff on Rehbine?

Two white knights; black and white; or only millionaires playing games expecting the other to get rooked? Is capitalism at this level anything but a casino?

Friday, July 27, 2007


What he looks like, and where he was in 2001. And anybody Michael B. Brodkorb carps about can't be all bad. Below, NAU officials and congress members.

(left to right) Elliot Konschak Vice President, Daryl Durum C.O.O., Greg Deal President, Rep Charles Stenholm-TX, Rep Collin Peterson-MN, Jim Deal Chairman/CEO, MN Senator Dallas Sams- Staples

* * *

2001 Comprehensive Plan Focus Group
Tom Kurak
Del Fredricks
Chris Dempsey
Terry Hendriksen
John Enstrom
Jim Deal
Mike Sjoquist
Blaine Edmundson
Jerry Bauer
Jeanette Monear
Erika Sitz
Marlys Williams
Paul Rogne
Wayne Jeffries
Margaret Connoly
Cindy Wirz

Redemption Games. The White Knight, and redemption. Opening or endgame?

No - not redemption in the sense of saving your soul. More a spectator sport, when you consider the Splat called Ramsey Town Center.

PiPress wrote of James Deal, owning acreage and buildings, considering more at Town Center. Price, expectations, and terms and conditions sought or expected by Mr. Deal not being matters of public knowledge.

But this real estate redemption game is where lawyers could tell you war stories - more than I could. However, if you go to the state law library site, this search, and read some of the cases you can get a flavor for the complications that are possible.

Without analyzing, consider a hypothetical, totally made up numbers for illustrative purposes, but enough to show complications. All an entirely hypothetical scenario.

Say, the City has a lis pendens and suit involving the bank, 150 acres, $35 million debt - a foreclosure, perhaps, perhaps not.

With a lis pendens, you buy at sheriff's sale, subject to risk of outcome of the litigation. Then if you buy; can the bank simply walk away, tank the case. or does the bank have to step aside and let you take the litigation position - does the defense run with the land?

That's one set of complications.

Another set is if the bank buys. If it bids more than its owed, it has to pay out money, so it will bid up to its debt, and if someone bids a dollar more, then the bank is paid off and cashed out.

Would the bank bid less than the amount of its debt? If they bid less, then a redemption position can redeem, for what the bank bid, so if it wants the property it bids its judgment - and if it wants a partial cashout and nobody else bid enought at the sheriff's sale it can bid less than the judgment, in hopes that the lower pricetag might attract redemptioner interest. Getting sixty cents on the dollar is better than nothing.

Anyone with a lien junior to the bank's position would face having its security position closed out if it does not redeem; and since there's no solvent debtor to chase, it loses what it's risked if it does not redeem.

But as with a purchaser at sheriff's sale, a redemtioner would take subject to the risk of outcome of the litigation. So the lis pendens is an ongoing complicating hammer. Of sorts.

The Sakry article quoted James Norman about liens starting to be filed in the fall of 2006 - hey, we heard nothing but an election was pending, so why put out info that could affect how folks vote? And that is why there probably was not much of a public hum back then. You would have to buy a title abstract or ferret out records at the recorder's office, then or now, to know anything not being reported by the City or the press. Anyway, James, he noticed liens then, - he said so to Sakry - at least.

Well, part of the distressed land apparently is Abstract property, part Torrens.

Were some liens perfected correctly for the one, but not the other? Another complication, for now, for later.

Say that junior to the mortgage, there are Contractor A, on the hook for an unpaid $1 million; contractors B, C, and D with priorities in that order, each for $0.5 million; and E, for $2000. E is lucky to not be in deeper, but is the end man. Is that good or bad? It depends - and that's a complication.

Each lien holder, for a fixed time, and meeting correct procedures, can redeem. But if you are B, and redeem, and C wants to protect itself, it has to redeem from B, paying the sale price plus the amount of B's senior lien. IF E redeems and the others don't want to risk things, after a lapse of a proper period of time with nobody buying out E, the other intervening liens are wiped out.

I think all that is correct so far. Ask a lawyer to be sure.

Here's where I am not entirely comfortable. E buys for $10 million, C redeems by paying E $10 million, not having to pay the $2000 because the E lien is junior to C; but then E can redeem again, paying $10,500,000 to C, because E is junior to C and has to cash out the C lien position and pay the purchase price, in order to be able to redeem - then I think E keeps, if sufficient time lapses. Before a lapse, D could redeem, paying what E paid, and E could redeem again, paying what D paid plus the amount of D's lien. At some point nonredeeming, non-players or those folding their hand, have their positions expire without participating to protect the position - some lawyer, tell me if I am wrong in any of that, the email address is at the start of the profile, top right-hand sidebar.

Now, White Knight, bank, and city sit at a table and try to work out a deal - closing out from negotiations each of the lien positions. Well any deal they cut will have to involve a sheriff's sale and all the A, B, C etc. is a risk their deal would face.

So, you are playing with that kind of money, you have to buy the junior liens at how many cents per dollar you can convince them to take. Or risk a deal being pulled like a rug, from under you. Or you can get cute - go and say for $500 buy the E position, as White Knight. Then an agreed sale, say for $5 million cash which the bank will get, plus White Knight agrees to take a $10 million loan from the bank to have working money, and add a wrinkle for fun, half the ten million is without personal recourse, secured by the property only, half with White Knight personally on the hook for it - that kind of give and take - and say it is a drawing account which you may or may not fully draw down -- some such deal.

Then C comes in and messes it up with a redemption.

As white knight you still hold the most junior position, E, and can always redeem back, but each time it costs you and each other lien holder has a will to protect its stake, balanced against - what if I redeem, and white knight hikes instead of using position E against me, then I am out millions and hold a distressed property.

The complications are stranger - if you only have a redemption right for half of the land, the Abstract half, but you did not perfect your lien in a timely way against the Torrens half.

Then, as bank, what if you had a discretionary drawing account, and after a couple of the liens had been filed you allowed further draws? Are those draws junior to the intervening liens? In some states yes, in some states no, and Minnesota agrees with its friends - I believe discrtionary draws become junior to intervening liens in Minnesota - but ask a lawyer if you want something to rely on.

And throw in this, between redemptions, an intermediate holder allows F to work on the property unpaid - what is F's position then - and how is holding E's position affected? You tell me. I asked first.

So --- That opening chess position, endgame. If white knight moves first, the win is easy. If black moves first, it's a bit harder to analyze and stalemate's perhaps possible. But if instead of an endgame at the foreclosure - what if what you really face at foreclosure is more like an opening as below - who wins regardless of who moves next from that position is why tournaments exist. Too many moves ahead, too many options, etc.

Bottom line: Even when you want to be the white knight, things need not be simple. The Lone Ranger never had it this hard as the City, bank, and Jim Deal have in deciding whether they can reach any basic agreement and then, also figure out, what about the redemptioners.

And if a deal is struck, what are the fundamental business risks to that? The risk of a sequential failure, akin to Nedegaard's? How do you from the bank, city, or Deal position bargain, with the current market as it is, and with uncertainty of where it's headed short and mid-term?

My answer - the city can sit tight, and will always have tax cash flow to rely upon. The city has wishes, and no single person calling the shots, as Deal does for himself and some one person does who is CEO at the bank.

The Lone Ranger, he always wrapped things up in under a half hour with time to leave behind a silver bullet. PiPress said the deal makers have cut another month's slack time, for deal making.

Any bets that will be enough? I bet it will not.

Bottom line, part 2: In the real world, White Knights can go Splat too, if not careful and lucky. Usually the splat can be limited to being aced out on the deal, but if you have 26 acres already in tow, you want to call shots more heartily. And if you're not aced out, the risk is you either make a silk purse of it, or you are stuck with an expensive largely unmarketable sow's ear. The fun has only started in this spectator sport. Wouldn't it be more fun with a seat at the table?

Those guys should sell admission tickets.

White knights can go Splat too.

This time Pioneer Press again breaks a story. Plus: Is this the Ramsey Office Plaza? Is it TIF'ed? Plus: Death and Taxes.

I wrote the prior item - just below this one - about the foreclosure sale called off again, now with folks talking; then at the end, speculation whether there could be a White Knight to possibly rescue Town Center.

Well, Pioneer Press has another story breaking - on point.

Perhaps -- Perhaps not. That's the White Knight story in a nutshell.

But in any event the recent Pioneer Press coverage has been exceptional journalism, deserving praise for thoroughness, fairness, ongoing attention, and tenacity. They report and I excerpt and editorialize. (Much easier.) This latest post is excerpting, mainly, with little or no analysis, sluthing, or editorializing - for now. But some editorializing, setting some questions that might later gain a higher profile and a sharper focus.

First, news/facts, from Pioneer Press, online - and their effort, again, is impressive:

Potential buyer for Town Center emerges

Auction of troubled project delayed again, but insurance exec is reportedly interested

Pioneer Press Press

The auction of the troubled Ramsey Town Center is at least another month away, but there could be a "Deal" afoot.

The Pioneer Press has learned that insurance executive Jim Deal has emerged as the front-runner - and favorite of senior county officials - to buy the 322-acre project [...].

But the biggest obstacle appears to be the city's love affair with its original $1.3 billion vision for the project, according to a county commissioner and a source familiar with negotiations.

Deal, who has played down any hunger to take on such an ambitious affair, has never denied his desire to see the Town Center move forward. A respected figure in the national crop insurance scene, DFL political circles and the Anoka County philanthropic arena, the 73-year-old already holds several key assets in the Town Center, including the only private commercial buildings yet constructed. He also controls exclusive banking rights to the entire area.

Ramsey Community Development Director Patrick Trudgeon denied Thursday that the city is getting in the way. The city says its original plans protect taxpayers and ensure whatever is built will benefit the entire community.

Last year, state regulators shut down a title company formed by Nedegaard and several of his financiers - executives of Community National Bank of North Branch. The title company, called Powerhouse, handled many of the Town Center transactions.

Last month, investigators with the Internal Revenue Service and U.S. Postal Service executed a search warrant on the bank, which has denied any wrongdoing.

And last week, James Heisel, Nedegaard's former chief financial officer, was charged in federal court with lying to IRS criminal investigators about financing on a separate Nedegaard deal in Columbia Heights.

While the Town Center has languished, Deal has been waiting for the more than 20 banks that hold a piece of the mortgage to agree on a lower price, said Anoka County Commissioner Dan Erhart.

"Jim Deal's got a price in mind that he'd pay for the whole thing," Erhart, who has a background in real estate, said Thursday. "I don't know all the details. ... I do think the price will need to get down substantially."

Deal got his start in the agricultural insurance business as a federal government administrator of crop insurance policy in the 1950s, he told the Pioneer Press this year. In the early 1980s, he founded the NAU Group in Ramsey. By 2003, it was the seventh-largest crop insurer in America. In 2005, when Lightyear Capital, a $2 billion private equity firm, decided to invest in NAU, its chairman heaped praise on Deal and his son, Greg.

"Jim and Greg Deal are true pioneers," Donald Marron, Lightyear's chairman and CEO, said in a news release. He added, "As a result of their efforts, crop insurance became a widely accepted commercial insurance product."

Today, NAU has its headquarters in Ramsey Town Center on about 26 acres Deal bought through his commercial development company, PSD LLC, which has erected two office buildings there.

When asked last month about the company's initials, Deal responded, "That's my wife, Pamela Smart Deal. That way everyone knows who my boss is."

Deal has also said he plans to start a bank there, under the name Ideal.

He's the only one who can.

In December 2005, PSD paid Community National $200,000 plus other considerations to buy exclusive banking rights to the entire Town Center. In 2003, when Community National initially financed Nedegaard, the bank secured those rights without city officials knowing. That angered city leaders who envisioned a downtown with several banks.

Deal doesn't appear to have been a part of those early Town Center arrangements. But Curt Martinson was.

Martinson was a loan executive with Community National in 2003, when Community National initially lent Nedegaard $35 million to start the Town Center. He also had an 8.34 percent ownership in Powerhouse Title, the company shut down by the Minnesota Department of Commerce because it was operating without a license.

At some point, Martinson, who notarized the transfer of the banking rights from the bank to PSD, left Community National and went to work for Deal.

In an interview last month, Deal said they've been "good personal friends" for 25 years. The pair served on the board of Anoka-Ramsey Community College, and Martinson and Deal's wife served together on the board of Mercy and Unity Hospitals Foundation.

Martinson has declined requests for interviews.

Commissioner Erhart said a Deal purchase of the Town Center could be the best outcome.

Dave Orrick can be reached at or 651-228-2171.

Nicole Garrison-Sprenger can be reached at or 651-228-5580.


Age: 73

Business: Crop insurance pioneer; founded the NAU Group in Ramsey, one of America's biggest such insurers.

Politics: $175,250 in donations since 1998, mostly to DFL causes; founded Minnesotans for Change last year.

Ramsey Town Center: Owns about 26 acres, two office buildings and exclusive banking rights.

Well there are the immediate obvious questions - given that Developers are Crabgrass.

How many real hard capital dollars up front are being put at risk by the offeror? How much TIF is in the proposed stew? Ben Dover may be a pile of rust by the time taxes are generated from Town Center TIF, and how's that treating citizens, this year and the next five-to-fifteen years, if there's more tax-dollar spending and all those Town Center Task Force promised tax-windfall benefits do not accrue until some of us have joined ranks with the dead Bruce Nedegaards?

Rephrased: What's it going to do for anyone's taxes, tomorrow?

Better? Worse? No difference? Worse, more likely than not, except for Jim Deal's taxes. I suppose there's a bright side to everything, and taxpapers paying to make a few rich folks richer probably is not new to Ramsey. Lift a few rocks and decide for yourself.

Is it all only some feel good speculation - or real money at risk on the table? Will there be a suppressed report on whether the new guy can hack it, (as Ms. Sakry quoted James Norman on reports about the last guy, dead Nedegaard).

A picture - Is this the Ramsey Office Plaza - Jim Deal's deal, AND IS IT TIF'ED? Note Ben on the picture, watching things at this place too. I think the one other office building just showing up in the background is the NAU Insurance thing, (I don't have a handy picture of it) so this must be Deal's plaza.

According to PiPress, Deal's involved in both, and the NAU is his crop insurance operation. If I have my facts straight, at least one Ramsey Planning Commission member is a part of the crop insurance workforce. That's a best understanding, not a pinned down fact. It might be with another crop insurance venturer, but how many of those are in Ramsey - Anoka County - where the main green acres "crop" is and for sometime has been development dollars.

And the guy holds an exclusive on banking rights for the entire site? When, how did that come about? Anyone know where in city minutes and records online that such a fact is presented? Who sold him that besides some guy who won't speak to the press and went to work for Deal after the sale? What did he pay the city, and who had the right to be giving exclusive franchises for any such thing other than the City of Ramsey? What did the City get in return from Mr. Deal? A salute and a thank you, or something you can take to the bank - his bank, if onsite at Town Center???

AND IS IT TIF'ED???? TIF and mirrors?

Death and Taxes.

Ben again. The myth of the rooftops - how it was going to be a tax bonanza, you remember that, don't you? Then - a ramp -- no tax cash flow benefit -- a city hall -- ditto -- now, the medical examiner - morgue. At least a morgue for Town Center, that's appropriate. But - how many tax dollars is that hummer going to generate to lessen the burden on you and Ben? Zilch? Or is there something we don't know about this public facility, making it different from the neighboring two? Doubtful, at best.

It will have to be named dead-beat row, for all the tax money it generates to lessen the burden on citizens. Sure a modern facility for a county medical examiner is good, sure there's land enough for now at Town Center for almost anything - even jobs - sites producing jobs as the Deal Office Plaza may do.

But TIF and public edifices - zilch benefit on lessening the tax burden on homeowners. Watch out and speak up to protect yourselves.

Closing note - a specific email address, where people with ideas, information on TIF in Town Center, information on suppressed reports, any news - where such people can send an email for suggesting a post or a place to lift rocks or dig for skeletons:

I opened that webmail account months ago, and will dedicate that address for Crabgrass Correspondence. Please help. Please share your ideas and worries.

Finally in closing, an excerpt from a prior post, in honor of someone holding "an exclusive franchise" for banking at the Town Center when only the City can license businesses in the City:

Actually, it is on sale, online and for only $45. A relative bargain, you can own the HAPPY CLOWN mechanical Bank. 8” tall plastic clown. You might not be able to buy it in any shop in Ramsey, from Ramsey Blvd. to Armstrong.

The website says, "Button on back of his head. When coin is placed in slot between his shoulder, then you push button, coin deposits and he sticks his tongue out. 1950’s vintage, no maker mark. Excellent condition, some paint wear around his name at base. MISSING the coin trap on the bottom side. 45.00" See the tongue, stuck out:

At least with this clown, you put your money into the little hummer, you center it between the shoulders, and at least you then have money in the bank that stays around. Not in some hare-brained scheme, not in some crabgrass pocket while getting a tongue-wagging response.

* * *

Why does this seem relevant, and why is Ben Dover, the Ramsey taxpayer, smiling?

Pick up Friday's Pioneer Press for a complete report.

Mark Knopfler, Dire Straits, sang, Sometimes You're the Windshield. Sometimes you're the Bug.

well it's a strange old game - you learn it slow
one step forward and it's back to go
you're standing on the throttle
you're standing on the breaks
in the groove 'til you make a mistake

sometimes you're the windshield
sometimes you're the bug
sometimes it all comes together baby
sometimes you're a fool in love
sometimes you're the louisville slugger
sometimes you're the ball
sometimes it all comes together baby
sometimes you're going to lose it all

you gotta know happy - you gotta know glad
because you're gonna know lonely
and you're gonna know bad
when you're rippin' and a ridin'
and you're coming on strong
you start slippin' and slidin'
and it all goes wrong because

sometimes you're the windshield

Leading image, from here, where I picked the most appealing photo.

And that leads to today' topic - surprisingly, Ramsey Town Center - and Splat.

How could it be anything else with that lead-in - we learn once again, of the sale that wasn't held once again. It looks like Yogy Berra, "It ain't over ..." redux.

Pioneer Press Online reports:

Ramsey Town Center auction delayed; city and banks in talks

Pioneer Press Press
Article Launched:07/26/2007 12:01:00 AM CDT

The fate of the troubled Ramsey Town Center project off U.S. 10 in Anoka County will hang in limbo for at least one more month.

Minnwest Corp., the bank that holds the mortgage on the property, has called off tomorrow's scheduled sheriff's foreclosure sale. The auction of 150 acres of land in the 322-acre development has been rescheduled for Aug. 31 at 10 a.m.

Originally slated for July 9, the sheriff's sale was postponed until Friday after the city of Ramsey filed a legal action against Minnwest. The city is trying to ensure Minnwest will preserve the original plans for the Ramsey Town Center development after the project is sold. Minnwest has argued those plans are not feasible.

"We are still in discussions with the city," said Russ Bushman, chief credit officer for Minnwest.

Ramsey Community Development Director Patrick Trudgeon said the cancellation of the auction shouldn't be a surprise, since the city and Minnwest are still in talks.

However, the city's official position still is that the original plan for the land should hold, he said. And that an obstacle for Minnwest. Trudgeon declined to specify what the city and Minnwest are actually talking about.

Well, Pioneer Press Online says pick up the print version "for a complete report."

It sounds like bait-and-switch to me. I doubt the "print version" will have who is saying what to the other side in the closed-door sessions, across the negotiating table - which IS the complete story.

My bet - with Ramsey still to hire its new City Administrator and acclimate him to the Culture of the City; things are at a preliminary stage. Will the discussion be about windshield-bug; or Loulsville Slugger - ball? Or possibly productive even, getting beyond that stage [the bug did not survive bankruptcy court] and aim for a work-out of differences. I cannot see any progress happening near-term, however, without a White Knight identified to step into the lead development position.

If there are liens that a foreclosure sale will affect; there are redemption positions. Why not an effort to get them to the table too? Otherwise, bank and city poobahs say, "Yes, yes and yes," and then a redemptioner exercise rights and says, "No," and it is back to square one. Or, "one step forward and it's back to go." As the song says.

Thursday, July 26, 2007

Tammy Sakry Writes About Ramsey Town Center Plight.

A lot of the article is factual, but too much of it is talking to people and uncritically reporting only what was said. Which includes falsehoods. Not everyone is or was on the bandwaggon. Certainly, I have said, it was bad, very bad, but do not make it worse by caving in to the bank and others now. That is, "faint praise" and I am not alone, that way. There were skeptics all along. The infamous "Would you like nice shoppes and restaurants," voting item, where 60% of voters said, "sure" and 40% saw the deception in it and anticipated the humongo housing mess, and voted "no" is as mischaracterized in Ms. Sakry's writing as ever, anywhere, and she declined, for reasons known only to her and her editors, to present the actual question text that voters voted on. In my view, that is not credible reporting of facts - it is reporting opinion, in the guise of fact. Decide for yourself whether you trust the article, excerpted here:


While some may criticize the city for not checking out Nedegaard’s financial situation, there was nothing the city could do, according to former Ramsey City Administrator Jim Norman.

Nedegaard assembled the land and owned it. The city didn’t have a choice in selecting a developer, Norman said.

“We wanted to do the project and he owned the land,” he said.

The city’s options were to condemn the land or go ahead with Nedegaard with a letter of credit to protect the city, said Norman.

Although the city consultants did a study before the project started that indicated Nedegaard may not survive financially, it is not unusual for projects to have two to three owners before completion, he said.

The first indication the city received that Nedegaard was in financial straits was when contractors started putting liens on RTC property in fall 2006.


“The town center is more than bricks and mortar, it’s about the vision. And it’s important to maintain the vision,” said Trudgeon.

When the urban center idea came in up in a comprehensive plan meeting with planning consultants in 1998, the council rejected it, said Norman.

The idea of a transit-oriented, mixed-use development resurfaced later in the year and was seen in better light by the council fighting for a Northstar Commuter Rail station site, which it later lost to Anoka in 2000.

The idea, with the vision of delivering walkability, transit oriented connections, mixed use, amenities and services to residents, also caught on with residents.

Sixty-one percent of Ramsey residents voted yes in a non-binding 2001 referendum on whether residents supported the Ramsey Town Center project.

Ramsey residents formed Citizens for Ramsey Town Center Design and collected 1,600 signatures to support the town center in 2001.

Everyone is disappointed by RTC’s status, said Trudgeon.

“Everyone embraced the vision expecting there would be more there,” he said.

“We had expected it to be further along.”

Although he gets a lot of questions about when RTC is coming, Trudgeon said he hasn’t heard anything about abandoning the plan.

Tammy Sakry is at

That bolded text - why was that information suppressed? Where was it ever presented, even by allusion, on the City of Ramsey website? What set of minutes? What full agenda?

Did every sitting councilmember know of that consulting opinion? If so, Ms. Sakry, report it. If not, who was privy to the information, who, sitting on council at the time was not? Any real nose for news would be sniffing out that question. Or it seems so to me. Did Ms. Sakry ask Ms. Kurak about what she knew that way, and when did she know it? Doubtful, but if so, the answer never made it into print.

I recall Mike Mulroney was supposed to check out the guy, and show up at a meeting and report. And he was a no-show. I recall that.

What's the story? If there was a report saying the guy was not the right guy; why was that story suppressed?

That, Ms. Sakry, would be news. News to report. News that would be of interest to the taxpayers. News to have reported back when there was the big putsch to move City Hall - who back then was saying the "consultants" had said this and that? NEWS. Not that complex a thing to comprehend.

The email address went with the write-up. Contact the reporter, if you have concerns.

Wall Street Flutters and Frets?

We can see that the NYSE floor remains always busy, even with most trading by workstations these days.

Moreover, if we believe today's Strib online, the bear for now seems to have the upper hand.

Dow drops 300 points

Associated Press
Last update: July 26, 2007 – 11:50 AM

NEW YORK — Wall Street fell sharply today, extending its weeks-long streak of volatility after disappointing home sales figures added to investors' increasing uneasiness about the mortgage and corporate lending markets. The Dow Jones industrials fell more than 300 points, while Treasury yields plunged as investors moved money from stocks to bonds.

Investors who had been able to shrug off concerns about subprime mortgage lending problems and a more difficult environment for corporate borrowing were clearly worried once again. Anxiety increased after the Commerce Department reported that sales of new homes fell 6.6 percent last month to a seasonally adjusted annual rate of 834,000 units, more than triple what had been expected and the largest percentage drop since sales fell by 12.7 percent in January.

Disappointing results from home builders including Pulte Homes Inc. and D.R. Horton Inc. — squeezed by a sluggish environment from home sales and continued defaults in subprime loans — weighed heavily on the market.

Familiar names? "Pulte?"


From the City of Ramsey homepage, you can choose DOCUMENTS off the top menu bar; and then do a search, as I did, for "Pulte" and "Horton."

What do you expect? I will save you the effort:

Pulte - 135 results

Horton - 131 results

Names from the Strib's article showing up quite frequently in City of Ramsey's official documents.

What does "Showing up a lot" suggest?

We know from the situation on ground and from recent Pioneer Press reporting that Ramsey Town Center is suffering from severe market malaise. We can read the current predictions that the dilemma will continue. We read in today's Strib that the entire stock market is suffering a similar ailment, because Pulte and D.R. Horton suffer too - and are big players in the housing market.

Pulte and Horton are several times bigger than all of Ramsey put together, and more diversified geographically. Yet, with the signs indicating a nationwide housing slump; who knows how severe their inventory pile-up is? Or how badly they suffer now, or how long into the future their suffering will last.

Ramsey can sit tight, and taxpayers pay.

These multi-billion dollar mega-builder firms are less flexible - they rely on profits, not taxes, and you cannot impose profits.

Unlike Ramsey taxes, profits have to earned.

A reminder to all - via an email I sent to a diligent reporter. Plus possible news to come ...

Here's the email, so, does anyone have an answer, besides tight-lipped folks at the Minnwest bank? Will the date be stood-up again? Runaway Bride, or reluctant pool of grooms?

from eric zaetsch <[...]> 11:26 am (0 minutes ago)
to "Orrick, Dave"
date Jul 26, 2007 11:26 AM

Ramsey Town Center - Scheduled Friday July 27 foreclosure sale

Do you or others at Pioneer Press know if the purported sale tomorrow is a go, or a no-go?

, via a reply suggesting hope, and possibilities ---

"Orrick, Dave" to me 11:47 am (52 minutes ago)

Stay tuned ... We're trying to confirm some information today...

- Dave Orrick
Pioneer Press

No apparent summer upswing in housing sales.

Other sources probably carry the story. Guardian reports the burst bubble in US housing growth and speculation shows little signs of quick recovery:

US housing market lurches lower

Angela Balakrishnan, economics reporter
Wednesday July 25, 2007
Guardian Unlimited

Sales of existing homes in the US plummeted last month to their lowest level for four-and-a-half years, government figures showed today, as analysts warned the "free-fall" in the US housing market is to continue.

The National Association of Realtors said sales in June fell to a lower-than-expected rate of 5.75m units a year, down by 3.8%. This was the lowest level since November 2002.

Wall Street had expected home resales to fall to 5.88m units from the 5.99m initially reported in May before they were downwardly revised.

A breakdown of the data showed that the weakness in the housing market was felt across the whole of the United States.

Boris Schlossberg, strategist at, said: "Housing is clearly in free-fall."

"The housing market has experienced a second down leg since the spring," said Richard Dekaser, economist at National City Corp. "The past few months have indicated that a bottom has not been reached, which is negative for the economy."

Analysts also warned that investors should continue to steer clear of residential real-estate related investments.

[A]nalysts said that the slowdown in the US housing market was "turning uglier by the month".

Dimitry Fleming at ING said that seasonally adjusting the prices showed a fall of 1% month on month rather than an increase of 3.2%.

"We see no other option for sales than for them to drop further during the summer," he said.

Leading US mortage lender Countrywide have said it does not expect any improvement for at least a year.

Meanwhile, the benchmark ABX mortgage indexes fell to record lows as the July data showed further deterioration in loans in the sub-prime market.

The article had footer links to earlier housing market reporting, including the doldrums in the mortgage financing sector. Guardian had another item, "Asian boom helps world economy to shrug off US housing market decline."

That is the reality. Roughly two years ago, what was the hype?

Smart Growth Online, A Service of Smarth Growth Network, said:

Smart Growth News


Ramsey Readies for Twin Cities Growth With 350-Acre Town Center Project

Once mostly rural and recently a fast-growing Twin Cities bedroom community, Ramsey -- about 20 miles north -- is ready for more newcomers with its smart growth vision, embodied in the 350-acre pedestrian-friendly Town Center project under construction, one of the Metropolitan Council's designated ''opportunity sites'' and the winner of the 2005 American Institute of Architects (AIA) Award for Regional and Urban Design.

''About three or four years ago, we knew growth was going to occur, and we started slowly,'' said Mayor Thomas Gamec. ''We thought about what employees we need, what police and fire, of all the services we'd need to handle the growth.''

Consequently, reports Minneapolis Star Tribune writer Jason Amundsen, Ramsey Town Center will be the city's focal point, ''a hub for transit and community life,'' offering perhaps 3,000 varied housing units -- a third of the city stock -- about 400,000 square feet of retail, and a first batch of offices, restaurants and parks.

Town Center will be linked with downtown Minneapolis initially by bus transit and later by the new Northstar commuter rail along the I-10 [sic] corridor. In the construction first-phase, the city will get its new 68,000-square-foot Municipal Center -- with city hall offices, administration and the police department -- and several stores and a restaurant.

The center, said BKV Group architect Ted Redmond, will feature ''a blend of traditional and contemporary components, face the main street and the new South Park, and sit ''on a fabric of green space,'' while internal design flexibility will allow its vertical expansion in the future. -- Star Tribune 9/16/2005

[Italics emphasis added] Here are two October 2006 Town Center views across the street from our miniurban-hub City Hall ediface and ramp, which the "Smart Growthers" touted:

Not much Town Center growth has happened since the October 2006 photographs were taken. Nedegaard was put into bankruptcy by his mortgage lender weeks after the election, and died days after being served the court papers. Foreclosure weeks ago was postponed. The smart growth news folks would have done as well predicting a flat earth, as predicting abundant smart growth. A dumb market apparently intervened. A Forrest Gump market trumped all the hyped smartness.

And if we are to believe the pundits now, we'd better hunker in and wait out the market. Meanwhile, Minnwest sits with a $35 million black eye from the Nedegaard effort failing. How much was bad planning, how much bad market timing, who can say?

But the certainty is the Town Center Task Force and others failed to anticipate anything beyond a perfect market without saturation and without hindrances. They had the idea to market the idea to citizens; and later when the sale of land to the Nedegaard-led Ramsey Town Center LLC was pending and preliminary plat approval was under council consideration there were those expressing worry that the city might not be able to keep up with the breakneck rates of growth some figured would happen.

So, history is history and the adage is learn from it or suffer repeating it. What has Ramsey learned? Where do things go next? If staffing growth was planned based on projections now appearing false; at least keep that in check, while citizens are being taxed to service building debt. If the growth is not happening, don't lay a double whammy on taxpayers.

Wednesday, July 25, 2007

Template change.

This altered font and bordering has not changed any text. Pictures for now have borders, and links are underlined, no longer in green text. I think this is more easily read than the former font. Old dog. New trick. Go figure.

Let us hope for one carryover from the Nelson interim city administratorship.

Heidi Nelson deserves notice and praise for the promptness in which minutes were prepared and published. It shows what had always been possible, before she took control of the duty. We citizens can only hope that information flow remains an administrative carryover priority when the new head honcho takes control.

By publishing this thought, it might have legs. Especially if others who may have noticed the improvements in communication during the interim period also speak up about seeing and appreciating something that did not have to happen, but did and was a quite positive change.

Ramsey Star Express - An experiment, for now. Premature to ask, success or failure.

Fiscal and ridership questions about the Ramsey Star Express were posed earlier. Here. Brian Olson had indicated a response was being prepared, and I have that response now.

First, what Brian Olson had to say, then a photo montage of images from the LSA Design website. As a "know something about your City's consultants' activity" measure, you can navigate the "Ramsey" parts of the website, starting here, here and here.

I value Brian's response, as fair and level, credible and terse. As a coach service that only began earlier this year, it realistically should not be expected to be in a net-payback net-earning posture, or a net-deficit level, for now in any way that would have long term forecast revelance or use. I think that is clear from what Brian says. I post his full email text, then the photos - no dissection or carping. I had a few disjointed follow-up questions not of general concern, so this probably is the last I will post on Star Express.

If you commute downtown, with no need for an auto during the day, and a job that will always excuse you to leave on time during the scheduled evening trips to Ramsey; then it's a fine deal to try. Few fit those criteria, and that is why I see merit to the Watchdog's "Dump the Train, Add a Lane" suggestion. Fixing Highway 10 would help more people for the amount spent; or that would be my guess. NorthStar would always have a limited ridership unless and until a full rapid transit grid is in existence. That takes time, one piece at a time, and whether NorthStar is the next right piece is the entire question.

Brian explains:

Let me start by expressing my appreciation for your interest in Ramsey's Star Express. The Ramsey Star Express, as you are aware, is a new service which was initiated back in January. This service was made possible by a grant from the Metropolitan Council and the City of Ramsey. Anoka County operates this service for a contracted fee every month.

Every new service takes time to build ridership. In the first month of service, the service has just under 500 riders and an operating cost of $20.25 per rider. Since this wasn't a complete month of operation, I will give you the statistics for the first full month. February experienced over 1400 riders and an operation cost of $16.15 per rider. As our ridership increases, our operating cost per rider decreases.

Since Anoka County operates the Northstar Commuter Coach we have access to information about their ridership experience and are the beneficiaries of their expertise in operating that service. They have indicated that the ridership during the summer months drops off slightly for a number of reasons (vacations, holidays, weather conditions, etc.) Even with the summer drop in numbers our ridership in July of 2007 has increased to almost 2,000 riders and the operating cost per rider dropped to $12.56.

As to your question about whether the service is "making or losing money", I would suggest to you that there are not too many multimodal options that "make money". The federal grant that I mentioned in the first paragraph that was awarded to this service from the Metropolitan Council pays for 80% of the costs associated with the service. This grant makes it possible to operate the service which allows the City of Ramsey to build ridership along the corridor reducing the number of vehicles on Trunk Highway 10. We know that this is not the solution to our congestion problems but it is a step in the right direction.

Our excitement about the project comes with a financial commitment as well. The City has agreed to commit a maximum of $310,000 (20%) over the course of the next 3 years to assist in operation of this service. Our hope is that ridership will continue to rise each month allowing us to not only have lower cost but also to have better justification for a station located within the Town Center in the future.

I hope this e-mail has answered the questions you had and hasn't just generated more questions. Again, thank you for your interest in the Ramsey Star Express.

It speaks for itself.

Now the montage, including a walking time diagram, photos or elevated graphics renderings - appearing to be photos, a rendering of the ramp showing a planned covered pedestrian overpass to the area's planned bus stop, and a layout picture. [Terminology: I do not use the wording "transit hub" or whatever designer-speak they prefer to use in anticipation of NorthStar. For now "bus stop" is totally accurate]:

NOTE: I think the landscaping on the second pic might have been "doctored" or the camera angle very artfully chosen. The image of a coach was probably added in the third. That last thing I am fairly sure of. The photo is from the construction phase of City Hall, near the end, but with the pair of port-a-pot kiosks in the parking lot, the corner of the red debris dumpster showing, and the white contractors' trailer nearer to the building. For sure, Ramsey Star Express was not operational then. The push was going on to get something like that before the election vote, a date not met. And was the grass that green back then? I don't believe so. I think the fourth picture might have added walkway texturizing, and a bus coach. It conveys the thought, even if not via an unaltered image. Here's a pic I took, dated 10/24/06 - same scene, no bus service back then however, the move from Nowthen Blvd had been started, not finished.

A fine piece of legislation. For municipal fiscal transparancy.

Minn. Stat. Sect. 471.701, read it here, helps citizens to know. We should have more laws like that.

As a consequence, the City of Ramsey website homepage, has a page footer, which discloses:

Chapter 156 of the Session Laws of 2005 (MN Statute 471.701) requires that "a city or county with a population of more than 15,000 must annually notify its residents of the positions and base salaries of its three highest-paid employees." For the City of Ramsey, titles and salaries for 2007 are as follows: Police Chief $97,981; Finance Officer $96,789; Fire Chief and Public Works Director $94,867. Posted on 5/22/07.

Are they worth it? You decide. I am just happy to see such disclosure mandated.

Now, how much are they "making" when you include the whole benefit package? The fine health insurance coverage not everybody in Ramsey has, etc.? I would like to see a Sect. 571.701, subparts a and b; with a being what's there now; and b requiring a discoloure of full cost to the city, for each of the big three. The fuller the disclosure the better things are for citizens. A fine statute. Indeed.

And it was worth a post. It will change soon when the new City Administrator is named and gets an employment contract. I thought I saw a puff of white smoke from the chimney, but there's nothing on the city website.

I suppose what made me anticipate the puff of smoke, this from the updated City calendar for July:

5:30 pm, Monday, July 23 2007 ---
City Council Work Session City Council Second Interviews for the City Administrator Position Council Chambers.

Soon, we learn, soon - hopefully -- if this session led to a decision, or not. And with that statute, the pay for the new guy will have to be published.

Monday, July 23, 2007

I probably was wrong. Unless there was some express intent to subordinate the City position to the lender's, Ramsey's litigation position looks strong

Like my earlier musing, this is the opinion of a non-lawyer. It's nothing more firm than that. It relates to whether I should complain or not, as a citizen; whether I think error occurred; and not whether others should - absent the advice of an uninvolved independent lawyer - think or believe as I do. My view, as a citizen, only.

That said, the City has pleaded the bank had actual prior knowledge of the city's interest under the Master Development Agreement it had with Ramsey Town Center LLC.

The detailed wording of the two pleadings differ, the "Petition" for Torrens property and the "Complaint" for abstract property; but there is a compelling showing of actual notice.

Three kinds of notice are important - actual notice, constructive or record notice - where the county land records and/or title abstracts apply and give notice, and implied or inquiry notice - knowledge of facts sufficient to put one on notice of a duty to inquire further so that you are held to "know" or have notice of facts that reasonable follow-up inquiry would reveal.

For recording act or Abstract property; a purchaser who has either actual, implied, or constructive notice of inconsistent outstanding rights of others is not a bona fide purchaser entitled to protection under Minnesota's Recording Act. Anderson v. Graham Inv. Co., 263 N.W.2d 382, 384 (Minn. 1978).

Torrens registration is a bit different; where the question of "actual notice" of things not duly registered on the certificate of title was only recently resolved with the Court opinion cautiously hedging, "In rendering this decision, we decline any entreaty by M & I [a party] and amicus [Hennepin County Examiner of Titles] to define the outer contours of actual notice; rather, we limit our holding to the facts of this case. Also, because we conclude that Collier is not a good faith purchaser, we do not reach the issue of whether Collier’s purchase of Conley’s interest in the property for $5,000 constitutes 'valuable consideration' [...]"

The opinion was issued by the Minnesota Supreme Court very recently, Feb. 1, 2007, and I do not have an official citation. The Minnesota Supreme Court reversed a Court of Appeals decision; In Re Petition of Collier, 711 N.W.2d 826 (Minn.App. 2006). I thought of excerpting; but it is lengthy legalese, and for those interested the Court of Appeals opinion is online, here; and the Supreme Court opinion, here.

In dismissing the reach of "actual notice" under the facts of the case, the Court of Appeals had reversed the District [trial] Court and reached an opinion differing from the amicus view of the Hennepin County Examiner of Titles - that actual notice should apply and control.

The Supreme Court's reversal of the reversal reinstated the trial court result - that under legal and equitable principles, a bona fide purchaser in good faith, for value, without notice is the required status. If there is a race to record first with each side knowing of the other's interest, which in fact attached first might play a role, and other specific facts can control.

Where the City appears to have a slam dunk; is this document [click to enlarge, or open it in a new window]. It is one page from something the lender recorded:

I got that item Monday, July 23, via email.

There is no such thing as a "smoking gun" in boring real estate dealings; but this item, I find it convincing, because:

To protect its loan the lender recorded and registered a "UCC-1 financing statement," taking a security interest in ancillary personal property as well as the real property; specifically taking a security interest in the Ramsey Town Center LLC's position in the Master Development Agreement running between the LLC and Ramsey.

That is indisputable actual prior notice of the City's contract status. End of story.

But not quite. What did the city hold? The mortgage attached only to encumber real property - which is why a financing statement was used also - and then the mortgage only encumbered what real property the LLC owned at the time the mortgage attached.

What did the borrower own at the time of the mortgage? Real estate, subject to a future interest, in some of the land, but more importantly subject to intangible City property - powers, rights, and conditional vesting of parkland status, all under what arguably was an executory contract running with - relating to use and disposition of the land. But the contract went from executory to actual, with part performance and all - before any default by the LLC on the loan. Conditions happened, deed releases were given, there was a school, a ramp, a city hall all built as part of ongoing contract performance. Before any default.

And the lender not only knew of the contract; it took a personal property security interest in the LLC's part of the deal. Go figure what effect that might have.

I would guess that the contract was not litigated at all in bankruptcy court - a court that can void executory contracts; future terms between an airline and pilots, for example in a non-liquidation bankruptcy proceeding; but where in a liquidation the real estate and other secured property is released for disposition under state law while the unsecured creditors are left in bankruptcy court to bone pick.

I would guess the real estate was released from bankruptcy court jurisdiction without any deliberation there, over the contract. I have not looked at that file, so it's all a guess.

Then, you can forclose a lien or an interest but what about a conditional power of use and disposition? A power with duties, vested conditional future interests. Would there be any redemption right, for a non-lien contract position. Easements, as servitudes rather than liens or interests also are different. Still some uncertainty. Some rough edges.

However, the lender taking a security interest in one side of a contract necessarily implies actual, prior knowledge of the existence of the contract - and that means inquiry notice is triggered, (and there should be imputed notice of the date of agreement and the terms and conditions). There is an expectation of inquiry, for any ordinarily sophisticated institutional lender originating a multi-million dollar loan. You know there's a deal, you take a security interest in part of it, other banks are participating and relying on your due diligence; so you look like a town fool if saying or thinking to say you did not know all a prudent institutional lender would know, under those facts.

So - that still leaves bank and city to talk; to bargain and see if they can do a work-out of the situation now faced - a lender on the hook for millions on a distressed parcel of land not worth millions. With a city wanting to keep a plan and dream in place. A city wanting to stand pat. But not for too long.

Some new bargain will come about; and if there actually is a July 27 sale I would be astounded.

If there's a buyer in the wings - that's a third party to be in negotiations, and the city should seek identification and having the potential purchasing party at the table. The buyer would become the key player, but the lender may remain, possibly financing the buyer as a new developer having a go where Nedegaard failed.

But getting the potential buyer involved up front is how you avoid the whining later about, didn't know, didn't expect; etc. Get the potential buyer to the table sooner rather than later and define the deal.

Based on the In Re Petition of Collier case, as current, recent, strong law favoring the city on actual knowledge being the key factor - and based on the security interest the bank took in the LLC's contract stake, the City is in a sound position and all should be well on the litigation front. If it is litigated.

But litigating would be an admission of an inability to reach a negoitiated settlement and it is too early for that. People have to talk and bargain.

Bottom line: Any doubts I had earlier about how the actual notice contention might be sidestepped, are lessened now by having gotten that document from the County Recorder's office. It's about as strong a paper trail of actual notice as there can be, plus with the lender's intent to attain a security benefit from it, waiver, estoppel and ratification arguably also apply in the City's favor.

Practically, there is a standoff - the bank's probably written it off as bad debt but wants to recoup as much as feasible; while the city wants someone to step forward to alter the unfinished fallow status quo.

Who can outwait the other? The City.

The lender wants it off the books and to move on. Snapping up a nice property is different. This is a lame orphan dog, and the bank wants out - or to get a new fish to come in with capital, in which case it might carry a loan on the chance to either be paid or to snap up the risk capital if the new venturer also fails.

The City can stand pat longer than the bank can. Only a weak will, or an attractive deal should cause city movement. If sound appearing fresh cash comes in and says, "Change this," and "Change that," and this and that are not deal-killing factors, it could be back on track.

However, would you jump such a deal, for denser shared-wall housing than some already on site and not selling? I wouldn't.

One final point - from copies of the recorder's office receipts, it appears all documents were brought in by "Metro Legal Services Inc., 330 2nd Ave S, Mpls, MN 55401." All the receipts are to that entity. Who sent and instructed them, on recording sequence, is uncertain to me, but I expect City lawyers know or will find out in discovery. If there were joint escrow instructions - record bank papers first and the city signed off on that - then actual notice arguments slip in importance. Others know about answering that concern. I do not.


Tuesday, July 24. Additional info, for anyone wanting to follow up.

To confuse things more: See, In re the Petition of Willmus, 568 N.W.2d 722 (Minn. App. 1997)(quoting In re Juran, 178 Minn. 55, 60, 226 N.W. 201, 202 (1929)), review denied (Minn. Oct. 21, 1997); online here, where actual notice was held lacking. See, also, In re Petition of Ocwen Fin. Servs., Inc., 649 N.W.2d 854 (Minn. App. 2002), review denied (Minn. Nov. 19, 2002), online here. Those cases arguably seem to favor the bank, but the Supreme Court holding in Collier appears to lessen their continuing authority. Decide for yourself.

Ocwen stood for first in time is first in right in Torrens registration and in any resultant litigation, when each mortgage holder there had actual knowledge of the other's interest. The City and lender, in our instance likely are comparable.

The Court of Appeals in Collier cited and explained Ocwen in support of its conclusions; while the Collier Supreme Court, in reversing, declined to mention the opinion. It is arguably likely the final Collier result lessens the reach of Ocwen in our case. Again, decide for yourself.

Two cases relate to the Abstract part of the Town Center property under foreclosure; where "actual knowledge" is analyzed; Comstock & Davis, Inc. v. G.D.S. & Assocs., 481 N.W.2d 82 (Minn. App. 1992),and Levine v. Bradley Real Estate Trust, 457 N.W.2d 237 (Minn. App. 1990), review denied (Minn. Aug. 7, 1990). Neither is online. They relate to non-registered property and hold that “actual notice” requires “actual knowledge,” a proposition that is clearly applicable to registered property as stated in Willmus. 568 N.W.2d at 726. Courts have relied on Comstock for the requirement of “actual notice” when discussing Torrens property and the Juran case. See Alchemedes, 546 N.W.2d at 42 (citing Comstock, 481 N.W.2d at 85, for the proposition that “actual notice requires knowledge of [an] enforceable agreement”). Comstock in turn relied on Levine for the proposition that “actual notice . . . requires conveying knowledge of a signed, enforceable agreement.” 481 N.W.2d at 85. So, given that Torrens - Abstract linkage, in defining "actual notice" there is an arguable parallel when actual notice exists, regardless of whether it is Torrens or Abstract property at issue. Confusing? Decide for yourself.

Interestingly, the Supreme Court in Collier, opined:

We also note that we have applied principles of equity when a result under the Torrens Act violates notions of justice and good faith. See Finnegan v. Gunn, 207 Minn. 480, 292 N.W. 22 (1940). In Finnegan, we concluded that “[n]othing in the Torrens system indicates that the ancient concepts of equity are not applicable” under certain circumstances. 207 Minn. at 482, 292 N.W. at 23. See also Mill City Heating & Air Conditioning Co. v. Nelson, 351 N.W.2d 362, 365 (Minn. 1984) (requiring a subcontractor to provide prelien notice of a mechanic’s lien to purchasers of Torrens property who had not yet filed their ownership interest with the registrar of titles, because failure to do so produced an “unfair and unreasonable” result). But, because equitable concepts are not necessary to our holding in this case, we mention this precedent only as an additional point of reference for our ultimate decision.


We conclude that under section 508.25, a purchaser of Torrens property who has actual knowledge of a prior, unregistered interest in the property is not a good faith purchaser. Here, Collier gained actual knowledge of M & I’s interest in the property through the Ramsey County Sheriff’s office’s publication of the notice of foreclosure sale and through his subsequent negotiations with M & I to purchase the property. We also conclude that Collier’s knowledge constitutes actual notice, and since Juran was decided in 1929, the law in Minnesota has prevented a prospective purchaser with actual notice of a superior interest in Torrens property from becoming a good faith purchaser. In the years after Juran,the legislature has not chosen to alter the relevant language in section 508.25 or define good faith. Moreover, Minnesota courts have relied on our precedent, and real estate practitioners have accepted and applied the foregoing principles without apparent difficulties. We have stated that “[w]e are extremely reluctant to overrule our precedent under principles of stare decisis” and require a “compelling reason” to do so. [citation omitted] The facts in this case offer no compelling reason to overrule our precedent. Accordingly, we conclude that M & I’s interest in the subject property is superior to Collier’s interest.

To me, and you can decide for yourself, the equity-still-applies language is interesting, since waiver, estoppel, ratification, and laches can be argued - the bank's extended forebearance in moving against Nedegaard vs. having moved sooner; all the while the City was relying on its Agreement terms and conditions.

And with Collier being recent and decisive on saying Juran stood as they described it, consistently over time re Torrens property, and with a parallel view of actual notice and actual knowledge existing for Abstract property, I view the City's litigation position as solid.

Again, however, negotiation will take place and probably be decisive - not litigation. Not unless the bank is intransigent and no "white knight" steps forward to stand where Nedegaard stood, to try to have a go at the balance of Town Center.

In that instance, there may be a standstill; with no substantial changes to the land as it now exists. Will the bank ultimately cease postponing its sheriff's sale, and bid its mortgage amount and take title? I could only guess. The bank's probably not reached a decision that way yet, and would await negotiation.

I wish everyone well in negotiating the future of Town Center, bank and City, rather than seeing them ultimately breaking off talks and litigating for a resolution.

Sitting still, for now, while things unwind as they will, is all we outside the loop can do, as Ramsey citizens.

I expect this will be my last post regarding the situation, unless some news arises that the log jam's been somehow broken. Leave it to the lawyers; their fees; their argument and activities. Bless them. They have to make sense of the mess, as does council. As does the bank. Bless them all. And - if there is a white knight - that could result in another failed and incomplete effort.

At least, now, the expectations of city officials is tempered by recent history and market trends. It is a far lot better than having had the cheerleader squad, Town Center Task Force, give us "marketing" assurances that have proven dead wrong and unduly exuberant.

I hope each of those folks have learned a lesson. Less hype. More reality.

The Mantra has changed.

It had been a perfect thing. "Rooftops" was the mantra. I will not name the main proponent of the deception - but more rooftops of the wrong kind can end up costing more for government services than they produce in tax income - unless the rates against assessed valuation are so high to prevent this, and that means the rates, being uniform, are that high for every taxpayer in Ramsey.

Now the Mantra has changed from instant gratification, taxwise, a gratification arising (or forecast to arise) automatically from the tax windfall of more Town Center rooftops [an effort as easy as baking a cake] to a presently convenient newspeak explanation, "In the long run ...". And, "Riverdale took xxx years ...". And, "Maple Grove took yyy years, etc."

I am waiting to hear, "Rome wasn't built in a day."

All under the rubric of that old classic, "In the long run ...".

John Maynard Keynes aptly said, "In the long run we are all dead." *

The Watchdog said, "Ramsey Spends $19 Million on Nothing."

That is a simplification. There is a building. It appears soundly built. It is inconveniently located for most of us compared to the prior Hwy 5 central siting.

It is big. It is under utilized. Staff will expand. Staff will fill the vacant space available for it's expansion. It is happening already.

The Watchdog should have said, "Ramsey Spends $19 Million and Gets Little of Value in Return in the Middle of a Weed Patch." That sums it up better. And taxpayers will be paying over the next decade or longer for the irresponsible mistakes of those in office who were making the bad decisions while promising "shoppes and restaurants" which we still await.

Surveys and all. Nineteen million dollars later, which shoppes and restaurants would you prefer?

Put aside the Kurak effort to advance Kurak land-holdings and dealings while on council and the Elvig effort to advance Bauer land-holdings and dealings while in office. That still leaves the other fellow-travelers on council, and their actions and choices.

If I had to sum it in one word, that word would be, "Irresponsible."

Next, I read of so-called "Public Facility Lease Revenue Bonds." Huh? Who is that? What is that? Who leases what from whom? Who owns what?

Then, I read about a bank ahead on the public records of the City's Master Development Agreement for the Town Center; and mischief involving dealings run through a suspect organ, a title company named Powerhouse Title, that was a Nedegaard operation, and I have the question - Does Ramsey hold good and marketable title to the land that the new City Hall and Ramp are built on?

If not, who owns what?

If owned, by Ramsey, how is it subject to potential rights or powers of divestiture, if any?

It is not the classic question, "Who runs City Hall?"

It is a step more basic, "Who owns City Hall?" And the City of Ramsey's answer is [... awaited]. Go down to City Hall and ask the question yourself. First, find someone to listen - our officials are good about that, they will hear you out - then ask, then wait to see if you get a credible answer and explanation of who owns what. Try it.

Even if title is good and free and clear; it was a bad investment of our citizens' wealth. But if title is not good and free and clear --- what then?

I have yet to see absolute reassurances and explanations from those in office, appointed, retained and elected, that the title situation is not problem free.

That is worrisome.

But an overbuilt palace and a ramp in the middle of a field that short-term could have been graveled at far less up-front cost - awaiting instead of prognosticating growth that did not happen.



The words are like polar extremes, on opposite ends of a continuum.

Where do YOU, reading this, place on that continuum the official decision making regarding Town Center, so far, as it has been, as it has turned out?

Sure. You understand.

But, in the long run ...


In a context concerning the quantity theory of money, something we can leave to economists, the fuller Keynes quote was, "But this **long run** is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again."

Local politicians, in the "tempestuous seasons" telling us that "when the storm is long past the ocean is flat again," not only rings hollow and unsatisfying; it might be totally wrong.

In the long run the opening photograph may go years unchanged; or worse, it may be patched up and cobbled together in a way to appear less a vast wasteland; but "in the long run" a deteriorated blighted spectre may remain if too bad a move is made now. It is better to stand pat than to let egos look and feel better, in the short run - say, running to next year's November 2008 elections. There will be pressures to patch, cover, and recharacterize.

Short run irresponsibility got us where we are. So what expectation, what probability is there that short run patches and band-aids will get us into better shape? Stand pat, for now.

------------an added thought------------

If Powerhouse Title was involved and if title to the city hall land was not properly perfected; two very big ifs that exist because I do not hold a current title abstract; then is a lawsuit involving the City and a foreclosing lender showing failure to join an essential party; the Public Facility Lease Revenue Bond holder(s)?

If they financed a fixture placed on vacant land, and title to the vacant land might be at issue; they appear to have a stake in the outcome of the litigation. Did the bond holders have any claim or participation in the bankruptcy?

As to this entire line of doubt; if the city holds a current title abstract from a company besides Powerhouse Title showing my worries are groundless I wish they would advertise or publish the fact. This image comes to mind, regarding unnecessary complications and keeping things simple: