consultants are sandburs

Thursday, October 11, 2012

Ramsey's second million dollar man. Sort of. Not quite. Not yet. Stay tuned. And, can you say "consent agenda?" And, coincidences mount, the audio-video equipment went kaput for Tuesday night's regular council broadcast and the following same-councilmembers-wearing-HRA-hats meeting broadcast. No TV. Dysfunctional. Out of order. Not working.

photo credit

Start with an obscured consent agenda item - shuffling a million between shells in a shell game ...

Right there, item 10, consent agenda being for routine things - transfer funds, to meet a planning goal. What could be more routine? Well, there is this - the routine consent agenda fund transfer resolution:

And I thought road improvement funds were to be used for - naive of me - improving roads, not, well, the story continues ---

And, loving the suspense, you ask, why transfer or authorize a transfer from the left pocket to the right pocket, since it looks to be a sort of sham cooking, back burner, since in all practical senses, the pockets are the same? Moreover, if the County provides it, it has to come from tax money - that's what the county takes in by levy and grants from bigger fish, and "the County" must be happy with such Ramsey intentions, to transfer for this or that, left to right pocket. "The County." Whoever that is.

And blame it all on "Ramsey Crossings." Down to the Crossroads ... you know the song and legend. Robert Johnson. Negotiated transaction.


What's the second pocket up to? And WHY? Why not just pay Jeff from general funds? Well, to him if the money's green, he's happy, but WHY CUT A TRANSFER?

ARE YOU READY - To be astounded? The suggestion from our learned savants, there would be an illegality if the council gave the money to councilmember Jeff, a speed bump in the road of changing liquor stores as easily as you change shirts. So the sham is, have the HRA give money to councilmember Jeff, and all is hunky-dory. I mean these guys were serious. No fooling. Really - there's proof it's not merely some bad joke I'm making up.

There is this Goodrich memo - noteworthy for its mastery of purporting a distinction without any real or practical difference:

NEXT: The new word of the day, "parapraxis." Per this second page of the Goodrich memo:

Uh, huh. Sure COUNCIL ACTION ... Wikipedia's opening paragraphs on "Freudian Slip," state:

A Freudian slip, also called parapraxis, is an error in speech, memory, or physical action that is interpreted as occurring due to the interference of some unconscious ("dynamically repressed"), subdued wish, conflict, or train of thought. The concept is thus part of classical psychoanalysis.

Slips of the tongue and the pen are the classical parapraxes, but psychoanalytic theory also embraces such phenomena as misreadings, mishearings, temporary forgettings, and the mislaying and losing of objects.

[...Later quoting Freud]
In the same way that psycho-analysis makes use of dream interpretation, it also profits by the study of the numerous little slips and mistakes which people make -- symptomatic actions, as they are called [...] I have pointed out that these phenomena are not accidental, that they require more than physiological explanations, that they have a meaning and can be interpreted, and that one is justified in inferring from them the presence of restrained or repressed intentions and intentions. [Freud, An Autobiographical Study (1925)]

We have one of those parapraxes beasts kicking around that Goodrich memo, second page, top. Big as life and twice as ugly.

Reporting and respect for the rule of law. Sakry of ABC Newspapers filed a terse but wide ranging report of the Tuesday, Oct. 9, meeting, here. Read it twice, for detail, briefly I found these paragraphs most compelling:

Ramsey HRA fails to approve Wiser Choice purchase
By Tammy Sakry on October 10, 2012 at 9:49 am

Fall construction projects on the west side of Ramsey’s The COR could be in jeopardy.

Ramsey city staff and its legal counsel have been negotiating since February to purchase the Wiser Choice Liquors, 14590 Armstrong Blvd. N.W., which is owned by Ramsey City Councilmember Jeff Wise, because the city will need portions of the one-acre property for an existing road project and most of the property for the future Armstrong Boulevard/Highway 10 interchange project.

But a state statute makes it illegal for a city council member to buy from or sell property to the city, according to City Attorney Bill Goodrich.

[...] The legal staff could find no state statute that covered cross conflict that addressed the city council and the HRA membership, Bray said.

As the HRA is made up of the same seven people as the council, that looks like a shell game, said Councilmember David Elvig.

“I don’t want to step in the bear trap,” he said.

There is something known as accessorial liability, if a criminal statute is breached and it's breach was knowingly facilitated. Sakry continued:

While the council agreed to address the issue as the HRA, Council/HRA members Randy Backous, Elvig and Strommen did not support the $1.1 million purchase of the Wiser Choice Liquors property and business from Wise.

During the HRA meeting, Strommen said she has a couple of concerns.

If the legal staff knew about this state criminal statute since mid-September, why did the council members not know, she said.

“This is a pretty serious issue and I am not happy that (the council) was not notified for three weeks,” Strommen said.

Presumably, that issue was for some on council, with not all animals on Animal Farm presumed equal. "Need to know" is on a continuum with "treat them like mushrooms," and in this $1.1 million dollar context, delay like that is most questionable.

Sakry again:

While the council and the HRA have separate statutes governing them, there is still a perception that the council could be using the HRA as a tool to get around the state statutes, she [Strommen] said.

There was a clear process in place for this purchase to make sure everything was transparent and now that has unraveled, Strommen said.

To avoid any conflict, Strommen suggested waiting until Wise’s term is up at the end of December – Wise lost in the August primary election – before proceeding with the purchase of his existing property and business and sale of property in the COR to him.

That in a nutshell nails the truth down well, and gives what is a non-slimy answer. Why the rush to lock in a price now anyway, since the actual land-for-land swap and Jeff's relocation is anticipated to involve, at present, an eighteen month window --- so what exactly is the play to lock in a $1.1 million dollar price three months before an election with 4 of 7 seats in play? Or have I answered myself?

The eighteen month window is apparent from the Goodrich memo's including the attached above deal synopsis, with much more that can be said (perhaps in a subsequent Crabgrass post - for now check the highlighting). The point is the time frame embraces no urgent need for hasty action; but for, again; there is an upcoming election ... Those wanting to be generous to Jeff to avoid a condemnation action, may be wanting to be too generous, and January, after the Wise term on council ends will be a sound time to revisit things.

Surely with an eighteen month window taking time to walk a straight line with the laws - to meet the concept of a prudent government respecting the rule of law as Strommen suggested, makes all the sense in the world. Another two and a half months now, on an eighteen month anticipated land-swap; what's the rush and why rush into a ruse?

Sakry, again:

“Nothing has changed,” said Mayor Bob Ramsey.

It still the same deal that has been under negotiation since February, he said.

[...] The HRA would not be violating any laws and it is ridiculous to stop now, Ramsey said.
That is His Honor Mayor Bob Ramsey, expert on the law of Minnesota, or how he sees no problem to a willing, informed and intentional circumvention of the spirit of a criminalizing statute, with what is (or might appear to citizens to be) "ridiculous" haste.

Bob - Think. The HRA would be trying to circumvent an applicable law, knowingly and without any decent just cause to plead exigent circumstances; and it is "ridiculous" to push hell-bent for liquidating a quite favorable $1.1 million transaction number from the Wise perspective, when the man himself negotiates an eighteen month time lag as fully appropriate.

Bottom line, it is "ridiculous" not to stop now, catch a breath, and respect the rule of law.

There you have it. A law, and a crude white-wash "use the HRA" attempt to evade a clear and unambiguous meaning (presumably, so, given that the Goodrich memo declines to name the statute by its official designation so we could read it ourselves, Bill putting in agenda writing only "it's there, trust me").

Then they turned off the cameras too. And used the consent agenda, with $1.1 million movement and the "why" of doing it offered as inconsequential enough to be on the consent agenda. Circumstances piled upon circumstances.

Whether a "use the HRA ruse" were pursued or a council decision pursued, elevating form over substance is a losing approach. There is only one simple undeniable truth --  either way it's the city buying a council member's property after negotiation. The nature of the pig is unchanged, regardless of how it's lipsticked.

Ramsey's first million dollar man? This earlier Crabgrass. He's the one with the sky-is-falling Sakry quote:

According to Lazan, delaying the purchase would impact the construction of a convenience store, sit-down restaurant, a fast food restaurant as well as the new Wiser Choice Liquor store.

According to Lazan ... Jeff is domino numero uno?

Let's work this out. In effect, it reduces to a land-for-land swap. That's what it is. So why have they not negotiated a "boot" amount to go to Wise over and above the land swap? Why go through the strange exercise of divining a "price" for the Wise stuff as is, and another "price" for the Wise new stuff, as it will be? If it is a like-kind transaction to Wise within an allowed time frame, Wise needs not recognize any taxable capital gain and keeps his historic basis in the new place. That means the price for the old place can be "x" and the new place "y" or just as easily juggle things with the old place at "2x" and the new at "y + x" with the "boot" to Jeff being identical either way, X being greater than Y. Could all this pricing stuff be focused on setting a commission amount to Landform? And would Landform's view of exigency be colored by a chance that a swing in council makeup might trigger the 30-day termination right the city holds in its contract with Landform? As to how the cash would be flowing - county to city pocket, to HRA pocket, to Jeff, to HRA pocked on buying the new site - and the larger the amount so "flowed" the easier it would be for the gamblers who used reserves to buy the distressed thing to say, see we are paying back the reserves we "borrowed" so reelect us, please. The size of the Landform commission and the "on the accounting books" amortization of the borrowed reserves run parallel, as motives for possibly kiting phantom prices in what in essence is a land-for-land plus boot transaction.

Someone emailed:

Is it even legal to use money from the road improvement fund or equipment replacement fund for other purposes? These guys have used these and other funds as their own personal piggy bank for general uses and for the Flaherty & Collins project. These funds are now dangerously low. They've placed us in jeopardy of losing our currant bond rating.

The "piggy bank" is an apt term, but not personal, in the sense nobody's proven to be funneling things for themselves. I like the term "slush fund" better. One big slush fund, to gamble as the mood fits; in hopes winning not losing bets are being made. I replied to that email:

It is gambling with the seed corn. It only starves you if you lose.

You have to presume Nedegaard did not go into things anticipating failure. These folks on council now, with a consultant to advise, are not anticipating failure either. Back to the question, whether legal or not, is it showing good judgment to slush out reserves beyond a prudent level of shrinkage - and might it "place us in jeopardy of losing our current bond rating?" Might it also lead to city, HRA, or EDA taking advantage of municipal bankruptcy law? Cities in California have done exactly that.

Google Stockton, San Bernadino, or Mammoth Lakes. Along with the word "bankruptcy." There are as many theories online as reports about those towns. But the thread is mismanagement of the budget and reserves. The chickens coming home to roost. And it can happen not on the offenders' watch, but to those subsequently stepping into the mire to mop things up. Try this. You will not like it.

__________FURTHER UPDATE_________
Rome failed. It could happen to Ramsey. One too many Emperors with the wrong ideas or skill sets; we are tinier than Rome.

__________FURTHER UPDATE_________
There is Minn. Stat. Sect. 471.831 "MUNICIPALITY MAY FILE BANKRUPTCY PETITION" stating:

Subdivision 1.Any relief under bankruptcy code.
A municipality, as defined in subdivision 2, may file a petition and seek any relief available to it under United States Code, title 11, as amended through December 31, 1996.

Subd. 2.Municipality defined.
In this section, "municipality" means a municipality as defined in United States Code, title 11, section 101, as amended through December 31, 1996, but limited to a county, statutory or home rule charter city, or town; or a housing and redevelopment authority, economic development authority, or rural development financing authority established under chapter 469, a home rule charter, or special law.

1997 c 148 s 1

Luckily, Ramsey has no Port Authority in a deep hole, since the Subd. 2 listing prominently omits "Port Authority" from the favored list. Make of that what you will, seeing HRA on the list, etc.

What I am curious about, is whether Darren's Landform contract with the city, should a new council want to void it in January but not pay future commissions or a severance fee, would be a voidable executory contract under the bankruptcy law applicable to municipal bankruptcy.

Should a new council wish that result, it would no longer be a moot or hypothetical thing.

Also, if the contract still says all intellectual property prepared under the contract is city property, not the contractor's, then might there be dispute over surrender of the fabled "dashboard" and/or all contact lists and customer info - (how else would delayed commissions be determinable) - would that be a material breach allowing the city to claim any performance duty on its part, such as paying delayed/deferred commissions, would be excused by such a breach?

Divorces can be messy. If/when they may happen.

Of course a new council in January has all options on the table. That would include embracing Landform with a contract extension even if new people are elected, or letting the contract run its course and expire in March, 2013. I do not believe the present council locked in any longer time frame beyond March 2013, I could be wrong, and there is always a chance that a post-election lame duck effort to give Darren better terms and conditions might be attempted.

As to any new council effects; Brünnhilde sings the final aria at midnight on new years eve.

And as to what may happen, it is anyone's guess. Especially before the election. As with the current council, and past councils, the duty is to do what is believed to be in the best long term interest of the city, to maximize the best future likelihoods. Views of what that might be clearly can differ greatly, but the new council will inherit the Flaherty adventure, for better or worse, and will have the benefit of the new Northstar stop; whatever that proves to be.

The new council also seems locked into the Armstrong interchange alteration, given how the present council was super-aggressive in changing the Sunwood layout. The new council will have to look at reserves, and whether the spending down has been excessive, or optimal. Reserves were very high when Bob Ramsey started his term as mayor, and given a decision was made to buy the distressed Town Center project, doing it via spending down reserves for the cash amount [apart from compromised tax liens] probably made more sense than bonding. The third water tower was a proper expense from the municipal water and sewer reserve account.

Presumably the new council will have to look at the books, report a prognosis, and go on from there. If there is a major change of council personnel it seems citizens would deserve that before the council does much else. Legacy duties and responsibilities will be inherited, much as the Bob Ramsey council inherited debt service duties dating back to James Norman days. To before the real estate crash. Before the Nedegaard bankruptcy/failure. History imposes limits and responsibilities.

___________FURTHER UPDATE_________
The email quoted above about reserve funds, and using highway improvement funds for property purchase aspects instead of contract costs for the actual road building, while not something I can answer, did lead to my discovery of MS 471.572 "INFRASTRUCTURE REPLACEMENT RESERVE FUND" with a Subd. 4 that is intriguing. Not that this city has been responsive to citizen expressions of a wish for more frequent use of referendum, but if there is a referendum about a reserve fund, it is locked into its designated purpose, and playing other gambles out of it would be problematic. I am unaware of Ramsey history, whether things like the Landfill Trust Fund were locked into specific purposes and uses, that way. Readers with knowledge of reserve fund histories are asked to submit helpful comments.


Ryan Bakke said...

Letter to Ramsey Council and Ulrich:

I'm flabbergasted and exhausted watching you all make decisions.

I'm tired of watching every council meeting and HRA meeting being driven by something COR related while the rest of Ramsey is neglected (roads, parks, economic development OUTSIDE of the COR). And I'm tired of standing by as our council is required to make uninformed or partially informed decisons.

As for the Wise deal in particular. There are plenty of reasons to complete this land sale except for one glaring's frickin illegal!!!! How did city staff and council spend months negotiating a deal without knowing that it was illegal (hence creating yet another reason for people to question city council/HRA/staff)? Maybe it's because nobody is required to sign conflict of interest forms or required to understand what a conflict of interest is prior to taking office? Or maybe it's the simple fact that some people work for the public or run for a seat to make sure decisions are made to benefit themselves and there kronies while ignoring the fact that laws have been put in place to try to hamper certain shenanigans and tomfoolery (like selling land to sitting council members, providing public handouts only to see certain public commissioners and council members benefit on the other side in the private market).

The bottom line is something is broken in the cities decion making flow and does anyone care to share the true reason why? Maybe the city is short staffed and can't produce solid data to assist in decision making. Maybe some on the council have decided they are omniscient and could care less what city staff presents to them (it continues to be interesting to watch experienced staffers walk out the door..I know nothing but have to speculate something is happening behind the scenes). Or maybe everyone is too afraid to comment on the fact that we probably don't have the experience, the staff, or more importantly the money to act as a master developer on a project of this size. Maybe the overwhelming amount of COR work is hamstringing the city staff's ability to offer up all pertinent data prior to decisons being made.

No matter the cause, I hope everyone recognizes that something is broken in the City of Ramsey. Does anybody care to fix it or are we too busy making land deals and handing out money in the COR? Elections are incoming...somebody needs to STEP UP now or maybe I should just expect more of the same going forward!

Beyond frustrating watching this all unfold before me...

Anonymous said...

If Bakke wants to write a letter to the Ramsey city council and Ulrich, why doesn't he do that instead of pontificating here in Zaetsch's backwater?