The unfortunate situation in Ramsey, (the Bethel Seminary sponsored PACT school locating itself in Ramsey, new spiffy building and all via a bonding juggling game I consider dubious and duplicitous, even though not illegal), was happening in part because of the paid-for effort of the wizard working the levers. That was lawyer John Cairns, strange bonding magic, games and all to build a large new facility, wanting to call a key Town Center development location "blighted land" in order to exploit statutes intended to rehabilitate truly blighted locales, etc., the lawyer whose livlihood apparently is drawn primarily from fees paid him by charter schools, and charter school wannabes, so that he in exchange will navigate them through their dealings - bonding, buildings, land, lawsuits, etc.
And he is proud [click on a thumbnail to enlarge and read either or both of the screenshots - each shows Lawyer Cairns publicizing himself and his range of actions]:
READERS: If you only read one of the screenshots, read the one without the photo, the one saying,
John helped create an entirely new area of law practice in this industry. [...] John’s advocacy has helped secure approximately three-quarters of a billion dollars in charter school facility financing.
My guess is that if Minn. Sen. Kathy Saltzman wants to look into excessive and abusive land and building dealings by charter schools, the general drift apparent in the above cited reporting and op-ed items, that John Cairns is a focal person of interest. If you want to understand the excesses, put under oath the man proud of how he "helped secure approximately three-quarters of a billion dollars in charter school facility financing." Don't bother with underlings. Go to the $750,000,000 man.
It might be time for the State of Minnesota to end all the charter school nonsense where public money is diverted from the public schools to this troubled and failed experimental extravagance - at a time when public money is in short supply and budget imbalances are imminent. Even if that step were to be taken and have the collateral effect of depriving lawyer Cairns of his prime cash cow, the upside and downside costs and benefits would not be greatly impacted by the Cairns ripple effect. I see the balance favoring doing all possible to ensure that public schools get the public funds they need, without having to shut buildings and without any further bleeding of any more public money down the experimental charter school rat hole.
____________
NOTE: I am unaware of detail of how that PACT school group attached itself to the Bethel sponsorship after the public schools District 11 leadership declined to have any further connection with them. Any reader knowing detail, especially the role of Cairns in all of that, if any, is asked to send an email or post a comment.
_______UPDATE__________
A comment was added that mentions a PCA link, here. If any readers know more about that situation, or others, please email [see the sidebar] or post a comment. I believe the one charter school situation the comment references was one reported in the Strib coverage, here. I searched but could find no online docket item for litigation involving that situation, but that does not disprove the comment saying there is litigation - it only proves I could not find it either because it is not yet posted online, or I erred.
________FURTHER UPDATE_________
Re the St. Croix Prep Academy that Strib analyzed, they have online bios for Jon Gutierrez, Kelly Gutierrez, and Carroll Davis-Johnson, respectively here, here and here.
In case of site scrubbing, I took screen shots today. It is interesting in the educational backgrounds of these charter-school-board people, Jesus was prominent.
Word has it he drove moneychangers from the Temple. Whether he had charter schools back then to deal with, and whether they had moneychangers to drive out, is unclear to me. Strib's reporting indicates there was money exchanged regarding land dealings of St. Croix Prep Academy.
I don't know whether there're stories of separation of church and state back then in Jesus-time, but in Anglo-American statehood, since the Glorious Revolution onward, the principle of separation of church and state has had a sound basis in history. It is an important thing to me, and I feel that the charter school thing, and those wanting vouchers, are aimed at undermining such a separation - with fig leaf hiding of church orientation in some charter schools, but with the one Muslim charter school at least being up front and honest about who they are. They should all be equally honest about who they are. But then they could not take public taxpayer money to their devices without disavowing or disguising religious orientation.
________FURTHER UPDATE________
The comment mentions a toxic plume beneath the St. Croix Prep Acadamy, saying:
Even better, if you look at the school that he build in Stillwater (St. Croix Preparatory Academy) it's located over a TCE plume that is a Superfund Cleanup site. From the MN PCA website: (http://www.pca.state.mn.us/cleanup/sites/baytown.html).
This stuff has now been found to work it's way out of the ground as a vapor that is odorless, colorless, tasteless. Minute concentrations are carcinogenic and the highest at-risk populations are pregnant women and young children.
There are techniques to build buildings over this stuff that will keep them safe and they are cheap to add at the time of construction. That, of course, was not done. They never even tested to see if there is the presence of vapor. In fact, the bond prospectus does not even mention it as a risk to the investment but it does mention that railroad tracks on the extreme corner of the property might be a problem because of unknown leakage from rail cars. You don't mention the huge plume under the building, but you do mention the potential for something on the far corner of the property that may or may not be true. Go figure.
If there's any misstatement in that summary, I would appreciate reader comment or an email. Cleraly the term "he built" is used expansively, not as in Cairns, himself, was a project contractor in construction, but handling the legal thing, and presumably prospectus disclosure, or having a hand in that, it is an interesting situation. At least if the blighted land statute was exploited there, it would have been legitimate and not a falsehood. But it is like the Gun Club property in Ramsey, turned by developers and land speculators [aka "Crabgrass"] into housing where children can play in the yards, etc., and while PCA had a supervisory role, I would favor requiring realtors to disclose land past history in such instances vs. caveat emptor, so that buyers might know to monitor blood lead levels over time - or to decide to buy elsewhere. It is similar.
Remember the LOVE CANAL situation outside of Niagara Falls? This Google. It cost a small fortune to undo that mischief. Mischief that NEVER should have been permitted to happen.
Put yourself in the situation. If I were on the market, and had fair disclosure, I would most surely shop elsewhere. A different charter school. A different housing situation. If I had been hoodwinked by nondisclosure, I would feel used, exploited, maltreated.
Fair and honest and thorough disclosure in such situations is key. Then any buyer makes an informed decision to hazard known risks, instead of being kept in the dark, as if a mushroom.
__________FURTHER UPDATE________
The PACT school building funding situation in Ramsey might be typical of at least thirteen prior deals of the kind that Cairns had a role in piecing together, hence it can be expected that much additional public data resides online, in various municipal minutes and meeting agenda records. For Ramsey, from the televised [available on DVD] meeting of the City Council, Dec. 16, 2003, this extended excerpt is from the Adobe pdf minutes document I downloaded from the City's website (note it was during the unfortunate tenure of James Norman as Ramsey's City Administrator). Because of the "thirteen" prior deals, a full excerpt is presented for any and all interested readers - minutes at pages 4-9 [italics added, bolding in original, bracketed text not in original].
Case 1: Preliminary Approval for the Issuance of Revenue Bonds for PACT Charter
School
Mayor Gamec called the public hearing to order at7:15 pm.
Presentation Finance Officer Lund stated that the PACT Charter School has asked the City to issue revenue bonds on their behalf to finance a Charter School facility in the City. State and Federal law allows cities to issue bonds and loan the proceeds to nonprofit corporations to finance capital expenditures. By issuing tax-exempt bonds through the City the Charter school reduces their borrowing costs due to the tax-exempt status. The PACT Charter School has agreed to pay all principal and interest on the bonds whereas the City is merely a conduit and the money and obligations are between the PACT Charter School and the Trustee for the bondholders. PACT Charter School will be held responsible for all fees that are incurred for the issuance of this bond [sic]. Also, PACT will be required [sic] for all fees associated with the costs incurred by the City relating to their own bond issuance if PsACT bond issues causes the City to become non-bank qualified. To remain bank qualified, which offers a lower interest rates, the City must not borrow more than ten million dollars in any one calendar year. Thus PACT will be responsible for the additional costs incurred on the Csity 2003 Capital Equipment certificates and also for any costs incurred in 2004, as the City is planning on issuing a total of 5 to 7 million dollars for the Town Center project.
Citizen Input
Eric Zaetsch [address omitted] stated that he was uncertain about the bonds. He questioned if the City was issuing the bonds and would the City be liable for the bonds. He also questioned if there was a statute that applies to such bonds and defines the process.
John Carins, Briggs and Morgan [at that time - since changed per opening screenshots], stated that he was the bond counsel for the City of Ramsey and was also representing the PACT Charter School. [Inherently conflicting interests??] He explained that the City has no liability for the bonds even if there is a default. The bonds are paid for entirely out of the funds the school receives and the school has agreed to reimburse the City for all the costs they incur with issuing the bonds. Mr Cairns noted there is a statute that allows for such bonds to be issued.
Mr Zaetsch replied that he did not understand what the City role was. He questioned if the City was going to issue the bonds.
Mr Cairns explained that under State Statutes 459.152 and 469.1651 the bonds are issued by a governmental entity issue so in this instance they would be issued by the City of Ramsey but the City would have no obligation.
City Attorney Goodrich noted that these types of bonds are called conduit bonds which means the Charter School would be using the City to receive bonds.
Mr Cairns replied that that was correct.
City Attorney Goodrich explained that the City has done this several times for other projects in the City. It is not an unusual or unique situation. Councilmember Elvig requested that Mr Cairns allude to what the remedies are if there is a
default on the bonds.
Mr Cairns explained that there will be a mortgage placed on the property that will be held by the trustee on behalf of the bondholders. If there is a default the bondholders can take the property, and then they can decide what to do with the property based on the mortgage and the use of the property. It they then find an acceptable tenant for the building the property could be sold subject to the land use of the site. They [who?]have never had that happen.
Mr Zaetsch stated it was then his understanding that there is the PACT School as an entity and a corporation that will be building the building. Are the beneficiaries of the bond the PACT school itself or the firm that will be building the property and is that information public or is it private?
Mr Cairns replied that all the information is public. He explained that the contractor, Amcon, will be paid a developer fee. When the bonds close Amcon will be the contractor but no longer the developer. A not for profit organization will own the property.
Mr Zactsch stated that it was his understanding that the Charter School is not [supposed to be] a religious affiliated organization and that there is [supposed to be] no State/Church connection.
Mr Cairns replied that the PACT Charter School is a public charter school and there is no public liability tor the bonds. [sic]
Erika Sitz [address omitted] was concerned if the City was getting into a Church
State problem which she is being told is not true. She inquired if the property the school is going to be located on is tax exempt.
Mr Cairns replied yes.
Ms Sitz made the statement that the City is placing tax-exempt property in the Town Center which is supposed to increase the tax base for the City. She questioned if the PACT Charter School had any connection with the Anoka Hennepin School District.
Mr Cairns explained that Anoka Hennepin was a sponsor for the PACT Charter School for the first several years but they are now sponsored by Bethel College which complies with all the rules of Church and State. [sic]
Motion by Councilmernber Kurak seconded by Councilmember Cook to close the public
hearing.
Motion carried. Voting Yes Mayor Gamec and Councilmembers Kurak, Cook, Elvig, Pearson, Strommen and Zimmerman. Voting No None.
The public bearing closed at 7:28 pm.
Council Action
The regular meeting of the City Council was called back to order at 7:28 pm.
Councilmember Strommen stated that when the Council discussed the issue at a work session she had some questions about the statute language that was included in the resolution because the language pertaining to blighted property did not apply to this situation. It was her understanding that therc was a new draft ofthe resolution that removes the language that is not relevant.
City Administrator Norman presented an amended Resolution for Council consideration.
Councilmember Kurak inquired if the City had any security measures in place to assure that the City costs will be covered by [sic] the issuance of the bonds.
Finance Officer Lund explained that the City does have an escrow with the PACT Charter School and the language in the resolution indicates that the PACT Charter School will pay for the costs incurred by the City.
Mi Cairns explained that there are many reserves maintained from the bonds for different purposes which would cover those issues.
Councihnember Elvig inquired if the cost of construction ends up being higher than what is estimated and the amount of the bonds does not cover the construction costs where would the funds come to pay for the overage.
Mr Cairns explained that the PACT Charter School has a guaranteed price maximum for construction so the price of the building cannot increase unless PACT were to come up with additional money to cover those costs. If they were faced with an overage they would have to reduce what they do in [sic] the building.
Concilmember Elvig replied in regards to Ms Sitz's statement that the non-taxation issue is somcthing the Council looked at very heavily in the process. There was forgiveness of costs such as land for City Hall as part of adding the PACT Charter School into the Town Center, because the devcloper thought it was very important. It does not eliminate any assessments on the property. [unclear]
Councilmember Cook stated that the Town Center is being developed to do more than create tax revenue. They [who]want to be able to offer many things to the community and one of those things is a school.
Mr Cairns noted that they have handled 13 similar transactions in the last four years in Minnesota for Charter School. Half of those projects were renovations of existing properties but they have also built new buildings several times with the closest school being the Woodbury math and science building.
Motion by Councilmember Kurak seconded by Councilmember Elvig to adopt the amended
Resolution#03-12-334 presented by staff at the meeting authorizing the preliminary issuance of approximately 12 million dollars in revenue bonds to be used for the construction of a PACT Charter School.
Motion carried. Voting Yes Mayor Gamee and Couneilmembers Kurak, Elvig, Cook, Pearson, Strommcn and Zimmerman. Voting No None.
Case 1 a Request by Amcon to Defer City Costs
City Administrator Norman explained that this development has gone through a development change. Previously they were working with Academic Investments and now the project has been turned over to Amcon.
Mr Robcrt Foster representing Amcon explained that Asmcon sole role initially was to build the building but it became necessary for Amcon to step in and replace Academic Investments. The reason Amcon is doing this is because time is of the essence in order to get the school open in September. There were significant delays in the closing on the property by Academic Investments which is why Amcon stepped in. Because the timeframe is so short they did not have the time to get a loan to buy the land and pay some of the upfront costs which includes reimbursing Academic Investment for up front costs and land closing, so Amcon is going to pay for the land up front until the bonds are closed. In order to get it all accomplished in such a short
amount of time Amcon was requesting that the City defer the cost of the site improvements and SAC and WAC charges until the bonds closed. Because Amcon has been pushed into the role of being the developer to save the project and pay out of their pocket, 1.5 million dollars [in fees, if not deferred] is a very difficult thing to do. He noted that it was anticipated that the bonds would close in six to eight
weeks.
City Administrator Norman noted that staff did have a meeting with representatives of Amcon and this is not a request to waive or reduce any of the fees, it is simply a deferment until the bonds are sold.
Mayor Gamec inquired if there were any problems legally if the City were to defer the costs.
City Attorney Goodrich replied that if in fact the Council would decide to defer the costs what guarantee will there be that the fees will be paid on time?
Mr Foster explained that they are going to start the project on Monday because they intended to close on thc land tomorrow. That date is essential to get started before Christmas to get the project completed. If they can't put the agreement together there is a real possibility the project goes away, at least Asmcon involvement. There is a very small chance that once they are this far that the bonds won't be issued. If that happens Amcon will go out and put permanent financing in place. At the time of closing on the land they will be putting a signed lease in place so that if thc bonds are not issued the PACT Charter School will lease the building from them. Amcon would be willing to include language that the fees paid to the City will be paid when the
bonds close or when permanent financing is in place.
City Attorney Goodrich replied that he would need to see that language in writing. He inquired if Amcon would be guaranteeing payment.
Mr Foster replied yes.
City Attorney Goodrich advised the Council to be careful of establishing precedent.
Mayor Gamec inquired if the Council was in favor of deferring the costs.
Councilmember Elvig replied that he had more questions he needed answered. He inquired as to what thc guarantee would be that the costs would be paid if something were to happen with the project during the construction phase.
Mr Foster replied that Amcon is not placing a mortgage on the property.
The Council tabled action until later in the meeting to allow the City Attorney an opportunity to discuss the issue further with Mr Foster.
So, one intermediary backed out or delayed or could not deliver. Amcon stepped in. Whether that kind of musical chairs thing is typical of the "13 projects in the last 4 years" that Cairns divulged, is unclear.
I could not find any full agenda extensive documentation online for the Dec. 16, 2003 meeting concerning this major issue. The extended excerpt indicates Strommen mentioning discussion in a previous work session, about the falsehood of terming the land "blighted" but there's no minutes reference to the particular work session. Possibly City Administrator James Norman hid the needle in a haystack of prior work session full agendas; or as was also his habit, he put some barebones thing into the agenda on this major city decision. City of Ramsey is fortunate for how he removed himself from the position, the only caveat I would add is sooner would have been far better than later for that step. If anyone has heard recent news about the sister city program with the one Chinese municipality officials in the past have visited, please email or add a comment.
A final thought - "bond counsel for the City and School" - I suppose it is nice having a pair of cash cows to milk, but when each is dealing at arms length with the other, there seems to be a problem of serving two masters where one or the other is, what, the primary master?