Cliff Buchan
News Editor

No attorney. No time. No money. Not much chance.

The Forest Lake Community Association, Inc. reached the end of the road Monday following the termination of its attorney, Michael Harnois, on Friday and an appearance before Judge Susan Miles in Stillwater during which a Monday response deadline was established.

Friday was a day for a major momentum change as the citizensí group went before Judge Miles with hope of arguing that a motion by attorneys for Lakes International Language Academy for $3.2 million in surety bonds be denied.

Late Monday, the FLCA approved a stipulation agreement that ends the suit.

ìToo much to do, too little time,î said FLCA spokesperson Richard Pecar. ìWeíve surrendered the case with prejudice. That means the FLCA canít reopen the case.î

The request for surety bonds followed a suit by the FLCA against the Memorial Hospital District and the city of Forest Lake that attempts to block the sale of the hospital building by Fairview Health Services to the school and Duffy Development. The motion by the school was hinged on a school argument that it is a public body under state charter school language.

The legal matter had been simmering for months, but is at an end for the FLCA.

Forest Lake City Council is expected to consider a consent degree over another lawsuit brought by Duffy Development Corporation, Inc. of Minnetonka and its partner, Human Services, Inc. of Oakdale. They have a purchase agreement with Fairview to buy land on the hospital campus for the construction of a 48-unit affordable housing apartment complex, Forest Ridge Apartments.

Duffy and HSI sued the city following a city council decision to deny a conditional use permit based in part on the existence of deed covenants on the hospital campus that restrict the site use to medical or health care purposes.

If approved by the council at a special meeting Wednesday night, the consent degree would go to the district court today (Thursday). The agreement would pave the way for Duffy-HSI to receive the city permits it needs and drop its suit against the city.

The governing board of the hospital district has also set in motion a plan to convey the deed of the hospital campus site to Fairview today (Thursday). Under its 10-year lease of the Forest Lake hospital and campus, Fairview has a contractual right to acquire the property for $1 and intends to do so.

Turn of events

The sudden twist of course Friday came at the start of the hearing in Stillwater when Pecar informed Judge Miles the group had dismissed Harnois because the White Bear Lake attorney had told the group 36 hours earlier that he could not or would not argue the matter in court.

At Fridayís hearing, Harnois told the judge he had not prepared pleadings in response to the motion by the school. That motion, if ordered by the judge, would have required the FLCA to post surety bonds in the amount of $3.22 million, including an initial bond of $1.36 million by Feb. 10 and $1.85 million by March 10 if the claims are not dismissed.

With Harnois walking away from the proceedings on Friday, school attorney John A. Cairns was quick to remind the court that under state law a corporation cannot be heard without an attorney. He asked Miles to approve the motion by default and order an assessment of attorney fees to the citizen group.

Stopping short of the request by Cairns, Miles gave the FLCA until the close of the business day Monday to retain an attorney and respond to the motion. She would allow no citizen comment on the facts in the case last Friday.

Pecar said Friday that FLCA had hoped to get its case heard in court and decided on factual arguments, not legal technicalities.

But that goal is not now possible, he said.

What happens next?

After a weekend of attempting to secure an attorney on short notice to take the case, Pecar said the FLCA was prepared to accept the final outcome.

Pecar compared the FLCA to a ìminnow in a bathtubî during the court hearing on Friday.

While the FLCA went before the judge with no attorney, a gaggle of attorneys was on hand representing the school, the city, the hospital district, Fairview and Duffy-HSI.

Early on Monday, Pecar said he was still attempting to retain an attorney to help with the case. When that effort fell short, he said the FLCA notified Miles of its efforts in letter form.

ìIt is a daunting task with too little time,î Pecar said.

The stipulation agreement accepted by Judge Miles late Monday brings to an end any FLCA pursuit of legal action as a corporation. The agreement calls for a ìnon-disparagingî clause between all parties except the city and no order for the FLCA to pay school attorney fees.

If the Duffy-city consent degree is OKíd today (Thursday), it is likely the March 13 trial date set by Miles last week would be dropped.

Pecar said the FLCA was in no position on such short notice to retain new counsel and raise more funds to carry on the case. He said $5000 to $10,000 additional would be needed to contest the surety bond motion.

ìPeople would have to put up their homes just to do that (post the bond),î Pecar said.

On Friday, Cairns expressed frustration with the court schedules and at one point asked Miles to consider reassigning the case. She would not.

He said delays in a desired April 1 construction start may place in jeopardy an Aug. 15 occupancy date for the expanded and remodeled hospital building.

The FLCA fight

In its suit against the city and the hospital district, the FLCA argues that decisions by Fairview to enter purchase agreements with the charter school and Duffy Development and HSI amount to a default of the 10-year-old lease agreement for the campus that Fairview holds with the hospital district.

FLCA contends that Section 1.2(d) of the lease of the hospital campus forbids Fairview to ìsell, lease, sublease, pledge, assign, mortgage, encumber, give, or otherwise transfer or convey any interest in its leasehold or other rights under this Agreement, or agree to do so, except as permitted herein or as agreed to in writing in advance by the District.î

The legal action by the citizens also charges that the hospital district board failed to enforce terms of the lease with Fairview and that the city of Forest Lake did not follow established rules and procedures in accepting and processing development plans by the school and the housing project.

More from FLCA

Pecar last Friday repeated FLCA assertions that because of deed covenants recorded on the hospital campus plat, the hospital district has no power to use its property for purposes other than providing health care. And because of the limitation, the city rezoning of the hospital campus as multi-family residential in 2004 constituted a ìtakingî under the U.S. and state constitutions.

Prior to the rezoning in 2004, the hospital campus was zoned B-1C limited business that permits medical use only. The rezoning created an MXR3 zone that requires a conditional use permit for any multi-family housing project.

Under its purchase agreement, Fairview intends to sell some 4.8 acres of hospital campus land, including the building, to a school group established as the Lakes International Building Company.

In court Friday, Cairns explained to the judge that the building company was a pass-through company for ownership and financing. The LIBC is in process of completing a $7.5 million revenue bond with the city council in Pine City to finance the project.

The building company will own the property and lease the facility to the charter school under state charter school requirements. A final public hearing date for the revenue bond is March 1 in Pine City.

Cairns said the revenue bond would receive financial backing from the state Department of Education in form of building lease aid. Under charter school rules, the state can fund lease aid not to exceed $1200 per pupil unit in circumstances where the aid is needed to secure a building or land for instructional purposes.

Projections call for the school to have 550 students.

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Forest Lake Times
P.O. Box 218
880 SW 15 St.
Forest Lake, MN 55025
651-464-4601
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