City slapped with lawsuit over municipal campus bonding

Papers served Monday at Forest Lake City Hall

 

Clint Riese
News Editor

The battle over a key public criticism of the city’s plans to build a municipal campus at the site of Northland Mall appears destined for court.

A summons and complaint landed at Forest Lake City Hall Monday afternoon, kicking off the process of a lawsuit. These papers – the pleadings one would file in court – allege the city deliberately structured the financials of the recently approved project in such a way as to avoid a referendum on the bond issuance.

Forest Lake residents Cameron and Cassandra Piper, along with the Lakes Area Business Association, are the plaintiffs. The City of Forest Lake and the Forest Lake Economic Development Authority are listed as defendants.

The complaint, prepared by attorney Fritz Knaak of White Bear Lake, asks the court to enforce a recent petition which would bring about the referendum. It also asks the court to make the city set aside the bond proceeds.

Upon service of the summons and complaint, the city has 20 days to provide a written answer and have it served to Knaak.

Most civil cases end in settlement, but the plaintiffs in this case are seeking a specific performance rather than a monetary judgement. Therefore, if filed, the case will likely go before a judge.

Plaintiffs’ Take

Cameron Piper said the lawsuit stems not from any personal feelings on the municipal campus plan itself; rather, it is a last resort in an effort to ensure that public sentiment is taken seriously.

“I’m not a big ‘sue everybody type of guy,’ but that is the only option left,” the local Realtor said.

Knaak is certain the city purposefully attempted to sidestep the referendum by financing the project with lease revenue bonds authorized by the EDA rather than general obligation bonds authorized by the council. The latter could be subject to a referendum.

“It’s clear that they are very deliberately circumventing the requirements of the law, and the question is, ‘can you?’” he said.

Knaak, a veteran of over 30 years in the field of municipal law, said Forest Lake is far from the first municipality to have positioned projects in that manner. But, he said, it is an example of such a case taken to the extreme.

Knaak does not believe the Northland Mall site meets the criterion spelled out for utilizing revenue bonds.

“It’s seen better years, but to call it blighted is pushing the point,” he said.

Knaak plans to file papers in court soon and expects to be granted an expedited hearing.

No matter what the court decides on the legality of the bonding process, Piper said the petition demonstrated enough public opposition that the city should have gone back to the drawing board from an ethical standpoint.

“It’s a pretty amazing thing that came together if you really think about it,” Piper said. “In two days we collected over 1,000 signatures. In two days you can’t get 1,000 people to agree on anything in this city.”

City’s Reaction

News of the lawsuit broke during the City Council meeting Monday night. Councilman Mike Freer questioned whether the group could meet in closed session, but it could not due to the requirements for advanced notice of closed meetings.

City Attorney Dave Hebert advised the council to proceed with the municipal campus details on that night’s agenda.

By Tuesday morning, the city’s wheels were in motion as it turned its focus to the lawsuit. City Administrator Aaron Parrish said the city’s bond counsel, Mary Ippel of Briggs and Morgan, was meeting with her firm’s litigator. Hebert will take the lead in crafting the city’s response to the summons and complaint.

Rumors of possible legal action have swirled since the project’s approval, so the city has had time to prepare.

“There’s been some intimations of it but nothing real definite,” Parrish said on Tuesday. “I was not particularly surprised that we saw this.”

Parrish defended the city’s use of lease revenue bonds, saying they are commonly used for redevelopment projects.

“We’re looking at this as a redevelopment opportunity, and I think people clearly agree that it is the type of property in need of redevelopment,” he said. “We heard that loud and clear through the Community Conversations series and other opportunities for public feedback.”

Mayor Chris Johnson, an attorney himself, said Tuesday that the city did nothing wrong.

“We’ve proceeded throughout this process in accordance with our attorney’s recommendations, so we’re comfortable that everything’s been done properly,” he said. “People certainly have the right to have that reviewed and scrutinized…We’ll have the opportunity to have the court decide that we did everything right, and I think in the end, it will be proven that we did.”

  • F.L. Resident

    I am glad that this issue is being called out. I do not trust some of the elected officials on our city council and I sure the hell don’t trust any attorney. I believe that there is more to this redevelopment behind closed doors that someone doesn’t want the general public to know. I agree with the need of a new facility, but I do not agree with it being shoved down the throats of the taxpayers without their say on the issue.

  • Cameron Piper

    Come join the conversation (let us know how you feel about the issue) and keep up to date with any revelations on the project, the petition, or the lawsuit as they happen:

    http://www.facebook.com/NorthlandMallFL

  • Bipartisan

    I didn’t realize our Founding Fathers intended that our elected representatives be merely figure heads. I also never realized even though they are elected by “We the People”, that mayors and city council members are not elected to make actual decisions.

    There is one big difference in what Mr. Cameron is writing about regarding our Founding Father’s situation versus this situation. Our Founding Fathers were reacting to the decisions of a King; an unelected dictator – remember “Taxation without Representation”.

    This decision was made by a representative government elected by “We the People” of Forest Lake. Isn’t this the very system our Founding Fathers envisioned?

    To compare the situation our Founding Fathers faced when writing the principles on which our government is based to an elected city government’s decision to build a new city hall is disingenuous and misleading.

    Mr. Cameron has every right to oppose the process used to determine to build on the Northland Mall site, but his idea for a referendum vote isn’t the solution. Where does it end, do we vote on every expense the city has? We elect people to make decisions, if we don’t like what they do, we vote someone else in; that is what our Founding Fathers intended.

    I have to believe our Founding Fathers didn’t envision the lawsuit (sue) crazy society we’ve become.

  • Cameron Piper

    Bipartisan,

    I first want to thank you for entering the discussion for it is my fervent believe that active and ardent debate will in the end yield the best ideas. My only regret is that I am not able to address you by name but rather a fictitious pseudonym. I have allowed every reader the courtesy of being able to weigh my opinion in context with my station, and if they so choose, the ability to research who I am as a person and my thoughts and feelings on other matters. My hope in the future is that we will be able to have an honest and open discussion person to person rather than person to pseudonym.

    In the onset, I want to immediately dispense with this idea that the democratic process in which our republic elects it officials ensures that once elected our officials ideas are not to be challenged. Our founders laid the foundation of a constitutional republic (not a democracy) where the sovereign people are endowed their rights by God, not granted rights from their government. They instituted a constitution that limited the power of the government, reserving all remaining powers and rights not specifically given it, for the people. The Tenth Amendment to the United States Constitution says it best: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” If our founders had believed in a government where once elected, officials were free to do whatever they liked, the rights of the people would be granted by the government and where not specifically given the people, the rights would be retained by the government.

    In fact, our founding fathers believed so strongly in the right to petition that they enshrined it in the First Amendment to the United States Constitution. “CONGRESS SHALL MAKE NO LAW…ABRIDGING…THE RIGHT OF THE PEOPLE…TO PETITION THE GOVERNMENT FOR A REDRESS OF GRIEVANCES.” Throughout this entire debate I have heard numerous times, even from our esteemed council members, that allowing a vote on this issue will grind the wheels of government to a halt. If nothing else, this idea is disingenuous, but likely simply dishonest. We are not seeking a referendum or vote on every issue, but rather, we are seeking to have a say on a project that spends the city’s annual budget three times over in one fell swoop. One vote on one issue – that’s it.

    Now I can already hear the voices of some perplexed project supporters arguing “if we allow a vote here, where will the insanity end.” It is an illogical statement to say that allowing a vote on a project of this size will automatically mean that citizens will have the right to vote on every issue before the council. However, in an attempt to quell those fears, I want to encourage people that I do not personally believe in, and am not advocating for a direct democracy. Some litmus test must remain, and in this case the citizens that circulated and ultimately those that signed the petition met the test outlined for challenging general obligation bonds by MN statute. As I recall, we received nearly twice as many signatures as was required.

    I do want to thank you Bipartisan for bringing up the idea of taxation without representation as it is a key component to what is taking place with this project and one of my personal reasons for choosing to move forward with a lawsuit. Not many Forest Lake residents are aware that they were just recently subjected to taxation without representation when the EDA and City Council colluded to push this project through. That’s right – the EDA is an appointed board of citizen volunteers and they just raised our taxes in this city to fund a project that will cost the people and businesses close to $30 million. Make no mistake here people, the city is not issuing the bonds and taxing the people to repay them (similar example in Wyoming, MN last year), the EDA is issuing the bonds and taxing the people to repay them.

    As our city administrator pointed out to me when I brought this to his attention in November, we can always choose to vote out those that put the EDA in place. I would however ask the citizens if they are okay with this structure. The EDA members serve 6 year terms, City Council members serve 4 year terms, and the mayor serves a 2 year term. That means if I disagree with an EDA action, I can vote out three mayors and one a half city councils during one EDA term. When considered in this light, I hope that my fellow citizens will consider what took place in our city late this last year. Are you okay with someone you didn’t vote for and cannot remove from power having the ability to raise our taxes without limit – I’m not.

    Lastly I would like to touch on the concept of our increasing litigious society that Bipartisan brought forward. I as well share his/her concern that we as a society too often turn to the courts to solve problems that can or should not be litigated. My concern however lies in the lack of personal responsibility found in most of these suits. As a society we turn to the courts to point blame outward rather than taking and introspective approach, maybe we should expect McDonalds’ coffee to be hot rather than blaming them for it.

    Where I will take departure with Bipartisan on this concept is his insinuation that our founders would have disagreed with this suit particularly. Our founders envisioned the judiciary as a check on the power of the other two branches. This suit is not an attempt to get rich by the plaintiffs. We aren’t litigating this matter to defame any one person or for any political gain. We are simply and humbly asking the courts as a last resort to arbitrate a dispute on what we perceive to be an overreaching executive/legislative branch here in the city of Forest Lake.

  • Kate

    To the Forest Lake Times I find the title of your article concerning at least pretend to not be biased. The city wasn’t slapped – this was not a violent act – it was a part of our democratic process and due process to the citizens of this city. The city was presented with a law suit would be more objective.

  • Matt

    This isn’t about a representative government being allowed to make decisions for the city. This is about state law regarding the issuance of general obligation capital improvement bonds versus revenue bonds for city capital improvement projects. Under MN state law, when undertaking a project like building a new city hall, the city is required to hold a public hearing on the project and issuance of bonds, and the citizens have the right to petition the city to force a referendum on the project, so long as the petition is turned in within 30 days of the public hearing. The Forest Lake City Council decided to weasel it’s way out of this required process by claiming that the city is actually renting the space from the the EDA – thus, “revenue” will be used to pay back the bonds for the project, not tax dollars. You see? Because the city is renting from itself, that’s revenue, not tax dollars, so the city doesn’t have to abide by state law regarding required public hearings and the ability of taxpayers to petition the government. So they issue revenue bonds rather than general obligation capital improvement bonds. Revenue bonds carry a higher interest rate as well, because they are considered riskier because the bonds will be paid back based on revenue from the project. Capital improvement bonds are considered safest, and carry the lowest interest rate, because they are backed by the full faith and credit of the city and its taxpayers.

    So, either your new city administrator Aaron Parrish or mayor Johnson came up with the scheme to flaunt the law, or in the very least the spirit of the law, and I commend Piper and his supporters for suing the city. Your neighbors to the north just went through this themselves, except the Wyoming City Council actually followed state law, held a public hearing, and accepting the resulting lawful petition. The Forest Lake City Council and EDA are breaking state law.

    This is about the law and confronting lawlessness. We expect our elected representatives to follow the law, and when they do not, they must be challenged.

  • Bipartisan

    Twisting the Constitution to justify a position is nothing new

    I’m always cautious with my identity, too many nuts and frivolous lawsuits out there

    In your view what is the monetary cut off for city spending to require a referendum?

    A mayor and city council are elected to make decisions about city spending and one would think city halls. This lawsuit will end up being a waste of taxpayers money spent on attorney fees; win or lose. This will probably go the route of the FL roundabout; a lot of wasted time, energy and money and in the end it will work out just fine and not be the disaster it’s opponents make it out to be.

    I’m all for accountability for our elected officials but am tired of conspiracy theories and the attitude that all government is corrupt. I also believe if you don’t like something you work to change it, not attack the duely elected leaders of the city.

    Does anyone know who had the original real estate listing for the Northland Mall?

    • http://www.EricLangness.com Eric Langness

      When over 1000 people in a town of about 15K sign a paper in less than 2 days … you ought to go for a referendum. Do you think our elected officials should ignore their legitimate concerns?

      • Bipartisian

        How did the petition read?

        I have never heard or read it, but if it said something about raising taxes, taxation without representation, corrupt city government, ramrod through, no citizen input etc, yes i could see how thar many people signed it

        I would be more curious about how many people in FL believe there is a need for a new city hall, police station etc.

        • Bipartisian

          When the city puts in curbs, gutters, sidewalks, repave streets, replace sewer and water lines they are spending millions of dollars. These decisions have a substantial impact on people .

          (the items below are just for conversation sake, unfortunately I believe there are times that government has to do exactly what they did below; while I realize the money amount isn’t nearly the amount the city hall proposal will cost, you can expect more of these types of deals as the industrial park and the city grow)

          How about when the city votes to give tax incentives and free ($1) land to a company to stay and expand in FL as they recently did (new manufacturing plant going up near the airport). These decisions are impacting the city’s ability to generate tax revenue on that property for decades to come in addition to the actual cost of the land and other public infrastructure improvements that are necessary.

          City officials are basically gambling taxpayers money and future money that this company will be successful; keep in mind, the company could go broke and (in reality) there is very little the city could do to recoup the taxpayer’s money.

          Do these types of decision go to a referendum vote or do these types of city programs/policies go to a vote?

          From May 2012 Forest Lake Times regarding incentives the city ended up giving to a company to stay and expand in FL

          “According to the proposed development agreement, the 7.49-acre parcel will be sold for $1. The agreement will be among several documents up for consideration at the June 25 council meeting. State law also requires cities in this type of arrangement to adopt a business subsidy policy.

          Also on the docket will be the development of a Tax Increment Financing (TIF) district, which is how the city plans to recover the $150,000 of site improvements it would provide. The TIF district would run through 2024 and provide an additional $176,130 on top of the $150,000 repayment.

          The parcel has a current market value of $660,400.”

          • Matt

            Bipartisan – you keep missing the point. The City is either breaking MN state law, or in the very least thwarting the spirit of the law in its convoluted avoidance of issuing general obligation capital improvement bonds for the city hall. They are moving taxpayer money from one hand to the other and calling it rent, and thus revenue, and thus they believe they can issue revenue bonds and avoid a required public hearing, denying the citizens lawful recourse to petition for a referendum. And revenue bonds carry higher interest rates than capital improvement bonds. So, they are thwarting state law and paying more interest on top of it. All to keep the people of Forest Lake from having a vote. Up in Wyoming, not only did the people submit a legal petition for a new city hall, but in the past a public hearing was held on the construction of soccer fields. There is a huge difference between soccer fields and a $22 million new city hall.

            As a result of this lawsuit, either justice will prevail and the citizens will get a chance to vote on the matter, or the current wording of the state law will need to be changed to prevent something insane like this from happening in the future.

        • Cameron Piper

          The exact text of the petition was as follows:

          “We, the undersigned eligible voters of the City of Forest Lake, pursuant to Minnesota Statutes 475.521, request a vote on the issuance of bonds in the amount of no more than $22,500,000.00 to finance the acquisition of land and improvements for and construction of a city hall and public safety building. See the Development Agreement and related documents dated 12-17-12 authorizing the issuance of bonds and creating liability for the City of Forest Lake and its Economic Development authority.”

          No twisting, no fearmongering. Very simple and very straightforward. A strong majority of people in this city want to have a say in this project.

    • Cameron Piper

      Bi-Partisan,

      I find it ironic that directly quoting two amendments to the United State Constitution is in your mind twisting the document. The reality is that our founding fathers have passed and are gone. Sadly we can’t ask them what we should do in Forest Lake in 2013. The only way for any of us to know what they intended for this great country is to read what they wrote and draw our own conclusions. Rather than leveling baseless accusations about my attempts to malign the words of our founders, why don’t you refute them with quotes that support your side of the argument? If you honestly feel as though we live in a democracy where the people retain no power and that once elected, political officials are to operate unchecked, please find examples of that being the original intent (as I argued it wasn’t) and bring them to the discussion.

      Our founders brilliantly set up a representative form of government where officials were elected to represent the will of the people. Yet they also understood that men inherently have a depraved nature, and that once elected it was possible that a person could be blinded by that nature and disregard the will of the people. In order to curb those risks, our founders established a system of checks and balances. Granting specifics powers to different branches of government and also certain powers to the people. No greater example can be found than the First Amendment that I referenced in my previous post, but we also see periphery items like, the freedom of the press or the ability to recall politicians (MN State Constitution).

      In my opinion the referendum should not be tied to any monetary amount, it should be tied to a certain percentage of the voting public. We see this idea enshrined in both MN statute (see referendum on general obligation bonds – SS 457) and in the MN constitution (see recall provisions – Section 6 Article 8). If we use a monetary test there is nothing to stop a city from breaking the project into smaller incremental parts to avoid the will of the people. Similarly using a percentage test prevents a small minority of people from hijacking the function of government, yet allows the people to speak if enough will come together. In my opinion this is exactly what has happened here. In this project, the monetary value is merely a symptom, but not the test that puts it on the ballot.

      Your frustration with what you call “the wasting of taxpayer money” is misplaced. Twice petitions were circulated surrounding this issue and twice the city chose to ignore the people. They purposefully structured the project in such a way as to avoid the legitimate concerns of the sovereign people in an attempt to force their unpopular ideas upon the citizens at large. If you are worried about the expense of the suit you need to consider that the previous council had numerous opportunities to adjust course and the current council still has the ability to avoid the suit by allowing the people to vote on this issue. You need to be asking those in charge why they would rather spend your money to silence the peoples’ voices than do the right thing and allow the public to speak through a vote.

      Lastly I would like to take issue with your insinuation that this suit is somehow an attack on our elected representatives. At no point have I nor any of the other plaintiffs made unfounded attacks on the character or personality of our officials. We have however, and will continue to challenge these officials when their actions and decisions show a direct distain for our rights to participate in our government.

      At its core the debate that seems to be raging here is whether or not our government officials are beholden to the people of whether the people are beholden the government. To be intellectually honest with yourself I think you need to consider whether you would fight for the right to have your voice heard if the we were to change sides. How would you feel if I were for a project and you were vehemently against it. Would you still believe that the public doesn’t have a voice?

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