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.”