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November 3, 2003 // UPDATED 11:06 am - April 30, 2007
By: Skyway News editorial staff
Skyway News editorial staff

City finds $10 million for lawsuit payouts General Fund, development fund may take hits

By Scott Russell

City financial leaders are recommending that the General Fund and a city development fund pay a $10 million hit from two lawsuits.

The city lost judgments relating to a failed Nicollet Mall development project and easements at a Cedar-Riverside apartment complex.

Patrick Born, the city's financial director, proposed the city pay $6 million of the $10 million from the General Fund, which pays for police, fire, street maintenance and other basic services

The General Fund payments would be $500,000 a year from 2005 to 2008, plus $4 million in "excess" 2003 General Fund dollars.

The "excess" money reflects estimated end-of-year book balancing. The city did better than anticipated in keeping expenses down and revenues up, finance staff said. Even after the lawsuit payment, the city will have a $39 million reserve -- about $13 million over the 10 percent reserve city policy requires.

The payment represent an opportunity lost, however. If the $4 million weren't going to defendants, it would have been available to pay off other one-time city costs, such as the ongoing pension shortfalls.

Under Born's plan, the city would pay the remaining $4 million from the $8 million "Local Contribution" development fund. The city had anticipated using the full $8 million to cover funding gaps for the Hollman housing project or renovating Downtown's Stimson Building, among other projects.

The costlier of the two lawsuits springs from the failed development pursued by La Societe Generale Immobiliere (LSGI) in the 1980s and 1990s. Nicollet Mall property owners say years of city uncertainty about dealing with LSGI diminished their rents and property values.

The Minnesota Supreme Court ruled against the city in August. Assistant City Attorney Jim Moore said the city owed $8.2 million, with some payment issues pending.

Michael Schwab of the Community Planning and Economic Development Department said clearing up property easement issues at Riverside Plaza near the University of Minnesota would cost $550,000.

Born's plan sought to "balance the pain" between the General Fund and development dollars, he said. An alternative, he said, was "judgment bonds," a form of borrowing with no collateral that worsen the city's financial position. "We would prefer not to borrow," Born said.

The City Council will vote on Born's recommendation by year's end, as part of the 2004 budget.

He presented his recommendation to the Ways and Means Committee, and discussion previewed the coming budget debate.

Councilmember Sandy Colvin Roy (12th Ward), who chairs the council's Transportation and Public Works Committee, said the city would have more General Funds to restore street maintenance cuts if more development money paid off the lawsuits.

Councilmember Lisa Goodman (7th Ward), who chairs the Community Development Committee, opposed the idea. If it spent down the development fund, unanticipated current project costs could eat up already-tight development dollars, she said.

The city did not have insurance protecting itself from litigation damages. Its self-insurance fund is short $43 million -- counting both what it knows it owes and the money it should have saved to pay for anticipate claims. Born said the city had a long-term plan to balance the self-insurance fund, but that plan did not anticipate the $10 million loss from the two lawsuits.

City Council actions October 24 meeting Top cop: Council voted 7-6 to ask the state for a waiver from the governor's salary cap to raise the police chief's top pay from $114,288 to $142,000. Voting no were Barbara Johnson (4th Ward), Dean Zimmermann (6th Ward), Lisa Goodman (7th Ward), Robert Lilligren (8th Ward), Gary Schiff (9th Ward) and Sandy Colvin Roy (12th Ward). Livability crimes: Council passed 13-0 a new ordinance banning public urination and passed 13-0 a new ordinance prohibiting public possession of drug paraphernalia. The ordinances will allow the city to ticket the crimes under its new administrative nuisance night hearing process, expediting punishment of livability crimes. Gateway Fountain: Council voted 12-0 to approve the request of the Downtown Minneapolis Neighborhood Association to use up to $25,000 in Neighborhood Revitalization Program (NRP) money to refurbish the Gateway Fountain. Urban Wildlife: Council voted 12-0 to grant a liquor license with Sunday sales to Urban Wildlife Bar & Grill, 327 2nd Ave. N., subject to prohibiting adult entertainment. Scott Benson (11th Ward) abstained. Sky Caf -- Appeals: Council voted 13-0 to stop extended hours for Sky Caf, 8 N. 5th St. and Downtown Tobacco, 428 Hennepin Ave. The Planning Commission had approved a conditional-use permit for the extended hours, and Michael Rosenstiel appealed to the Council to reverse it. Whitney Hotel conversion: Council voted 13-0 to allow the owners of the Whitney Hotel, 150 Portland Ave. S., to proceed with their condo conversion, including the enlargement of riverside windows and 13-0 to deny an appeal of neighboring property owners seeking changes in the project. -- Scott Russell

Rybak's park proposals get cold shoulder City Ccouncilmembers say no dough for more trees, ski trails and a skateboard park

The Minneapolis Park and Recreation Board is enough of a lightning rod among City Councilmembers that when Mayor R.T. Rybak proposed adding a few park perks to the city's borrowing package, he got caught in the crossfire.

Rybak has proposed adding an extra $200,000 for tree plantings; $200,000 for skiing and snowboarding opportunities at Theodore Wirth Park and $200,000 to help the Park Board build a skateboard park. The Park Board -- otherwise set for a $3 million 2004 capital budget -- would get a 20 percent boost from the mayor's plan.

City Councilmember Dan Niziolek (10th Ward) was one of several people who took exception. The city needed to focus on its own needs, he said, adding he wanted to support the Park Board without "just throwing money at it."

City officials have butted heads with park leaders over many issues, from the Park Board's recent purchase of its riverfront headquarters to disagreements over how to split state-aid payments. Some city leaders have pushed to merge park police into the city force. The Park Board has resisted that plan and this year signed a deal with the Minneapolis Schools to provide school liaison officers, a job once done by city police.

Rybak said he has joined and even led criticism of Park Board spending and that he would continue to do so. But the city and park system needed to do more to provide opportunities for teenagers. "I consider that goal more important than getting into a turf war with the Park Board," he said.

The city also needed to plant more trees to give future generations "the same shady streets we got," he said.

City leaders currently have dramatically fewer dollars. "But Minneapolis is great because people have had big visions, during good times and bad," Rybak said. "I want to be sure we leave some legacies. ... I think those can be done in far less expensive ways."

Councilmember Paul Zerby (2nd Ward) applauded the skateboard park -- something he promised his grandson when he ran for office in 2001. His comments were the exception at the Oct. 21 Ways and Means Committee meeting.

Councilmember Sandy Colvin Roy (12th Ward) said she didn't support planting trees if the Park Board didn't have the staff to maintain them. Further, the city has failed to address basic street and bridge maintenance, she said.

"People in the city love trees," she said. "It's difficult to argue for pavement or bridges."

Councilmember Barbara Johnson (4th Ward) -- admitting to what she said could be a Northsider's heresy -- said she did not support the Wirth Park upgrades, including the possible new snowmaking equipment. Suburban regional parks were investing in ski areas, and Minneapolis had other basic needs. "Lights along the parkway are falling down," she said.

Councilmember Gary Schiff (9th Ward) said the city should not play favorites among the independent boards. If the mayor wanted to add money to the Park Board, maybe the city should reopen the discussion with the Library Board, too, he said.

Schiff didn't appear sold on the Wirth Park improvements, even if snowboarding was now an Olympic sport. "We have to make bridge repair an Olympic sport, then it will get prioritization," he said.

Rybak said the trees would get maintained, even if it meant citizen volunteers and firefighters watered them. He himself would help raise money for the Wirth Park improvements, which continued his emphasis on "silent sports." -- Scott Russell

Nuisance-crime ticket plan draws foe City plan to fine offenders and bypass courts may be unconstitutional, group says By Scott Russell

The Legal Aid Society of Minneapolis is opposing the city's effort to crack down on Downtown livability crimes through a new administrative hearing process.

Sam Magavern, a Legal Aid public policy advocate, said the new hearing process would violate the constitutional separation of powers, which vests judicial authority with the courts, not the city.

"Just because the court isn't operating as efficiently as you like doesn't allow you to shoehorn ... this administrative process," he said.

The City Council approved the new Administrative Enforcement and Hearing Process Sept. 26. Starting as a pilot project Downtown, its goal is to expedite prosecution of livability crimes such as begging, consuming alcohol in public, loitering and graffiti tagging.

Critics of the current system said District Court is slow, and offenders do not receive immediate consequences. Once the new hearing process is in place, police would ticket nonchronic offenders.

The ticket would include a city contact number if the suspect wants to contest the fine at a hearing, according to a City Attorney's report. The city could use a collection agency if they don't pay.

Supporters of the plan note many who are ticketed are not indigent, including Warehouse District partiers, and the ticket with tougher enforcement would be a better way to deter such crimes.

The city is still getting procedures and staff in place, and the program could be up and running as early as year's end, said Dana Banwer, deputy city attorney.

Magavern said Legal Aid has no plans to sue to block the hearing process; it doesn't have a client, he said. Cathy Haukedahl, Legal Aid deputy director, said her agency makes decisions on litigation on a case-by-case basis.

Magavern said the hearing process faces legal problems beyond the constitutional issues. State law prohibits the city from issuing its own fines for crimes already defined and punished under state law, he said. The system also does not distinguish between scofflaws and homeless people.

"We have to ask if this proposal will be appropriate and effective in dealing with people who experience homelessness -- all of whom are deeply impoverished, many of whom are jobless, many of whom are mentally ill, many of whom are chemically dependent," he wrote a City Councilmember Sept. 25.

State Auditor Patricia Awada has also raised concerns about local governments creating new administrative penalties.

In an Oct. 2 letter to House Judiciary Policy and Finance Committee Chair Steve Smith, R-Mound, Awada quoted from a court case: "It would be a strange anomaly for the Legislature to define a crime, specify punishment therefore, provide that its application shall be uniform throughout the state and then permit a municipality to prosecute the crime as a civil offense."

The 14-page letter raised multiple concerns. "When administrative penalties go straight into a municipality's coffers, there may be an incentive for law enforcement officials to seek penalties," she wrote; later, "an administrative penalty system may contain a threat of criminal prosecution as a trade-off for a citizen paying a smaller administrative fine directly to the city without getting the court involved."

The City Attorney's office is preparing a response to several issues raised.

The City Council is moving ahead with the hearing process, recently approving ordinances against public urination and possession of drug paraphernalia. It would add them as nuisance crimes and allow police to write tickets for administrative fines.

A representative from the Citizens for a Loring Park Community spoke in favor of the ordinances at a City Council committee hearing but asked the Council to look for ways to increase the number of public toilets.

Neighborhood notes

Downtown Minneapolis Neighborhood Association (DMNA) Next: Land Use Committee meeting, Tuesday, Nov. 4. Meetings: Board meetings 2nd Tuesday of each month, 6:30 p.m., LaSalle Plaza, 800 LaSalle Ave., Suite #131. Contact: 659-1279, www.thedmna.org Borders: Mississippi River, Hennepin Ave., Washington Ave., 3rd Ave., 12th St., 5th Ave., 5th St., I-35W.

North Loop Neighborhood Association Next: Board meeting, Nov. 26. Meetings: Last Wednesday of the month, 7 p.m., Heritage Landing, 415 N. 1st St. Contact: Jim Grabek, 677-1090, www.northloop.org Borders: Lyndale Ave., Mississippi River, I-94, Hennepin Ave., Washington Ave., 3rd. Ave.

Citizens for a Loring Park Community Next: Nicollet Task Force, Nov. 12. Meetings: Board meets 2nd Tuesday, 6:30 p.m. 430 Oak Grove St., #207. Nicollet Task Force, 2nd Wednesday, Hibaq Coffee Shop. Livability Committee, 3rd Wednesday, 6:30 p.m., Dunn Bros on 15th St.; Land Use Committee, 6:30 p.m., 4th Monday, 430 Oak Grove St. Contact: Jana Metge, 874-9002; www.loringpark.org Borders: S. 12th St., I-35W, I-94, Lyndale Ave., and I-394.

Elliot Park Neighborhood, Inc. Next: Board, Nov. 10. Meetings: Board 2nd Monday of the month, 7 p.m., 1000 E. 14th St.; Economic Development Strategies, 3rd Wednesday, Building Land Use and Housing, 3rd Thursday; Neighborhood Action Committee, 4th Monday. (EPNI's committee meetings are open to all adults who live, work or own property in the neighborhood. Local Churches may appoint up to 3 people to represent them.) Contact: 335-5846 Borders: I-94, Hwy. 55, 5th Ave., S. 5th St.

Nicollet Island/East Bank Neighborhood Association Next: Nov. 18. Meetings: 3rd Tuesday of the odd-numbered months, 7 p.m., Pracna on Main, 117 SE Main St. Contact: www.niebna.org. Borders: Nicollet Island, Mississippi River, Central Ave. SE, railroad tracks north of and parallel to 1st Ave.