The Local Scene Part Two -- The Mayor Leads, New Brighton Bleeds

Steve Larson has been the mayor of New Brighton for a decade now. If you were to imagine what a suburban mayor might look like, Larson's appearance would be almost prototypical. He's got the silvery mane, the ruddy complexion and the open smile of a small-town politician. And when you talk to him, he's usually a very pleasant fellow with a ready smile. It would be hard not to like the guy; the few times I've talked to him, he's been uniformly pleasant and engaging. In some respects, he's almost the mayor from Central Casting.

The problem is this: sometimes when you cast a movie, the movie doesn't have a happy ending. And if you made a movie of city government in New Brighton for the last decade, you'd think that the script was a horror show.

Mayor Larson has presided over the Northwest Quadrant project, which has turned into an enormous boondoggle. If you go down Old Highway 8 in the area north of 694, you see a moonscape. This was the land that was to become a vibrant multi-use development. This was the project that would bring New Brighton into the 21st century, the project that would be Mayor Larson's crowning achievement. When I first moved to New Brighton in 1997, that stretch of road wasn't beautiful, but it was home to a number of businesses that contributed modest but consistent revenue to the city's coffers and provided jobs for citizens in New Brighton and other surrounding communities.

What happened? You can get an excellent overview of the missteps at the Enlighten New Brighton website. Consider the following from Dennis Flahave, who has served on the New Brighton Economic Development Commission and has had a birds-eye view of the proceedings:

About six years ago when the City's consultants provided "cash flow" projections, I brought two prominent developers to the site to get their opinions of the viability of the project. I told then-city manager Matt Fulton of the developers' opinions: one stated that the project was too dense. The other did not feel that we would receive the high-end dollar projections on the townhomes due to the proximity of the two freeways and the noise associated with these freeways.

Let me make an analogy of the density issue. At The Lakes development in Blaine, the project has a density of approximately 9 units per acre. The density at the Northwest Quadrant is at 15 units per acre. To me this would be like backing out of your garage and into your neighbor's living room. However, the City decided to proceed with these cash flow projections.

While the plan called for mixed-use development, Flahave is correct: 15 units per acre is rather a lot. Many New Brighton homeowners live on 1/4 acre lots. Imagine putting 3 1/2 families in that space. Would you expect to get top dollar for a project like that?

As Flahave notes, the developers were skeptical and ultimately, because of poor initial pre-sales and environmental concerns, the developers backed out of the project. Did that stop the City fathers from going forward? Not at all. In fact, they doubled down. Flahave:

In this same time frame the city took $10.7 million out of surplus from other TIF districts and put the money into the Northwest Quadrant in the form of infrastructure such as roads, light poles, curbs, etc.

The City then purchased the Midwest Asphalt property for approximately $19 million on a non-contingent basis. With commercial purchase agreements in Minnesota it is normal to include environmental testing and inspection clauses. Why is this important? Answer, because if a property is found to be environmentally contaminated, the purchaser faces a potential unlimited liability to clean it up. I asked why the City waived its right to test and was told, "if we had done the testing, Midwest Asphalt would not have sold us the property."

Midwest Asphalt's reluctance to sign a contingent deal should have been a huge red flag. Not to put too fine a point on it, but buying a contaminated property on a non-contingent basis was lunacy. The city now owns this land and the costs of abatement will be huge. And while the City of New Brighton might be willing to buy contaminated land, no one else will be. So we're stuck with the cost until and unless the city pays the cost to clean up the site.

But there's more -- the current administration has taken to using creative accounting to minimize the visible impact of its decisions. Flahave:

The City is recently taking great pride in going to the Legislature to get permission for the pooling of our funds. This simply means being able to co-mingle funds - not a good thing as it makes it easier to obfuscate the performance of the individual Tax Increment Districts, no doubt a goal the City desires particularly as it relates to the Northwest Quadrant.

And as a practical matter, it pretty much puts all the City's eggs into one contaminated basket. Perhaps someday the City will be able to sell the NWQ property to other developers. Will they get anywhere near the money that was projected? I wouldn't count on it. Everyone in the Twin Cities business community is well aware of the city's plight and no one is eager to get involved in the development. Would you be?

So where does that leave the City of New Brighton under Mayor Larson's watch? Mr. Flahave runs the numbers thus:

In conclusion, we are currently $100 million in debt and have sold two commercial lots. We are exposed to an unlimited environmental cleanup liability on contaminated sites. Finally, the City now has permission to co-mingle funds making it harder to track the accounting by project. I feel that this is a total breach of fiduciary responsibility.

I would agree. Understand this -- "we" in this context doesn't mean the city government. It means the entire city. If you live in New Brighton, you own some of this liability. It also means that it will be exceedinly difficult to get additional development in town and it might make it harder for you to sell your home, too. Would you buy a home in New Brighton if you knew about the liability you might someday incur as a future homeowner? Or would you choose to live elsewhere?

While it wouldn't be fair to pin all of this on the mayor, he's been a major player throughout and these fateful decisions have happened on his watch. Mayor Larson is now asking for another chance. Would you give it to him?