John Nephew

Maplewood City Council Policy & Politics


Sunday, April 20, 2008

On Probation

The League of Minnesota Cities Insurance Trust board met on April 8th, and one of the topics before them was whether and on what terms to renew insurance coverage of the City of Maplewood. As the Pioneer Press reported on April 9th, the LMCIT did decide to continue our coverage, but with some harsh consequences for past behavior.

Late this week the Council and City received a letter from the LMCIT laying out those consequences in more detail. It states:

The Board approved offering Maplewood continued coverage, subject to a $200,000 per occurrence deductible for any employment liability claims, and any claims made by any City officer, employee, or volunteer against the City or another officer, employee, or volunteer. These claims will not be counted towards the City's aggregate deductible. In addition to the higher deductibles, the City can also expect a sizable increase in insurance premiums as a direct result of its loss experience.
In other words, if we get into future litigation similar to the kind that arose from the December 2006 reorganization plan, we can expect a substantial portion of the expenses and any settlement costs to come directly out of the pockets of Maplewood taxpayers.

Even if we stay out of trouble going forward, it appears that we still run the risk that future claims stemming from past incidents (say, if someone filed a suit this summer that was the result of alleged actions of the city in 2006 or 2007) will be subject to these new deductibles as well. This is because, as I understand it, our LMCIT policy is the "claims made" variety. An article on Claims Made vs. Occurrence notes, "If coverage terms ever become more restrictive on subsequent renewal of a 'claims-made' policy, the new terms apply retroactively to the original retroactive or inception date."

It's clear that Maplewood is on probation going forward. The letter stresses that the LMCIT is "only committing to offer coverage to Maplewood for the coming year. Whether the LMCIT will be willing to renew Maplewood's coverage again in 2009 will depend entirely on what happens over the next year."


Thursday, April 10, 2008

Final Plat

At the March 24th city council meeting, we approved the final plat of a development on a 3-2 vote. Some neighbors objected to the completion of this development, and one of them wrote to me to express disappointment that I did not vote with Mayor Longrie and Councilmember Hjelle to deny the final plat. According to this resident, "The reason they voted against it is because they took the time to come out and look at it and saw first hand the problems with the design."

I sent a reply this morning, and thought it would be worth posting here as well. Not only does this touch on the general topic of land use decisions that come before the council (a final plat approval vote is not the place where you come up with new conditions to place on a developer), but it also illustrates the concerns expressed to us earlier this week by the League of Minnesota Cities Insurance Trust about council behavior that can limit our options or create legal problems for the city.

~ ~ ~

Dear [name withheld],

Thank you for writing with your concerns about the vote on the final plat approval for the Beaver Lake project at our last council meeting. Respectfully, I must stand by the vote that I took, which I believe was the legally correct and responsible action for the council to take.

Yesterday I attended the League of Minnesota Cities Safety & Loss Control Workshops in Brooklyn Park. Some workshops were on the topic of land use, and I had the opportunity to ask some legal experts in this field specifically about final plat decisions and what practical latitude a council has in voting on them. Also, the binder I received as an attendee had helpful information about preliminary and final plats.

According to the LMC's risk management information sheet, “Subdivisions, Plats, and Development Agreements–Oh My!” a council has very little discretion on a vote like the one that was before us. It states (p. 6):

The term “preliminary” approval can be misleading because preliminary plat approval establishes the nature, design, and scope of a development project. After a plat is preliminarily approved, the city generally cannot require further significant changes. Once the conditions and requirements of the preliminary plat approval are satisfied, the applicant is generally entitled to approval of the final plat.
City staff had informed us that the conditions required in the preliminary plat approval had been satisfied. This entitled the developer to final approval. In order for the council to vote otherwise, we would have needed to provide findings of fact that indicated deficiencies in the specific conditions that were set out by the city council long ago for this project. As the LMC's risk management information sheet “Ten Tips for Avoiding Land Use Claims” states (#8), “Neighborhood opposition alone is not a basis for denying an application.”

While Mayor Longrie and Mr. Hjelle voted against the final plat approval, they did not offer any findings of fact to support their votes. As you observed, at an earlier meeting I asked them for their reasoning, and I did not hear any satisfactory explanation at that time. If, as you suggest, they came out and looked at the site and agreed with problems that you perceive, they failed to communicate those issues to the council or place them on the record as reasons for their votes. On the contrary, the only reasons I recall were that Erik seemed to want to punish Mr. Schreier for allowing Will Rossbach to place lawn signs on other Maplewood properties he owns; and Mayor Longrie wanted to vote against the developer because in her view he always got his way.

I would humbly suggest that neither of these reasons would hold up in court, if I had voted with them and denied the final plat approval. For that matter, even if I had voted against the plat and had provided findings of fact, contrary to the staff's report, that suggested the conditions of final approval had not been met, I think the developer could have made a strong case that two of the three votes were, based on the public comments of Mr. Hjelle and Ms. Longrie, motivated by arbitrary or illegal reasons (such as an intent to punish Mr. Schreier for his implied expression of political views).

As you may have heard, this week we nearly lost our insurance coverage because of situations like this would have been. The League of Minnesota Cities Insurance Trust specifically expressed concerns about comments made by council members to the public and the media that undermine the ability to defend cases, by creating grounds for a plaintiff to argue that stated reasons for a decision were pretextual. As it stands, the losses created by council decisions in 2006-2007 are giving us a 38% premium increase and a 300% deductible increase in the coming year. In the interests of the entire city and all its taxpayers, this is really not a good time to invite further litigation, particularly not in the context of public councilmember remarks that could severely harm our prospects of prevailing in court.

Again, thank you for writing with your concerns. I know this is not the answer you wanted to hear, and that you are unhappy with that vote, but I hope I have provided you with a better understanding of my decision.

John Nephew, Councilmember

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Wednesday, April 09, 2008

Maplewood Monasticism

For a welcome change of pace from the usual news about Maplewood politics, check out yesterday's Star Tribune coverage of the Benedictine retreat at St. Paul's Monastery here in Maplewood. Accompanying that story is a short piece about changes coming to the monastery, such as the new building for the sisters, the Common Bond housing project, and the conversion of the original monastery building into headquarters for the Tubman Family Alliance. I find it inspiring to see how the sisters have adapted their spiritual and social missions to changing needs and changing times, while remaining true to the core values of their monastic tradition going back 1,500 years.


Tuesday, April 08, 2008

Insurance Renewal

Last night the city council held a sobering workshop with representatives of our insurance brokers, Arthur J. Gallagher Risk Management Services, Inc. They informed us that the League of Minnesota Cities Insurance Trust board would be deciding at a meeting today whether or not to renew our city's insurance policy, and if so under what terms. They communicated the LMCIT's serious concerns about the litigation risk posed by Maplewood, particularly in light of the net losses from the 7/1/06-7/1/07 insurance period. Those losses substantially exceed the total of the previous twenty years' losses combined.

We were told that, were it not for recent developments in Maplewood (such as "positive changes, staffing-wise," an apparent reference to the removal of Mr. Copeland), our coverage with the LMCIT would have been cancelled. As it stands the LMCIT is willing to continue, but with higher premiums and higher deductibles. The deductible for employment lawsuits, for example, seems likely to rise from $50,000 per incident to $200,000 per incident.

Our brokers asked if some individual councilmembers could write to the LMCIT board to make it clear that their message had been received. I volunteered to write a letter last night (here it is as a PDF) that could be delivered to the board in advance of their meeting today, as did Mayor Longrie. I welcomed the chance to acknowledge the gravity and legitimacy of the LMCIT's concerns, call attention to corrective steps already taken, and make clear that the council as a body and the city staff share the goal of working closely with the League to continue to reduce claims in the future.


Monday, April 07, 2008

Open Letters and Audits

The front page of the Maplewood website has an open letter to residents from Acting City Manager Chuck Ahl, addressing concerns about the city's finances. It will also be printed in the next city newsletter that is mailed to residents each month.

The key message in the letter is to reassure residents that no evidence of misappropriation or wrongdoing has been found. Rather, the underlying problem is that the city's accounting has not been kept up to date. This is understandable, given that the finance department was seriously short-staffed at various times last year. I believe we went from a full complement of eight employees in 2006 down to a low of just two people in the finance department for one portion of 2007. A lack of timely accounting has a ripple effect on planning and budgeting city-wide (remember the erroneous claims from certain elected officials and their supporters that the Community Center was "in the black" last year?), so this is not a situation we want to have going forward. Fortunately, our city staff has made fixing this problem a top priority.

What about an audit? The Pioneer Press called for the State Auditor to get involved with Maplewood's situation, and Councilmember Erik Hjelle has written that he "will be requesting a forensic audit of the city by an outside body."

After last fall's election, I paid a visit to the State Auditor's offices. I happened to stop by on an afternoon when Rebecca Otto had an opening in her schedule, and I was able to learn directly from her about her office's role in relation to local governments like Maplewood. The State Auditor is charged with directly auditing a number of government entities, such as the counties and the three first-class cities (Minneapolis, St. Paul, and Duluth). Normally a city like Maplewood hires a private auditing firm to review its books. However, our city council could request that the State Auditor audit our books as well, and I wondered if this might be a good idea, given the concerns I had about Maplewood's financial management under last year's leadership.

There are a couple of things to keep in mind at this point. One is that our auditors review the books once each year, so they have not yet looked at the 2007 records that are of concern. The second is that requesting the State Auditor to perform our 2007 audit would probably cost us taxpayers more (the city would be paying for the audit either way), since those auditors don't have the familiarity with our books and past practices that our current auditors do.

The State Auditor also is charged with special investigations of local governments -- for example, if someone finds evidence of missing property or funds. As Mr. Ahl's letter indicates, we have found no indication of such misdeeds. If we did, we would be required by law to notify the State Auditor.

After the meeting, my conclusion was that the best course of action was to let the normal auditing process play out. If anything suspicious was uncovered, then we would turn to the State Auditor for investigation and forensic auditing as appropriate. In the meantime, at the January 14th city council meeting, I proposed that the council name a liaison to our auditors, and received that appointment.

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Thursday, April 03, 2008

Open Meeting Law Enhancements

This week's Maplewood Review includes an article by Alex Davy that is well worth reading. Entitled "Goal-setting session pushed back; Mayor cites concern about open meeting law," it should probably be nominated for some award for longest and most in-depth article about a meeting that did not actually occur. Davy uses last week's cancelled council retreat as a springboard for a discussion about the Open Meeting Law in its Maplewood historical context, and also in the context of a bill now working through the Minnesota Legislature.

That bill is SF 3120/HF 3367. The two key provisions of the bill are first to require the recording of meetings that are closed for reasons other than attorney-client privilege. (In Maplewood we already record all closed meetings.) The second is an addition to the law that allows for the award of reasonable attorneys fees in cases where a written opinion was issued by IPAD and "the court finds that the opinion is directly related to the cause of action being litigated and that the public body did not act in conformity with the opinion." This brings the Open Meeting Law in line with other aspects of the Minnesota Government Data Practices Act with respect to IPAD's advisory opinions.

These are small steps, but I'm happy to see any movement forward in the law. Remember, the Open Meeting Law does not only apply to the city council -- it also applies to the volunteers who serve on our city's citizen boards and commissions. As I am correctly quoted in Mr. Davy's article, I believe we need to bring more changes to the Open Meeting Law, to better encompass modern communications technology. This could improve communications within elected and appointed bodies, and increase transparency for citizens.


Wednesday, April 02, 2008

Your Police Report

Each month the Maplewood Police Department produces a show for the government cable access TV channel, called "Your Police Report." I don't know if it has been available in this format before, but at least with this month's episode you can download it from GTN's website as a QuickTime movie and watch it on your computer.

P.S. Yes, that story I linked to yesterday was an April Fools spoof.

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Tuesday, April 01, 2008

News of the Day

April is starting off with news even more startling than last night's snowstorm. Visit the Lollie Suburban Newspapers website for full details.


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