Conlan: The sequel

Mike Conlan, Duluth city planner from 1999 to 2003, was a very polarizing figure. On the one hand, Mayor Gary Doty and others praised Conlan for his ability to get projects done; on the other, vast legions of citizens objected to Conlan’s methods.
In one instance, when Conlan was trying to get Office Depot to move into the Holiday Center downtown, he repeatedly (and publicly) misrepresented the situation with an existing tenant he wanted out: the Renegade Comedy Theater. In a Budgeteer News article, Conlan said that Renegade leased its space on a month-to-month basis; in reality, they had a five-year lease. He said that Renegade was “basically in the Holiday space for free,” though they were, in fact, paying rent. And he repeatedly referred to the Holiday Center as a “black hole,” implying that no business of any sort was taking place there, and that none ever would unless Office Depot came in. In reality, Renegade employed over 100 people during their time in the Holiday Center.
When I wrote about the Renegade situation in these pages in 2001, Conlan charmingly responded, “Maybe Brian Matuszak [executive director of Renegade] should figure out that whining isn’t funny.” Office Depot did eventually move into the Holiday Center, and went out of business six months later.
In addition to his shabby treatment of citizens, Conlan was known for pointing the finger of blame in all directions when his projects failed. By 2003, Conlan’s reputation was so tarnished that mayoral candidate Herb Bergson promised to get rid of him if elected. Bergson won, and Mike Conlan went sailing out the door.
In recent years, Conlan has resurfaced as representative for a group that wants to restore the burned-out Pastoret Terrace building on First Street (former home to the notorious Kozy Bar and apartments). In his early appearances before the city council, Conlan projected an air of professionalism and courtesy, leading some observers (well, me) to wonder if perhaps the man had changed for the better.
On November 5, 2014, city councilors opened their email boxes to find a letter from Mike Conlan. In it, he lamented the fact that the Pastoret Terrace project had failed to receive low-income housing tax credits during the state’s most recent funding cycle. One reason for this, Conlan said, was that the state was concerned about unanticipated costs that might arise when rehabilitating a 137-year-old building. But that was not Conlan’s main concern.
“The major issue,” he wrote, “was [Housing and Redevelopment Authority Director] Rick Ball’s refusal to support the project with ‘project-based assistance.’ […]The HRA has provided project-based assistance to virtually every other low-income tax credit project in the last several years, and its refusal in this case is indefensible.”
Suddenly, the old Conlan was back, in all his finger-pointing glory. Rick Ball responded the following day, November 6, in his own email to the council.

It has come to my attention that Mike Conlan has sent a letter to you regarding the status of the Pastoret Terrace project in which the HRA is viewed as being unsupportive of the project. I want to clearly set the record straight in this regard, and clarify that there have been only two requests made of the HRA relating to this project, and both have been fully supported by the HRA staff and Board.

In February 2013, Mr. Conlan requested the support of the HRA for the creation of a Tax Increment Finance district to support the redevelopment of the building. The Board unanimously approved Resolution #3360-13 (attached), expressing intent to create and administer a Tax Increment District for the Pastoret Development, along with my recommendation supporting this. […]

Secondly, in June 2014, the HRA was asked to prepare and submit a letter to Minnesota Housing Finance Agency in support of the project, and agreeing to utilize the HRA’s public housing and Section 8 waiting lists which would assist in bringing tenants with Section 8 rent subsidy vouchers to the property. The HRA was pleased to provide the requested letter of support for this project, a copy of which is attached.

At no point in time has Mr. Conlan requested project based rental assistance for the Pastoret project from the HRA. The HRA has solicited proposals for project based assistance three times in the past four years, and the Pastoret project did not respond to any of those Requests for Proposals, which ultimately resulted in project based rent subsidy support for Lincoln Park School, Steve O’Neil Apartments, Gateway Tower, and the Lutheran Social Services Center for Changing Lives. The HRA would have been pleased to entertain a request from Pastoret Terrace during any of these processes, or could have initiated an RFP process as required by HUD regulations, if this had been requested. […]

I understand Mr. Conlan’s frustration in not being awarded tax credits from MHFA. However, it is most inappropriate for him to place the blame for not receiving an award of tax credit financing from MHFA with the HRA.

It was just like old times, watching Conlan’s bitter allegations get destroyed by facts. But Mr. Conlan, true to form, was not done yet. On November 18, he doubled down and fired off another frothing email to the city council.

I feel compelled to respond to you, because Rick’s response was disingenuous at best.

The HRA board did indeed approve a resolution of intent to create a tax increment district associated with this project eighteen months ago and the HRA submitted the public housing agency support letter in conjunction with this project as required by the MHFA. Neither of these cost the HRA anything—the real measure of support is the project-based assistance that helps underwrite the cost of the homeless units.

The statement that the Pastoret project has not sought project-based assistance is simply not true. Last year, when the project first sought funding, I met personally with Rick and requested four project-based units. He stated that they were too expensive and that there would be none available (although George Sherman was shortly thereafter awarded eight units). […]

But you don’t have to take my word for it.  This year, our project consultants from the Sand Companies met with Rick specifically to request project-based assistance for this round of funding. Rick stated that none was available and they reported that response back to me. At no time—ever—has there been mention of any application process. […]

What Rick told the City Council is very different from what he told this project. This was not a misunderstanding, nor a miscommunication; rather, it was a deliberate effort to mislead the Council. The consequences to a person in a position of public trust that lies to our local elected officials I leave to you.

The next day, Rick Ball responded.

It is certainly unfortunate that you are being subjected to a series of conflicting emails relating to the Pastoret project, but it is important to provide you with clear and accurate information, especially when personal integrity is being challenged. […]

Attached are HRA Board resolutions that clarify the dates of HRA’s support for Project-Based Section 8 assistance including Gateway Tower (January 25, 2011), Steve O’Neil Apartments (May 31, 2011), Lincoln Park Apartments (Sherman Associates - May 28, 2013), Lutheran Social Services (May 28, 2013), and Harbor Highlands (May 28, 2013). These projects… were awarded through 3 publicly advertised Requests for Proposals issued over the past 4 years. The Pastoret project could have applied for project based assistance during any of those open public solicitations, but it did not. […]
Although Mr. Conlan seems to think that the Lincoln Park School commitment of project-based vouchers occurred “shortly thereafter,” in fact the commitment had been made in May of 2013.  Mr. Conlan also seems to think that commitments to Gateway and LSS were made at later times, although those commitments were made in January of 2011 and May of 2013 respectively as documented in the attached resolutions.

Although I certainly understand Mr. Conlan’s frustration, it would be far more productive to work cooperatively to attempt to find solutions to funding gaps, rather than to spend time trying to assess blame. 

Some things never change. Meanwhile, the Pastoret Terrace building, like Mike Conlan’s reputation, continues to fall apart.

Amazing overlapping boards update

In July, I wrote about the cozy relationship between the Duluth Economic Development Authority (DEDA) and two nonprofit organizations to which DEDA grants money: the Area Partnership for Economic Expansion (APEX) and the Northspan Group. Tying the three groups together is Nancy Norr, president of DEDA, who also sits on the board of directors of both APEX and Northspan. As you might expect, this makes for very efficient money transfers: Norr first votes to grant cash to APEX and Northspan as a DEDA commissioner, then she hurries across town to the APEX and Northspan boards and accepts it.
I originally identified three instances of DEDA money going to Northspan and APEX during Norr’s tenure. In May of this year, DEDA granted $33,334 to Northspan and $31,000 to APEX to develop Northforce, a “talent community” job-search website that seeks to match employers and employees in northern Minnesota. In 2012, DEDA voted to grant $15,000 to Northspan to administer the Northland Connection, an economic development website that lists land and buildings for sale in the city of Duluth.
Since writing the July column, I have become aware of other instances in which Northspan or APEX benefited from DEDA’s actions.
In 2010, when the city was trying to lure Google to town, DEDA hired the marketing firm of Pure Driven to lead the effort. Pure Driven, in turn, contracted with APEX to assist in attracting venture capital and other investors to the project. DEDA paid Pure Driven an initial fee of $18,000 for their services, and an additional $5,000 when Google took longer than expected to make up their mind (Google eventually went to Kansas City instead).
In 2011, DEDA helped the national data-management company Involta to build a 26,000-square-foot data center on Rice Lake Road to house their computers. To help fund the project, Involta made use of the Revolving Loan Fund of the Arrowhead Regional Development Commission (ARDC), a business development organization that seeks “to support business activities for which credit is not otherwise available on terms and conditions which would permit completion… in the seven county region of Northeast Minnesota.”
ARDC and Northspan, as it happens, have a very close relationship. Not only do they share the same office at 221 West First Street in downtown Duluth, but Northspan senior business developer Bob Palmquist is the person tasked with administering ARDC’s Revolving Loan Fund. Therefore, DEDA’s vote in favor of the Involta project had a direct financial benefit to Northspan.
On June 12, 2012, DEDA approved a contract with TAJ Properties to build a large warehouse and office space for AW Kuettel and Sons, a well-established local construction company. This project, too, made use of ARDC’s Revolving Loan Fund.
We now have six known instances—TAJ, Involta, Pure Driven, Northland Connection, and Northforce (twice)—where Nancy Norr’s votes as a DEDA commissioner financially benefited other groups to which she belongs. There may be more; untangling these connections is not always easy. In the case of the Involta project, Northspan and ARDC are not mentioned in the contract at all. It was only after I submitted a Freedom of Information request to ARDC for something else that I discovered the connection.
The money pipeline does not appear to be in jeopardy anytime soon. On November 19, 2014, the city’s Director of Business Development Chris Eng presented DEDA’s 2015 budget to commissioners, which included $15,000 for APEX’s marketing services and $15,000 for Northspan to administer the Northland Connection website.
Another line on the budget, relating to Northspan’s Northforce website, was blank. Director Eng explained: “We do expect that that talent database will continue in 2015. I don’t know what the amount will be, and so we’ll leave it for now, and plug that number in as we go.”
Nobody seemed to mind awarding an unknown amount of money to Northspan. President Norr certainly didn’t object. Commissioners approved the 2015 budget unanimously.
I offer these observations for the enlightenment of the public only. Few people are more respected in the community than Nancy Norr, who is Minnesota Power’s director of regional development in her professional life. City leaders, who probably clink glasses with Ms. Norr at cocktail parties on a regular basis, would sooner gnaw off their own arms than suggest that she’s doing anything unsavory.