At special meeting, CHEDA Board votes unanimously against Finch's proposal

After the special CHEDA Board meeting, Finch responds to some Times' questions, clarifies a couple things, and provides an update on the June 14 council agenda

Mike Christopherson
The scene from Tuesday evening's special CHEDA Board meeting at Valley Technology Park, with CHEDA legal counsel Olivia Leyrer, seated right foreground, providing some comments. Counter-clockwise from Leyrer are city council member Joe Kresl, CHEDA Executive Director Craig Hoiseth, CHEDA Board members Leon Kremeier, Steve Erickson (also a city council member), Paul Eickhof, Kurt Heldstab, Betty Arvidson, Craig Buness, and council member/CHEDA liaison Wayne Melbye. On the TV screen is CHEDA Board member and city council member Tom Vedbraaten, participating remotely from Florida.

The Crookston Housing and Economic Development Authority (CHEDA) Board of Directors at a special meeting Tuesday evening unanimously approved their lone agenda item, a resolution “opposing the City of Crookston’s proposed dissolution of CHEDA.”

    City Administrator Amy Finch, on the job since last October, has proposed dissolving CHEDA, re-establishing a Housing and Redevelopment Authority (HRA), and establishing a City-run Community Development Department at city hall, overseen by a community development director. Finch said she developed her proposal through consultation with City Attorney Corky Reynolds.

    She has previously told the Times that a full search would be conducted for the community development director, and that CHEDA Executive Director Craig Hoiseth would be welcome to apply if he so wished. But in an interview with the Times last week, Finch cited differences in management style and other areas between she and Hoiseth, and noted continued communication problems between the City and CHEDA over the years that she said necessitates bold action. Finch also said her proposal will save the city money; the specific dollar amount, she told the Times, will be detailed at two public hearings at the city council’s June 14 meeting, which has been moved to the Crookston High School auditorium. The council at its last May meeting voted, with some council members opposed or abstaining, in favor of calling for the public hearings so the public can weigh in with their thoughts as well.

Idea is to keep City, EDA separate

    With CHEDA’s legal counsel weighing in frequently at Tuesday’s special meeting at Valley Technology Park, board members cited several factors in voting to oppose Finch’s proposal.

    For one, attorney Olivia Leyrer of Rinke Noonan Law Firm in St. Cloud explained, state legislation exists specifically to keep cities and their economic development authorities (EDA) at least somewhat separate and mutually independent, giving appointed EDA board members and EDA directors more flexibility in decision-making than elected members of a city council or mayoral position might have. (Leyrer told the Times after the meeting that her firm has worked with CHEDA on various matters over the years and wasn’t retained simply to provide counsel in response to Finch’s proposal.)

    Hoiseth, making his first public comments since Finch’s proposal went public, said the legislative intent noted by Leyrer should carry a lot of weight. Citing Finch’s comments about continued communication challenges between the City and CHEDA, Hoiseth said the “legislative intent wants those challenges.”

    “Our own rhyme or reasons, risk-taking if you want to call it that, it’s not always seamless to the city council, so the legislative intent was to create that on purpose,” he said. “(The City and CHEDA) can combine our expertise and complement our expertise, and we always work on communications with the City, but don’t forget that the legislative intent is to keep us separate.”

    By their very definition and mission, EDAs take more risks when it comes to pursuing development deals and other proposed business ventures, Hoiseth said. Much of the financing CHEDA provides to various business ventures is known as gap financing, he stressed.

    “Every loan we take is a risk; it’s there by design, a gap, because the banks don’t want it,” he said. “If the banks wanted it, we wouldn’t have to make that loan.” He added that it would be more difficult for the city council to “wrestle with those risks” because so much of what the council does involves being a “guardian of taxpayer dollars.”

    “We’re fully enabled to decide those things on our own. We’re working so hard to give the city council everything they want, and I want to be an open book,” Hoiseth continued. “But don’t forget the sovereign-ness of an EDA was created by the state legislature on purpose.”

Transition won’t be seamless

    Asked by CHEDA Board member and city council member Steve Erickson to give the odds that dissolving the EDA and HRA and relaunching both in different forms and/or under the City umbrella will be seamless or flawless – Finch has said her goal is to have “no disruption” in services, especially when it comes to the re-established HRA – Leyrer said she couldn’t give any odds because it’s the first time she’s been faced with a situation involving a City making a proposal like the one Finch has put forth.

    Noting Crookston’s substantial low-income community that relies on various housing subsidies from federal Housing and Urban Development (HUD), Erickson said a less-than-seamless transition would potentially impact a lot of people in a negative way.

    “I don’t see how (a seamless transition) is possible,” he said. “We can’t have a flaw in our system.”

    Even if the City had a detailed plan in place, Leyrer said replacing decades of HRA experience overnight is simply not possible. “And these are practical realities, it’s not even a legal question,” she said. “Is this practically possible? The City should consider whether they should make more of a plan and offer assurances to citizens and make sure nobody’s worried in the community. And if people are worried, they need to address those worries.”

    Leyrer said everything involved with a CHEDA-run HRA, when it comes to HUD, wouldn’t “automatically transfer over” to a new HRA. “The City would have to talk to HUD and HUD would have to agree and work with the City,” she said.

    To that, Hoiseth noted that only 7% to 9% of CHEDA’s budget is strictly for economic development, with the bulk of the rest of the budget earmarked for housing.

    “That’s critical. Dissolving CHEDA dissolves the HRA,” he said. “We’ve been talking to the highest officials at HUD, and I’m just going to say it’s not going to be seamless.”

    CHEDA Board member Betty Arvidson worked with the City for 19 years before becoming RiverView Health’s finance manager several years ago. She was city clerk and treasurer for the City, was a finalist for city administrator when Aaron Parrish got the job, and was involved in the planning and decision-making that combined what were then a separate EDA and HRA and housed them at Valley Technology Park.

    “The separate HRA ran Oak Court and did public housing, but there wasn’t any of the community housing we were looking for,” she explained. “The EDA was at city hall, but we needed someone to manage VTP, and we saw a synergy in creating CHEDA. From our perspective it was a great marriage of those groups and it worked well.”

    But the transition was not seamless then, and Arvidson said she can’t imagine a return to a similar configuration prior to CHEDA’s formation not hitting bumps in the road.

    “Even combining for the right reasons at the time, there were hiccups,” she said. “To think you can undo that without hiccups is not realistic, in my opinion.”

Hoiseth the ‘elephant in the room’?

    City council member Wayne Melbye, who was on the council for many years and served as mayor before choosing not to run for a full term and then being re-elected to the council in 2020, said at the council’s last meeting in May that Hoiseth and continuing communication issues with several recent city administrators and mayors amounts to the “elephant in the room.” As the council liaison to the CHEDA Board, at the board’s special meeting Tuesday, Melbye made the reference again.

    If people think there are too many empty buildings in town or not enough manufacturers being lured to Crookston, Melbye said, in making a baseball reference, that the manager is typically fired, not the whole team. But now the talk is about “dissolving the whole works,” he added.

    “So we’re dancing around it, but what is our problem? Where’s the disarray? The discord between the City and CHEDA?” Melbye wondered, citing several city administrators and mayors who have come and gone, with more than one pointing to issues with Hoiseth. “Craig has been pretty much the common denominator on that in my mind. But you gave him a good evaluation and a raise. But what’s he been doing? That’s what I hear and that’s the elephant in the room.” Melbye wondered if the “elephant” could be addressed without “busting up the whole thing.”

    Arvidson said the notion that Hoiseth has been the “common denominator” is not entirely true. Although they didn’t work together for a long time before Parrish took the city administrator position in Forest Lake, Minnesota, Arvidson said Parrish and Hoiseth worked well together, and the City and CHEDA worked well together during that time and prior to that time. “I was at city hall and there was a lot of communication (between the City and CHEDA),” Arvidson recalled. “Things worked very well. We worked with five EDA directors and we always had open communication. Then it stopped. I find it hard to believe – I’m not saying Craig isn’t completely, somewhat, maybe part of it – but the City role changed. That’s when the communication stopped. I’m sorry, I can’t quite feel that Craig is the common denominator in that.”

    Ward 5 Council member Joe Kresl, who attended Tuesday’s meeting, said too often community members see a building being vacated or a business failing and they want to point the finger at CHEDA, especially if it has provided financing in some form. But there are positive things happening with businesses in Crookston, too, he said.

    “Failing businesses aren’t CHEDA’s fault, it could be a bad manager or something else,” Kresl said. “If someone gets a loan, there’s lots they have to fulfill.”

Finch’s ‘marching orders’

    Noting Finch’s current process of going through various City departments in search of better efficiencies and better ways of doing things, Melbye said doing what she’s currently doing was part of her “marching orders” delivered by the council when she was hired.

    “She was to find efficiencies in departments and come up with ideas and run them by the council,” Melbye said. “I believe that’s exactly what she’s doing.”

    Kresl said Finch’s “marching orders” from the council were to “work closely” with CHEDA. “They’re not talking? She’s got to fix that,” Kresl said. “She needs to make sure they’re working closely together. At this point in time if she feels there’s some kind of separation, she needs to fix that, not go to this point. Every single council member said ‘You need to work with CHEDA. If something’s not working, get together and fix it.’”

    Council member and CHEDA Board member Tom Vedbraaten, participating in the meeting remotely from Florida, agreed with Kresl. “When Amy came in, those were her marching orders,” he said. “The way this came about, to me, is totally wrong.”

    Melbye said several people have tried to fix the ongoing communication problems for a number of years. “Trying to fix it has not worked,” he said. “We’re getting the same result with every administrator we’ve had the last seven years.”

    Vedbraaten said the proposed changes are being “rushed.”

    “Someday, if we we want to take a look at things and do some stuff different, that’s fine and dandy,” he said. “But right now, there are too many big things going on.”

Resolution bullet-points

    The resolution opposing Finch’s proposal approved by the CHEDA Board includes several bullet points, including:

    • By statute, CHEDA performs functions and exercises authority not readily available to the City.

    • Dissolving CHEDA will expose the City to liability for paying back millions of dollars in state and federal aid.

    • Assuming all of CHEDA’s projects and activities will create significantly more work for City staff with little, if any justifiable financial savings.

    • CHEDA has decades of experience and established relationships that cannot be replaced overnight. Removing this longstanding agency will create a disruption in the housing assistance and business aid citizens have relied on for years.

    The resolution also cites the “abrupt” nature in the call to dissolve CHEDA.

    CHEDA Board President Kurt Heldstab said the City has “not sought a dialogue with CHEDA.” But, he added, CHEDA would welcome “any dialogue” with the City to address whatever concerns there might be.

Supportive letters

    In the packet accompanying Tuesday’s special meeting were several letters written by individuals, representatives of agencies or businesses that have worked with CHEDA over the years, VTP tenants, and those who have benefited from various CHEDA housing programs. Although the letters didn’t specifically call for CHEDA to not be dissolved, the authors cited various positive experiences they’ve had with CHEDA.

    Letters in support of CHEDA were submitted by Kristi Thorfinnson; Ryan Carlson of Northridge (which built what is known as The Meadows apartment complex in the northeast corner of town); CHS Construction Trades teacher Travis Oliver; local child care provider Janelle Berhow, who received a CHEDA loan to start her business; single mom and self-employed Larissa Kurpius-Brock, who utilizes CHEDA’s housing programs; Jared and Janessa Quanrud, who worked with CHEDA through the Northwest Minnesota Housing Cooperative; Jesse Morrow of Diversified Contractors; Gladys Bakken, director of RiverView Home Care, housed at Oak Court; Twanda Smith, who has benefited from CHEDA housing programs; Tom Jorgens, former city council member and president of PolyCell Technologies; Jim McBride of McBride’s Automotive; Ryan Olson of Bids Trading, a former VTP tenant; developer Bob Herkenhoff; architect Michael Burns; Crookston Inn owner/manager Laurie Stahlecker; Head East Salon; developer Jeff Evers; True-Value Hardware; former VTP tenant Fred Parnow; Brent Melsa, owner of Drafts Sports Bar and Grill; Oak Court tenants Brad and Mary Sistad; Oak Court tenant Ives Ricks; VTP tenant Vertical Malt, which is looking to expand with a new building and is working with CHEDA; CHEDA intern Cody Magsam; Biermaier Chiropractic Clinic, which received a Building Better Business (B3) grant; Doug Holtman at HN Quality Plumbing, which did a major plumbing replacement project at Oak Court; CHEDA intern Sarah Derosier; Dee, Inc.; Brent Epema, owner of B&E Meats; Paul Gregg, owner of Irishman’s Shanty; Chris Fee of KROX Radio; Dale and Janet Kopecky, who purchased a previous construction trades house; Lisa Loegering, regional director of U of M Extension, a VTP tenant; Lori Wagner, former United Way of Crookston executive director and a VTP tenant; Christine Anderson, consultant with the Northwest Minnesota Small Business Development Center, a VTP tenant; Carol Simmons, owner of Real Good Bath and Body; Heroes Rise Coffee Company; Keith Oien of Crookston Paint and Glass; Doherty Staffing; Amanda Grover, owner of DaRoos Pizza; Garret Kollin of Thrivent, a former VTP tenant; Adam Stratton of AURI, a VTP tenant; Christel Vigness, owner of Functionally Fit, a former VTP tenant who expanded to downtown Crookston; Brandon Kresl of Snap Fitness; Andy Hall, owner of Sweetlight Gallery; the late Craig Theede of Aspen Chiropractic; Carrie Larson, owner of Hair Connexion; and, Mike Gregg, VTP tenant.

Finch responds on HRA and June 14 council meeting

    The Times reached out to Finch via email after Tuesday’s special CHEDA meeting to seek her response to some things that were said at the meeting.

    About HUD, she said she and Reynolds have spoken to a HUD representative and were provided a different HUD contact. “Messages have been left and we are awaiting a reply,” Finch said via email.

    As for concerns relating to a re-establshed HRA and HUD funding, Finch said the new HRA would be “stand-alone” with a board and HRA powers enabled by the City. “It has never been the intent or the proposal for the City to take over HRA duties or HUD-related items,” she said.

    Finch went on to say she has never said the HRA transition would not be complex. But the City is not “attempting to absorb” HUD activities, she stressed. “Essentially, HUD items would be ‘transferred’ from a combined HRA/EDA (CHEDA) to an HRA,” she said.

    Finch went on to say that she, along with Mayor Dale Stainbrook and a CHEDA Board representative, met with Hoiseth on Monday, June 7 and she and Stainbrook at that meeting said the decision had been made to not have resolutions on the June 14 agenda, which will include the two public hearings, requiring council action on dissolving CHEDA or establishing an HRA. She said the full council will be notified on that matter in a memo on Wednesday, June 9.

    Not having any action items relating to her proposal on the June 14 agenda will allow the council to absorb what she expects will be a lot of feedback and input at the public hearings, Finch said. Council members will also be able to digest a presentation on the June 14 agenda on the findings from the online survey Finch recently set out to the community, in which respondents weighed in on various City services and CHEDA. As of Tuesday morning, more than 600 responses had been submitted.

    Putting off council votes on her proposed actions will also allow more time to get more detailed information from HUD, Finch said, which could also involve a “reasonable timeline to plan for.”

    She stressed that the council will have the final say on her proposal, and that no timelines as far as any transitions will be necessary if the council votes against it.