Iron John

A court ruling sets up the latest cliffhanger in the municipal soap opera starring scrapper John Isaacs

John Isaacs takes down a black-and-white photo hanging on a wall in a corner of his office and flips it over. There's no date written on the back, but the presence of a middle-aged Hubert Humphrey II suggests the late Forties or early Fifties. Humphrey, mayor of Minneapolis between 1945 and '48, is standing alongside Isaacs's grandfather, Harry, in front of heaps of scrap metal, pointing to something outside the frame. "What's interesting," says Isaacs, pointing in turn, "is this guy, Humphrey, asked us to come here and buy this property."

"Here" is the 11-acre lot in north Minneapolis, in the industrial corridor on the west bank of the Mississippi River. "Us" is American Iron & Supply Co., a scrap-metal company where Isaacs serves as CEO and president. But the fourth Isaacs to head American Iron isn't likely to be seen posing for any pictures with the mayor.

For more than ten years, Isaacs and his company have locked horns with Minneapolis officials over American Iron's plans to build a large metal shredder known as a Kondirator. The fight has become one of the longest-running municipal soap operas around; one judge dubbed the saga "arduous and labyrinthine." Critics cast Isaacs as Big Bad Business incarnate, a foe of the environment and the river, an enemy of neighborhood tranquility.

It's a long way from the days when Abraham Isaacs first hitched horse to wagon in 1885. As a company history on American Iron's Web site (www.scrappy.com) puts it, the immigrant from Russia "set out each day through the dirt and rough brick streets of this young city, scrounging the iron debris that was a byproduct of the building boom that accompanied the explosive growth of Minneapolis industry."

"Business proved good," the tale continues, "and soon Abraham was able to hire a few men to help pick up and sort the scrap for recasting into materials like locomotive rails and structural framework." The firm moved to its current site in 1949, at a time when Humphrey and others were promoting the upper riverfront as a corridor for industrial commerce.

Throughout his battle with the city, John Isaacs has worked hard to play up his company's image as a venerable corporate citizen. Both the U.S. and Minnesota banners flap in the breeze above the firm's vaguely bunkerlike office building at the corner of 28th and Pacific Street. In the small waiting room just inside the front door, a framed letter of commendation from former governor Arne Carlson hangs on the wall near the Bunn-O-Matic coffee maker.

Isaacs himself receives visitors in a second-floor office as spacious and comfortable as a living room. Clad in a dark navy blazer, an azure shirt, and gray slacks, he exudes a let's-get-down-to-business demeanor. He directly eyeballs whomever he's talking to and occasionally peers out over his reading glasses, especially when he's casting aspersions on his city hall foes.

Isaacs started working for American Iron at age 12, when he spent summers painting scrap containers for his father. Now 48 years old, he has run the company for about 15 years; his father, Fred, remains chairman of the firm, and his sister, Mindy Isaacs Odegard, serves as director of community affairs.

In the mid-Eighties John and his father began talking about buying a shredder to boost the amount of scrap the firm could handle. They settled on a German model with the now-infamous brand name Kondirator. They projected that the five-story, $6.2 million machine could increase the firm's capacity threefold, and in turn help boost American Iron's profits.

At first everything went smoothly. A metal shredder was among the land uses the city code allowed in the area, zoned as heavy industrial; in addition, in 1990 the City Council voted unanimously to grant a "special council permit" for the Kondirator.

But then, as neighborhood opposition to the project began to foment, the city backpedaled and imposed new conditions, including the completion of an Environmental Assessment Worksheet (EAW)--essentially an investigation of claims that the Kondirator would spew dust, noise, and toxic chemicals all over the neighborhood. But American Iron and the city couldn't agree on how the study should be conducted, and in 1991 the company sued the city, charging breach of contract and seeking recovery of money forgone because of delays in the project. The case has percolated through the court system ever since.

Isaacs concedes that his company lost the struggle over semantics early on. "I think the city won the battle on demonizing the machine," he says, "and I think that we handed them the victory by purchasing a machine called 'the Kondirator.'" Instead of that term with its Godzilla-vs.-Megalon ring, Isaacs prefers the phrase "metal recycler."

No matter what its name, American Iron's project was becoming decidedly unpopular in the halls of government. In 1993 voters in the Third Ward, the company's home, elected vociferous Kondirator opponent Joe Biernat to the Minneapolis City Council. The following year the Legislature--at the behest of Minneapolis lawmakers--passed a law requiring completion of an environmental assessment worksheet (EAW) for "a metal materials shredding project... upstream from United States Corps of Engineers Lock and Dam Number One." The only company above the lock to propose such a project happened to be American Iron.

But the battle dragged on. In June 1996, the Minnesota Pollution Control Agency (MPCA) completed the EAW, concluding that there were no significant environmental effects from the Kondirator; the city promptly sued the state agency contesting the opinion. In 1998, a judge directed the MPCA to reconsider the matter; that December, the MPCA reiterated its earlier position. Again the city appealed.

As it defended its project in court and at the Legislature, American Iron retained some of the best help money can buy. Records at the state Campaign Finance and Public Disclosure Board currently list five lobbyists registered as representing the firm, including John Isaacs and veteran Capitol operative Larry Redmond. American Iron has retained former Carlson spokeswoman Cyndy Brucato for public-relations work, and last year it hired celebrated political ad man Bill Hillsman to produce a 15-part serial ad, "Hearts of Iron," that chronicled the company's version of its "struggle against the manipulations of an urban bureaucracy."

Now, it appears as if American Iron's persistence may finally be paying off. Last month the Minnesota Court of Appeals ruled that the MPCA had acted appropriately in giving the project the environmental green light. Three days later, the Minneapolis City Council voted not to appeal the matter to the state Supreme Court, and to "develop a schedule for prompt consideration" of American Iron's permit requests.

What exactly that language means is now a matter of considerable behind-the-scenes argument. American Iron has taken the position that officials should now issue a building permit for the Kondirator. The city, according to Biernat, maintains that the company simply has won the right to begin the application process. If history is any guide, resolution will be neither swift nor simple.

Biernat recalls the morning of the latest council vote as "without question one of my saddest days at city hall." He also says that he thinks things would be different if John Isaacs were not running the company. "I think if Johnny's father was still calling the shots, it's very possible that all of this would have been over years ago," he offers. "He's got a personal dislike for the city that just impeded the ability to form a working relationship."

"'Johnny,' he calls me, eh?" Isaacs sighs upon hearing that comment. His father, he points out, remains active in the firm, and the two discuss every major decision. "I'm sorry he feels that way. I don't know how he could ever come to that conclusion. I would have to say that he has misread the entire process." In Isaacs's view, American Iron has kept up the fight simply because it was forced to--and, he adds, because "it's hard to walk away when you're right."

While Isaacs often positions the struggle as a moral one, there is clearly plenty of money at stake. Isaacs says a current court order prevents him from discussing the firm's financial claims against the city in the still-pending 1991 lawsuit. But a 1993 document in the court's file on that case estimated the firm's potential damages at some $37 million--more than American Iron's sales for all of the previous year, which topped $23 million.

More than eight years after it was filed, that suit is currently scheduled for trial on July 6. Talks between the parties last year didn't produce an agreement; court filings suggest that one of the sticking points involved a confidentiality agreement. "I think we're definitely going to trial," Biernat maintains. Assistant City Attorney Peter Ginder declines to speculate on the outcome, though he notes that so far the city has spent "something over $600,000 on outside counsel" on matters relating to American Iron. And Isaacs says he would prefer to settle: "I'm hoping that we're going to be able to invest money in our company," he explains, "rather than [in] our attorneys."

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