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City Councilwoman Lisa Goodman wants it her way

Minneapolis Councilmember Lisa Goodman
Nick Vlcek

YEARS AGO, a naive businessman in Minneapolis wanted a liquor license for his business. The man approached the neighborhood alderman, who made clear that $10,000 would grease the wheels. The businessman went away, saddened at how his city conducted business.

"That man was my grandfather," William Skolnick told Judge Stephen C. Aldrich in a Hennepin County Court last month, pausing to let his tale of the city's past corruption sink in.

Then Skolnick shifted to draw a present-day parallel. "In this case, the evidence is that Lisa Goodman made sure the fix was in," he said, clipping his words with nasal precision.

"The city of Minneapolis trampled all over my client's constitutional rights," he continued. "I am ashamed of what the city has done here."

Skolnick pointed across the room.

"And you should be too!" he belted, jabbing his finger at one of the city's lawyers. "And you!" Skolnick spun around. "And you!" he nearly hollered at the handful of people in the back of the room.

Among them sat Minneapolis Councilmember Lisa Goodman, the target of his ire. With her blond, neatly combed hair and floral-patterned skirt, Goodman looked like a harmless schoolteacher. Yet Skolnick was describing her in language typically reserved for a mob boss.

"What plaintiff has done in this trial is to vilify Councilmember Goodman," said Charlie Nauen, the attorney for the city and Goodman. "He has referred to Councilmember Goodman using the 'c' word and the 'b' word."

Stories of Goodman's strong-arm attempts to control Minneapolis have long dogged the veteran councilwoman. Her tendency to speak her mind and strongly advocate for favored projects make her someone not to be trifled with. But lately, some have been asking whether her zealousness went too far.

"When I'm on your side, I'm really on your side," Goodman says. "Unfortunately, when I'm not, I'm really not."

LISA RUTH GOODMAN moved from Madison, Wisconsin, to Minneapolis in the fall of 1989, along with her good guy friend Kim Havey. After a year of fundraising for Paul Soglin, the Madison mayor famed for protests against Dow Chemical, she wanted to join a statewide campaign.

Goodman got picked up by Paul Wellstone's first campaign for U.S. Senate. She was chief fundraiser until the election, then served for a year as development director of a nonprofit dedicated to college service-learning projects.

Goodman got to flex her political muscles in her next post—executive director of the Minnesota chapter of NARAL, the abortion rights group—which she landed in 1992, when she was just 26.

The position brought her political connections. Goodman's Rolodex grew as she worked with pro-choicers from both parties. Two City Council members—Steve Minn and Lisa McDonald—were board members.

"I loved that job, because you are very clear in that position of who's for you and who's against you," Goodman says.

In 1997, Goodman won her seat on the Minneapolis City Council with 54 percent of the vote, the narrowest margin of victory for a council race that year. She was 31 years old.

From the beginning, Goodman had a clear vision for her ward. Downtown and its surrounding neighborhoods were ripe for redevelopment. Before the condo explosion was even a spark, she wooed developers to a blighted block of East Grant Street and Portland Avenue. They were rewarded with Grant Park, the 29-story luxury condo tower that sold out before it was built.

As the market for downtown condos and high rises heated up over the first part of the decade, Goodman stoked the flame. When a builder wanted to develop a key property, Goodman's Community Development Committee had to approve it. If a disgruntled developer appealed a Planning Commission decision, Goodman was on the subcommittee that heard the appeal.

Goodman also cashed in on the market she was helping to fuel. She and Havey bought a condo together in Grant Park, which they sold for $315,000 in 2005. Asked about her share of the original purchase price, Goodman says, "I have no idea—it's so long ago I don't remember."

Even as she encouraged development, Goodman made a point of looking out for neighborhood residents. When developer Tim Rooney wanted to turn two distressed buildings on Ninth and Hennepin into the Chambers Hotel, Goodman told him to take care of the displaced tenants first.

"Tim Rooney helped people move their furniture," says Tom Streitz, former director of the Minneapolis Public Housing Authority, who now works for the city's housing division.

Councilman-turned-developer Steve Minn, who is known to have fought with Goodman but still calls her "a dear friend," says her straight-shooting style makes things easier for would-be developers. He should know—Goodman gave him plenty of warning about the fate of his Pacific project, a boutique hotel, commercial space, and condos proposed for the block behind the Monte Carlo restaurant in the Warehouse District, which got shot down.

 

"Her first words when I told her about the project were, 'That will not be successful,'" Minn says.

There is no question that Goodman is forthright. The question is whether she's overstepping her authority.

"She has a very strong sense, I think, of what she wants," says Robert Cook, a former board member of the Loring Park neighborhood group. "And beyond that line, I find it difficult to work with her on things."

Goodman's strong, direct style has earned her enemies. They are reluctant to speak out against her precisely because of how much power she wields and her willingness to punish those who cross her.

"She's vengeful—sort of like George Bush—when you go against her," says one architect who has dealt with her extensively on projects. "She will eat you."

"If there was ever a serious contender to challenge her, a lot of these people who sort of grin and bear it would stab her politically in her back quicker than you can say her last name," says another architect whose project died in front of Goodman.

After her narrow victory, Goodman has since coasted to re-election, winning 80 percent of the primary vote in 2005. She is widely expected to cakewalk into a fourth term this November. Her influence and fundraising expertise have helped her amass a campaign war chest of over $100,000—several times what is typical of Minneapolis City Council incumbents.

She does it by throwing herself a fabulous birthday party each year at a fancy house in her ward. She doesn't need all the cash for her own campaign, so she uses it to reward fellow candidates.

"She'll look and decide who she would prefer to work with, and maybe give them some money," says Terrell Brown, who once ran against Goodman.

"She raises money to remind those thinking of running against her that it would be expensive, and don't," Minn adds.

So far, the strategy seems to have worked.

"In terms of recruiting candidates to run against Lisa, people are nervous or even scared," says Peter Tharaldson, a political operative with the Independence Party of Minnesota. "It's not just the money—she almost seems like the second mayor."

A DECADE AGO, Michael Krause was hailed as a visionary—the creative genius who made the Green Institute a national leader in the sustainability movement. Krause was a brilliant grant-writer and motivator with legendary persuasive powers, and under his leadership, the Green Institute became a beacon in the once-blighted Phillips neighborhood.

Krause is one of Goodman's dearest friends. Together with Havey, they own a hobby farm in Kandiyohi County, where the trio has spent long weekends talking late into the night. Goodman considers Havey and Krause "like family."

Unfortunately, Krause was like the brother who couldn't manage his checkbook. He used one grant after another to build his green empire. While he jetted off to India on sustainability missions paid for by a Washington, D.C.-based consultant, the institute sank deeper into debt.

In summer 2005, Krause resigned under pressure, with the Green Institute facing nearly $5.5 million in debt. As part of the separation agreement, the board members agreed not to publicly criticize him.

According to many accounts, Goodman took Krause's departure personally. When he left, Krause was working on his brainchild: a plan to turn a city garbage-transfer station in Phillips into a biomass energy facility.

After Krause's unceremonious ousting, he started a new for-profit company with Havey and Goodman's former student intern, Craig Wilson. They called it Kandiyohi Partners, after their vacation spot. They wanted the biomass plant.

At first, Kandiyohi tried to negotiate with the institute. When that failed, Krause's new company began to lobby the City Council.

"The Green Institute was the only one being considered," says Corey Brinkema, who took over as interim director after Krause left. "All of a sudden, Kandiyohi pops up, and now it's a competitive project."

The City Council was already in discussions about selling the land to the Green Institute. Instead it reversed direction and issued a request for proposal, opening the project to competitive bidding.

"There's no doubt that Kandiyohi's lobbying efforts resulted in that RFP coming out," Brinkema says.

The relationship between the City Council and the Green Institute, which had once been cordial, was suddenly tense. And to some observers, Goodman seemed a little too involved.

In September 2006, Goodman became an investor in the biomass facility. By then, the Green Institute had given up the project—its studies showed that a lack of ready access to wood fuel was going to make it financially infeasible. The Green Institute sold its rights to Kandiyohi for $75,000 and washed its hands of the project.

Goodman poured her own money in. When asked how much, Goodman says she's not required to report that. Goodman disclosed her investment to the city clerk and recused herself from all discussions on the matter.

 

"I was super fastidious," Goodman says. "Everyone knows I'm associated with Michael and Kim. I was very careful."

Still, eyebrows raised when Goodman wrote a letter to the Minnesota Pollution Control Agency, urging it to issue Kandiyohi a permit. Kandiyohi had suggested that supporters send a form letter to the commission; Goodman printed the form letter on campaign stationery.

"What happened with the letter was an innocent mistake," Goodman says.

Despite Goodman's advocacy, the Phillips biomass plant was doomed. Neighborhood activists rose up against it, raising environmental concerns. After years of negotiations, Kandiyohi dropped the biomass project in June 2008.

With the project dead, investors in the energy burner lost money. But Goodman managed to avoid the worst of the financial hit.

In 2006 and 2007, Goodman dutifully disclosed her investment in the energy burner. But by 2008, it had disappeared from her portfolio.

"I sold my interest in it," Goodman says. "I can't remember when. As a result, if you don't have an investment, you don't have to report it."

Goodman won't say to whom she sold her interest or how much she received for it. Krause and Wilson did not return calls seeking comment. Havey refused to answer questions. "Are you kidding me? That's a private situation."

IN THE SUMMER of 2006, the excitement in Loring Park was palpable. For several years, volunteers had worked with the city to come up with a plan that would transform blighted stretches of Nicollet Avenue into a thriving corridor of high-density housing, retail, and nightlife. The neighborhood even scored funding for its vision.

Now the project was finally going to come to fruition. A narrow strip of land on the corner of Nicollet and 15th Street—known as the "meter farm" because it's dotted with parking meters—was up for grabs. Redevelopment would signal the beginning of a Nicollet renaissance.

City planners encouraged the developers to dream big, and four took the challenge. The most dazzling of the ideas was a 29-story boutique hotel proposed by 4RM+ULA, a St. Paul architecture firm, and Ivizion, a developer from New Jersey. The neighborhood task force loved it.

Nonprofit Clare Housing came up with a second pitch—a more modest proposal for 44 units of supportive housing for people with AIDS. Clare was also partnering with gay rights group OutFront Minnesota. And Kandiyohi Partners did some pro bono consulting for the proposal.

"Michael Krause had been on our board—so he offered to help put the project together. At that point, we were actually not looking for another project to do," says Lee Lewis, executive director of Clare. "This parcel became available, and Lisa's office thought it was a good site for this kind of development."

Two more hopefuls proposed a 42-unit apartment complex and a 29-32 unit residential building.

The committee that Goodman chaired would review the proposals and then recommend one to the City Council. Goodman's committee was supposed to consider the will of the neighborhood and the advice of the city planners.

The neighborhood group wanted the hotel. The city planners said that it was too big for the zoning on that piece of land, and recommended the AIDS housing instead.

Goodman gave the AIDS housing her support, too—even after Kandiyohi dropped out. "Kandiyohi, after they put together the proposal, they wanted to continue as the developer. We were not interested in that," Lewis says.

Clare eventually dropped out as well, leaving OutFront without a project partner.

Instead of choosing one of the remaining three developers, Goodman recommended that the City Council award the development contract to OutFront.

The gay-rights group had not submitted a development proposal. It did not have funding lined up. It had no architectural plans. The neighbors and developers were furious.

"She gave it to somebody who didn't have to participate in the process," says one of the developers. "It was just disgusting."

One developer considered a lawsuit. Others swore not to build in Minneapolis—at least while Goodman reigned downtown.

"The community was getting screwed, and at every instance was rebuked and rejected by one council member, who was making moves behind the scene," says a member of one of the development teams. "All the shady backdoor dealings—that's sort of where a lot of the bitterness and frustration came."

The neighbors who had volunteered their time were as outraged as the developers and architects.

"To me personally, when this happened it was frustrating, because I felt like everyone's time had been wasted," Jana Metge, secretary of the neighborhood group, testified in court documents. "And if they had a plan for 1501, they should have done a direct sale and not put everybody through all this work." (Metge would not comment for this story.)

The neighborhood group lost volunteers, who felt their work had been ignored.

 

"She had her own ideas about Nicollet Avenue," says Cook, the Loring Park board member. "She particularly objected to the idea of high-density and hotel, for some reason, which was never very clear to us."

Today, the meter farm still sits as it did three years ago—an empty parking lot on the corner of 15th and Nicollet. OutFront Minnesota's project has been set aside due to funding issues.

BRAD HOYT SAYS he came to Minneapolis with an ambitious plan. His development empire, Continental Property Group, had mostly specialized in large, square, commercial space. Now he wanted to create something special.

"I wanted to build something that had some lasting significance and that I'd be proud of," Hoyt says.

Hoyt found a parcel for sale—a parking lot at 401 Oak Grove St. on Loring Hill. He hired the firm of famed architect Garth Rockcastle to come up with the design. Hoyt wanted to build a slender, 21-story condo tower that would shape the city's skyline. He would call it Parc Centrale.

Goodman's office made clear that Hoyt must convince the neighbors first. The tower concept met a tepid reception, and opposition quickly mounted. One of the leaders was Scott Mayer, a friend of Goodman's whose 13th-story view would be affected if Hoyt prevailed. Mayer worked on a petition drive that collected 800 signatures.

Hoyt was also striking out with Goodman. At their first meeting, Hoyt mentioned that he was interested in another Loring Park property, the old Eitel Hospital.

"All of a sudden, her demeanor changes," Hoyt says. "She said, 'You're not buying the Eitel Hospital. Magellan's buying that building.'"

Hoyt was put off. "At the end of the day, how did she know Magellan was going to buy it?" he says. "Her campaign contributors and friends from Chicago?" (Campaign records show that the CEO of Village Green, the company working with Magellan on the Eitel Hospital project, contributed $200 to Goodman in the past 10 years.)

Hoyt saw the writing on the wall. As his public-relations effort with Goodman and the neighbors failed, he began to plot his legal revenge. He told his team to keep detailed notes of all meetings, emails, and phone calls. Then, the day before the City Council shot down his project, Hoyt bought the property. The move gave him legal standing to sue.

Hoyt next applied to build a seven-story residential building on the site. The project sailed through the planning process easily. Hoyt changed direction and got tenants lined up for an office building. But the building got held up when Goodman unilaterally implemented a development moratorium for the area.

The moratorium applied to Hoyt, but it didn't include the old Eitel Hospital, which was in the same neighborhood. Magellan, the developer, had been approved to build 39 stories. "That really raises my blood pressure," Hoyt says.

Goodman had pissed off many a developer before. But they tended to swallow their anger because they'd have to work with her again. Not Hoyt. He had successfully sued other cities. And he had plenty of money.

One night, Hoyt was having drinks with restaurateur Josh Thoma, who owns La Belle Vie.

"Josh says, 'I will never forget how she called you a horrible, despicable scumbag,'" Hoyt remembers.

That pushed Hoyt over the edge. He filed his lawsuit on March 27, 2007.

Goodman hounded the Loring Park neighborhood group staff and board members to provide the group's email list, so that she could send them the complaint. When they refused, she even threatened to cut off the group's funding.

The court battle dragged on for two and a half years. Skolnick, Hoyt's attorney, pursued a three-pronged legal strategy, essentially arguing that Goodman—and the city of Minneapolis—had deprived his client of fair and equal treatment.

The key question was whether Goodman had made up her mind before she voted on Parc Centrale. Unfortunately for Goodman, a flurry of email evidence showed she had taken a position, lobbied other council members, and even helped neighbors organize their opposition. She did all this weeks before she cast an official vote.

On September 16, Judge Aldrich issued his decision.

"We won and the city lost," Hoyt's attorney emailed reporters.

In actuality, Hoyt's attorney had lost on two of his arguments. The judge disagreed with Skolnick that Hoyt had been treated unfairly, finding that the city had plenty of other reasons to deny the 21-story Parc Centrale.

But the judge agreed with Skolnick's most important argument: that Goodman had made up her mind about Parc Centrale before the hearing. Her closed mind, Aldrich ruled, deprived Hoyt of a fair hearing and entitled him to monetary damages.

The decision sent shockwaves through the power corridors of the city, which could be on the hook for Hoyt's legal bills of well over $400,000.

 

The city might also be forced to pay damages. Hoyt is asking for $23.6 million—the amount he claims he would have made if the tower had been approved.

Goodman would not speak directly about the judgment, other than issuing an uncharacteristically tame written statement approved by the city attorney.

"Only after all the information was in and considered did I take a position on behalf of my constituents and based on the facts for this reason: The 21-story project was out of character with the neighborhood," Goodman's statement reads.

Two weeks ago, the city appealed the case—before the penalty phase of the case was even over. The judge found out about it on September 28, the day before he was set to hear arguments on how much money Hoyt should get from the city.

Meanwhile, Hoyt has threatened to take the case to a higher authority. He says he has set up a meeting with the U.S. Attorney's Office and is pushing for an FBI probe.

He's upset over 112 emails that the city did not initially turn over during discovery in the trial. He had to hire an outside computer expert to find them, and they proved critical for making his case.

"That's 112 counts of obstruction of justice," Hoyt says. "This is no different than Watergate."

THE DAY AFTER Aldrich's ruling, Goodman is in her office, describing her political career. Dressed in a bright green jacket and white cotton shirt, she is her usual forthright self. She talks of long hours and righteous battles fought on behalf of her ward.

"I see what I do as being a public servant," she says.

Weeks later, when she's called back to follow up on tales her political enemies have told, Goodman already knows what has been said. People have been calling her.

In each instance, Goodman can offer a detailed explanation of her reasoning. It always boils down to trying to make the best decision—not for herself, not for her campaign contributors, but for the constituents.

She seems to be baffled that anyone would think she wields so much clout.

"I just never knew I was the kind of person that generated this level of attention," she says. "I understand that people think I'm all-powerful, but I'm really not."


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