Riverfront Double Play

According to an old saw, every city has its conflicts of interest, but only in Minneapolis do they call them civic responsibility. A case in point: When Peggy Lucas was recently reconfirmed for a second term on the Metropolitan Sports Facilities Commission, no one asked about the fact that she's also a partner in a potential real estate development on the Minneapolis riverfront, near where the MSFC hopes to operate a new Twins stadium.

One of the two locations where Minneapolis officials would like to see a new stadium is the stretch of largely undeveloped riverfront between the Whitney Hotel and Interstate 35W. Lucas is a one-third partner in Brighton Development Corp., which has an option on the North Star Woolen Mill, next door to the Whitney, and is negotiating with the city to get development rights to another nearby parcel. Brighton hopes to renovate the historic structures for use as luxury condos.

The subject wasn't discussed six weeks ago when the Minneapolis City Council reappointed Lucas for another four-year term on the commission, an all-volunteer panel that oversees the state's publicly owned sports facilities. The governor appoints the MSFC's chair, and the council picks the other six commissioners. Alice Rainville, head of the council panel that handles the city's MSFC appointments, says she didn't know Brighton had development options near the stadium parcel.

"[Lucas's] business dealings didn't come up," says Rainville. "I'm sure you've brought that to her attention and she's an honest and conscientious person." Rainville and other officials say they aren't concerned about the issue because the MSFC hasn't yet been involved in site selection. "One can always recuse one's self for a specific issue," Rainville adds. (It's true that the MSFC hasn't taken a position on where downtown a new stadium should be built, but the seven-member panel has formally asked the Legislature to build a new ballpark in Minneapolis.)

Lucas herself is stunned that anyone would perceive her dual roles a potential problem. "You're not really going to write a story about this," she said when contacted last week. "I mean, I can't believe anyone would consider it a conflict." Lucas says she first applied for the MSFC post because she has a history with amateur athletics and a personal interest in women and sports. Reporters from other newspapers have known about her dual roles for some time, she adds, and never thought it noteworthy.

Brighton has a long history of helping city officials fulfill their vision for Minneapolis's downtown and the neighborhoods that ring it. And if the trajectory of that relationship is any indication, one reason no one has perceived a conflict is that in the eyes of many city officials, having a "good" developer participate in downtown planning equals good planning.

Brighton got into the housing business as the owner of low- and moderate-income rental properties. In 1988, it and several other development companies bought the troubled Riverside Plaza apartment complex from the U.S. Department of Housing and Urban Development. One of Lucas's partners in Brighton is Dick Brustad, who up until 1980 headed the Minneapolis Housing and Redevelopment Authority, forerunner to the Minneapolis Community Development Agency.

At the time, city officials persuaded HUD to sell Riverside Plaza to the city at a hefty discount, even though other bidders reportedly offered more. The MCDA then sold the complex to an investment consortium that included Brighton, which continued to receive public subsidies for renting apartments to low-income families.

About two years later, Brustad was appointed president of the Minneapolis Public Housing Authority, putting him in the unique position of overseeing the subsidies paid on the hundreds of Section 8 units in Brighton's low-income housing projects, many located in downtown Minneapolis's Elliot Park neighborhood. He no longer heads the agency, but serves on its board.

Brighton went on to develop market-rate housing, including two posh projects--Lourdes Square and the Marquette Townhouses--near St. Anthony Main. In contrast to Riverside Plaza, the condos reportedly sell for up to three-quarters of a million dollars. Lucas herself lives in one.

Brighton is often described as having an inside track with the city. Many of its projects have received tax subsidies, and last year the city granted it a controversial waiver from a Northeast Minneapolis development moratorium to renovate a block of East Hennepin Avenue. Currently, the MCDA is seeking legislation that would allow taxes to subsidize the planned riverside condos.

Last December, Mayor Sharon Sayles Belton drew fire for circumventing the City Council when she proposed spending $500,000 for a Mill Ruins Park near the proposed locations of both Brighton's townhouses and a new stadium. (The council later approved the funding.) Critics hinted that the mayor's support for the park was tied to her relationship with Brighton's owners, who have been her financial and political supporters.  

Indeed, Sayles Belton has made no secret of her "dream" of transforming the no man's land between the Milwaukee Depot and 35W into a pedestrian-friendly mix of entertainment and upscale housing. That vision for the riverfront is most fully articulated in "Downtown 2010," a recent joint-planning effort of the business-sponsored Downtown Council and the city. Lucas served on the housing subcommittee of the task force that put together the 15-year growth plan.

The vision makes a certain amount of sense. According to the Minnesota Historical Society's expert on the area, David Wiggins, there are only so many good ways to simultaneously preserve and use historic properties. Housing would be a good use in part because it would help complete a riverfront neighborhood anchored on the east by St. Anthony Main, Nicollet Island on the north and the Stone Arch Bridge and a future Mill Ruins Park on the south. The Children's Theatre Company is reportedly considering renovating the Washburn-Crosby mill complex as its new home.

"The whole district has tough adaptive reuse propositions," says Wiggins. "Brighton is one of the few folks in town with pockets deep enough to try it." Brighton's most recent preservation efforts, the renovation of the East Hennepin block that now houses Bobino's wine bar and other small businesses, have won praise.

"They're not doing this out of charity," notes Wiggins. "They're looking at the way loft housing is taking off in Chicago. They have some real serious [buyer] interest in these projects."

One reason Lucas sees no potential conflict between her business dealings and her MSFC post is that she feels the kind of buyers Brighton hopes to attract to mill-district condos would be put off by living next to a stadium. She says Brighton is already fielding calls from potential buyers worried about traffic jams. "We have to talk real fast to keep their interest," she says.

That might be true, but if it is, it wasn't contemplated by the downtown planning task force Lucas herself participated in. The city describes high-end residential developments and sports facilities as mutually beneficial. The right mix of projects could turn the now-moribund strip of land into a pedestrian-friendly destination, according to "Downtown 2010."

Lucas waited until after Brighton publicly released its plans for the North Star building to write to MSFC Chair Henry Savelkoul, disclosing her financial interest in the developments. "I don't believe that my work on these projects creates a conflict of interest for me as a member of the Metropolitan Sports Facilities Commission," the January letter explains. "As you know, the Commission has not been involved in choosing a site for a potential new ballpark. It is also true that, should a ballpark be built on either of the sites selected so far by the City Council, it is unclear whether a new stadium would be a positive or a negative interface with potential homeowners." Lucas added that if a conflict arose, she would abstain from debate on the issue. "Certainly, the work of the Commission is too important to compromise in any way."

In Minnesota, the legal definition of a conflict of interest is quite narrow. The statute outlines a legal conflict as one in which a public official "would be required to take an action or make a decision that would substantially affect the official's financial interests or those of an associated business, unless the effect on the official is no greater than on other members of the official's business classification, profession, or occupation." The provision is rarely enforced, notes Ethical Practices Board Executive Director Jeanne Olson, because officials almost always have the option of abstaining from a given vote.

In addition to providing legal opinions to officials wondering where they stand, Ethical Practices keeps public records of officials' property, investments, and sources of income. When she was first appointed to the MSFC in 1993, Lucas filed a disclosure statement with the board listing Brighton's low-income projects. In 1995, she amended the disclosure to include the firm's market-value properties in Northeast Minneapolis. But Lucas says she didn't know she was required to list development options until after she was contacted by City Pages. Since then, Lucas has amended her file at the Ethical Practices Board to include the North Star project.

Several local officials say Lucas's potential conflict isn't common knowledge. City Council member Jim Niland says he's unaware Brighton has projects underway so close to the city's preferred stadium site. "I think if that's true it creates at least the perception of conflict," he adds.

Likewise, Sen. John Marty (DFL-Roseville) says he knows nothing about Lucas or Brighton's plans to restore the textile mill. But he says there's a big difference between state law and what the public perceives as conflicts of interest. "If somebody is serving as a public official on the MSFC and they have a financial interest in land located near a likely location for a new stadium, they should not only disclose their interest, but they shouldn't be involved in discussions over development of the stadium, either."  

But for the most part, local officials seem to feel that Brighton's and Lucas's multiple roles in riverfront development are business as usual. Council member Walt Dziedzic, contacted for this story, didn't even deem the subject worthy of discussion. "Whatever," he snapped. "There's a lot juicier ones out there than that."

City Pages intern Margaret Delehanty contributed to this story.

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