Official's land deal raises hackles in Grand Marais
In late April, after a closed-door meeting and using records the city wouldn't release to the public, the director of Grand Marais' Economic Development Authority bought from the city 20 acres of scenic land overlooking Lake Superior and next to ...
In late April, after a closed-door meeting and using records the city wouldn't release to the public, the director of Grand Marais' Economic Development Authority bought from the city 20 acres of scenic land overlooking Lake Superior and next to the Gunflint Trail for $75,000 -- that he'll develop for his own zip line business.
And with the sale due to close any day now, the director is being laid off.
The circumstances of the sale and Grand Marais EDA Director Matt Geretschlaeger's subsequent layoff could appear suspicious, agrees Mark Sandbo, chairman of the Economic Development Authority.
But Sandbo and other city leaders say the deal was above-board and an effective way to get acres of unused land onto the tax rolls.
"He's going into business," Sandbo said of the reason for Geretschlaeger's layoff.
"We weren't going to fire him," Sandbo said with a laugh. "We wanted him to resign."
To some of the town's residents, the purchase by Geretschlaeger was an insider deal and a conflict of interest for someone who's responsible for advancing the city's economic interests.
"In this case, our adviser was on the other side of the table," said John Gorski, who owns a vacation rental and painting business in Grand Marais, population 1,351.
Geretschlaeger will work as the economic development director until next month, when his layoff will begin, Sandbo said. He said the sides agreed to that arrangement after he bought the land.
"You can't have a business to run and be the EDA at the same time," Sandbo said.
Geretschlaeger didn't return a reporter's phone messages left Thursday on his work and home phones,
"The meeting was legally advertised, we called for hearings, and the city said it would sell the property for the fair-market, appraised value of the land," said Grand Marais Mayor Larry "Bear" Carlson. "And it was. Period. The end."
The land Geretschlaeger bought is part of 200 acres owned by Grand Marais and Cook County.
In the '90s, community leaders had extensive discussions about what to do with the land, said City Administrator Mike Roth, but that talk died down until last month, when Geretschlaeger asked the City Council about buying it and putting a zip line there. The council had previously voted against his zip line proposal in another part of the city.
"The council liked the idea" of the new location, Roth said. "They thought it was a good fit for the property."
The city paid for an appraisal of the land by John Vigen of Duluth -- an expense Geretschlaeger is to repay -- and on April 25, the council unanimously agreed to sell the land for $75,000. The discussion before the vote was closed to the public, which is legal under state law for property sales.
At the time, the city would say only that the property was sold at its fair market value; officials declined at least one resident's request to release the appraisal, saying it was protected under the state's data privacy laws.
Though Gorski said the land has potential for development for lake cabins and condominiums, others disagree.
Because the 20-acre parcel is a steep, rocky area that's zoned recreational, Sandbo, the town's former mayor and current general manager of the Grand Marais Hotel Co., said it can really be used only as a ski hill or a zip line.
"You're not going to see it and say, 'Let's build townhomes here,' " he said. "It's not pristine land. It's billy goat land."
Gorski said his suspicion of the deal only increased when the city refused to turn over the property appraisal. City Administrator Roth initially told the News Tribune it wouldn't be turned over until the sale was closed, but when it was pointed out to him that state law classified the record as public at the time of a purchase agreement, he provided it.
That appraisal shows that Vigen valued the land at exactly $75,000. It was an amount that Vigen said was slightly below market expectation because of the land's aggressive slope, the need for specialized civil engineering work, and the likelihood of experiencing "significant public scrutiny" as the land is developed.
Selling the land to Geretschlaeger wasn't considered a conflict of interest, Roth said, because the Economic Development Authority director doesn't work for the city but for a board, and the director has the statutory authority to work on projects independently of the city.
"He doesn't need to go through the City Council," Roth said. "He may attend a few meetings a year, but not in advisory capacity or to seek permissions."
The head of Duluth's Economic Development Authority, Brian Hanson, said he doesn't see a conflict of interest in Geretschlaeger's purchase of the city land, because the vote was held in public. But he said he would have had the land sale go to a public auction.
"I think then there would be no question at all, if there was a public auction," Hanson said. "Because then you're just another bidder."
Sandbo's view of the purchase? "I think you're taking 20 acres of land that doesn't pay taxes and putting it on the tax rolls," he said.
"As an EDA person, I think that's perfect."