Documents reveal preoccupation with secrecy in selection of St. Paul Port Authority president

Original MinnPost photo by Peter Callaghan

In mid-February, a committee created by the board of the St. Paul Port Authority to find a new president had made its decision, so it went ahead and sent an offer letter to the candidate.

“I am pleased to formally offer you the position of President of the Saint Paul Port Authority effective March 1, 2016,” Nneka Morgan, a port board member and chair of the search committee, wrote on Feb. 12 to the committee’s choice, Lee Krueger, who had been the port’s vice president for real estate. “We are excited to work with you as our new President at the St. Paul Port Authority.”

That was 11 days before the port authority’s board held a public vote on the appointment.  

Krueger returned the signed offer letter on Feb. 18. But his name wasn’t made public until just before he was approved by the full board, on Feb. 23. Indeed, Morgan’s letter emphasized that “confidentiality of this offer is crucial until action by the board.”

Krueger was the only finalist brought forward by the selection committee. He was not interviewed by the board, and there was no opportunity for public comment at any point during the selection process.

In fact, the full board’s vote approving Krueger was the only part of the hiring process not conducted in secrecy.

Yet the port maintains that only the formal final vote needed to be in public under Minnesota law — a position backed by a two-decade-old court of appeals ruling. According to port staff and board members, the search committee — which sought out, interviewed, culled the field and made the decision as to who would lead the city’s economic development entity — isn’t covered by the state open meetings law. 

Vote was a formality

The examination of the port’s process for selecting its new president comes from emails and other documents released to MinnPost in response to a Data Practices Act request made on April 8.

While the board was ultimately responsible for deciding who would lead the city’s economic development entity — the offer letter signed by Krueger said it was contingent on the board vote — the documents make it clear that that board vote was merely a formality.

Lee Krueger
SPPA
Lee Krueger

For example, when Krueger signed the letter and accepted the job on Feb. 18, Marcia Ballinger, a principal in the firm used by the authority to conduct the search for a new president, excitedly told to the selection committee members: “I have received a signed offer letter!”

“Woohoo!” replied Joan Grzywinski, one of three non-board members on the selection committee. “He’ll be great.”

As early as Feb. 12, Ballinger wrote St. Paul Mayor Chris Coleman to provide an update to the search process. “The name of the new President will be shared with the staff directly before the board meeting on the 23rd. Until then, we hope to keep the name of the finalist confidential.”

The port staff, selection committee members and Ballinger were usually careful to not include the names of finalists or the winner in their communications. The members were made to sign confidentiality agreements, and Grzywinski even lamented that she couldn’t consult with outgoing president Louis Jambois because “we all have a cone of silence over our heads.”

Draft press releases and the draft offer letter left slots for names blank. Those who took part in the process didn’t always succeed, however, in not naming Krueger before the formal board vote.

Two days before the formal vote, for instance, Krueger forwarded a copy of the board agenda to Ballinger, triggering her response: “Thank you!! Congrats again!”

The day before the board meeting, Jambois forwarded to Krueger copies of a press release announcing the appointment, adding: “FYI. Key documents for tomorrow’s big whoop.”

Also on Feb. 22, search committee vice-chair and one of two port authority board members on the committee, directed Ballinger to bring 10 copies of “Lee’s resume,” to the board meeting.

An open meetings pioneer, once upon a time

Minnesota’s open meeting law, first adopted in 1957, is intended to prohibit public officials taking action at secret meetings, where it is impossible for the public to be informed about a board’s decisions or to detect “improper influences,” the supreme court has written. The court also said the law is there to assure that members of the public have an opportunity to present their views to the public body.

Yet various rulings over the years have muddied and eroded the law’s power. In particular, a 1993 state court of appeals ruling, Sovereign v. Dunn, found that a subgroup of a government body that doesn’t include a quorum of a government’s full board or council is not covered by open meetings. 

Since the Sovereign ruling, government agencies that have used open processes — such as the recent hirings of the Minneapolis schools superintendent and the St. Paul police chief — do so not because they are legally required to, but because they choose to.

Marcia Ballinger
Ballinger Leafblad
Marcia Ballinger

Case law surrounding open meetings laws in other states says the public must not only be allowed to watch final votes but to watch how officials reached their decisions. That is, boards are required to show their work, not just their answers. And subcommittees that take actions short of a final decision — including taking “negative” actions such as eliminating candidates or options — can be required to be disclosed.

Minnesota appeals courts, however, have issued at times conflicting rulings that have muddled any sense of what is required under the law, especially when boards that are covered by the law create subcommittees or task forces. In a 1988 ruling, Minnesota Daily v. University of Minnesota, for example, the court of appeals found that a presidential search committee wasn’t subject to open meetings requirements because it wasn’t the ultimate decision maker in the process.

“The presumption of openness is not absolute, and it may be outweighed by other concerns,” wrote Judge D.D. Wozniak, who went on to write that “the [Minnesota Supreme Court] has endorsed a balancing test between ‘the public’s right to be informed’ and its ‘right to the effective and efficient administration of public bodies.’”

The opinion stated that it didn’t mean to declare that an entire search process could be done outside the public eye. “The regents cannot avoid public comment of a controversial matter by delegating the choice of a president to (the advisory committee),” Wozniak wrote.

The court also was satisfied that the committee wouldn’t simply recommend a single finalist “thereby effectively closing the entire selection process” because university lawyers assured the judges that multiple finalists would be interviewed in an open meeting.

But those two assurances — an opportunity for public comment and the use of a sole finalist to keep the entire process secret — were negated by the 1993 Sovereign ruling.

“We hold that a gathering of public officials is not a ‘committee, subcommittee, board, department or commission’ subject to the open meeting law unless the group is capable of exercising decision-making powers of the governing body,” wrote Judge Daniel Foley.

Only if a subcommittee of a governing body is empowered to act on behalf of that body would it be subject to the law. But that sets up a circular argument — proving a search committee is subject to open meetings is dependent on the committee being formally empowered by the full board to make a decision.

In the case of hiring a president for the Port Authority, only the full board can make that decision. And with the authority’s hiring of Krueger, the documents make clear, all but the formal vote was delegated to the search committee, which felt empowered to not only decide on a finalist but offer him the job.  

Who hired Lee Krueger?

For the port authority to keep the meetings of the selection committee secret, it had to assert that it, and not the selection committee, made the hire.

In an interview in March, Port Authority Board Chair Harry Melander said:  “We empowered the selection committee to be our eyes and ears. We trusted their judgment and I can tell you, in fact, if there was an issue we would have had a lively debate.”

Board chair Harry Melander
Ever-Green Energy
Board Chair Harry Melander

But in her comments to the board on Feb. 23, Morgan used terminology that presented Krueger not as a nominee but as the winner: “… the person we have chosen …,” “… the selected candidate …,” “… we decided on the candidate before you …,” “… the reason we selected this candidate….”

And this: “This is the candidate we unanimously decided on at the committee.”

Moreover, the letter she sent to Krueger offered him the job, not the opportunity to be interviewed by the board for the job.

The port staff and board members have said the process to hire Krueger was the same as that used to hire Jambois.

But according to minutes of the board’s Sept. 29, 2008, meeting, when Jambois was hired, the process used then was similar, but not the same. Jambois was brought to the board for confirmation after the search committee “unanimously agreed to extend an offer” to him. But unlike this year, Jambois was interviewed by the board, who asked him questions covering his earlier meeting with port staff, his references, his reasons for leaving his previous job and what he knew about the port itself. He was then excused from the room while the board voted.

Krueger, having been on staff, was a known entity to the board so members felt there was no need to interview him, Melander said.

But the notion of having a single finalist seems to have gone counter to what was communicated to at least one board member earlier in the process. St. Paul City Council Member Dai Thao, one of two council members on the port authority board, asked port senior vice president Lorrie Louder questions about the process, according to an email from Louder to Ballinger.

St. Paul City Council Member Dai Thao
St. Paul City Council Member Dai Thao

Thao wondered whether the board or the search committee would make the final decision on the candidate. Then, according to Louder, Thao asked “whether or not the full Board will be advised about the top several candidates, so that those not on the Selection Committee can review and comment.”

Ballinger sought Jambois’ advice while drawing a distinction between “top several candidates” and “a couple of candidates.”

“My understanding is that the full board will interview the top couple candidates, but will not be advised about the top ‘several candidates,’” Ballinger wrote. If “several” candidates rather than “a couple” candidates are interviewed, she wrote, that would trigger public knowledge of their names.

“I would have to circle back to candidates and let them know that their name is to be made more ‘public’ than I thought.”

Jambois did not appear to respond via e-mail but later wrote to Louder that she should “circle on back when you’re around and I’ll share the plan with you.”

There were no written communications with Thao in the documents obtained by MinnPost, but neither “several candidate” nor “the top couple candidates” were made available for Thao or other members of the full board to interview.

Thao said that he did not recall ever hearing back from either Louder or Ballinger. He said he asked the questions to assure that there were diverse candidates among the finalists. He learned of Krueger’s selection at the Feb. 23 board meeting. “I was told it was a confidential process so the selection committee didn’t reveal any of the that information,” Thao said.

“I ended up with the conclusion that there was a selection committee and I trusted they would do their very best to find the best candidate, and I respected that it was confidential because some of the candidates didn’t want to be known,” he said. “I respected they would make the right decision.”

Would St. Paul ever consider such a process to select someone for a top job, such as the police chief?

“I don’t think that would work well,” he said.

‘Anything but open government’

When the port staff announced that the board would be acting on a new president, several reporters expressed concerns over the process. One, Sam Black of the Minneapolis-St. Paul Business Journal, wrote to Jambois, Louder and the port’s attorney, Eric Larson, asking port staff to release the name of the sole nominee before the meeting.

“I can’t believe that the announcement of the new CEO for a public, governmental body like the Port Authority won’t be public until the same meeting it is considered for approval,” Black wrote. “This is anything but open government in my opinion.” He cited several other instances where governing bodies release the names of finalists.

Black then made a formal DPA request for “any and all communications that have been sent via email or regular mail in advance of Tuesday’s meeting that mentions the name of the candidate.”

Nneka Morgan
LinkedIn
Nneka Morgan

Three days later, Louder wrote back: “The Port Authority has no records in response to your request.” While Louder may have had no way of knowing — and was unlikely to have had time to search — the documents provided to MinnPost under its DPA request shows records may have existed that named Krueger prior to the board vote.

Port officials have argued that they would not get top quality candidates if applicants — even finalists — were to become public. Those applicants might not want current employers to know they are job hunting and don’t want to suffer professional embarrassment if they are named but not hired.

Other government entities, however, conduct public searches and still make hires. And there is an argument that a public process can expose a candidate’s flaws before they are hired.

The response to another media inquiry suggested that the port thinks its method for selecting a leader is superior to that used by other entities such as those referenced by Black. “Can you give me a hint as to why you suspect there will be more media interest with this replacement,” wrote Sarah Horner of the Pioneer-Press in St. Paul.

“I’m not sure it’s a big story at all,” Jambois wrote to Horner, “unless someone considers an efficient, effective, orderly and timely public sector leadership transition to be unusual,” adding a smiley face emoticon.

Other port board members have described how they took lessons from what had been a messy process to appoint a new superintendent for Minneapolis Public Schools. But in that case, and the appointment of a new police chief in St. Paul, a more-public process was used because the public demanded it, a level of scrutiny the port authority, whose members are appointed, seldom receives.

A ‘highly confidential’ process

In October in announcing his retirement, Jambois sent an email to staff and board members regarding a replacement process that included a recommendation that a search firm be hired.

“… these firms aren’t cheap. But it’s the right way to go,” he said. He then asked for two board members to volunteer to serve on a selection committee, something that would require a lot of their time for meetings, interviews “and, of course, the selection of a successor.”

Louis Jambois
MinnPost photo by Tony Nelson
Louis Jambois

In order to be sure that the search committee not be subject to open meetings law, Jambois wrote that “it is my recommendation that a Search Committee consists of no more than 2 Board members.”

While three firms apply to be hired as the search firm, Jambois recommended Ballinger-Leafblad. In their letter accepting the commission and describing the process they will follow, the partners also stress that the process is “highly confidential.”

“After the search is completed, we respectfully request that written materials related to the search process be destroyed,” Ballinger and her partner, Lars Leafblad, wrote. A later version amends that request to say that the firm would “provide a copy of the candidate materials for the organization’s HR records.”

The full board selected Morgan Regal to be chair and vice chair of the search committee. Jambois appears to have selected the three “public” members, who were not voted on by name by the full board. They were former port authority board chair Grzywinski; Ken Johnson, Jambois’ predecessor as president; and Jonathan Sage-Martinson, who was named because St. Paul Mayor Chris Coleman wanted someone from his administration on the committee.

Of course, the names of the “public” members were kept secret at their request until the final appointment of the new president was made Feb. 23.

‘I have a huge problem …’

The documents obtained by MinnPost also reveal how locally focused the search was, and how much interest St. Paul Mayor Chris Coleman expressed in the process.

As Ballinger was preparing materials to advertise the job, board members weighed in. Regal, an executive with Securian, said he thought the expertise needed was available in the region; that a national search wasn’t necessary.“Let’s get more granular and East Metro focused,” Regal told Ballinger. “… remove the picture of Target Field and replace it with CHS Field. And for that matter, remove the Vikings picture and replace it with the MN United Soccer team.”

The port, he noted, had helped with property transactions for CHS in Lowertown and was working to secure leases and environmental cleanup for the Midway soccer stadium site.

Committee member Johnson agreed with a St. Paul focus and the “removal of information useful to out-of-state candidates.”

The changes were made and Ballinger asked a port staffer preparing a press release to change “national search” to “broad search.”

St. Paul Mayor Chris Coleman
MinnPost file photo by Terry Gydesen
St. Paul Mayor Chris Coleman

“The search committee has a strong feeling that knowledge and experience in our region is very important,” she wrote. “I wouldn’t want to give the impression that the majority of candidates will come from out of region. Perhaps one or two, and only if their experience is spot-on.”

In his email briefing of Coleman, Sage-Martinson noted the “chatter” about not conducting a national search but a local search.“Not sure if they feel they have one or more strong contenders in mind,” he wrote.

The documents also show that Coleman wanted to be kept informed throughout the process. At one point, he complained that he hadn’t been consulted about possible candidates. “I have a huge problem with a search firm that puts together targets without talking with me,” Coleman wrote to Sage-Martinson. “Who’s doing the search?” And later, “Even the Science Museum [of Minnesota] search team called me looking for names.”

In early December, Jambois received an email from Coleman’s staff asking for a meeting between Ballinger and the mayor. Before responding, Jambois wrote Ballinger saying “of course I’ll have to say, ‘Yes,’ ” but telling Ballinger that the meeting “will be a bit of a finesse job for you.” Jambois wrote that if the mayor appeared to be pushing specific candidates, “… at least a couple of the Selection Committee members wouldn’t want to waste their time with this process if they thought the Mayor was going to make the selection anyway.”

Replied Ballinger: “I would be delighted to meet with Mayor Coleman and will handle the meeting with discretion.”

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Comments (10)

  1. Submitted by Jim Million on 08/01/2016 - 12:01 pm.

    Thank you, Peter

    This is MinnPost journalism at its best. While many readers likely don’t follow Port Authority shenanigans, some have known of this “closed shop” collective for many years.

    While many detractors speak in terms of “crony capitalism,” I focus on “capital malfeasance.”

  2. Submitted by Jim Bernstein on 08/01/2016 - 12:34 pm.

    This Is Not How Governance Is Supposed To Work

    While the Port Authority may have not violated the Open Meeting Law, it danced right to the edge of it and was clearly seeking to keep the appointment “in house” and to eliminate any public scrutiny of both the decision and process.

    When public agencies like the Port Authority act so cavalierly to evade the Open Meeting law, it creates rightful skepticism and disdain for the governance of public agencies.

  3. Submitted by Paul Udstrand on 08/01/2016 - 01:10 pm.

    Yeah…

    Weird stuff goes on over there with the St. Paul Port Authority. Explain for instance how it is that the State built two brand new buildings, one for the Health Dept. and the other for the Agriculture Dept. over by the Capital, but the buildings themselves ended up being owned by the Port Authority who now collects rent from the Health and and Ag departments?

    • Submitted by Jim Million on 08/01/2016 - 03:28 pm.

      And, then:

      There was that beautiful building erected just over the Robert St. bridge some years ago to anchor redevelopment of those river flats. It sat empty for quite awhile, so the State moved our Dept. of Revenue into the place so that rent would support the IDR debt service. It may have been this gambit that finally brought the Feds to town, resulting in a pretty sharp slap on the public development wrist.
      [Discussed in earlier MinnPost article]

  4. Submitted by Bill Kahn on 08/01/2016 - 01:28 pm.

    Yes, thanks; it is extremely gratifying to hear that a municipality with a strong mayor/council government has the same sort of problems with the control from below the elected government and any semblance of government by the people. Mayor Chris Coleman seems almost as superfluous to the function of government as the mayor of my city, Minneapolis.

    As the piece relates, the redevelopment arms of St. Paul and Minneapolis are strikingly similar, largely because the laws creating these government creatures have been tweaked regularly since their creation. They have a great deal of freedom to act on their own and get approval, if required, at some time along their way. A good analogy might be that of owning a pet, and like others, this pet does both things we want and things we may not be so crazy about, but get used to.

    Only question is if your redevelopment authority is a dog or a cat; I prefer the former, but we are sort of stuck with the feline model.

  5. Submitted by Jon Kingstad on 08/01/2016 - 01:37 pm.

    Great Journalism

    I agree with Mr. Million. I’d add that this is journalism at its best and why we need a strong “Fourth Estate” to keep an eye on our government.

    One detail. The precedent for the “recommendation/final decision” interpretation of the Minnesota Open Meeting Law goes back to the 1982 Minnesota Supreme Court decision in Hubbard v. City of Afton in which Mr. Hubbard sued Afton for a violating the law. Hubbard complained that it violated the Open Meeting Law for a subcommittee of 2 planning commission members to meet in private to discuss a Hubbard application to site his radio towers on some protected geological formations in the City. The Court ruled that the subcommittee lacked any decision-making authority so it was not a “board” under the Act.

  6. Submitted by Sean Olsen on 08/01/2016 - 01:59 pm.

    Not a good look for anyone here

    Including the search firm which ought to know better given its oft-trumpeted deep connections in the community and especially all the public officials dancing around the edges of the law here.

  7. Submitted by Ray Schoch on 08/01/2016 - 02:25 pm.

    Sam Black is correct

    This is anything but “open government.” It’s much more the antithesis, and I’m not going to be too picky about whether it’s called “crony capitalism” or “capital malfeasance,” it’s still a process pointedly and quite obviously designed to AVOID public knowledge, much less involvement. If the Port Authority is a private entity, the wording and intent of the law allows for this, but if the Port Authority is a public body, funded with public dollars, the people responsible for this process (Mayor Coleman included) deserve, at the very least, a public reprimand (there’s a quaint old phrase…) from a judge who carries some legal weight.

  8. Submitted by Allan Wilson on 08/01/2016 - 03:59 pm.

    Secret Selection

    The very antithesis of Open Government.

    I assume he passed all the smell tests at the local Lodge, correct?

  9. Submitted by Tom Goldstein on 08/09/2016 - 05:50 pm.

    Port Authority Malfeasance

    Just another day in St. Paul politics…

    If St. Paul residents are wondering why the public ended up footing the bill for a $7 million cleanup of the CHS Ballpark site after the Port Authority purchased the Gillette Building without including a standard clause that would have indemnified the city for pollution costs, the recent selection process for a new Port Authority President should set off all sorts of similar alarm bells.

    The Port Authority is essentially the development arm of the city, but its track record is dubious at best. According to a 2011 StarTribune article, “Between 1974 and 1991, the Port Authority issued about $429 million in development bonds that paid for 139 projects, including warehouses and industrial parks designed to broaden the tax base. But more than 60 percent of the value of those projects evaporated in the real estate bust of the late 1980s.”

    http://www.startribune.com/st-paul-port-authority-lawsuit-ends-with-settlement-ok-d/132752538/

    So here we have a government agency striking deals that make Donald Trump seem like a savvy investor. As a result of the agency’s mismanagement–that’s what you call it when investments lose 60% of their value–“Bondholders will receive 20 cents on the dollar in interest for their holdings, said attorney Keith Broady, who represented them. So the holder of $5,000 in bonds would receive $1,000.”

    Normally, an organization or entity that squanders 80% of investor value goes out of business or is declared bankrupt; at the very least, the agency would be completely reconstituted with aggressive oversight, transparency, and accountability. But that’s not the St. Paul way.

    Instead, we treat malfeasance and insider corruption by ignoring it. That might explain why the Port Authority is the lead agency for managing the cleanup up of the polluted Bus Barn site.

    You can’t make this stuff up.

    Kudos to Peter Callaghan and MinnPost for actually doing investigative journalism in the Twin Cities.

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