Once again how the city of Ramsey does business is being influenced by an anonymous letter.
The Ramsey Housing and Redevelopment Authority (HRA) voted 5-1 Feb. 12 to seek an outside attorney’s opinion on whether Landform Professional Services’ work under its contract with the HRA equates to serving as a real estate broker or agent, for which the company does not hold a licence.
HRA Chairman Randy Backous was absent due to illness and HRA member Jason Tossey voted against the motion.
According to the anonymous letter, which was received by the city in early January, the HRA’s “… contract with Landform, which requires it to pay Landform commission for managed service, is unenforceable because Darren Lazan… does not hold a required license to manage the sale of land in the development area.”
“Landform is not entitled to compensation for its role in selling land in the city of Ramsey because Lazan… is not a licensed broker. The city has no obligation to pay Landform and public policy and the city’s charter weigh against compensation.”
In addition to its monthly $15,000 administrative compensation for providing the city development management services for the COR, Landform receives 2 percent incentive compensation on the total capital costs of the end use of any property sold or developed in the COR, which is what the letter writer is targeting.
This letter looks like it could have written by someone in the legal profession who did not have the courage to sign it, Tossey said.
“I don’t agree with this anonymous attorney out there,” he said.
While he wants the era of the city being a master developer of the COR to be over, “I also want the people who deal with the city to know the city honors its word,” Tossey said.
“What message does this send to other contractors if we don’t fulfill our end of the contract,” he said.
There have been questions raised about the legality of the Landform’s actions, said HRA member Mark Kuzma.
The city also received a letter from local attorney William Erhart expressing concerns regarding the same matter, said City Administrator Kurt Ulrich.
Given that the City Attorney Bill Goodrich and the HRA Attorney Tom Bray have worked on the Landform contract, Ulrich recommended the HRA hire an independent attorney to give an outside opinion, which could cost up to $2,000.
Possible anomalies have been brought to light and the HRA needs to find out if it has stepped into something illegal, said HRA member David Elvig.
Contracts are very important, but HRA member Chris Riley said the HRA has to look into concerns that it could be party to something that is illegal.
The city needs to make sure that potential is taken out, he said.
“We have a contract and intend to honor it, but we need to make sure nothing illegal was done,” HRA member and Mayor Sarah Strommen said.
The HRA needs to get the opinion and take it whole-heartedly into consideration, she said.
Landform attorney Rob Shainess said the company is not concerned that the city is seeking an outside opinion, but he is wondering what the city will do differently with the opinion.
The city already has the opinion of Bray, which was kept as a confidential document, and the city knew at the time of the original development manager contract that Landform was not a real estate broker, Shainess said.
The city used the incentive compensation as a way to spread Landform’s pay over a longer period of time, he said.
To take the action to get a legal opinion on concerns raised by an anonymous letter, “will have a chilling effect on contracts,” Shainess said.
It is chilling to know an anonymous letter writer can come in off the street and challenge something the city has done due diligence on, he said.
The HRA made no decision on the Landform contract, which will be allowed to expire March 31.
“We had not made a decision on (the Landform) contract, but there was a decision to put in for a staff person, an economic development manager, and there was not room in the budget for both positions,” said Strommen.
The HRA expects to receive the outside attorney’s opinion at its Feb. 26 meeting.
Tammy Sakry is at [email protected]