EDA struggles with finances; board considers director layoff

At the monthly meeting of the Cook County-Grand Marais Joint Economic Authority, or EDA, on Tuesday, Feb. 9, Director Matt Geretschlaeger was not at his usual place alongside the board of directors.  Instead, he sat in the audience.  This is because the EDA hasn’t had the funds to pay Geretschlaeger in over a month, which is a violation of state law, according to EDA Attorney Mike Hero.  Hero was at the meeting and told the board that they should have consulted him about the situation with Geretschlaeger sooner.

“One of the problems that I’ve been having is that I haven’t been involved in certain things that I think were important to have legal counsel at least consulted with,” said Hero.  “And, unfortunately I get to read about it in the paper instead.  The most recent example would be the example with the director not being paid.”

Hero explained that even with an employee’s consent, it is illegal to withhold payment for more than 31 days.  At the time of the meeting, Feb. 9, Geretschlaeger had not been paid since the Jan. 4.  The board discussed laying Geretschlaeger off, but decided instead to cut his hours and benefits by 50 percent, until the agency regains its financial footing. 

Part of the reason the EDA is currently short funds is because of legal fees paid out to defend itself in an MPCA action related to stormwater runoff violations at Cedar Grove Business Park.  The MPCA levied $277,000 in fines against the EDA after repeated citations for stormwater violations went unaddressed by its contractor, KGM, during construction of the park.  The EDA has been contesting the fines and so far it’s cost the agency about $50,000 in legal fees.  Attorney Mike Hero briefed the board on the status of the MPCA action, and for the most part, it was welcome news. 

 “The basic terms of the settlement have been agreed to between the parties and a bunch of that has been performed,” said Hero. “The original fine was proposed at $277,000.  That we got reduced to $120,000.  Of that $120,000, the EDA will pay zero.  KGM will pay $120,000 dollars.”

But the issue can’t be put to rest yet.  Hero said that there is still a dispute with the EDA’s contractor, KGM, regarding unfinished work at Cedar Grove.  The EDA and its engineering firm SEH contend that KGM did not fulfill its contract and that work from the original punch list remains to be completed in the park.  Because the project is incomplete, Hero has advised the EDA not to sign the final stipulation agreement that would settle the case.  Signing it would make the EDA responsible for any further stormwater violations at the park. Time is an issue for the EDA; if construction of the business park is not complete and the stipulation agreement is not finalized by June, the MPCA will file a lawsuit.

A special committee has been formed to discuss the future of the EDA, in light of its current shortage of funds and projected budget deficits.  The committee will include representatives from the Cook County Board of Commissioners, the Grand Marais City Council, and the EDA board.  A meeting is scheduled for this week, but is not open to the public, according to County Commissioner Bob Fenwick, who is heading up the committee.