SIOUX FALLS, S.D. (KSFY) - Sioux Falls City Councilors Theresa Stehly and Pat Starr have penned an ordinance to repeal the bond that is set to fund the mixed-use parking ramp on 10th and Phillips Ave. in downtown Sioux Falls. They held a heated press conference at the downtown Sioux Falls library on Wednesday afternoon.
Stehly said they've been working with City Attorney Danny Brown on the legislation.
"I was opposed to this project from the get-go," Stehly said. "Multiple taxpayers have voiced their concerns to me about this project. Businesses downtown are concerned."
Stehly voiced concern about the public-private partnership for months when the City refused to disclose which private investors were involved.
The $50 million mixed-use parking ramp and development project relies on nearly $21 million in taxpayer dollars. The city council voted 6-1 to approve the ramp back on Dec. 6 after heated debate. Councilman Starr tried to abstain from the vote, when he was told he wasn't allowed to, he walked out.
"In light of recent revelations concerning Legacy Development we are bringing an ordinance to repeal the bonding of the $21 million multi-use parking ramp," Stehly said.
Last week, KSFY News obtained court documents from the U.S. Attorney's office that show Aaron Hultgren, owner of former construction company Hultgren Construction, is under federal criminal investigation. The company, since dissolved, was behind the Copper Lounge renovation project, when the building collapsed on Dec. 2, 2016, killing 24-year-old Ethan McMahon.
Hultgren is an employee of Legacy Development, the developer the City selected for the mixed-use parking ramp. He and Legacy owner Norman Drake are backers for the project.
"We have four guarantors on the contract and as part of the settlement agreement they admitted no fault and wrongdoing," Councilman Staff said. "But at the same time didn't have the resources to pay a $20,000 fine, but at the same time have the resources to guarantee a $30 million building."
In April, OSHA assessed $200,000 in fines to Hultgren Construction and found the company violated 23 OSHA policies. Two of them were willful violations, meaning the company intentionally ignored OSHA rules.
Back in June, the DENR told KSFY News reporter Erika Leigh it had cited Hultgren Construction and CLP Investments, LLC and that a settlement and compliance agreement had been reached on May 23.
DENR spokesperson Kim Smith issued this statement to Leigh on June 19:
"During follow-up investigation DENR determined that Hultgren Construction improperly removed asbestos-containing pipe insulation from the basement of the former Copper Lounge building about one month prior to the building collapse on December 2.
DENR determined that Hultgren Construction violated state asbestos emission control and disposal standards. Therefore, DENR issued a notice of violation on April 20, 2017, to Hultgren Construction, LLC, and CLP Investments, LLC (the building owner at the time of the violations occurred) for these violations. A settlement and compliance agreement was signed on May 10, 2017, and both parties were determined to be in compliance with the notice of violation and settlement and compliance agreement on May 23, 2017."
During KSFY's investigation into the improper asbestos removal, the DENR said it concluded all of the asbestos removed and disposed of, happened about a month prior to the building collapse and that no first responders on scene were exposed to the materials.
On Wednesday, the DENR disclosed settlement documents to KSFY News that show an agreement absolved Drake's company, Copper Lounge Partners, (CLP) and Hultgren Construction of the fine because both companies were dissolved and no longer planned to do business. Both companies asked for a waiver due to "inability" to pay. The imposed fine was $20,151.50.
"This partnership --- Legacy Development -- ties the city of Sioux Falls to this company with an 80-year contract," Stehly said. "We think it is prudent to slow down."
Drake issued responses to Leigh's question of why they were unable to afford the DENR fine on Wednesday, stating:
"The Settlement Agreement recites that it was, 'negotiated ... in good faith to avoid the costs and risks of prolonged and complicated litigation.' The Settlement Agreement states that there is no admission of liability and provides that payment would be suspended if other conditions were performed. They were and, therefore, there was no “fine” to be paid. Neither Aaron Hultgren nor I were, individually, parties to the Settlement Agreement."
Additional, Drake said he and Hultgren as personal guarantors of the project, something Community Development Director Daren Ketcham, who was at the press conference Wednesday, explained.
"The city has secured personal guarantees from the four members of the corporation," Ketcham said. "That means beyond their company, they as individuals, would pledge their personal assets to support this project if need be if something were to happen with the company."
Still, Stehly and Starr said council members have an obligation to do the right thing for taxpayers.
"We have an obligation on the City Council to vet this out and make sure the process is as pure as possible ... for the sake of our citizens," Stehly said.
The first reading of the ordinance is schedule for next Tuesday's city council meeting on Jan. 2.
Stehly and Starr introduced an additional ordinance this afternoon that will take another recently changed ordinance to Sioux Falls voters.
Back in September, Mayor Mike Huether broke a 4-4 tie over a proposed amendment by Councilman Rex Rolfing to the City's election ordinance to do away with the plurality requirement to win a City Council seat, forcing the winning candidate to achieve a 50 plus one percent. Previous rules said the top vote-getter only needed to achieve 34 percent of the vote.
Stehly said this will cause a runoff elections that will cost taxpayers $80,000 and she and Starr believe the taxpayers should vote on how they elect their city officials.