Last updated on 2014.01.16
...and you can see and Feel the Surge(!!!) of the "Forward Madison 2" launch...
My neighbor Ashley Kenneth Allen attended the Lake Area Improvement Corporation's dog and pony show promoting its "Forward Madison 2" economic development initiative, which is counting on taxpayers to pick nearly a third of the tab for attempting to bribe businesses into moving to or expanding in Madison. When Allen saw the list of businesses who get handouts from the LAIC, he got to wondering if maybe a majority of the Madison City Commission has a conflict of interest in voting to transfer hundreds of thousands of dollars to the LAIC:
Once again, the Lake Area Improvement Corporation (LAIC) is asking our Madison City Commission and Lake County Commission for additional funding, this time for the new "Forward Madison 2" program. The original program lasted 5 years and was led by the LAIC. Executive Director, Dwaine Chapel, has presented a "pamphlet" to the City Commission along with a request for a 5 year, $625,000 tax payer funding commitment from the City of Madison for this "recharged and refocused" program. At this time, there have been no specific plans, detailed financial records, or business plans provided to the public. I have been told that local officials have seen detailed records. LAIC officials state they will focus on Job Creation/Retention, Housing, and Retail Development. It may be a suitable use of taxpayer dollars, but I expect that the City and County officials will fully evaluate and obtain the detailed plans before voting on such funding.
However, this letter is not about the successes or failures of the original "Forward Madison" program or how the LAIC managed that program. I am writing today to discuss issues of "conflict of interest" and "crony capitalism". The LAIC is a private development corporation, even though it receives tax payer funding through the City of Madison and Lake County. Because the LAIC is a private corporation, they do not disclose what specific money and or resources are being given to other local businesses for economic development.
A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other. The presence of a conflict of interest is independent from the execution of impropriety. Therefore, a conflict of interest can be discovered and voluntarily defused before any corruption occurs.
Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, and so forth. Self-serving friendships and family ties between businessmen and the government influence the economy and society to the extent that it can corrupt public-serving economic and political ideals, even on a local level.
A research and analysis document entitled "ROI Benchmark Analysis: Forward Madison" was prepared by the NCDS Inc. for the LAIC and outlines the efforts made in the original Forward Madison program. Page 9 of this document lists the companies that were "assisted" over the five year program. We do not know from the report if this is a financial, "in-kind", or other type of assistance. Three of the 57 businesses listed include East River, Rewards Runner (owned by Bulldog Media), and Prostrollo's. Again, the report does not indicate what type of assistance was given.
Last fall, I asked the City Commissioners and Mayor to abstain from voting on any funding for the LAIC if they are currently or previously employed by a company that works with or has been assisted by the LAIC. For the record, Scott Delzer is employed by Bulldog Media, Karen Lembcke is employed by Prostrollo Auto-Mall, and Gene Hexom was employed by East River for 36 years. The commissioners did not feel there were any conflicts of interest and all of them voted on funding requests from the LAIC. According to the LAIC's report, the commissioners I have listed have had work relationships with companies that were "assisted" by the LAIC Forward Madison program between 2007 and 2011.
As stated above, there does not have to be any impropriety for there to be a conflict of interest. I am not accusing anyone of impropriety or wrong doing. However, I believe these public officials should refrain from voting on any budgetary and policy items if there is even a slight potential of a conflict. When this does not happen, it can lead to improprieties and appearances of crony capitalism. It would be ethically correct to recuse themselves and abstain from voting on issues regarding the LAIC. At this time, I am not advocating voting "yes" or "no" on these requests. I want a fair and unbiased vote on this request.
I am unable to find a code of ethics on file for our City Commission. If there isn't one, it needs to be created. We need to include language that prohibits public officials from voting on budget and policy issues that can benefit them individually or the businesses that they represent.
I believe these specific commissioners should abstain from voting on the matter of giving $625,000 tax payer dollars to the LAIC over the next five years. I would expect Lake County Commissioners to act in the same manor (if any of them have a potential conflict of interest).
The merit of the funding request for the "Forward Madison 2" program is a different argument for a different day.
Sincerely,
Ashley Kenneth Allen
Mr. Allen also recorded last week's LAIC meeting in three parts. Put on your hip-waders and enjoy:
Part 2, wherein Madison advertising jumps the shark. "It's Time to Feel the Surge!... Recharge! Move Forward! Jolt into the Future and Envision a Bigger, Stronger, Modern Madison! It's Time to Execute, and You're Taking Charge! Right Now, You Have the Power to Shock Forward Madison 2!" Yes, well, maybe shock therapy is Madison's solution:
And at 40 seconds into Part 2, when you follow that marketing flash and dash with, "I suppose by now you know that the co-chairs of this group are Moe, Larry, and Curly," well, I really don't need to blog any commentary. Thanks, Curly.
Part 3, wherein any shreds of energy manufactured by that video opening have dissipated entirely. The speaker gamely asserts that anyone who says Forward Madison failed will hear a different story from the managers of the companies who got handouts from the LAIC. Why yes, I'm sure we would....
I would really like to know the names of businesses in Madison who have asked for help from this group and if they were turned down. Hopefully, everyone has an equal opportunity to get the support.
Ruth - small business owner.
Is this $625,000 being requested only from the city, or a share of it or more from the county too? I can't understand why the city/county do not insist upon full disclosure when giving away that much taxpayer money. It doesn't seem like a responsible way to treat the taxpayers. Ashley, you need to run for the city commission!
I agree with Linda and Ruth.
There needs to be more transparency. The LAIC needs to include more people from the community on their committees. They need more open communication and they need to show the public the accounting books if they want to continue getting taxpayer handouts.
Our city leadership must recognize conflicts of interest when they arise and do everything to be open and honest about these situations. An open government allows the public to make sure it is a fair government.
We need people to ask tough questions, demand results, and hold people accountable. We do not need "rubber stamp" politicians.
The individuals on the city commission are good people, but some are playing some closed door politics. Let's open the door, the windows, and maybe the skylight and let everyone see what is going on. Maybe invite a few common people in to have coffee around your dinner table.
The "Forward Madison 2" program now has a retail component and and I am excited to see how this will evolve. Our efforts over the last year have changed the message from the LAIC for sure. They went from saying "we don't do retail" just last spring to it now being a critical component of the Forward Madison 2 program.
I have asked the Director and Board Members of the LAIC for permission to participate in their organization and subcommittees. Per the LAIC bylaws, anyone that makes a contribution to the organization becomes a member in good standing for 2 years and has a vote at the official annual corporation meeting. I have asked to become a member of their organization and I am awaiting a information on that request. I am eargerly awaiting details on how I can help move Madison forward. I feel though that I am getting the "run-around" and I am expecting the LAIC to pass new bylaws making it harder for a guy like me to join their organization. I guarantee you that if I do become a member of the LAIC and have a vote, I will work to open the lines of communication with the public. There were many good people that I talked to at the LAIC meeting that have the same committment to fairness and transparency, unfortunately there were still some individuals that I met that could not be "bothered".
Open and honest government. Is that too much to ask? If you don't want to disclose your records the the public, don't take taxpayer money.
Now... how many of you are willing to contact your public officials and demand accountability, transparency, and open communication?
Can you feel the SURGE now? Are you SHOCKED? Economic development is SUNDAY SUNDAY SUNDAY! MONSTER TRUCKS START AT 8 PM SHARP! BE THERE!
(Video 2 with the opening commercial really is the "best".... strange that no one clapped for it.) :/
Remember when I wrote a letter to the editor this spring discussing our "marketing" message. I am sure this new EXTREME campaign will SHOCK AND AWE people into starting new businesses.
http://legis.state.sd.us/statutes/DisplayStatute.aspx?Statute=6-1-17&Type=Statute
There may be a perceived conflict of interest for some of the Council Members. Agree that perception becomes reality in a small community. However legally, according to SDCL 6-1-17, there needs to be a direct monetary benefit in order to be considered a legal conflict of interest.
Justin,
You are correct on the law and there being a direct connection.
I am not accusing anyone of inpropriety or wrongdoing. I am talking about keeping the public's trust, being open, and disclosing relationships. There are many in this community that want to know who is benefiting from these financial handouts. When there isn't a full accounting and disclosure to the public, it can creat uncertainty and appearances of crony capitalism. This can be more harmful than reality.
Believe me, people are talking about it around town. I have hand tons of people approach me in person, by phone, through email, and facebook. They all want to have a better understanding of how our city government is spending our money. They want fair rules for everyone, equal opportunity, and no favoritism.
The LAIC has been viewed by many as an "in-between" organization for redistributing tax money to select businesses. I think they have done many great things, but some of the major mistakes come down to common sense. In the videos, you will see the LAIC Leadership say it is a Public/Private partnership. If that is the case, they need to start disclosing a lot more to the public.
The City Commission couldn't be bothered to help with our school renovation projects, but they give millions in land and money to the Private LAIC. They are considering giving $250,000 to the Private Country Club, with some commissioners openly stating that it was a great idea. We seem to be giving a lot to these privately controlled organizations, but failing our basic public needs.
There is deficit in common sense leadership in our small city.
The big question is, if there is public money given to the LAIC, and then the LAIC "assists" businesses that a public official is employed at, is that a direct or indirect connection? What do people think about this type of connection with a "man in the middle"? Is it a potential conflict of interest? It is a valid argument and needs to be discussed by everyone in our community.
Linda,
Looks like they want another $35,000 dollars per year for five years from Lake County. That would be another $175,000. Keep in mind, this is in addition to the yearly funding that the City and County already give to the LAIC. That would be $800,000 dollars in additional taxpayer funding.
The Radio Station has a great article and audio clips from the presentation to the County Commission.
http://www.amazingmadison.com/LAIC-presents-Forward-Madison-II-request-to-Lake-C/12093854
It will take leadership change so run Ashley for city commission. Many people who watch Madison affairs are ready for a little shake up. We seem to have only one guy currently on the city commission who is willing to question how things are, and we need two for starters.
Here is just a question. How can we put this to a vote? this needs the community as a whole to decide if Mr. Chapel did his job the first time.
Very good discussion. I have spoken with some of my family/friends who live in town (Madison) regarding this, and it seems that no one quite seems to know what exactly the LAIC is really doing. If I still lived there, it would make me very nervous to give that much money and not know exactly what is being done with it.
"The big question is, if there is public money given to the LAIC, and then the LAIC “assists†businesses that a public official is employed at, is that a direct or indirect connection? What do people think about this type of connection with a “man in the middle� Is it a potential conflict of interest? It is a valid argument and needs to be discussed by everyone in our community."
We live in a small community, how do you expect the majority of people that are elected to city commission to not be an employee at a local business or an employer at a local business. It's blasphemy to look at a list of local businesses and tell our commissioners that because they are involved in the business district that they don't have a vote in a matter of giving public money to a corporation with a high priority on economic growth.
The commissioners were elected because they are well known, well liked, business men and women of this town. If you want to remove any commissioner from a vote on LAIC that has to do with giving funds to local businesses because they are currently involved in the business district.
This is ridiculous, I'm sorry but good luck finding someone to vote on an LAIC issue, that you can't draw a cute little line on a piece of paper linking them to having involvement with a business in the community...that's why they got the job in the first place!!!
Stop looking for a conspiracy theory...to choose 3 businesses out of 60 and say that these commissioners shouldn't be able to vote is an outrage...we live in a small town, stop trying to throw a wrench in it just because these organizations don't want a complete radical that looks for these crazy connections like you Cory.
Blasphemy? Interesting choice of words. True in a small town conflicts happen more easily, but all the more reason to be transparent about contributions, recipients and relationships.
I am leary of the LAIC requests for large amounts of cash from the City of Madison and Lake County. I am even more leary of those requests being honored by those respective commissions as they have in the past. There is no accountablility, no oversight and no regulation in regard to the LAIC's relationship with the public. As a stubborn conservative I would like to see all requests for tax payer funds denied by both commissions. I am not naive enough to believe that would ever be the case. Might I suggest an oversight committee within the county or the city that would make it their business to see how this large investment is being maintained and distributed. Accountablility must be a priority. If I promise to make Lake County a better place to work and live in the future, but do not give specific plans, details, budgets, or format; I will make my routing and account number available to anyone who wishes to donate their funds to me despite my lake of direction so that they may help me "make Lake County a better place to work and live." More over, isn't the LAIC at the mercy of the city and county? Are they going to refuse the public funding if we step up and put some strings on how it is spent? Of course not! It's your (my) money. Take care of it like you would any other investment.
I can't help but bring to mind a once famously butchered saying regarding Forward Madison 2...
"Fool me once, shame on you. Fool me twice, shame on me."
John I am with you in believing that the LAIC should have to support their budget with a transparent plan, however I don't blame the commissioners and view them as being corrupt just because they happen to associate with one of 60 businesses...and blasphemy seemed like a fun word to use today..and its used in the tense as to presume that these commissioners are corrupt is very dishonorable and lacks respect.
Once again Cory has taken a subject that could have some meaning (transparency of the LAIC budget) and twisted it into a conspiracy theory of corruption in our city commission. The focus should be on the LAIC, its ability to gain access to public taxes, and its ability to assist local businesses with that money. Not on how we have commissioners that are within our business district, that have to vote on economic improvement through a private corporation...it's a small community, of course they are involved with local businesses. We voted them in, we as a small community must trust these people and the decisions they make. However, if we have an issue with the transparency of the budget, we should bring it up. Not condemn the commissioners who somehow have "something to gain", which I do not see....the businesses mentioned in this article, all can show that over the last 5 years they have been very good at creating new jobs, and keeping young educated college graduates in this town. Anyone can say forward Madison has failed, but in my eyes, seeing the jobs that have been created through the initiative, and watching people I went to college with and myself included be able to find jobs in their career right here in Madison, is something that 5 years ago wouldn't have happened.
John - no one said there is corruption happening; on the contrary Ashley (who wrote the letter to the editor) says he is not accusing anyone of wrongdoing (see 3rd paragraph of letter).
It is a conflict of interest. In a larger city, such as where I currently live, a commissioner would abstain from the vote if there was a conflict of interest. The point is to avoid any possible thought of impropriety. I don't see an issue with that.
John E., anyone can say Forward Madison succeeded, but I can say it failed by looking at clear, publicly available, objective evidence. Compare their stated goals in 2006 to the outcomes in jobs, sales tax revenue, and population, and you see failure. I need no conspiracy theory or crazy radicalism to make that point. I need cast no aspersions on any commissioner, city or county, to second Matt's point and say that the responsible use of tax dollars requires much more in the way of clear upfront benchmarks and accountability to warrant handing $160,000 a year of taxpayer dollars over to this program.
$160,000 a year would hire four good city employees to provide public services for everyone. $160,000 would buy three or four new police cars. $160,000 would put four more cops on the beat. $160,000 would buy a lot of new books and computers for the library. $160,000 would buy a lot of lumber for park tables, picnic shelters, and a new bandstand at Westside Park. $160,000 would acquire a lot of right of way and lay a lot of bike path around the county. Every one of those uses would provide immediate, tangible benefit to the community.
I don't think it's at all radical or crazy to require the LAIC to prove with objective evidence that it can provide more direct public benefit than any one of the above projects before giving it the huge handout it desires. (Remember, John, when you start trying to make the issue about me, you lose track of the real issue.)
By the way, John, did Bulldog Media produce that Surge video?
The problem is perception. You are handing off public dollars to a private entity. Many organizations could lay claim they do economic development for the area. Organizations like Dakota Rural Action do tremendous work with beginning farmer support, local foods, etc. Yet many would distrust the "political twist of DRA" if they received tax dollars. But the same is true with LAIC and their political views like their unwillingness to work on tax reform in this state or their unwillingness to take GDD on with his cuts to Medicaid and education last session. Residents may just have a problem with an organization-not with their work up front but the political agenda that is tied to the perspective of that organization. Again whether it is right or wrong, public dollars is going to a private entity--an entity that may not reflect the political views of many residents here in the area.
Heather, putting LAIC funding to a vote requires going to Jeff Heinemeyer (city vote) or Bobbi Janke (county vote) the day after such funds are approved and taking out a referral petition. Voters have 20 working days after a commission vote to collect signatures from 5% of registered voters in the jurisdiction to refer such a vote to the public. (See statute on county referendum and city referendum.)
It seems that the LAIC can't figure out how to relate to their efforts to the rest of the world. I'm fairly well-informed about what is going on in Madison yet I'm not sure what the LAIC's director does.
How much effort would it take to start a blog and do regular postings? If Cory can push out several researched posts every day while working a full time job and spending time with his family, why can't the the man in charge of the LAIC do one or two a week? Dakota State has plenty of students looking for internships. They could help.
Michael, the LAIC doesn't understand real openness and participation. They understand crony capitalism. They don't quite understand marketing, although that's all they think in terms of. It's not about supporting two-way, multi-voiced communication. It's about shaping a message, getting everyone to mouth the same propaganda, and slapping down anyone who challenges the party line as "not a team player."
That's part of why their video is so absurd. It's ears-plugged marketing on steroids that ignores really inviting people to create a new program and share ideas.
If the LAIC can attract businesses to the area through their marketing efforts than they can do it locally as well.
Point of clarification. The LAIC did ask for $35,000 per year, but the county already contributes $25,000 in the organization's annual budget, so in reality, I took it to mean they are asking for $10,000 per year or a $50,000 contribution to Forward Madison 2.
Point taken, Elisa! Perhaps my calculus should include the $140K the city already gives the LAIC in addition to the $125K Dwaine wants for FM2. (No results, and he wants a 25% boost: that takes gall.) So really, for five years, the LAIC would get $1.5 million in tax dollars from city and county combined... and no accountability? No public transparency? That takes real gall.
If over the years you operated on a Trust Me, Hands Off Principle from which you benefited, and then new voices demanded accountability, would you resist it?
"Hell God Damn Yes." That's what my Army drill sergeant liked to say.
Jerry Prostrollo croaks: http://www.argusleader.com/viewart/20120226/OBITUARIES/202260341/Jerry-Prostrollo