2007-03-13 Key Dates & L Kruse Transcript
Key Dates
2003 Summer Albertville Flood 8+ inches of rain
2003 November Larry starts work for City of Albertville
Plat approved - cooperative venture with City facilitating project for multiple
2004 owners
2005 September SiQnificant rain event, fish in Prairie Run Cul-de-sac
2005 November Couri letter to withold buildinQ permits on about 25 lots boardering weltlands
2006 May Gold Key sues
2006 December City issues letter to Gold Key holding building permit on entire development
2007 August Court orders release of building permits
2007 September City approves Letter of Credit reduction
Key Points
Market peaked in 2005
Last town home permit issued was in AUQ 2006
Approximately 1500 vacant lots in Albertville immediate market area
Housing slow down because of financing, jobs, gas, congestion, longer
commute times
Building revenuew down approximately 2/3 from 2004
Assessments certified in late 2005 for first payment in May 2006, then October,
etc
Letter of Credits
$680,000 Municipal Improvements
$53,000 Off-site improvements
$58,000 LandscapinQ improvements
New Home BuildinQ Permits
2001 & 2002 = Over 200 per year
2003 & 2005 = Over 100 per year
2006 & 2007 = 90 and 54 respectively
2008 6
Questions
Do you believe it is right for the City to stop development several years after
approval.
This has been a difficult situation for all involved. The Developer, the builders,
the developer's engineer who everyone relied on, the City's consulting engineer
and the City. When you find fish in a cul-de-sac and other significant flooding
after a less than 100 year rain event, the City has the obligation to ask question
and make sure the Developer plan works. It is unfortunate and in a perfect world
the answer to your question is yes.
.
1
1 STATE OF MINNESOTA DISTRICT COURT
2 COUNTY OF WRIGHT TENTH JUDICIAL DISTRICT
3 Gold Key Development, Inc., a Minnesota corporation,
4
Plaintiff,
5
vs.
File No. 86-CV-06-2998
6 City of Albertville,
7
De fen d ant / T 11 i r d Par t y ..P la i u,t iff,
DEPOSITION OF
8 vs.
LARRY KRUSE
9 Short Elliott Hendrickson, Inc.,
MARCH 13, 2007
10
Third Party Defendant.
11 T/C Homes, Inc., a Minnesota corporation,
12
Plaintiff and Cross Claimant,
13
vs.
File No. 86-CV-06-4997
14 Gold Key Development, Inc., a Minnesota corporation,
15 Defendant/Third Party Plaintiff,
16 vs.
17 Hedlund Engineering,
18 Third Party Defendant,
19 vs.
20 City of Albertville,
21 Defendant/Third Party Plaintiff,
22 vs.
23 Short Elliott Hendrickson, Inc.,
24
Third Party Defendant.
25
KIRBY A. KENNEDY & ASSOCIATES
(952) 922-1955
Larry Kruse, March 13, 2007
1 STATE OF MINNESOTA DISTRICT COURT
2 COUNTY OF WRIGHT TENTH JUDICIAL DISTRICT
J Gold key Develop.ent., Ine., .. MiDDe.ata corporati.on,
4 Pt"lntlft,
5 "8. f11. No. 8'.CV'O"~!i98
6 Clt)' ot Albert vl11e,
i Oet end.." t! Th I..-d P;o. rt y PI" I ~.t 1 t t.
8 "...
DJ:POSITXON OP
9 Short Ell. at.t H."dr,ek,,:>n. I nc.
LARRY UUSI
10 Tilt ,.d Pal"ty Oat end..".
IO.Jl.CB 13, 2007
11 TIc He..e, Ine . " Minn..ota corporat.ion.
12
Pla.nt.ff &r.d Croee Cl&""6nf.
13 .., ~
F11. No. B6-CV-n~ 4~~'
14 Gtl, d Key Oe".ltlp"'.nt. I tiC'.
M. nn."ot.. corpOr6t I cn.
15 aefend"n<_ ;Thlrd p" n. y Pi6l0t 1 t f
16
. / .-: ',", ~'-'j'" r?~ t';
1'~ ( ') '. .l'\,
I! 'I'''';'
''-.'"'' "",- _ r " "
\'''''_ ,-11 L.
17
Hedl"nd En9'n..erlll9.
18
Thl rd P....ty eet end..nt.
19 ,,~
20 c. t 'i or 41 t.e...t..,. lie.
21
0.. t "n d 6 n tiT h . ,. d P.. I't i PI.. I n ~ . f f .
22 "!!.
23 Short El j. ct t Hend... .ek"on. J nc..
24 Till rd P6r'.y O.t."d6<d.
25
1 The Deposition of LARRY KRUSE. taken pursuant to
2 Notice of Taking Deposition, taken before Randall D.
3 Herrala, RPR. a Notary Public in and for the County of
4 Wright, State of Minnesota, taken on the 13th day of March,
5 2007. at 9321 Ensign Avenue South, Bloomington, Minnesota,
6 commencing at approximately 9:10 a.m,
7
8
9 APPEARANCES:
10
11 CINDI SPENCE MATT, ESQUIRE. of the Law Firm of
12 JOHNSON, LARSON. PETERSON & MATT, P.A., 908 Commercial
13 Drive, Buffalo, Minnesota 55313. appeared for and on behalf
14 of Plaintiff Gold Key Development. Inc.
15
16 JASON J. KUBOUSHEK. ESQUIRE, of the Law Firm of
17 IVERSON REUVERS, llC, 9321 Ensign Avenue South, Bloomington.
18 Minnesota 55438, appeared for and on behalf of
19 DefendanVThird Party Plaintiff City of Albertville.
20
21 JOHN A. MARKERT, ESQUIRE, of the Law Firm of
22 COLEMAN. HUll & VAN VLIET. PllP. 8500 Normandale Lake
23 Boulevard, Suite 2110. Minneapolis, Minnesota 55437,
24 appeared for and on behalf of Third Party Defendant Short
25 Elliott Hendrickson.
Kirby A. Kennedy & Associates 952-922-1955
3
1 APPEARANCES (CONTINUED):
2
3 STEPHEN E. YOCH, ESQUIRE. of the Law Firm of
4 FElHABER LARSON FENLON & VOGT, P A, 444 Cedar Streel Suite
5 2100, SI. Paul, Minnesota 55101-2136, appeared for and on
6 behalf of Plaintiff and Cross Claimant TIC Homes, Inc.
7
8 ANTON J. VAN DER MERWE, ESQUIRE. of the Law Firm
9 of ARTHUR CHAPMAN KETTERING SMETAK& PIKALA, PA. 500 Young
10 Quinlan Building, 81 South Ninth Street, Minneapolis,
11 Minnesota 55402-3214, appeared for and on behalf of Third
12 Party Defendant Hedlund Engineering.
13
14
.The Original is in the possession of
Attorney Cindi S. Matt."
15
16 INDEX
PAGE
17
_. Cross-Examination by Ms. Matt
5
18
Cross-Examination by Mr. Yoch
51
19
Continued Cross-Examination by Ms. Matt
81
20
Cross-Examination by Mr. Markert
157
21
Cross-Examination by Mr. Van der Merwe
166
22
Recross-Examination by Ms. Matt
171
23
24
25
2
4
1 LARRY KRUSE DEPOSITION EXHIBITS
MARKED
2
94 - Plat of Prairie Run Addition, 41
By Hedlund Engineering. August 2004. four pages
3
4
5
95 - letter, To Cindi Matt and Stephen E. Yoch. 61
From Jason J. Kuboushek. Re: Gold Key
Development. Inc. V. City of Albertville v.
SEH, Inc.. and TIC Homes. Inc. V City of
Albertville v. SEH, Inc.. March 13,2007;
Attached City of Albertville Council Minutes
Of February 5.2007; 15 pages
6
7
8
96 -letter, To Mike Couri. From Robert L Moberg. 102
Re; Summary of Issues to be Resolved,
November 23.2005. CITYATTY 0154 - 0155
9
10
97 - City Council Minutes, City of Albertville,
December 19. 2005. seven pages
114
11 98 - City of Albertville's Supplemental Answers to 135
Gold Key's Interrogatories, Gold Key
12 Development, Inc.. vs. City of Albertville vs.
Short Elliott Hendrickson. Inc..
13 December 28, 2006, four pages
14 99 - letter, To Gold Key Development. Inc.. From 144
City of Albertville. Larry Kruse, Re Revised
15 Figure for 100-Year Flood Elevation and the
Highest Known Water Elevation for the Prairie
16 Run Plat. December 1.2006, three pages
17 100 - Application for General Storm-Water Permil for 147
Construction Activity. By Larry Kruse, City of
18 Albertville. July 22. 2004, CITY 0910 - 0942
19 101 - Storm Water Pollution Prevention Plan (SWPPP), 147
NPDES General Stormwater Permit for Construction
20 Activity No. MN Rl0000l, Project 2004 Prairie Run,
Albertville, MN, May 12.2004. CITY 0943 - 0951
21
22
23
24
25
1-800-545-1955
Pages 1 through 4 of 176
Larry Kruse, March 13, 2007
5 7
1 LARRY KRUSE, 1 Q. How long have you held that position?
2 the Witness in the above-entitled 2 A. Three years last November.
3 matter after having been duly sworn 3 Q. So you started that in November of 2003?
4 deposes and says as follows: 4 A. Yes.
5 5 Q. Okay. And is that an elected position. or were
6 CROSS-EXAMINATION 6 you hired for that?
7 BY MS. MATT: 7 A. Hired. Appointed.
8 Q. Mr. Kruse, my name is Cindi Matt. I represent 8 Q. And prior to your appointment, Linda Goeb was
9 Gold Key Development in this litigation. Have you ever had 9 the city administrator?
10 your deposition taken before? 10 A. That's correct.
11 A. A long time ago. 11 Q. Do you know how long she had been the city
12 Q. Okay. I'm going to go over a few ground rules 12 administrator?
13 50 that we all are on the same page as to how this is going 13 A. No, I don't.
14 to go. The court reporter is taking down your test!mony, so 14 . Q~ Can you tell me What your duties as city
15 if you would answer my questions verbally rather than 15 administrator are?
16 shaking your head or shrugging your shoulders so that an 16 A. Overall management of the city, carrying out
17 accurate record can be taken? 17 the council's directives, including - we have a utility
18 A. Yes. 18 department, street department, park department, and our
19 Q. And if you don't understand or don't hear a 19 office, the city offices.
20 question, please ask me to repeat it or rephrase it, and 20 Q. So you manage all of those departments that you
21 I'll do so. If you don't ask me to repeat it or rephrase 21 indicated?
22 it, I'm going to assume that you heard it and that you 22 A. Oversee, yes. We have department heads in
23 understood it. Do you agree? 23 various departments.
24 A. Yes. 24 Q. And so would you be the supervisor of those
25 Q. And if you need a break, let me know and we'll 25 departments?
6 8
1 finish the line of questioning and you can take a break. 1 A. Yes, the department heads, yes.
2 A. Yes. 2 Q. Any other duties of yours as city
3 Q. Are you taking any medications or is there any 3 administrator?
4 reason today that you can't testify truthfully and 4 A. We have a small staff, and my duties are very
5 accurately? 5 broad, including human resources and just all the different
6 A. No reason. 6 aspects of a typical city.
7 Q. What have you done to prepare for this 7 Q. Of a typical city?
8 deposition, and I don't want to hear about meetings that 8 A. Yes.
9 you've had with your attorney. 9 Q. Have you been the city administrator before for
10 A. I reviewed some of the exhibits briefly. 10 cities other than Albertville?
11 Q. Okay. Reviewed What exhibits? The exhibits 11 A. Yes, I have.
12 that have been introduced in the depositions, or What are 12 Q. What cities?
13 you referring to? 13 A. City of Red Lake Falls, City of Park Rapids,
14 A. I imagine all of the exhibits, a couple 14 City of Baxter.
15 binders. Ninety-some I believe there was. And I just 15 Q. Any other cities?
16 briefly - our attorney and I perused those briefly. 16 A. No.
17 Q. Have you done anything else to prepare for your 17 Q. How many years experience do you have being a
18 deposition? 18 city administrator?
19 A. No. 19 A. About 21.
20 Q. Have you read any deposition transcripts from 20 Q. And were your duties in the City of Red Lake
21 previous individuals' depositions in this case? 21 Falls, Park Rapids, and Baxter the same as your duties in
22 A. No. 22 the City of Albertville?
23 Q. And you are the city administrator for the City 23 A. Yes.
24 of Albertville? 24 Q. Do you report to anyone, or are you supervised
25 A. Yes. 25 by anyone?
2
Kirby A. Kennedy & ASSOCiates
952-922-1955 1-800-545-1955
Pages 5 through 8 of 176
Larry Kruse, March 13, 2007
1 A. I report to the city council.
2 Q. Are you supervised by them?
3 A. Yes, I guess you could say that
4 Q. Anyone else that you are supervised by?
5 A. No.
6 Q. And who is the city attorney for the City of
7 Albertville?
8 A. Michael Courl.
9 Q. And he has been for the entire time that you've
10 been city administrator?
11 A. Yes.
12 Q. And do you have an understanding of what the
13 city attorney's role is?
14 A. To provide legal counsel to the. city.
15 Q. Does Mr. Couri provide any other role other
16 than providing legal counsel to the city?
17 A. I would say it's primarily legal counsel.
18 Q. Primarily legal counsel, but does he provide
19 any other role to the city?
20 A. Not that I'm aware of.
21 Q. Who is current city engineer?
22 A. Mark Kasma.
23 Q. And he is with Bolton & Menk?
24 A. Yes.
25 Q. And how long has Bolton & Menk been city
1 engineer?
2 A. I don't know exactly, but a couple years now, i
3 suppose.
4 Q. Okay. And prior to Bolton Menk, who was city
5 engineer?
6 A. Pete Carlson with SEH.
7 Q. And does it sound roughly right to you that SEH
8 would have been city engineer from January '95 through
9 January '05?
10 A. One more time, the question?
11 Q. I'm wondering if it sounds right to you that
12 SEH would have been the city engineer from January '95
13 through January '05.
14 A. Yes.
15 Q. And then after January '05, SEH was finishing
16 up some projects, kind of random projects for the city.
17 Does that sound accurate?
18 A. They were finishing up projects that were
19 started under their previous agreement, yes.
20 Q. Under your previous agreement as city engineer?
21 A. Yes.
22 Q. Okay. Why did SEH leave or no longer be the
23 city engineer?
24 A. Oftentimes when new councils come on, they want
25 a change, and It's their discretion who they want to have
Kirby A. Kennedy & Associates 952-922-1955
3
9
11
10
1 working with - for them We had a new election, and
2 several members came on and felt that the city was due for a
3 change and sought requests for proposals for engineering
4 services.
5 Q. Was there a specific reason that they felt the
6 city was due for a change from SEH?
7 A. You know, I can't think of a specific reason,
8 no.
9 Q. Was there any dissatisfaction by the city with
10 SEH's work?
11 A. You know, I don'tthinkthere was. The new
12 council coming on had some perceived ideas that the city was
13 due for a change.
14 Q.. Was there-any dissatisfaction by the city with
15 SEH's work?
16 A. I think towards the end it became obvious that
17 the new political leaders wanted a change and-
18 Q. Mr. Kruse, was there any dissatisfaction by the
19 city of SEH's work?
20 A. I think some of the council had some
21 dissatisfaction, yes.
22 Q. Okay. Who? Particular council members?
23 A. I would say, you know, probably obviously the
24 majority because they decided to seek a different
25 engineering service, but as with all projects, you encounter
12
1 some difficulties, and I think that they just felt that, you
2 know, the cumulative effect of projects over time, so, yes,
3 they sought a different engineer.
4 Q. In what respect were they dissatisfied with
5 SEH's work? Was there a particular project?
6 A. Well, I think at the time the city engineer,
7 Pete Carlson, had suffered the loss of his son, and things
8 were happening very rapidly in Albertville. I think
9 Mr. Carlson was probably reevaluating where he was going in
10 his life and Robert Moberg was stepping in to take over some
11 of his duties. That was probabiy the biggest thing is that
12 the council never - never gained the confidence in Bob
13 Moberg, and thus I think that probably was the main reason.
14 Q. Was there a particular project that the city
15 was dissatisfied with SEH's work on?
16 A. At the time, you know, I don't -I'm trying to
17 think - probably experiencing some flooding problems In the
18 Albert Villas Addition, but I don't think It was anyone
19 specific problem. I think it was just the transition from
20 Pete Carlson to Bob Moberg, and, you know, Bob apparently
21 wasn't the right fit for our city council. I think maybe
22 the council thought that, you know, Pete Carlson had the
23 history with Albertville and that if we were going to break
24 In a new engineer, they wanted to pick the one that they
25 wanted and maybe not the one that was assigned by SEH.
1-800-545-1955 Pages 9 through 12 of 176
.
Larry Kruse, March 13, 2007 4
13 15
1 Q. You mentioned problems, flooding problems in 1 and what I can summarize is that after Pete Carlson lost his
2 Albert Villas. Was that a project that SEH had done some 2 son, some of the attention to detail appeared not to be
3 engineering work on? 3 there. Pete was transltioning a new engineer in, and at
4 A. Yes. 4 that time the council didn't take to Mr. Moberg, and that
5 Q. And the city council was dissatisfied with that 5 prompted them to pursue an engineer.
6 engineering work? 6 Q. And so at that time the council was satisfied
7 A. Well, obviously when you have flooding, you 7 with the work that SEH had done with respect to Prairie Run;
8 look at why. And so, yes, they were dissatisfied that there 8 is that right?
9 was flooding. 9 A. I think so, yeah.
10 Q. Any other projects that SEH had worked on that 10 Q. Okay. When SEH was the city engineer, SEH
11 the city was dissatisfied with other than the Albert Villas 11 wasn't an employee of the city, was it?
12 project that we just talked about? 12 A. No.
13 A. None come to mind right now. 13 Q. SO it was more of an independent contractor
14 Q. Was the city dissatisfied with the work that ~4 consultant?
15 SEH had done on the Prairie Run project? 15 A. They were a consultant to the city.
16 A. You know, at the time of the Prairie Run, when 16 Q. And they weren't paid a salary. They were paid
17 we -I believe when we ran Into the difficulties, when we 17 on a project basis. Is that correct?
18 learned of some of the problems later on, I think the city 18 A. Right.
19 was already embarking on seeking other engineers. Up until, 19 Q. Do you have an understanding of what the city
20 you know, we learned about some of the flooding problems and 20 expects as to the duties of its city engineer?
21 some - you know, I think for the majority of the project, 21 A. Yes.
22 SEH, the council was comfortable with the work that they 22 Q. And tell me what the city expects as to the
23 did. 23 duties of the city engineer.
24 Q. When the council was seeking a new city 24 A. Well, Albertville doesn't have an engineerlng
25 engineer -- well, if SEH stopped being city engineer in 25 staff, so we rely heavily on our engineering firm from
14 16
1 January '05, how much before January '05 would council have 1 initial concept of a project, you know, through the ultimate
2 started seeking a new city engineer? 2 closure of that project to provide us with guidance along
3 A. You know, I guess if I could recollect the 3 the way, along with all the other engineering technical work
4 exact time that Mr. Carlson lost his son, and, you know, 4 that gets done to bring a project through all the steps.
5 some of that just kind of gets blurred together, so I would 5 Q. And when you say that you rely on them to
6 say it followed after Mr. Carlson lost his son. 6 provide you guidance, what do you mean?
7 Q. And at the time that the city was seeking a new 7 A. They are a hired consultant that, you know,
8 engineer, at that time the city was not dissatisfied with 8 helps us formulate projects, does preliminary feasibility
9 the work that SEH had done on Prairie Run? Is that what I'm 9 studies, analyzes whether a project Is viable, makes
10 understanding you to say? 10 recommendations to the council throughout the process.
11 A. You know, I don't recall any - you know, up 11 Q. Anything else that you rely on the city
12 through the bidding and through some of the early 12 engineer to do?
13 construction, I think the majority of council was, you know, 13 A. They handle a lot of, you know, the regular
14 it was a typical project that we were doing. 14 typical duties that an in.house city engineer would do _
15 Q. And was the council satisfied with the work 15 municipal state aid, overlays, maintenance, seal coating,
16 that SEH was doing? 16 helping us put together bid packages, making sure we meet
17 A. Yes, the council was satisfied with the work 17 the Intent of the law on all of our projects as far as
18 that Pete Carlson had done. 18 whether it be financing or even providing some guidance on
19 Q. With respect to Prairie Run? 19 methods to finance - or options, I should say.
20 A. Yes. 20 Q. Anything else that the city expects the city
21 Q. SO at the time that the city council sought a 21 engineer to do as part of its duties?
22 new city engineer, the city council was satisfied with the 22 A. Well, I think we all expect all of our
23 work that SEH had done on the Prairie Run project. Is that 23 consultants, Including the engineer, to look out for what's
24 what you're saying? 24 best for the residents and anticipate problems and make
25 A. You know, the time lines kind of meld together, 25 recommendations.
Kirby A. Kennedy & Associates 952-922-1955 1-800-545-1955 Pages 13 through 16 of 176
Larry Kruse, March 13, 2007
17 19
1 Q. And these things that you're talking about, I 1 attend?
2 think you said guidance and engineering technical work to 2 A. Right now they're attending the majority of the
3 bring the project through to completion. When you're saying 3 meetings. Occasionally if there isn't an engineering Issue,
4 "project," are you meaning - can you give me an example of 4 they don't have to attend.
5 what types of projects you're meaning? 5 Q. What about in 2003 and 2004? Do you know
6 A. Well, we have multiple projects going on all 6 whether the city expected the city engineer to attend the
7 the time. The majority of them are developer-driven, and on 7 planning commission meetings?
8 occasion, like the Prairie Run project, the city got 8 A. I think they were on an as-needed basis.
9 involved to bring the landowners together to make the 9 Q. Okay.
10 project work. 10 A. I should say I don't know about 2002 and '3
11 Q. So the projects -- some of the projects would 11 because I wasn't here, but post my arrival, that's what It
12 be plats; is that correct? 12 was.
13 A. Platting. 13 Q. When you became the city administrator, was
14 Q. Okay. What else? 14 there some type of a transition meeting that you had with
15 A. Seal coat, bituminous overlays, bidding, street 15 Ms. Goeb to figure out how the City of Albertville worked
16 utility construction, water. Kind of taking a piece of 16 and what you were expected to do and so forth?
17 ground from the raw state through the development of a, you 17 A. Our employment overlapped about a month.
18 know, not only the subdivision of lots but also doing a 18 Q. So you kind of shadowed her? Is that fair?
19 review of compliance with site plans and approvals, 19 A. Yes.
20 postdevelopment of the home, so from beginning to end. 20 Q. Did you go back and read previous council
21 Q. Okay. And do you have an expectation that the 21 meeting minutes to figure out what had happened before your
22 city engineer will attend city council meetings? 22 arrival?
23 A. The city engineer attends all city council 23 A. Yes. I reviewed a lot of information during
24 meetings, and we have regular staff meetings. 24 that time.
25 Q. And the city engineer attends those as well? 25 Q. What year council minutes had you read?
18 20
1 A. Yes. 1 A. You know, I don't remember specifically, but I
2 Q. Okay. 2 did peruse the minutes, previous minutes.
3 A. We call them staff, but they're really 3 Q. So you came in November of 2003?
4 consultant meetings. I meet with the city attorney, city 4 A. Yes. You know,l recall reading 2003. I know
5 engineer, and city planner. 5 I did that.
6 Q. How often are those meetings? 6 Q. Okay. And do you - does the city expect the
7 A. Right now we meet the Tuesday after every 7 city engineer to review the engineering aspects of plat
8 council meeting. 8 submissions?
9 Q. Are there any other meetings that the city 9 A. Yes.
10 engineer typically would attend? 10 Q. All plats?
11 A. There's numerous meetings with developers and 11 A. Yes.
12 also meetings, just initiai contacts with potential 12 Q. Has there ever been a plat in Albertville that
13 developers to discuss potential projects. 13 has not been reviewed by the city engineer?
14 Q. Okay. So also meetings that are specific to a 14 A. Until I recently learned that the Prairie Run
15 particular project? 15 one, other than that, the expectation that they would review
16 A. Yes. Yes. 16 all engineering work.
17 Q. Okay. Any other meetings that the city would 17 Q. And as far as you know, they did in fact review
18 expect the city engineer to attend? 18 all engineering work related to all plats in Albertville
19 A. Pretty much any aspect where engineering 19 other than Prairie Run. Correct?
20 services or technical advice is needed. It can be a parks 20 A. That would be my expectation, yeah.
21 meeting looking at various amenities In parks, planning 21 Q. And as far as you know, they did do that.
22 commission meetings, city council. 22 Correct?
23 Q. Is the city engineer expected to attend 23 A. You know, our contract I don't believe
24 planning commission meetings, or do you just let him know if 24 specifically states that they do a review. I react to --
25 there's going to be an engineering type issue that he should 25 our engineer provides consultation and guidance, like I
5
Kirby A. Kennedy & ASSOCiates
952-922-1955 1-800-545-1955
Pages 17 through 20 of 176
Larry Kruse, March 13, 2007
21
1 said, from beginning to end, and as issues come forward and
2 If there Is an Issue, you know, they would be letting me
3 know, but they, as a part of our expectation, would be doing
4 a thorough review of that.
5 Q. Are you aware of a plat in Albertville other
6 than Prairie Run that has not been reviewed by the city
7 engineer?
8 A. No, I'm not.
9 Q. And does the city expect that one of the duties
10 of the city engineer is to review grading plans submitted
11 with the plats?
12 A. Yes.
13 Q. Does the city expect that one of the duties of
14 the city engineer is to review drainage plans submitted lor
15 plats?
16 A. Yes.
17 Q. How about storm sewer plans?
18 A. Yes.
19 Q. Do you expect that the city has to specifically
20 tell the city engineer when you get preliminary and final
21 plat documents, here they are, review them now? Do you
22 expect that you have to specifically tell the city engineer
23 something to that effect?
24 A. No. No.
25 Q. You would anticipate that the city engineer
1 knows that's one of his duties and would just do it?
2 A. Knows, and that would be our expectation that
3 they provide, you know, full service.
4 Q. Do you tell -- do you have any input into how
5 the city engineer actually goes about and reviews the plat
6 submissions, the engineering aspects of the plat?
7 A. No. No. They're skilled professionals that do
8 that on a regular basis, and they would be providing us
9 guidance, or me guidance.
10 Q. SO you don't care what method they use?
11 A. No. They know better than I.
12 Q. So as long as the review of the engineering
13 aspects of the plat documents gets done, you really don'
14 care when or how it's done. Is that fair?
15 A. As far as the technical work behind the scenes,
16 no, we don't see that at all.
17 Q. And do you tell the city engineer what type of
18 reports it has to issue --
19 A. No.
20 Q. -- to show that the engineering aspects of a
21 plat have been reviewed?
22 A. No.
23 Q. Does anyone from the city supervise the work of
24 the city engineer?
25 A. No.
Kirby A. Kennedy & Associates 952-922-1955
6
23
1 Q. And let me be a little more specific. Does
2 anyone from the city supervise the work of the city engineer
3 with respect to plat review?
4 A. You know, I would say that the council gives
5 direction for the city engineer to do some work, and I am
6 the coordinator of, you know, getting that information to
7 the city council, or the conduit, you might say.
8 Q. But I thought you testified earlier that the
9 council doesn't need to specifically direct the city
10 engineer to review a plat; is that correct?
11 A. Right.
12 Q. And I thought I understood your testimony to be
13 that the council doesn't direct or provide any input as to
14 the specific engineering methods that are used to review a
15 plat; is that correct?
16 A. Right.
17 Q. And I mean used by the city engineer. Correct?
18 A. I don't supervise. They are a consultant of
19 the city, and I am their contact at the city, and I am a
20 conduit to provide that information to the council.
21 Q. SO whatever information the city engineer comes
22 up with. they typically would give it to you and you then
23 pass it along to the council?
24 A. Yes.
25 Q. Okay. Is there anyone from the city who
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actually does a check on like calculations or the specific
engineering aspects of the work that the city engineer does?
A. That's the job of our city engineers to do
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4 that.
5 Q. Okay. And so I just want to clarify that
6 there's no one from the city that does a check on those
7 engineering calculations and functions. Correct?
8 A. No. No.
9 Q. Can you walk me through the process that one
10 would have to go through to get a plat considered and
11 approved by the city council?
12 A. Initially we, as a development team, you might
13 say.. myself, the city planner, city engineer, city
14 attorney - would meet in a predevelopment meeting to
15 discuss the process, and that entire process would be laid
16 out.
17 Q. Can I just interrupt you? You meet with who?
18 With the developer?
19 A. Right. The developer comes in and is
20 interested in developing a plat. We host a meeting and
21 proVide information on all the process and fees Involved and
22 provide him a schedule of opportunities to bring that
23 forward through the planning commission and city council.
24 And at that meeting, I think what you're asking for, that
25 long laundry list of duties or job functions, project
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Larry Kruse, March 13,2007
1 functions, are outlined and given to the developer.
2 Q. Okay. And then so would it be fair to say that
3 that initial meeting is before any preliminary plat
4 documents have been submitted, kind of in the concept phase?
5 A. Right. Right. It can be at the very initial,
6 you know, the preconcept, providing guidance and letting the
7 developer know the expectations of the city or what I, we as .
8 staff or consultants, expect that the council would approve.
9 Q. And then after that initial meeting, what
10 typically is the next step towards plat approval?
11 A. The developer would submit an application.
12 Q. For plat approval or preliminary plat approval?
13 A. Sometimes it's concept, get some gUidance from
14 the council. Otherwise it would be preliminary plat.
15 Q. Okay. And then what happens?
16 A. Well, if you're in a concept stage, they would
17 share some drawings, ask for some guidance. If they were
18 looking at a zoning change, the council would want to see,
19 you know, what probably the end users are going to be. If
20 It was just something that was zoned residential in a
21 residential development, they would come in with a
22 preliminary plat. That would be reviewed by our engineer,
23 city planner, goes to planning commission. The planning
24 commission makes a recommendation to the city council. At
25 that time we'd look at a development agreement. Our
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1 engineer and consultants would be doing reviews and making
2 comments.
3 Q. Throughout the process?
4 A. Yes. Yes.
5 Q. And when you say engineering consultants, do
6 you mean the city planner?
7 A. City planner. City planner, city engineer.
8 And we eventually go to final plat before the city council.
9 And before -I believe before the final plat would be
10 signed off on, we'd have a developer agreement that would
11 layout the expectations of the developer to the city and
12 vice versa, I guess.
13 Q. Okay. And then anything else?
14 A. I mean, I quickly summarized a very extensive
15 and detailed process. In essence, yeah.
16 Q. And after the final plat is approved, typically
17 the developer would begin development and builders would
18 begin building?
19 A. Right.
20 Q. At what stage of this platting process that you
21 described is there a public hearing?
22 A. The planning commission holds a public hearing
23 at the preliminary plat.
24 Q. And is there a particular stage of this process
25 that the city would expect that the city engineer would have
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1 conducted a review of the grading, drainage. and other
2 engineering aspects of the plat?
3 A. Our expectation would be that they would be
4 working with the developer throughout the entire process,
5 reviewing, providing guidance. And at their discretion,
6 when they feel there are issues, they bring those forward to
7 the city council. When consultants feel they are unsure
8 about Issues, they bring those forward to the city council.
9 The council then directs them.
10 Q. SO is there one particular point in this
11 process where you would expect by X point, grading and
12 drainage need to have been reviewed by the city engineer?
13 A. Definitely, yes.
14 . Q, Okay. When?
15 A. We like to have the engineer's comments
16 incorporated in the planning report usually prior to
17 preliminary plat approval. That doesn't happen on all of
18 the projects. On occasion there are .. things are approved
19 subject to the engineer's review and approval at a later
20 date to work out some of the details.
21 The Prairie Run project I recail was kind of a
22 unique one that the developer had done much of the
23 engineering, and then the only way the project really would
24 go forward with multiple landowners was that it had to be a
25 city project, and so that was a little unique I think in
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1 that the developer incorporated their plans into the city
2 plans.
3 Q. Okay. You indicated that you typically like to
4 have the engineer's comments incorporated in the planning
5 report prior to preliminary plat approval. Is that a fair
6 summary of your testimony? Typically that's how you like
7 it?
8 A. That's the way it is today. I'm not sure
9 that's the way it was early on _
10 Q. Okay.
11 A. - in my tenure.
12 Q. Okay. Do you have something in writing? I
13 mean, if you're incorporating comments into a planning
14 report, does the city engineer provide you something in
15 writing?
16 A. Not ail the time, but a lot of times he works
17 with the city planner to Incorporate their comments into the
18 planner's document, more so today probably than when I first
19 started.
20 Q. What's more so today?
21 A. Incorporating - many times I recall more
22 things being subject to the engineer's approval so that it
23 gave, you know, a lot of the discretionary decisions on
24 details to the engineer, things that the council probably
25 didn't need to spend a lot of time on that were, you know,
1-800-545-1955 Pages 25 through 28 of 176
Larry Kruse, March 13, 2007
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1 very standard in the engineering Industry to work through
2 issues.
3 Q. SO in your experience at the City of
4 Albertville have there been any plats other than Prairie Run
5 where the city engineer did not provide like a written
6 review memo type thing that would incorporate any comments
7 from the city engineer?
8 A. I don't know specifically because I haven't,
9 you know, tied the two together. Our engineer brings those
10 memos forward when he feels there are issues that need to be
11 communicated, and we look to their guidance on these
12 matters.
13 Q. SO in your experience, the city engineer only
14 brings those memos forward if there are problems with the
15 plat, is that fair, with the engineering aspects of the
16 plat?
17 A. Well, not --when they do plat review, there's
18 a lot of engineering requirements, a lot of issues that get
19 incorporated into those documents. And a lot of those
20 issues are probably some planning issues, some engineering
21 issues, and we today would get them Incorporated Into the,
22 you know, the planner's report.
23 Q. And so if there are no issues on a plat from an
24 engineering perspective, would you expect the city engineer
25 to write you a memo saying everything looks fine, we checked
30
1 grading. there's no issues, and you would incorporate that
2 into the report?
3 A. I think the majority of the time the engineer
4 writes a report, you know. Usually it's directed to me, and
5 that gets incorporated into the council communications, you
6 might say.
7 Q. Okay. How many plats have been completed while
8 you have been city administrator?
9 A. I think I'd say quite a few, but I don't have a
10 number.
11 Q. More than a dozen?
12 A. In three years maybe - I'll guess at four or
13 five a year.
14 Q. Four or five a year?
15 A. Yeah.
16 Q. Okay. And of those approximately four or five
17 plats a year that have been completed while you have been
18 city administrator. have you received a review memo from the
19 city engineer on all of those?
20 A. You know, I guess I don't know. I couldn't
21 answer that.
22 Q. Do you have the - can you go back to your
23 office and look through some documents and get me an answer
24 to that question?
25 A. Yeah. You know, we have all the files and all
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1 our correspondence in those files, so yes.
2 Q. Do you believe that of those four or five plats
3 that you have worked with each year that you've been
4 administrator that there were any that review memorandums
5 were not prepared by a city engineer?
6 A. One more time with the question?
7 Q. I'm wondering with respect to those four or
8 five plats that were done each year while you were city
9 administrator. do you believe that there are any of those
10 plats that the city engineer did not prepare a review
11 memorandum?
12 A. I don't recall any.
13 Q. You don't recall that the memo wasn't prepared?
14 . A. No, I -
15 Q. Or you don't know the answer?
16 A. A whole lot of paperwork crosses my desk, and
17 I, you know, right now a memo is not required, I don't
18 believe, and so, you know, I see memos coming across
19 regarding these projects, but when you ask me specifically
20 to tie a memo to projects and numbers, I don't know.
21 Q. On a plat, during the plat approval process, if
22 you did not receive a review memo from the city engineer,
23 would you assume that all of the grading and drainage and
24 engineering aspects of the plat were okay?
25 A. Yes.
32
1 Q. Would you go to the city engineer and
2 double-check, bring it to their attention and say. I didn~
3 get your memo, is everything okay?
4 A. No.
5 Q. SO it wouldn't raise a red flag to you if you
6 didn't receive a review memo from the city engineer?
7 A. The city engineer comes forward with a
8 recommendation on the project, and when the engineer does
9 that, there's the assumption that he's done all his due
10 diligence.
11 Q. And if the city engineer doesn't come forward
12 with a recommendation but just sits there and doesn't say
13 anything, are you assuming that he's conducted the review
14 and there's no problem?
15 A. Yes.
16 Q. Do you have any checklist that you follow to
17 make sure things are done in the plat process?
18 A. Our city planner, you know, oversees that
19 process.
20 Q. Do you know if he has a checklist?
21 A. No, I don't.
22 Q. SO you don't have a checklist that you. as city
23 administrator, follow in the plat process?
24 A. I mean, there are, you know, bigger concept
25 plan, preliminary plat, final plat, you know, those type of
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Larry Kruse, March 13, 2007
33 35
1 development agreements, bigger but not all the detail that 1 Q. SO if you saw something in the city planner's
2 goes on behind the scenes. 2 work. in a memo, or a document that was prepared by the city
3 Q. SO when you say they're bigger, you mean 3 planner that you knew to be incorrect, would you bring that
4 there's an ordinance or provision of the code that tells you 4 to the attention of the city council, or do you go to the
5 what to do. or what do you mean? 5 city planner, or what do you do?
6 A. The planning process - I mean, there's basic 6 A. It could be a combination of both.
7 steps that we follow, but I may be not understanding your 7 Q. And when you're looking at the city planner's
8 question. 8 memorandums and documents that come across your desk, are
9 Q. I'm just wondering if there is a checklist. Do 9 you looking to be sure they're accurate?
10 you look to a piece of paper and see __ 10 A. I review them. You know, I won't spend _ I
11 A. No. No. I don't have a checklist. 11 have a lot of broad functions. We're a small city with
12 Q. Okay. When a plat is submitted, do you go back 12 limited staff, and we have a trust relationship and a
13 and look at the portions of the ordinances and city code to 13 history with our consultants that they know and understand
14 see, hey, did the devel()per submlt A[3C? 14 the expectations and, you know, go about their work in a
15 A. Our city planner oversees that, consulting 15 prompt and diligent way. That's our expectation.
16 planner oversees that planning process. 16 MS. MATT: Could you read the question
17 Q. And you oversee his work, you said earlier. 17 back again, please?
18 Correct? 18 (Whereupon the requested portion of the record
19 A. Yeah. 19 was read aloud by the Court Reporter.)
20 Q. SO do you, when you are overseeing the work of 20 A. To the best of my knowledge, yes.
21 the city planner, go and check through the ordinances, 21 Q. And if you noticed any inaccuracies in
22 subdivision ordinances. those types of things to be sure 22 documents prepared by the city planner, you would bring
23 that the developer and the developer'S engineer submitted 23 those to the attention of the city council?
24 all of the things that are required for the plat process? 24 A. The city council and city planner.
25 A. The city has a trust ~elatlonship, a history 25 Q. Mr. Kruse, I had asked you if there was a
34 36
1 with our city planner, along with that, normal expectations 1 particular point in the platting process that the city
2 that he knows and understands the codes and when he makes 2 expected the grading and drainage and engineering aspects to
3 his recommendations, that they meet all the requirements. 3 be reviewed. Do you recall that?
4 MS. MATT: Could you read the question 4 A. Uh-huh.
5 back, please? 5 Q. Yes?
6 (Whereupon the requested portion of the record 6 A. Yes.
7 was read aloud by the Courl Reporter.) 7 Q. And you said that typically the council
8 A. No. 8 expected it to be done by the time of the planning
9 Q. SO your answer to that question, Mr. Kruse, was 9 commission meeting preliminary plat. Correct? That's what
10 no? 10 you-
11 A. Right. 11 A. I guess maybe I - you know,' - I look at the
12 Q. Yes? 12 development process as kind of a continuum, and there's a
13 A. Right. 13 lot of interactions that go on, so if I have to clarify
14 Q. Okay. Because you trust the city planner? 14 myself, you know, I'm not sure exactly when all those things
15 A. Right. 15 come forward in the process. Once again, the engineers do
16 Q. SO what do you do that's overseeing the city 16 this on a dally basis, and they have - they know the
17 planner's work? 17 process and what the expectations are. And right now I look
18 A. Well, when we say as city administrator, once 18 at it as a continuum, and there's reviews and, you know,
19 again, I am a conduit. I don't oversee as In an employee 19 sometimes when you get new information, you go back and
20 relationship. It's a consultant/city relationship, and so I 20 maybe things are changed or adjusted to make sure that we
21 don't review their detailed work. They get direction from 21 protect the public interest.
22 the council, and they make recommendations to the council, 22 Q. Certainly you would expect that by the time the
23 and I'm a conduit of that information to the council, and 23 council. city council approves a final plat, the grading,
24 then I'm kind of the eyes and ears of the council on a daily 24 drainage, and engineering aspects of the plat would have
25 basis in numerous meetings and interactions with people. 25 been reviewed --
9
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Larry Kruse, March 13,2007
1 A. Yes.
2 Q. - and commented on and approved by the city
3 engineer. Correct?
4 A. Yes.
5 Q. Okay. And the developer then at the time the
6 final plat is approved by the city council can assume that
7 the city engineer reviewed, commented, and approved the
8 grading, drainage, and other engineering aspects of the
9 plat. Correct?
10 MR KUBOUSHEK: I'll object to the form
11 of the question. II lacks foundation. I don't know if the
12 witness has information to make that assumption. Answer it
13 if you can.
14 Q. Go ahead, ".,
15 A. You know, our council has high expectations of
16 our consultants, and they expect them to have thoroughly
17 reviewed and dealt with any of the issues prior to making a
18 recommendation to the council for approval. 00 you want to
19 repeat the question so , _
20 Q. The city is assuming at the time that the final
21 plat is approved by council that the engineer has reviewed
22 and approved the grading, drainage, and engineering aspects
23 of the plat. Correct?
24 A. Yes.
25 Q. SO is it fair to say that the developer then
38
1 can also assume, like the city is assuming. that the
2 grading, drainage, and engineering aspects of the plat have
3 been reviewed and approved by the city engineer?
4 MR. KUBOUSHEK: Object to the form of the
5 question. Lacks foundation. Asking him to assume what the
6 developer thinks. Answer it if you can.
7 Q. Go ahead and answer.
8 A. You know, "ve always in my job understood that
9 our city engineers aren't the designer of these projects.
10 We review them, but we - you know, we don't do the-
11 reengineer it, you might say. Our expectation is that the
12 engineer reviews all the engineering on all plats to make
13 sure that it works, and the council has high expectations
14 that all issues have been addressed prior to making any
15 approvals.
16 Q. And so again, Mr. Kruse, if the city is
17 assuming at the final plat approval meeting that the city
18 engineer reviewed the grading, drainage, and engineering
19 aspects of the plat, then is it fair to say that the
20 developer can also assume that the city's engineer has
21 reviewed the grading, drainage, and engineering aspects of
22 the plat?
23 MR KUBOUSHEK: Same objection. Lacks
24 foundation. Asks him to assume what the developer knows.
25 Q. Go ahead and answer.
Kirby A. Kennedy & ASSOCiates 952-922-1955
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1 A. My assumption would be that if the council
2 approves it, yes, the developer would do the same.
3 Q. The developer could assume that the city
4 engineer reviewed and approved the grading, drainage. and
5 engineering aspects of the plat?
6 A. Yes.
7 Q. And the same thing - question with respect to
8 the developer's engineer. If the city council can assume at
9 the final plat process that the grading and drainage plans
10 were reviewed and approved by the city's engineer, is it
11 also fair to assume that the developer's engineer can assume
12 that the grading and drainage plans have been reviewed and
13 approved by the city's engineer?
14 MRKUBOUSHEK: Objecttothefonnofthe
15 question. Lacks foundation. Requires Mr. Kruse to assume
16 what the design engineer knows. Answer if you can.
17 A. You know, I think that when the city council
18 makes any approvals, they assume that everybody throughout
19 the process has done their work and is giving their
20 approval.
21 Q. SO if the city council is assuming that
22 everyone's done their work. they're assuming that - the
23 city council is assuming the city engineer reviewed the
24 plat. Correct?
25 A. Yes.
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24 Q. And what role does the city council play in the
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1-800-545-1955 Pages 37 through 40 of 176
Q. And so the developer's engineer could also
assume at that point, at the point of final plat approval,
that the city's engineer reviewed the grading, drainage, and
engineering aspects of the plat. Correct?
A. I guess I would say yes. I'm assuming what the
developer would assume.
Q. What specific role does the city attorney play
in the plat process?
A. The city attorney provides legal guidance
throughout the platting process on all of the requirements
and in the end develops a development agreement between the
city and the developer which sets up the expectations of the
city and developer.
Q. Anything else that the city attomey does with
respect to the platting process?
A. The city attorney is a part of our development
team, attends all of those staff meetings, or the majority
of them and, you know, provides legal guidance throughout
the process.
Q. As to whether the plat meets the requirements
of the city's ordinances and subdivision ordinances?
A. I would say all aspects of city ordinances,
Larry Kruse, March 13, 2007
1 Council of the City of Albertville, Minnesota, at a meeting
2 held this 7th day of June, 2004"?
3 A. Yes.
4 Q. And what does that mean to you that it's in
5 compliance with that Minnesota statute?
6 A. It means that the city council approved this
7 plat based on the recommendations of our consultants.
8 Q. And that it was in compliance with that section
9 of the Minnesota statutes?
10 A. Yes.
11 Q. Okay. And at that point on June 7th, 2004, did
12 the city believe that SEH had reviewed and approved the
13 grading and drainage plans submitted by Gold Key as part of
14 the plat process for Prairie Run?
15 A. Yes.
16 Q. And at that point on June 7th, 2004, was it
17 reasonable for Gold Key and Hedlund Engineering to assume
18 that the plans that they submitted had been reviewed and
19 approved by the city engineer, by SEH?
20 A. Yes.
21 Q. And did the city have any reason to believe
22 that the grading and drainage plans submitted by Gold Key
23 had not been reviewed and approved by SEH?
24 A. No.
25 Q. Did anyone on the city council undertake their
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the end, or what are they doing?
A. The city council receives a recommendation from
the planning commission. Our staff, primarily the city
planner, gives a thorough review, takes comments, and our
council is pretty familiar with development so they usually
have questions and staff responds - staff, I.e.,
consultants, I should say.
(At this time Larry Kruse Deposition Exhibit
Number 94 was marked for identification by the
Court Reporter.)
Q. Mr. Kruse, handing you what's been marked as
Exhibit 94, do you recognize that document?
A. Yes, I do.
Q. And what is it?
A. Plat of the Prairie Run Addition.
Q. And on the first page of Exhibit 94, the plat
of Prairie Run Addition on the right-hand -- in the second
column on the right-hand side about halfway down, that's
your signature on there?
A. Yes.
Q. On June 7th, 2004?
A. Yes.
Q. And it says above your signature. "This plat of
Prairie Run was approved and accepted in compliance with
Minnesota Statute Section 505.03 Subdivision 2 by the City
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own assessment of whether the grading and drainage plans
submitted by Gold Key Development as part of this plat
process complied with city code ordinances and subdivision
ordinances?
A. Not that I'm aware of.
Q. Did you?
A. No.
Q. Did the city planner?
A, I would say yes.
Q. Did the mayor?
A. No.
Q. Did the city attomey?
A. Yes.
Q. . And as to the city planner' and the city
attomey, what do you believe was their assessment of
whether the grading and drainage plans submitted by Gold Key
complied with city code ordinances and subdivision
ordinances?
A. In my opinion, based that they are making a
recommendation to move forward with the plat, that they
would assume that it meets all code requirements.
Q. And ordinances and subdivision ordinances?
A. Uh-huh.
Q. Yes?
A. Yes. Sorry.
42
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1 Q. Mr. Kruse, handing you what's previously been
2 marked as Deposition Exhibit 80, the June 7th. 2004, city
3 council meeting minutes, do you see in the first paragraph
4 that you were present at that meeting?
5 A. Yes.
6 Q. And then if you flip forward to the fourth page
7 of Exhibit 80, do you see the subparagraph "Prairie Run
8 Improvement Project"?
9 A. Yes.
10 Q. And then if you flip forward to the next page,
11 page 5 of Exhibit 80, it looks like about a quarter of the
12 way down, "Councilmember Beming. seconded by Councilmember
13 Rich moved to approve recording the final Prairie Run Plat."
14 Do you see that?
15 A. Yes.
16 Q. It doesn~ look to me like a whole lot of
17 discussion went on at that meeting on January - excuse me,
18 June 7th. 2004.
19 A. Uh.huh.
20 Q. Do you recall any specific discussion about
21 whether to approve this final plat? Or tell me what you
22 recall about that meeting.
23 A. I think the council was very aware of the
24 Prairie Run project and understood that staff and everyone
25 had worked with the developer through a number of scenarios.
1-800-545-1955 Pages 41 through 44 of 176
Larry Kruse, March 13,2007
1 They were very familiar with the project, and based on this
2 motion they expected the consultants and staff to have done
3 all of their due diligence and approve the plat
4 Q. And so is it a fair assessment that not a whole
5 lot of new discussion went on with respect to the Prairie
6 Run improvement project at that June 7th, 2004. council
7 meeting?
8 A. You know, I think there was discussion. It's
9 not noted here, but I think there was quite a bit of
10 discussion.
11 Q. Okay. Well. typically doesn't - who is
12 keeping the minutes of the city council meetings?
13 A. Bridgette Miller, our city clerk.
14 Q. And typically wouldn't Bridgette Mil!er,ir
15 there was quite a bit of discussion on something, wouldn't
16 she put it in the minutes?
17 A. You know, in looking at it here now I think
18 there should have been more, but she's summarizing the final
19 council action.
20 Q. Okay. Typically if there was quite a lot of
21 discussion about something, wouldn't Bridgette Miller, the
22 city clerk, note it in the city council minutes?
23 A. Not all the time but -
24 Q. Typically?
25 A. Yes. Yes.
46
1 Q. Okay.
2 A. More than what's here.
3 Q. Tell me what was discussed that's -- what was
4 discussed on June 7th, 2004, at the city council meeting
5 about Prairie Run that's not noted in the minutes?
6 A. You know, I don't recall any specifics.
7 Q. Okay. Well, you've just told me that there was
8 quite a bit of discussion about Prairie Run that wasn't
9 noted in the minutes.
10 A. Typically the council, you know, quizzes the
11 consultants on, you know, a number of issues, just the _
12 they're very knowledgeable and diligent to make sure things
13 are done right And "mjust making assumption that there
14 was some discussion on it, and once again, this whole
15 project is kind of a continuum, and I know it went through a
16 lot of different - some different concepts, and so for me
17 to remember back if there was a lot of discussion at this
18 specific meeting or it was a prior meeting, it all becomes
19 kind of melded together. Maybe I need to clarify that first
20 one. I don't remember any specific discussion at this
21 meeting.
22 Q. About the Prairie Run project other than what
23 was listed in the minutes?
24 A. Right
25 Q. So do you believe that there was additional
Kirby A. Kennedy & Associates 952-922-1955
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1 discussion at this June 7th, 2004, meeting that was not
2 reflected in the minutes?
3 A. When plats come through, the planner makes a
4 presentation to the council, and I don't remember if all the
5 issues had been resolved at this meeting or not, so if it
6 was early on when this project was in more of its infancy,
7 you know, there's probably a lot of discussion. Usualty
8 when a plat get close to final approval, staff has worked,
9 consultants have worked through all of the issues and
10 have - you know, aren't going to make a recommendation to
11 the council unless they're very comfortable that this is a
12 project where all the I's have been dotted.
13 Q. Right. And I'm just trying to figure out at
14 this particular meeting on Jll!1e7th, 2004, whether anything
15 else happened besides what's noted in the minutes.
16 A. I don't remember.
17 Q. If the planner made a presentation to council
18 about the Prairie Run project, that would be noted in the
19 minutes, wouldn't it? It would say City Planner AI Brixius
20 presented to city council -
21 A. It should, yeah.
22 Q. And it does not say that. Correct?
23 A. No. I haven't read it here all.
24 Q. Is there any document that would help you
25 recall whether there was anything else discussed at the
48
1 June 7th, 2004. city council meeting about Prairie Run other
2 than what's reflected in the minutes?
3 A. Usually the planner has a recommendation, makes
4 a presentation, has a recommendation and -let me read the
5 minutes here just a little bit
6 Q. Sure.
7 A. I would say this motion, you know, looking at
8 the other motions, this was at the culmination of a long,
9 lengthy process, and you can see by the previous motions a
10 number of things are happening in succession there, and
11 these are kind of the final steps in approval, and prior to
12 that time the council, you know, met several times on this.
13 Q. Mr. Kruse, maybe it will help you to take a
14 look at Exhibit 78, a memo from the City Planner AI Brixius
15 to yourself dated June 2nd, 2004. so just five days before
16 that city council meeting.
17 A. Okay.
18 Q. Do you recall receiving that document?
19 A. Yes, it looks very familiar.
20 Q. And that would have been received by you prior
21 to the June 7th, 2004, meeting?
22 A. Yes.
23 Q. And in that document is the city planner making
24 a recommendation as to whether the council should approve
25 the plat of Prairie Run?
1-800-545-1955 Pages 45 through 48 of 176
Larry Kruse, March 13, 2007
49
1 A. Yes. It says staff recommends approval of the
2 final plat with conditIons.
3 Q. And are any of the conditions that are listed
4 there that it is subject to review and approval of by the
5 city engineer?
6 A. I don't see any, no.
7 Q. Mr. Kruse, handing you what's previously been
8 marked Deposition Exhibit 67, do you recognize that
9 document?
10 A. Yes.
11 Q. And it's the Preliminary Plat Findings of Fact
12 and Decision. Correct?
13 A. Yes.
14 Q. '. And if you flip to the -- well,. at the bottom
15 of the first page, "Decision: Based on the foregoing
16 considerations and applicable ordinances, the Rezoning from
17 R-1A to PUD and the Preliminary Plat to be known as 'Prairie
18 Run' are approved based on the most current plans and
19 information received to date, subject to the following
20 conditions:" And then Number 9 says, "The submitted grading
21 and drainage plan is subject to review and approval by the
22 City Engineer." Do you see that?
23 A. Yes.
24 Q. And if you flip back to Exhibit 78, the third
25 page --
50
1 A. (Witness complies.)
2 Q. - under the Recommendation section it says,
3 "Based on our review, we find that the Prairie Run final
4 plat is consistent with the approved preliminary plat and
5 has complied with the conditions of the preliminary plat
6 approval." Do you see that?
7 A. Yes.
8 Q. So does that to you mean that the preliminary
9 plat condition that the submitted grading and drainage plan
10 is subject to review and approval by the city engineer has
11 been complied with?
12 A. One more time with your question?
13 Q. Yes. I'm wondering if you look at Exhibit 78,
14 Mr. Brixius's memo regarding the Prairie Run final plat __
15 A. Yes.
16 Q. - in the recommendation section, he's saying,
17 "we find that the Prairie Run final plat is consistent with
18 the approved preliminary plat and has complied with the
19 conditions of the preliminary plat approval."
20 A. Yes.
21 Q. If that to you means that the condition of the
22 preliminary plat approval that the submitted grading and
23 drainage plan is subject to review and approval by the city
24 engineer has now been complied with.
25 A. I guess I would say yes.
Kirby A. Kennedy & ASSOCiates 952-922-1955
13
51
1 MS. MATT: Off the record for a minute.
2 (At this time a discussion was held off the
3 record.)
4 (At this time a brief recess was taken.)
5
6 CROSS-EXAMINATION
7 BY MR. YOCH:
8 Q. Sir. we're going to take this a little out of
9 order because I have some scheduling challenges, so my able
10 co-counsel has been kind enough to let me go. My name is
11 Steve Yoch. I'm here representing TIC Homes. I have just a
12 few questions for you.
13 First of all, when -- you had some discussions
14 with Ms. Matt about sort of the general platting process and
15 how things generally occur, and I realize that's sort of a
16 10,OOO-foot view. To get a little lower, when the process
17 starts, from the city's perspective, does the city make an
18 effort to give what amounts to all of the information it has
19 on that property to the city's developer? So here is what's
20 occurred in the past and to give it to either the developer
21 or the engineer to help them begin the development process?
22 A. Yes.
23 Q. And who is responsible for giving that
24 information to the developer or the engineer?
25 A. Usually, you know, when we have the initial
52
1 meeting, if there's information that we can contribute and
2 help guide, it can come from a number of sources.
3 Q. SO essentially is there at the city what
4 amounts to a file for kind of each parcel in the city and
5 then you go and pull that information and put it in a packet
6 and give it to the developer or their engineer? Is that how
7 it works. or how does it mechanically work?
8 A. A lot of times these are ag land, you know, so
9 there really Isn't a file, per se. So in some instances,
10 maybe if there was a previous project that started and
11 didn't go forward, there might be, but if it was just
12 farmland, there wouldn't be a lot of information, I don't
13 think.
14 Q. Here where we've got -- here. being Prairie
15 Run - we've got Ditch 9 and some wetland. would there be
16 something in the city's file about either Ditch 9. the
17 wetland, or maybe either of the roads that border the
18 property? Would that be then given to the developer to the
19 extent it exists?
20 A. I think, yes. I think once again at one of the
21 initial meetings when we work with the developer, we do our
22 best to find whatever information is available, and we're
23 looking to get the best product that we can, so our goal Is
24 probably the same goal as the developer's, how do you do a
25 good project and, you know, keep the cost reasonable for
1-800-545-1955 Pages 49 through 52 of 176
Larry Kruse, March 13,2007
1 everybody.
2 Q. Do you know in this case, in Prairie Run. what
3 information was given by the city to the developer?
4 A. No, I don't.
5 Q. Is there a file that would reflect that, you
6 know. something that would say "documents given to the
7 developer," a folder, or is it going to be more organic?
8 A. Not that I'm aware of.
9 Q. I think you had talked briefly about the Albert
10 Villas property which is on the south side of the county
11 road; is that right?
12 A. Yes.
13 Q. Do you know whether the city is currently
14 engaged or contemplating litigation relating to that
15 property?
16 A. We've been discussing il I don't believe any
17 action has been brought forward.
18 Q. What's the nature of the dispute or the
19 concems relating to the Albert Villas property?
20 A. The city, prior to my tenure, received a large
21 rainfall and the neighborhood flooded rather severety, and
22 then since I've been here, on two occasions we've had
23 significant rains that threatened some homes. I don't
24 believe any homes were inundated. There may be some that
25 had some groundwater problems.
54
1 Q. Mr. Hedlund. who is the engineer for Gold Key,
2 opined in his deposition that the cause of the flooding in
3 the Prairie Run development was water backing up in a rain
4 event from the Albert Villas property, downstream backing up
5 into the Prairie Run development. Do you have any knowledge
6 about whether, from your discussions with anyone, whether
7 your engineers or others, that the cause of flooding in
8 Albert Villas is impacting adversely Prairie Run?
9 A. I believe that water is inundating the entire
10 area, that, you know, it's the entire watershed that funnels
11 down to that area, and whether It's backwater or water
12 coming off the larger drainage area, it accumulates, you
13 know, in that Prairie Run, Albert Villa area.
14 Q. My question is a little different. Obviously
15 when it rains, it rains everywhere mostly.
16 A. I've heard that there's some backing up
17 occurring under County Road 18.
18 Q. And that is the backup being from the water
19 flowing from Prairie Run into Albert Villa and Albert Villas
20 is not able to pass through that water so it's causing a
21 backup into Prairie Run. Is that your understanding?
22 A. That's what my understanding Is.
23 Q. From whom did you gain that understanding?
24 A. We did a - recently did a flood study, and I
25 don't remember speCifically if it states that in there -It
Kirby A. Kennedy & ASSOCiates 952-922-1955
53
14
55
1 probably does - but I've been at numerous meetings on these
2 issues, and that has been the conversation.
3 Q. Have you had any contact with my client, TIC
4 Homes, or any of its employees?
5 A. You know, when we were tying to resolve some of
6 these Issues, we had some meetings, some conversations, yes.
7 Q. Who did you meet with?
8 A. You know, I don't remember their names right
9 now, but one or two builders.
10 Q. And could you tell me to the best of your
11 recollection what was the nature of your discussions with
12 the builders? Does Mr. Brian Tult refresh your
13 recollection -
14 A. Yes;
15 Q. -- from TIC Homes? Anybody else that you can
16 recall?
17 A. I don't remember any names.
18 Q. And what was the nature of your discussions?
19 A. I sat in on primarily a conversation our
20 engineer probably was leading, a discussion of, you know,
21 what ultimately is acceptable to get people to live in those
22 homes. Some building permits were issued, and the city was
23 holding up certificates of occupancies, and we were I think
24 all working together to find out if there was a way to, you
25 know, complete those projects.
56
1 Q. When you say the city engineer at these
2 meetings, who are you talking about?
3 A. Adam Nafstad.
4 Q. And when did those meetings occur, to the best
5 of your recollection?
6 A. Probably, you know, I don't have a good
7 recollection of time, but maybe mid.2005 or late 2005.
8 Q. Was there anyone else present in the meeting
9 besides builders. yourself, Mr. Nafstad? Was there anyone
10 from the developer? Mr. Johnson?
11 A. Part of that might have been even In 2006.
12 Right now I don't know when the litigation and everything _
13 could you repeat your question, please?
14 Q. Sure. I'm just asking who was there, first of
15 all. You mentioned some of the builders were there. There
16 was the city engineer, Mr. Nafstad, there. I'm just trying
17 to get a head count. Was there someone there from the
18 developer then at that point, do you recall, Mr. Johnson or
19 someone else?
20 A. You know, I think we had a number of meetings,
21 and I recall, you know, Mr. Johnson or maybe someone else,
22 Randy Hedlund. There was a number of meetings. I also
23 remember sitting down - our engineer was working with the
24 builder to, you know, review what could and couldn't be done
25 and maybe seeking some options, and at the same time we had
1-800-545-1955 Pages 53 through 56 of 176
Larry Kruse, March 13,2007
57
1 meetings with the developer. So there was a number of
2 different meetings with different players, but I would
3 summarize the people as Dean Johnson, probably Randy
4 Hedlund, the builder, Adam Nafstad, Allen Brixius, our city
5 planner and then on occasion our city attorney.
6 Q. In terms of the go, nOilO decision. that is,
7 which property building permits or certificates of
8 occupancies are going to be issued on, who was the person
9 from the city's side of the fence ultimately making the
10 recommendation - I realize it's subject probably ultimately
11 to the city - but from an operational standpoint, who was
12 the one saying here is okay, here isn1 okay?
13 A. I think our city engineer.
14 Q. And thl.lt would be Mr. Naf!>tad again?
15 A. Yes.
16 Q. Did Mr. Moberg play any role in these meetings?
17 A. I should say he was also involved, yes. And
18 actually Mr. Moberg probably, you know, that Yo(as one of the
19 projects that SEH was finishing up, so, yeah, he was
20 involved.
21 Q. Had you had any contact with TIC Homes prior to
22 beginning your work at Albertville?
23 A. Not that I'm aware of.
24 Q. Not in any of the other cities you've worked
25 in?
58
1 A. Not that I'm aware of or remember.
2 Q. Do you know what role, if any. TIC Homes played
3 in the development, that is. putting together the plat?
4 A. As far as I know, they were someone that just
5 bought a lot from the developer after.
6 Q. To your knowledge. did TIC Homes construct the
7 homes that they purchased - the lots they purchased
8 consistent with the requirements of the approved plat?
9 A. Yes, at the time, yes.
10 Q. Well, my point, sir, is at this pOint there
11 is -- the only plat that's been approved is what you looked
12 at, Exhibit 94. Correct?
13 A. Yes, it was consistent with that.
14 Q. Put another way, are you aware of anything
15 they've done that is inconsistent with either the city's
16 instructions or the requirements of the plat?
17 A. No.
18 Q. Have you had any chance to evaluate any of the
19 damages that TIC Homes has claimed in this lawsuit?
20 A. No.
21 Q. Have you instructed anyone in your staff to
22 make an evaluation of the damages claimed by TIC in this
23 lawsuit?
24 A. No.
25 Q. Now, I think you sort of alluded to it. Are
Kirby A. Kennedy & ASSOCiates 952-922-1955
15
59
1 you aware that Bolton Menk did an analysis. a flood study of
2 Ditch 9 and the related properties?
3 A. Yes.
4 Q. I'll represent, sir, that Bolton Menk
5 calculated a new 1 OO-year flood level of 949.9 feet. Does
6 that sound right?
7 A. Sounds familiar.
S Q. And they examined a watershed area of
9 approximately 2300 acres. Does that sound right?
10 A. Yes.
11 Q. Have you had any discussions with Bolton Menk
12 about how that number, that is, the 949.9 100-year flood
13 level, do you know what 100-year flood level was used by
14 Hedlund Engineering in putting together the plat in this
15 matter?
16 A. You know, I recall something about aquatic
17 vegetation.
18 Q. And that was used for the 100-year flood level,
19 but do you -- have you had any discussions about the fact
20 that the difference between what Hedlund used, which I'll
21 represent to you is 950.5 feet, and the 494.9 feet, 6/10ths
22 of a foot difference, whether that __
23 MR. VAN DER MERWE: 949.9.
24 MR. YOCH: Did I say it backwards?
25 MR. VAN DER MERWE: Yes.
60
1 MR. YOCH: Thank you.
2 BY MR. YOCH:
3 Q. - that there's a 6/10th of a foot difference
4 between the two 1 DO-year calculations? Have you had any
5 discussions with either Bolton Menk or anyone else whether
6 that is a material difference?
7 A. After experiencing all the floods, everything
8 is material, you know, if water is threatening homes.
9 Q. Do you know if there are currently any speCific
10 homes that are threatened in the Prairie Run development to
11 flooding?
12 A. You know,l probably defer to our engineer to
13 give me specific direction, but my recollection of
14 conversation is we're talking about some of the freeboard
15 requirements that provides a safety net.
16 Q. I'm going to show you, sir, a document that was
17 previously marked as Deposition Exhibit Number 22, and that
18 was generated by the city engineer as of January of this
19 year. Have you seen a document, either this document or a
20 document like it, generated by the city engineer?
21 A. I saw one the other day on my desk, yes.
22 Q. And correct me if I'm wrong. sir. but the
23 properties that have hash marks in them are properties that
24 the city engineer is expressing concerns about issuance of
25 either a certificate of occupancy or a building permit. Is
1-800-545-1955 Pages 57 through 60 of 176
Larry Kruse, March 13, 2007
1 that your understanding?
2 MR. KUBOUSHEK: Object to the form of the
3 question in that it lacks foundation.
4 MR. YOCH: Fine. I'll go the long way
5 then. I was going to try and save us time.
6 BY MR. YOCH:
7 Q. Sir, why don1 you explain to me what your
8 understanding of the hash marks are on this document,
9 Exhibit 22.
10 A. You know, I just look at the legend here, and
11 as-built low opening elevation, as-built low floor
12 elevation, walkout - yeah, that's the area of concern.
13 Q. Okay.
14 (At this ti.me LanyKruseDeposition Exhibit
15 Number 95 was marked for identification by the
16 Court Reporter.)
17 Q. Sir, I'm going to show you what's been marked
18 as Exhibit Number 95, and I'll represent to you this is a
19 letter that we received from your counsel this morning. If
20 you go to the second page, you're copied. I don't know if
21 you've had a chance to read the letter yet.
22 A. I've briefly seen It this morning, yes.
23 Q. And what I'm understanding from the second
24 paragraph of the letter is the city council is directing "me
25 to inform you the city will not be issuing any new building
62
1 pennits on the Prairie Run project because the project is in
2 default. The city will, however, issue certificates of
3 occupancy where a lot has previously been given a building
4 pennit and the homes meet the city's building elevation
5 requirements." And then the minutes relating to that are
6 attached, which I'm not going to go over right now.
7 What I'm trying to understand, sir, is looking
8 at Exhibit 22, which is the map, what's your understanding
9 of which lots - first of all, I gather no lots will the
10 city be issuing building permits; is that correct?
11 A. Any that don't meet the - I have to read it
12 here again.
13 Q. As I read it, there will be no building permits
14 issued on any lots --
15 A. Right
16 Q. - in the development. Please correct me if
17 I'm wrong.
18 A. No, that's right.
19 Q. So even - if I can just come over, sir -. even
20 those lots, for example, the ones that border County
21 Road 18, there's no hash marks on them, or the lots that are
22 on the easterly corner of the property, the Kalland Court
23 lots which .- would you agree with me there doesn't appear
24 to be any expressed concerns by the city's engineer about
25 the height of those properties? Would you agree, based on
Kirby A. Kennedy & Associates 952-922-1955
16
61
63
1 the map?
2 A. I don't know If I'm answering your question,
3 but it's my understanding that the development Is In
4 default, and, you know, at that point we're looking at it
5 from a little higher up.
6 Q. My question wasn1 about the default, sir. My
7 question is that the city is refusing to issue building
8 permits on properties, all the properties, even those that
9 are not a subject of a concern as to building height.
10 Correct?
11 A. Yes.
12 Q. And, however, the city will issue certificates
13 of occupancies as to homes that have been constructed that
14 meet building elevation requirements. So am I understanding
15 that as being those lots that are, for lack of a better
16 word, not subject to hash marks on Exhibit 22? If you have
17 a house that's built, there's no hash marks on the property
18 on this map, and you're ready for occupancy, the city would
19 issue a certificate of occupancy; is that correct?
20 A. Yes, if it meets elevation.
21 Q. And at least according to this map, those would
22 be those properties that don1 have the hash marks on the
23 lots. Correct?
24 A. Apparently.
25 Q. Are you aware that the --the map we have
64
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22 one.
23
24 Exhibit 22.
25 BY MR. YOCH:
1-800-545-1955
there, Exhibit 22, is dated January 4 of 2007. Are you
aware of any updated map that's been generated by Bolton
Menk?
A. You know, like I say, I recently saw one, but I
don't recall the date on It, whether it was this one or
another one.
Q. It looks similar to this?
A. I would say yes. You know, I didn't study it
I saw It and I say, well, it graphically shows our _ but I
haven't analyzed it at all.
Q. This might be a question for your counsel.
MR. YOCH: Is there an updated map beyond
what we have here, Jason, do you know?
MR. KUBOUSHEK: I have not been provided
one by Bolton & Menk.
MR. YOCH: Okay. And let me represent
and ask on the record, if there is an updated map that is in
any way different from Exhibit 22, obviously that is of
intense interest to both my dient and everybody else, and
if that can be provided --
MR. KUBOUSHEK: It will be if I receive
MR. YOCH: Right now we're working off
Pages 61 through 64 of 176
Larry Kruse, March 13, 2007
65
1 Q. Could you tell me, sir, what role has the city
2 attorney played in the decisions to - first I should
3 probably find who is the city attorney. When you look at
4 the minutes, it talks about based on a recommendation by the
5 city attorney. Is that city attorney Mr. Kuboushek, who is
6 sitting here, or is it Mr. Couri?
7 A. Mike Couri.
8 Q. What role has Mr. Couri played in the decisions
9 of the city to issue building permits or issue certificates
10 of occupancy?
11 A. I think our engineer has been, you know,
12 probably the technical person looking at what's acceptable
13 and isn't. City Attorney Couri has been involved in a
14 number of ~etings talking abou~ this. project, and so ~ but
15 primarily the engineer.
16 Q. And the reason I ask, sir, is if we go back to
17 Exhibit 94 and if you go to --
18 MR. KUBOUSHEK: Which exhibit?
19 MR. YOCH: Excuse me, Exhibit 95.
20 Q. - Exhibit 95, third to the last page, it looks
21 like on the top it's cut off, 11 of 15.
22 A. Yes.
23 Q. And at the bottom I believe that's the
24 discussion about Prairie Run. Do you see that going onto
25 the next page?
66
1 A. Yes.
2 Q. And it appears when I read this that the city
3 council is relying upon recommendations from Attorney Couri
4 in making decisions about the letter of credit; is that
5 right?
6 A. Yes. Yes. After, you know, after, you know, a
7 lot of input from our city engineer, he's carrying the
8 message.
9 Q. Well, and there's a message also that they're
10 in default. Is the city engineer or the city attomey
11 advising the city council that Gold Key is in default?
12 A. You know, I think both. You know, we operate
13 as a development team, you might say.. our city planner,
14 city attorney, and engineer - and we collectively review
15 these things, and It may be a different person, you know,
16 may be the city attorney making a recommendation, but that
17 recommendation would be the consensus of myself and the
18 other consultants most likely.
19 Q. Are these llPproved minutes that I'm looking at
20 here? Do you know if these minutes have been approved? The
21 February 5,2007, meeting?
22 A. Usually they're approved the following meeting
23 after, so the 7th is the first meeting of the month. They'd
24 be approved the following - two weeks later.
25 Q. SO these probably would have been approved. Is
Kirby A. Kennedy & Associates 952-922-1955
17
67
1 that your understanding?
2 A. Yeah.
3 Q. It indicates in here that the city attorney
4 recommended not reduce the letter of credit. It doesn't
5 mention anyone else. Likewise, it says the city attorney
6 reminded the council the litigation with Gold Key is
7 continuing. Is it the normal practice in the minutes where
8 individuals have made recommendations and they not be
9 referenced in the minutes?
10 A. Our consultants all sit together at a table,
11 and we are -- as far as I know, all the time we've been In
12 consensus when recommendations are made.
13 Q. What I'm asking, sir, is that's not what's
14 reflected in the minutes;' Would you agree? .
15 A. Right.
16 Q. So are the minutes in error?
17 A. No. I think Mr. Couri was making a
18 recommendation with the knOWledge that, you know, the city
19 engineer would be supporting that.
20 Q. But it would certainly appear here that
21 Mr. Couri is taking the lead on making the decision
22 certainly with respect to the letter of credit and making a
23 recommendation to the city; is that correct?
24 A. Yeah, I think whenever we get into litigation,
25 a lot of times the city attorney plays that role.
68
1 Q. He references a defaull by the developer. What
2 is your understanding of a default by the developer?
3 A. You know, I guess I don't know the specifics,
4 but we know that we've learned that the lots, certain lots
5 cannot meet the elevation requirements above the flood stage
6 that's been identified. We know that some of the homes the
7 freeboard isn't adequate, and so technically they don't meet
8 the ordinance. I'm trying to think if he has kept current
9 on all of his billing, that would be another reason. I'm
10 not sure on that right now.
11 Q. Stick with the last one first. As you sit here
12 today, do you know whether Gold Key is not current on its
13 billings?
14 A. I'm thinking they aren't, but I'd have to
15 verify that.
16 Q. They are not current?
17 A. Gold Key? You know, I'm not sure. I'd have to
18 review that.
19 Q. So to your understanding, is that the basis for
20 the default, or is it the height and lot requirements that
21 we're talking about?
22 A. I think it's the health safety flooding issue
23 that's, you know, primarily the problem.
24 Q. The city is taking the position that Gold Key
25 is in default as to the proper level of lots in this
1-800-545-1955 Pages 65 through 68 of 176
Larry Kruse, March 13, 2007
1 development. Correct?
2 A. Yeah.
3 Q. And certainly would you agree with me that the
4 lots of the development that have been buill and that are
5 intended to be built are at least consistent with
6 Exhibit 94, that is. the approved plat. Correct?
7 A. I would assume so.
8 Q. And the city at this point has commenced a
9 lawsuit not only -- or is in litigation not only with Gold
10 Key, but actually commenced an action against SEH. Is that
11 your understanding?
12 MR. MARKERT: I object just to the fact
13 that it's not a - the city has not commenced litigation
14 against SEH. They've brough) acorltribution in indemnity.
15 claim that is part of the lawsuit commenced by Gold Key.
16 BY MR. YOCH:
17 Q. Sir. do you have an understanding that the city
18 has sued SEH?
19 A. I haven't seen anything. You know, I know that
20 we're contemplating all remedies to fix these flooding
21 issues and the problem. Formally I have not received
22 anything at all, so I'd have to say that it's definitely on
23 the top of our list.
24 Q. Sir, do you know whether or not the city has
25 sued SEH?
1 A. I guess I don't. Not--
2 Q. To your knowledge, has the city ever authorized
3 a suit against SEH?
4 A. I'd have to look back at the specific language,
5 but the council wants our staff to pursue all remedies and
6 look to everybody - SEH, the developer.
7 Q. If - I'm going to represent to you, sir, that
8 there has been an action against SEH by the city. Who would
9 have, if you're the city administrator and you're not aware
10 whether that's correct, that's your testimony, who would
11 have authorized the city's attorneys to commence the action?
12 A. The city council early on, you know, authorized
13 staff to pursue that, but whether, you know, my answer
14 regarding - I haven't formally. I don't know the dates
15 when - I haven't seen anything yet.
16 Q. And I'm not asking for a specific date.
17 A. But the council authorized.
18 Q. As you sit here today, sir, do you believe that
19 SEH made any errors or mistakes in the course of performing
20 its services relating to the Prairie Run project?
21 A. In hindsight, if they didn't review the
22 project, our expectation would have been that it was
23 reviewed and met all our ordinances and codes.
24 Q. As you sit here today, sir, do you have any
25 belief or understanding of any errors made in putting
Kirby A. Kennedy & Associates 952-922-1955
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1 together the Prairie Run project by Gold Key?
2 A. Maybe not in seeking out maybe additional
3 Information. You know, when - and we've talked about this.
4 When you go stand out there where the flooding occurs, it
5 appears quite obviously that by the box culvert and Ditch 9
6 that there could be problems.
7 Q. Same question as to my client. TIC Homes. Are
8 you aware of any errors or mistakes made by my client, TIC
9 Homes, in any of the work it performed?
10 A. I don't think so.
11 Q. Same question as to Gold Key's engineer,
12 Hedlund Engineering. Are you aware of any mistakes or
13 errors they made as it relates to the Prairie Run project?
14 A. In hlpdslght, you know,.knowing about the
15 letter, the county and the box culvert, you know, I would
16 say yes.
17 Q. Sir, when you talk about the letter and the box
18 culvert, is this what you're talking about, the culvert risk
19 assessment, Exhibit 65?
20 A. You know,' don't recall this document. I
21 was - I'm familiar recently of another letter, I thought,
22 but, you know, I don't believe J've seen this document.
23 Q. Can you describe for me the letter that you're
24 thinking of that - well, first of all, explain to me the
25 significance of the letter and how that relates to
70
72
1 Mr. Hedlund's responsibility where you believe he may have
2 erred.
3 A. You know, I guess I don't know all the
4 engineering details or anything like that. I just know that
5 our development team feels that the elevations are not
6 adequate right now.
7 Q. Sir, do they still feel that way in light of
8 the completion of the Bolton Menk flood study, that is, that
9 there still is a material or significant difference between
10 the 1 DO-year flood elevation used by Mr. Hedlund in the plat
11 versus the flood level calculation that's recently been
12 completed by Bolton Menk? Do they still feel there's a
13 material difference?
14 A. I would say yes.
15 Q. Do you know whether an assessment has been made
16 by Bolton Menk to examine whether there is indeed a material
17 difference between the 1 DO-year flood level as used by
18 Mr. Hedlund and the new one as calculated by Bolton Menk?
19 A. I just don't feel I have the expertise to
20 answer that.
21 Q. And I'm not asking if you have the expertise to
22 make that materiality calculation. I don't either. I'm
23 asking whether you know whether that assessment has been
24 made, that is, whether or not they still believe, in light
25 of the flood study that was completed by Bolton Menk
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Larry Kruse, March 13, 2007
73 75
1 relatively recently. whether there still is a material 1 A. Yes.
2 problem here with this project. 2 Q. What was the result of those discussions prior
3 A. Yes. 3 to the litigation? What was the response by the developer
4 Q. And the conclusion is, yes, there still is a 4 or the city to those areas? Was there ever -- let me back
5 material problem? Is that what you're saying? 5 up. Bad question.
6 A. The approved plat is too low and does not meet 6 Did you ever -- are you aware of a concrete
7 the intent of our ordinance, and so, yes, there Is a 7 proposal that was made by either the city or the developer
a problem. a that here is our proposed fix and this will address all the
9 Q. And when is the last time you had a discussion 9 issues? Did it come down to that level of discussion?
10 with someone about that concern? 10 A. I don't think there was anything in writing,
11 A. It was probably in the latter part of 2006. 11 but I think there was some suggestions that if Gold Key
12 Q. Who did you have that discussion w~h? 12 could sign off or the builder could sign off that they
13 A. You know, I don't recall having a specific 13 acknowledge It didn't meet the freeboard, there was some
14 discussion. I'm trying to kind ,of aggregate. all the things. 14 room to Issue permits on homes that had already been issued
15 that I hear. I know that all of our consultants that we 15 a building permit. But I don't - you know, when you say
16 rely on, city engineer, are recommending that the proposed 16 formal, I think these were discussions, brainstorming, you
17 development as it is doesn't meet the requirements of the 17 know, trying to find a solution.
18 ordinance and thus that there's a potential for flooding. 18 Q. I gather the brainstorming didn't come to a
19 Q. Have you had any discussions with anyone 19 successful resolution in terms of resolving the issues. Is
20 conceming potential fixes to the problem you're discussing? 20 that fair?
21 You've been told there's a problem with the height of the 21 A. You know, I thought we were working toward some
22 development. I s that fair? 22 acceptable solutions when we were filed with the lawsuit.
23 A. Yes. 23 Q. At the time the lawsuit was filed, however, the
24 Q. Have you had any discussions with any of the 24 city had imposed restrictions on the development in light of
25 folks, engineering-related folks or the city attomey or 25 these issues. Correct?
74 76
1 anybody else -- and I'm setting aside litigation counsel __ 1 A. Yes, as soon as we became aware of the problem.
2 but have you had any discussions about what the possible 2 Q. Since those discussions and the commencement of
3 fixes are? 3 the lawsuit, setting aside discussions with your litigation
4 A. Yes, we have. 4 counsel, of course, have you had any other discussions about
5 Q. Can you tell me what your understanding of 5 possible resolutions or ways to solve the problems as the
6 those possible fixes are? 6 city views them with the development?
7 A. I sat in on some meetings with the bUilder and 7 A. No, not that I'm aware of.
8 Gold Key where options were pursued to, you know, to 8 Q. Until your discussion with Ms. Matt, you talked
9 continue the construction. I believe one of them was that 9 about Prairie Run being somewhat of a different type of
10 the homeowners or the builder, the owner of the home now, 10 platted development because you described it as it was a
11 the builder would sign off that they acknowledge they don't 11 city project. Do you recall that testimony?
12 have the freeboard to meet the ordinance. 12 A. Yes.
13 One of the other more extreme measures would be 13 Q. What did you mean by a "city project"?
14 to bring the development Into compliance with the ordinance 14 A. Normally, the typical development like this,
15 by raising all of the infrastructure, i.e., roads and 15 the developer would enter Into a development agreement and
16 hydrants and raising the development, also to incorporate 16 they would secure their own contractors and do all of the
17 adequate storm water ponding to contain the water that comes 17 work. In this case, it required the cooperation of
18 from the development and not have It so Ditch 9 Inundates 18 adjoining landowners, and it appeared that the only way this
19 that prior to I think the 100-year. 19 project would go forward is If the city provide a mechanism
20 So In summary I guess we've worked with the 20 to assess and provide some Interim financing and get the
21 developer to try and find some, you know, low cost solutions 21 parties all working together, and so the city was the
22 and ultimately more comprehensive solutions. 22 conduit to bring this project together, and so rather than
23 Q. What was the net result of those? Obviously-- 23 the developer having his own private contractor doing this
24 you're saying this must have occurred prior to the 24 work, It was a city project.
25 litigation; is that right? 25 Q. SO in this development, that is, the Prairie
19
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Larry Kruse, March 13,2007
1 Run development, the city played a more active role than it
2 would in typical platted developments. Is that what you're
3 saying?
4 A. Yes.
5 Q. You testified a number of times earlier about
6 the high expectations you have or the city ha s with respect
7 to outside consultants and employees; is that right?
8 A. Yes.
9 Q. And when I heard your prior testimony, I noted
10 you clearly have SEH, which is the outside engineering
11 consultant that you use. Correct?
12 A. Yes.
13 Q. You have the city planner, which is Northwest
14 Associate Consultants, correct, and they ac~ asth~ c,ity
15 planner?
16 A. Yes.
17 Q. And you have the city attorney, who is an
18 outside counsel; is that correct?
19 A. Yes.
20 Q. Are there any other outside consultants that
21 the city looks to as part of the platting process?
22 A. No.
23 Q. In your discussion about the city consultant,
24 you indicated that you had an expectation that the city
25 planner would also be reviewing the plat for confonnance in
78
1 relation to city ordinances; is that right?
2 A. Yes.
3 Q. In this case, do you know whether the city
4 planner reviewed the plat as approved and confirmed that
5 it's in conformance with city ordinances?
6 A. That would be when he makes his recommendation,
7 I'd make that assumption, yes.
8 Q. And in this case, do you know or do you have
9 any perception that the city planner did not adequately
10 review the plat in light of the requirements of city
11 ordinances?
12 A. No, I don't. No.
13 Q. Put another way, do you have the belief that
14 the city planner in any way dropped the ball as part of
15 their review of the preliminary plat and final plat approval
16 in this process?
17 A. I don't believe they dropped the ball.
18 Q. Same question for the city attorney. I believe
19 your testimony was that you understood that the city
20 attorney would be reviewing the plat, making sure irs in
21 conformance with the ordinances; is that right?
22 A. That's right.
23 Q. And in this case. do you have any understanding
24 or belief that the city attorney did or should have engaged
25 in a more detailed review of the plat to ensure that it was
Kirby A. Kennedy & Associates 952-922-1955
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1 in conformance with city ordinances?
2 A. I think City Attorney Couri did a good job and
3 the council is satisfied with the work he's done.
4 Q. I think I know the answer as to SEH, but in
5 this situation, do you have any concems that SEH failed to
6 perform in its review of the plat as it should have based on
7 your expectations?
8 A. Yes.
9 Q, Since you have been the city administrator for
10 the City of Albertville, has the city conducted any other
11 flood calculations as of the type that were done by Bolton
12 Menk in the Ditch 9 flood study anywhere else in the city?
13 A. Ditch 9 also involved the Albert Villas, so not
,14 that I'm aware of."
15 Q. How about having developers do a broader
16 watershed calculation as part of the development to
17 determine the 100-year flood level? Have you asked any
18 other developers in any other developments in the City of
19 Albertville to do a 100-year flood calculation looking at a
20 larger watershed than their development?
21 A. I don't know -- I'm not aware of any, but my
22 expectation is that when you develop a project, you have to
23 look at all of the issues around the property and take them
24 into consideration.
25 Q. Well, my question was different than that, sir.
80
1 My question was, Are you aware of any developments that you
2 have been involved in in the City of Albertville where the
3 city has required a developer to look at and determine a
4 100-year flood level based on a watershed that is larger
5 than their development?
6 A. In northwestern Albertville they did a - I
7 forget the name of the document that is a preplanning
8 document for future development, kind of a preenvironmental
9 impact statement. The name slips me right now. You know, I
10 believe that may have, you know, been - looked broader than
11 just the City of Albertville, but I'm not sure.
12 Q. "They," being Bolton Menk, or "they" being the
13 developer? I lost you on the pronoun.
14 A. Since I've been there --I'm not aware of any
15 that come to mind right now.
16 Q. One of the logical reasons to have a city
17 perform that sort of function, that is, that broader
18 analysis. is because the properties impacted are often
19 beyond the relatively small number of properties impacted in
20 the development itself; isn't that right?
21 A. Yes.
22 Q. So, for example. here in Bolton Menk. the
23 Bolton Menk study looked at a watershed of some 2300 acres,
24 which is many times larger than the Prairie Run development;
25 is that right?
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Larry Kruse, March 13,2007
81
1 A. Yes.
2 MR. YOCH: Thank you. sir. No more
3 questions.
4 A. Just going back, the term AUAR was the term,
5 one of the previous questions.
6 Q. AUAR? I'm sorry, what was my question that
7 you're answering now?
8 A. Regarding any other studies where we may have
9 looked at a broader drainage area, and that was pre my time.
10 Q. Okay. The AUAR study in Northwestem
11 Albertville was the name of the study; is that right?
12 A. That's an area-
13 MR. KUBOUSHEK: It's a term of art.
14 MR. YOCH: I think I remember Mr. Nafstad .
15 talking about that.
16 BY MR. YOCH:
17 Q. And is that a study that was done by Bolton
18 Menk?
19 A. No. That was a study initiated by a developer
20 that was proposing a development.
21 MR. YOCH: Thank you. sir.
22
23 CONTINUED CROSS-EXAMINATION
24 BY MS. MATT:
25 Q. Mr. Kruse, you said the approved plat of
82
1 Prairie Run was too low and does not meet the intent of the
2 city's ordinances. Correct?
3 A. Yes.
4 Q. Whose fault is that?
5 A. My expectation Is that the developer develops
6 the plans and our city engineer reviews, so probably both.
7 Q. Well, in this case, in the case of Prairie Run,
8 the developer's plans were never reviewed by the city
9 engineer. Correct?
10 A. Right.
11 Q. And so how is it that it is the developer's
12 fault that the approved plat is too'low and does not meet
13 the intent of city ordinance?
14 A. I guess it would be my understanding that it's
15 the developer's responsibility to engineer the project in
16 compliance with all the codes and so It functions. And the
17 city engineer doesn't redesign or redevelop it. It reviews.
18 And so ultimately I think that the developer's engineer Is
19 responsible to do the job right from the get-go and If our
20 city engineer didn't review it, you know, the city erred in
21 not doing that too.
22 Q. You told Mr. Yoch that one of the
23 considerations or options I guess that you discussed was
24 what you called an extreme measure, bringing the
25 infrastructure into compliance by raising roads and ponds
Kirby A. Kennedy & Associates 952-922-1955
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1 and so forth. Correct?
2 A. Yes.
3 Q. Why did you characterize that as an extreme
4 measure?
5 A. I should say it's an expensive measure.
6 Q. Have you done an assessment of what it would
7 cost, or do you have a ballpark?
8 A. No.
9 Q. But you are aware that you're talking millions
10 of dollars? You're not just talking $10,000. Correct?
11 A. No, I'm not aware of the number.
12 Q. Well, I'll represent to you that we've had
13 engineers testify that it would be a multimillion dollar
14 fix.
15 A. I just say that I don't think the whole project
16 was that much, so I couldn't quite understand it would be
17 that much, but I have no number.
18 Q. If it would be a multimillion dollar fix, it
19 wouldn't be fair to make the developer go back and correct
20 that, would it?
21 A. I think it would.
22 Q. When it was the city engineer who failed to
23 review the problems. you think the developer -- or, excuse
24 me, review the plans, you think the developer should have to
25 pay multimillion dollars to raise the infrastructure?
84
1 A. From my experience, It's the design engineer's
2 job to design it right. And our city engineer does a
3 review, doesn't, you know, go do another whole engineering.
4 It is a review.
5 Q. SO the city engineer would - should also bear
6 some of whatever the cost is to fix these alleged problems,
7 in your opinion?
8 A. I don't know.
9 Q. Well, didn't you just say that the city
10 engineer was at fault for the approved plat being too low
11 and not meeting the intent of the ordinances?
12 A. If I have to clarify that, I would say that the
13 city engineer erred in not reviewing it.
14 Q. Okay. And so shouldn't the city engineer bear
15 some of the cost of whatever the fix to this alleged problem
16 is?
17 MR. MARKERT: I'm going to object to the
18 extent it calls for a legal conclusion.
19 Q. Go ahead.
20 A. I don't know. I don't know.
21 Q. Who do you think should pay to fix these
22 problems that the city is identifying with the Plat of
23 Prairie Run?
24 A. You know, I guess I can say that I don't think
25 the city should pay. Obviously these lawsuits, you know,
1-800-545-1955 Pages 81 through 84 of 176
Larry Kruse, March 13, 2007
85 87
1 will ooar out who is responsible. 1 plans, and now I'm wondering - and you answered that the
2 Q. Why is it that you think the city should not 2 city would not have to specifically direct the city
3 have to pay anything? 3 engineer. is that right?
4 A. I think, you know, we worked through this with 4 A. Yes.
5 all due diligence and took all the steps we nonnally take. 5 Q. And now I'm wondering specifically with respect
6 We have all of the high expectations with all of our 6 to the preliminary plat of Gold Key, did the city council--
7 developments and apparently this review on our side was 7 or the city have an expectation that it needed to direct the
8 missed, so I think, you know, we acted with good intent and 8 city engineer to review the preliminary plat documents with
9 the city in its approvals did not make any mistakes. 9 respect to grading and drainage and engineering issues?
10 Q. Except approving a plat that hadn't been 10 A. The city council gives the broad, you know,
11 reviewed by the city engineer. Correct? That's a mistake. 11 10,000-foot direction, and our expectations are that, you
12 A. At the time it was unknown that that didn't 12 know, all of our consultants do their due diligence, and
. 13 happen. 13 they fully understand, you know, what it takes to do a good
14 Q. Rig~t. But it's a mistake nonetheless. 14 project, so they would expect that
15 A. In hindsight, looking back on It, yes, it would 15 Q. So the answer is, no, the city did not expect
16 not have been approved had it not been reviewed and received 16 that it would have to specifically tell SEH that it needed
17 the recommendation of our consultants. 17 to review the grading, drainage plans, and other engineering
18 Q. Mr. Kruse, when we took the previous break, I 18 aspects of the Prairie Run preliminary plat documents?
19 was asking you about whether there was any other discussion 19 A. Yeah. We did not have to specifically give
20 at the June 7th, 2004, city council meeting, where the final 20 direction in order for that to happen.
21 plat had been approved, and I think. if I'm understanding 21 Q. Your expectation was that the engineer would
22 your testimony correctly, you testified that you thought 22 review the Gold Key preliminary plat submissions and let the
23 there was some other discussion that wasn't reflected in the 23 city know if there was a problem with them?
24 minutes, and then you clarified that you were making the 24 A. Yes.
25 assumption that there was some discussion. Correct? 25 Q. And the city engineer at that time was SEH?
86 88
1 A. You know, I don't remember the specifics of 1 A. Yes.
2 that discussion or anything. When I look at the minutes, it 2 Q. Did SEH make the city aware of any problems
3 looks like that is the culmination of, you know, a process 3 with the preliminary plat documents submitted by Gold Key
4 the council went through over a period of time, and there 4 for Prairie Run --
5 mayor may not have been discussion. 5 A. Not that I'm aware of.
6 Q. Are there any documents out there that will 6 Q. -- with the grading and drainage plans that
7 help you recall whether there was specific discussions other 7 were submitted?
8 than what's reflected in these June 7, 2004. city council 8 A. Not that I'm aware of.
9 minutes? 9 Q. Did SEH make any of the city consultants,
10 A. There may be. I'm not aware of what they are. 10 either the city planner or the city attorney, aware of any
11 Q. But as we sit here today. you're not aware of 11 problems with the preliminary plat documents submitted by
12 any other documents that would help you remember? 12 Gold Key for Prairie Run?
13 A. No. 13 A. Did the city -- who now?
14 Q. And you've provided all the documents relating 14 Q. I'm wondering if - I had previously asked you
15 to this file, the Prairie Run file, to your counsel? 15 if SEH made the city aware of any problems with the
16 A. As far as I know, yes. 16 preliminary plat documents. You answered no. Now I'm
17 Q. And on June 7th, 2004, at that city council 17 wondering if SEH made the city consultants, either NAC or
18 meeting when the city approved the final plat of Prairie 18 Mr. Couri's office, aware of any problems with the
19 Run, you assumed that review and approval had been given by 19 preliminary plat documents.
20 the city engineer? 20 A. No.
21 A. Yes. 21 Q. As we sit here today, do you believe that SEH
22 Q. Mr. Kruse, I think I just asked you in general 22 reviewed the grading and drainage plan documents submitted
23 during the preliminary plat process about whether the city 23 by Gold Key prior to the time the final plat was approved?
24 had an expectation that it would have to direct the city 24 A. Yes, that would have been our expectation.
25 engineer to specifically review the grading and drainage 25 Q. I'm asking you if they did in fact do that. if
22
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952-922-1955 1-800-545-1955
Pages 85 through 88 of 176
Larry Kruse, March 13, 2007
1 SEH in fact did that.
2 A. Maybe in some ofthe discussion here I've
3 leamed that they haven't done it Is that what you're _
4 Q. I'm wondering as we sit here today, do you
5 believe that SEH reviewed the grading and drainage plans of
6 Prairie Run?
7 A. I've been told that they haven't
8 (At this time Mr. Yoch left the deposition
9 proceedings.)
10 Q. Who have you been told that by?
11 A. You know, "m not sure where that came from.
12 Q. Okay. So as we sit here today, you don't
13 believe SEH ever reviewed the grading and drainage plans
14 that were submitted, by Gold K~y as part of the plat 9f
15 Prairie Run. Correct?
16 A. It goes back to my expectation would be when
17 the recommendation was made that they were reviewed. And
18 there's - I've been told that somewhere along the line that
19 they didn't do the review. That's secondhand information,
20 so I haven't seen anything, you know, specifically saying
21 they didn't do their review. I haven't talked to them and
22 got that from them.
23 Q. SO as we sit here today. do you believe they
24 reviewed those documents or not, the preliminary plat
25 grading and drainage plans?
1 A. You know, once again, I go back to my
2 expectation that that would be what they should have done.
3 Q. And I understand that. I'm asking if you
4 believe that they ever did that, if SEH ever reviewed the
5 grading and drainage plans. Do you believe they did that?
6 A. I guess I have a hard time answering that
7 because my expectation Is they would have.
8 Q. Right. And I understand that.
9 A. I don't know -- you know, I haven't seen any
10 work product or anything that says that they haven't. I've
11 heard it mentioned. That's the only information I have Is
12 that it's been mentioned that they haven't, missed the
13 review.
14 Q. SO do you believe that they reviewed the
15 grading and drainage plans? Yes or no.
16 A. I would say yes.
17 Q. Okay. When did SEH review the grading and
18 drainage plans?
19 A. Prior to making their recommendation for
20 approval.
21 Q. When did SEH make a recommendation for
22 approval?
23 A. You know, when the preliminary plat and the
24 final plat, all of that comes through the process, our
25 consultants as a team are making a recommendation that the
Kirby A. Kennedy & ASSOCiates 952-922-1955
23
89
91
1 plat meets all of the ordinance requirements.
2 Q. SO your testimony is now that you believe SEH
3 did make a recommendation for approval of the plat? Is that
4 what you're saying?
5 A. Our team, and I'd have to go back to, you know,
6 when we --I think we operate as a, you know, city planner,
7 city attomey, city engineer, are all Involved In this
8 process, and when a recommendation comes forward,
9 everybody - all of the other people believe that the other
10 consultants and individuals have done their due diligence
11 and are making a recommendation, and if they felt something
12 wasn't done, they'd be bringing it to my and the council's
13 attention.
14 Q, Do you believe SEH dropped the ball somewhere
15 and in fact failed to make the review?
16 A. That's what I'm hearing.
17 Q. You're hearing it, but do you believe it?
18 A. If they didn't do the review, if that's what
19 happened, then, yes, they did.
20 Q.- And do you believe that they did do the review?
21 A. I have to think back. It goes back to what my
22 expectations would have been. Yes, we would have all
23 expected them to do the review.
24 Q. Okay. And I understand that. You didn't see a
25 review memo in the file, though. Correct?
90
92
1 A. I haven't seen one, no.
2 Q. Who is telling you that SEH didn't do the
3 review?
4 A. You know, I think that that probably came out
5 with our discussion with our attorney during the _ prior
6 to - probably in the last week or so.
7 Q. SO at the time of final plat approval,
8 June 7th, 2004, did the city believe that the review of the
9 grading and drainage plans of Prairie Run had been done?
10 A. Yes.
11 Q. BySEH?
12 A. Yes.
13 Q. And so it was reasonable, then, for Gold Key
14 and Hedlund to assume as of that date, June 7th, 2004, that
15 the grading and drainage plans had been reviewed by the city
16 engineer. Correct?
17 A. Yes.
18 Q. Did you have an expectation that either someone
19 from Gold Key or someone from Hedlund would stand up at the
20 June 7th, 2004. meeting and say, "I want documentation to
21 prove that these grading and drainage plans had been
22 reviewed"?
23 A. No.
24 Q. That wouldn't have been normal or typical that
25 a developer would stand up and demand proof for his file?
1-800-545-1955 Pages 89 through 92 of 176
Larry Kruse, March 13, 2007
1 A. No.
2 Q. So would you agree that it was reasonable for
3 Gold Key and Hedlund to assume that because they did not
4 receive comments back from the city engineer as to any
5 deficiencies with their grading plans, that those documents
6 were satisfactory to the city?
7 MR. KUBOUSHEK: Object to the form of the
8 question. Lacks foundation. Asks him to assume what the
9 developer and design engineer were thinking.
10 Q. Go ahead and answer.
11 A. Usually an approval means that things are In
12 order.
13 Q. And so do you believe that it would be
14 reasonable for. Gold Key and Hedlund to assume that because
15 it had not received comments back from the city engineer as
16 to any deficiencies with those grading plans, that they
17 complied with city ordinances and subdivision ordinances?
18 MR. KUBOUSHEK: Object to the form of the
19 question. Lack of foundation. Asks him to assume what the
20 developer and design engineer thought.
21 Q. Go ahead.
22 A. Yes.
23 Q. Is there anything that Gold Key should have
24 done as part of the plat approval process that it did not
25 do?
94
1 A. I guess I don't know.
2 Q. Anything that you can think of that Hedlund
3 should have done as part of the plat approval process that
4 it did not do?
5 A. Maybe looked at maybe Ditch 9 a little closer,
6 what directly abuts the improvement
7 Q. And you'd agree that if the city or its
8 engineers had information about Ditch g that abuts the
9 development, that they should have shared that information
10 with Hedlund. Correct?
11 A. It would be my assumption that we would share
12 whatever Information we could to make a better development
13 Q. Is there a particular point in time that the
14 city leamed that SEH did not review the grading and
15 drainage plans submitted as part of the Prairie Run
16 development?
17 A. I can't think of a specific time.
18 Q. In general?
19 A. Recently, like I say, I heard - and I don't
20 remember exactly who said it - but that that was missed.
21 We knew for a while now that there was a problem, but, you
22 know, I did not know that It wasn't reviewed, and I don't
23 know even today If there was, you know, a small review or an
24 all-encompasslng review wasn't done. I don't have that
25 information.
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24
95
1 Q. Would it be fair to say that you learned that
2 SEH hadn't reviewed the grading and drainage plans just as
3 part of this litigation process?
4 A. Yes. Yes.
5 Q. Do you recall being present at a meeting in
6 November of 2005 with Bob Moberg, Jon Sutherland, Randy
7 Hedlund, and Dean Johnson about grading issues?
8 A. I don't remember a specific date or anything.
9 I recall having some meetings with those parties.
10 Q. What do you recall about those meetings?
11 A. You know, I don't recall any - the specifics
12 of, you know, which one you're referring to or anything, but
13 I know that we discussed what might be some acceptable
14 strategies to move forward - exploratory discussions, fact
15 finding.
16 Q. And those are the strategies that you already
17 discussed with Mr. Yoch?
18 A. Yes.
19 Q. Okay. What do you mean "fact finding"?
20 A. Well, I think as you go through this whole
21 process, there's information that gets exchanged and
22 dialogue.
23 Q. Did you find out any facts at these meetings?
24 A. You know, I don't know any specific facts. I'm
25 just talking. I'm just saying that these meetings were
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1-800-545-1955
exploratory. Information was shared. There was dialogue.
Maybe I'm using the wrong term "facts." There was dialogue.
Q. Do you recall at that meeting Randy Hedlund
receiving for the first time a document, the culvert
analysis document?
MR. KUBOUSHEK: It's right here
(indicating).
Q. Do you recall that being given to Mr. Hedlund?
A. I don't recall seeing this specific document,
so, as I stated earlier, I saw maybe some type of another
Jetter in the material, exhibits.
Q. Do you recall any discussions about the culvert
assessment in those meetings -- culvert risk assessment
document, Exhibit 65, that's in front of you, do you recall
discussions about that in those late 2005 meetings that
you're talking about?
A. Once again, the timing of It, the dates I'm not
sure of, but I remember they had discussions about this
which I was listening to.
Q. And when you say "they," you mean the engineers
and developer?
A. You know, there was a number of meetings, and
once again, Dean Johnson was Involved In some, Randy
Hedlund, Bob Moberg.
Q. And they were having discussions about the
Pages 93 through 96 of 176
Larry Kruse, March 13, 2007
25
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99
1 culvert risk assessment and the lOG-year number in there?
2 A. There were discussions about that, yes.
3 Q. What were the discussions about that?
4 A. I think it all, you know, with that
5 Information, it showed that the elevation of the development
6 was low and Hedlund debated, you know, what was their
7 interpretation of the ordinance, and our city engineer gave
8 his interpretation.
9 MR. MARKERT: Excuse me, which city
10 engineer are you referring to?
11 THE WITNESS: You know. my memory gets
12 mired. For the most part, Bob Moberg was working on this
13 project, but also Adam Nafstad was on the periphery of that.
14 The majority. of thetirnewe tried to keep SEH
15 involved in projects where they were -- it was a
16 continuation of something that was already ongoing, whereas
17 Bolton & Menk took over new projects.
18 However, as building permits and stuff were
19 being issued, Bob Moberg wasn't always available or we
20 looked to our new city engineer to provide some guidance, so
21 at that point in time there was a crossover. So it could
22 have been - you know, some of those discussions could have
23 involved -- early on they all involved SEH. and after Bolton
24 & Menk was on for a period of time in, you know, I don1
25 know the recent date, the past year, 18 months, Adam Nafstad
98
1 became more involved in the building permits, the issuance
2 of them.
3 BY MS. MATT:
4 Q. Do you recall during those meetings that
5 happened with the engineers and the developer that
6 Mr. Johnson and Mr. Hedlund were surprised about that
7 information regarding the culvert 1 DO-year level?
8 MR. MARKERT: I'm going to object. Calls
9 for speculation.
10 Q. Go ahead and answer.
11 A. I don't remember.
12 Q. Do you remember Mr. Hedlund or Mr. Johnson
13 making comments that they had never seen this 1 DO-year _
14 seen or heard about this lOG-year level associated with the
15 culvert?
16 A. I don't remember.
17 Q. Is it possible that they made those comments
18 during those meetings?
19 A. It's possibie, yes.
20 Q. And you said that Mr. Hedlund debated his
21 interpretation of the ordinance. Correct?
22 A. There was discussion about the ordinance, yes.
23 Q. And Mr. Hedlund's position was that he had used
24 the line of permanent aquatic vegetation as the goveming
25 benchmark?
Kirby A. Kennedy & Associates 952-922-1955
1 A. That's what I recall.
2 Q. And do you recall that he used that because a
3 1 DO-year number was not made available to him?
4 A. Yeah, that's what I would assume.
5 Q. Mr. Yoch asked you a question about who was
6 making the decision on which lots were okay to build on and
7 which lots weren't okay. Do you recall that?
8 A. Yes.
9 Q. And I believe that you testified the city
10 engineer made those decisions; is that right?
11 A. You know, the city engineer was very involved
12 in review and, you know, looking at all ofthose issues. At
13 some point it did involve, you know, ordinance
14 interpretation, ahdso' ollrcity" attorney was also involved
15 in some of the discussions and as our city planner. We
16 operate as a deveiopment team, and this was a big problem,
17 so everybody was involved.
18 Q. I guess the -- what I am trying to figure out
19 is which city engineer is making the decision as to whether
20 particular lots can get a building permit or not. We, in a
21 previous deposition, I'll represent to you that Adam Nafstad
22 of Bolton Menk said that Bob Moberg made the decision. And
23 Moberg in his deposition said. no, he wasn't making the
24 decision, so I'm trying to figure out who was making the
25 decision as to particular lots.
100
1 A. You know, I think there's probably some gray
2 area. If you're talking about In recent times our city
3 engineer Adam Nafstad was, since litigation and all of that,
4 was probably the person carrying that message. in the early
5 days, SEH, when Bolton Menk came on, SEH was in charge of
6 the Prairie Run project, and we tried our best to keep
7 Bolton Menk working on new things and not projects that were
8 underway. But there were times where I would say there's
9 some gray area where we were expecting SEH to continue with
10 the project and we had a new city engineer under contract
11 with us, and I can just describe it as I can see where
12 there's some gray area in between there.
13 Q. You indicated that prior to the lawsuit by Gold
14 Key you were -- you believed the city and Gold Key were
15 working towards an acceptable solution. Is that a fair
16 summary of your testimony?
17 A. I think we were having some healthy discussion,
18 and I think with continued discussions, you know, prior to
19 the lawsuit, we were heading towards some what would have
20 been maybe some acceptable solutions.
21 Q. SO what would be an acceptable solution in your
22 mind?o23 A. You know, ultimately we want to protect the
24 homeowners that are there. We want that if a home is built
25 with inadequate freeboard, we want them to know what they
1-800-545-1955 Pages 97 through 100 of 176
Larry Kruse, March 13, 2007
101
1 have. The city doesn't want to see a residence flood after
2 they purchase a home.
3 One of the suggestions was that on some of the
4 marginal homes with - and I don't know the amount of
5 freeboard that might be acceptable, but It sounded like
6 there might be a way to comprise on some of the freeboard if
7 the homeowner signed an Indemnity or, you know, something
8 that would be passed on to future homeowners so everybody
9 would know what they're getting.
10 And then also it was discussed that probably
11 some homes that might have had basements would be converted
12 to slab on grade and some of the elevations of the homes
13 raised so that they met the requirements of the ordinance.
14 Q..Did the city .have an eXf)ectation that.the
15 infrastructure of Prairie Run, that is. the roads themselves
16 and the ponds will be or need to be raised?
17 A. The council ultimately makes that final
18 decision, and I hate to predict what would be acceptable to
19 them. I think that that's a possibility. I would hope that
20 there would be something, you know, that might lessen that.
21 Ultimately we have to look at those homeowners and make sure
22 that they're protected from a 100-year event.
23 Q. Wouldn't the time to have done that be before
24 the city approved the plat?
25 A. Definitely.
102
1 MR. KUBOUSHEK: Are we at a point where
2 we could take a quick break? Or I don't know what your plan
3 for the day is.
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MS. MATT: I have a lot more.
MR. KUBOUSHEK: 00 you want to take a
lunch, or how do you want to handle it?
MS. MATT: I don't need lunch, but I know
you guys typically need lunch.
MR. V~ DER MERWE: I'm fading fast.
MR. KUBOUSHEK: Should we say 45 minutes?
11 Does that work?
12 MS. MATT: Sure.
13 (At this time a recess was taken.)
14 (At this time Larry Kruse Deposition Exhibit
15 Number 96 was marked for identification by the
16 Court Reporter.)
17 BY MS. MATT:
18 Q. Mr. Kruse, in the normal plat process, would
19 you expect that any deficiencies or errors in the grading
20 and drainage plans would be commented on by the city
21 engineer and corrected by the time it got to final plat
22 approval?
23 A. Yes.
24 Q. Okay. Handing you what's been marked as
25 Exhibit 96, could you take a look at that document and tell
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1 me if you recognize it?
2 A. (Witness complies.) I have seen this, yes.
3 Q. And irs a letter from Mr. Robert Moberg to
4 Mr. Couri. dated November 23rd, 2005; is that correct?
5 A. Yes.
6 Q. And you are copied on ~, as is Jon Sutherland
7 and Mark Kasma?
8 A. Yes.
9 Q. In the first paragraph of that letter, it
10 states, "At the request of the City of Albertville, SEH has
11 prepared a summary of issues to be resolved by the developer
12 for the residential portion of the Prairie Run project."
13 Who at the City of Albertville requested that SEH prepare
14 this? ,.....
15 A. Possibly it was the council.
16 Q. The council as in city council or as in __
17 A. City council.
18 Q. Not Mike Couri?
19 A. You know, I guess I don't know for sure who
20 would have requested it You know, there may have been an
21 update of Prairie Run at the council meeting, and they might
22 have said to pursue this.
23 Q. Okay.
24 A. I don't know.
25 Q. Okay. And that first sentence also says. 'SEH
104
1 has prepared a summary of issues to be resolved by the
2 developer." Why is it at that point that you were --that
3 the developer should resolve the issues?
4 A. As I recall, the developer did the design of
5 the lots and the storm water ponds on that residential
6 portion, and that would be the person - the entity we have
7 the development agreement with.
8 Q. Okay. And at that point, in November of 2005,
9 were you aware that SEH had in fact not reviewed the grading
10 and drainage plans that were submitted as part of the plat
11 of Prairie Run?
12 A. No.
13 Q. So at that point you didn't believe SEH had to
14 resolve the problems, had any responsibility to resolve the
15 problems at Prairie Run?
16 A. That's correct.
17 Q. When did SEH make you aware that ~ had not
18 reviewed the grading and drainage plans?
19 A. I guess I really learned about It during this
20 litigation and some recent depositions that, you know, from
21 Pete Carlson.
22 Q. So people from SEH attended these I guess I've
23 been calling them brainstorming meetings that you had with
24 various members of Gold Key and Hedlund and people from the
25 city to come up with solutions to these problems that the
1-600-545-1955 Pages 101 through 104 of 176
Larry Kruse, March 13, 2007
1 city was identifying. Correct? SEH representatives were
2 there?
3 A. Yes.
4 Q. Bob Moberg?
5 A. Yes.
6 Q. Was Pete Carlson at any of those meetings? He
7 had left by then?
8 A. I don't recall Pete being at any of those
9 meetings.
10 Q. And during any of those meetings. those
11 brainstorming type meetings. did Bob Moberg stand up and let
12 you know that SEH hadn1 in fact reviewed the grading and
13 drainage plans for Prairie Run?
14 ~. Not that I'm aware of, no.
15 Q. The second paragraph of -- is it Exhibit 96
16 that you're reading from?
17 A. Yes.
18 Q. The second paragraph of Exhibit 96 refers to
19 recent rainfall events. It says, "After several recent
20 rainfall events. it has been discovered the grading plan for
21 the site does not account for the 1 OO-year flood elevation
22 (calculated at951.5 by Wright County) of an existing box
23 culvert where County Ditch Number 9 passes under Jason
24 Avenue." Do you see that?
25 A. Yes.
106
1 Q. Do you know what rainfall events are being
2 referred to there?
3 A. I don't know the dates or anything, but we In
4 recent, since my tenure there, we've had two significant
5 rainfalls where there's been some threatening flooding.
6 Q. And there was one in - well, if it's saying
7 "several recent rainfall events," does that lead you to
8 believe it was rainfall in the fall of 2005?
9 A. Yes.
10 Q. Late summer, fall of 2005?
11 A. Yes.
12 Q. And is it your understanding that it's at that
13 point that this 951.5 elevation of the box culvert was first
14 discovered?
15 A. Yes.
16 Q. You hadn't heard anything about the 951.5 box
17 culvert before then?
18 A. No, I hadn't
19 Q. And Bob Moberg apparently believed that it had
20 recently been discovered?
21 MR. MARKERT: I'm going to object. It
22 calls for speculation about what Mr. Moberg believed.
23 Q. Go ahead and answer.
24 A. J know that the box culvert eievation was _ I
25 learned about it In this November time frame, probably
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1 somewhere in the fall, late fall of 2005.
2 Q. Okay. And in fact Mr. Moberg is the author of
3 this letter of Exhibit 96. Correct?
4 A. Yes.
5 Q. And he's writing, "After several recent
6 rainfall events. it has been discovered the grading plan for
7 the site does not account for the 1 OO-year flood elevation
8 (calculated at 951.5 by Wright County) of an existing box
9 culvert where County Ditch Number 9 passes under Jason
10 Avenue"?
11 A. Yes, that's what it says.
12 Q. Did you have discussion with Mr. Moberg any
13 time around then. around this November 23rd. 2005. about
14 when he had discovered that 951.5 elevati6n?
15 A. I didn't, no.
16 Q. In the third paragraph of Exhibit 96, it refers
17 to City Code 11-7 -5G. Do you see that?
18 A. Yes.
19 Q. Is there another number for it? I'm having a
20 hard time matching up all these ordinances. The ordinances
21 I've seen are like 600. 700, 1000. Does that tell you
22 something right there. city code __
23 A. I'd have to research that. J don't know.
24 Q. Did the city code used to have like an old
25 numbering system or something?
108
1 A. We codified our code in this time frame here,
2 so there has been a change.
3 Q. Just in the - what you were numbering it as?
4 A. No. All of the city went through in the
5 codification process and reviewed, you know, a large number
6 of ordinances, updating them.
7 Q. But you have a document that could tell me
8 specifically what 11-7-5G is?
9 A. Yes, I would think so.
10 Q. Or was as of November 23rd, 2oo5?
11 A. The historical record should show that
12 Q. The next paragraph says, "The city is
13 requesting resolution of the fOllOWing issues:" and then it
14 has three numbered paragraphs. Who came up with those
15 numbered paragraphs, the ideas behind them?
16 A. You know, I think that Bob Moberg was obviously
17 instrumental in the development of these, and I don't
18 remember, you know - J think it would have been
19 substantially Bob Moberg in consultation. Uke I said
20 earlier, we have kind of a development team approach _ city
21 planner, city attorney, and city engineer. So I believe
22 that this is the outcome of our team working together.
23 Q. Backing up to the previous paragraph, it says,
24 "Using the 1 OO-year flood elevation calculated by Wright
25 County. we have determined there a number of lots in the
1-800-545-1955 Pages 105 through 108 of 176
Larry Kruse, March 13, 2007
109
1 Prairie Run development that do not comply with City
2 ordinances requiring that the lowest opening elevation of a
3 building be at least 2 feet above the 1 OO.year flood
4 elevation," and then it goes on to list the specific lots.
5 Do you see that?
6 A. Yes.
7 Q. You thought those specific lots complied with
8 city ordinances when the plat was approved, didn't you?
9 A. Yes.
10 Q. Otherwise you wouldn't have approved the plat.
11 Correct?
12 A. That's correct.
13 Q. And then turning to the second page of
14 Exhibit 96, that paragraph at the top starts off, "As an
15 alternative to mitigating existing non-compliance," and then
16 it goes on to talk about study and having the developer
17 finance a flood study. Do you see that?
18 A. Yes.
19 Q. Was the idea that the developer could pay for
20 the $7500 for the flood study and avoid having to comply?
21 Is that what that meant?
22 A. No. I think just what It says there, that
23 there may be the possibility that Wright County's number was
24 a conservative elevation and that with a more extensive
25 study, maybe a better number could have been detennined.
110
1 Q. So if the developer finances a study and comes
2 up with a less conservative number, then maybe it wouldn't
3 need to comply; is that right?
4 A. Oh, they always have to comply. I think that's
5 our goal, our standard.
6 Q. But then they wouldn't need to comply with the
7 951.1 number that's referred to in Exhibit 96?
8 A. You know, I guess I don't know the technical
9 aspect of answering that, other than what the engineer Is
10 recommending here saying that when they determined -- the
11 county determined that 100.year study, I remember them
12 saying that, you know, they do a pretty abbreviated analysis
13 and that number may be a IIWe higher than if they did a
14 more detailed study.
15 Q. So the idea was to have a more detailed study
16 done to come up with a more accurate 100-year number; is
17 that right?
18 A. Yeah, I guess that would be a good way to say
19 it.
20 Q. Mr. Kruse, handing you what's been marked
21 previously as Exhibit Number 39, which is a November 29th,
22 2005, letter from Michael Couri to Mr. Dean Johnson at Gold
23 Key Development, have you seen that letter?
24 A. I believe I have, yes.
25 Q. Okay. And then my quick review of it in
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1 comparing it to Exhibit 96 that we just talked about, the
2 November 23rd, 2005. letter from Mr. Moberg to Mr. Couri, is
3 that it appears that a large portion of Mr. Moberg's letter,
4 Exhibit 96, was cut and pasted and used in this
5 November 29th, 2005, letter from Mr. Couri. Would you agree
6 with that?
7 A. It appears that way, yes.
8 Q. In the first paragraph of Exhibit 39,
9 Mr. Couri's November 29th, 2005, letter, I noticed some
10 additional language. In the last two sentences it says,
11 .City staff is of the opinion that this discrepancy occurred
12 as a result of an error in Hedlund's calculation. You may
13 want to verify this with Hedlund." And I did not see that
14 language in Mr. Couri's ~ excuse me, Mr. Moberg's latter to
15 Mr. Couri. And I'm wondering where that opinion came from
16 that the discrepancy occurred as a result of an error in
17 Hedlund's calculations.
18 A. I guess I can only assume, but I know we once
19 again used the team approach, and our engineer and attorney
20 and planner are at some of these meetings, and I believe
21 Mr. Moberg's letter here is - may be listing out the
22 alternatives, and then this is more of a legal notification,
23 and I don't know what transpired In between. There could
24 have been a meeting, you know, with the developer, and
25 whether this is maybe the result of that, but I guess I
112
1 couldn't ask you - answer you on it, who specifically made
2 that.
3 Q. Did you direct Mr. Couri to put those two lines
4 in there in Exhibit 39, .City staff is of the opinion,"
5 those sentences?
6 A. No, I didn't, but I believe that that would
7 have been the consensus of city staff at the time.
8 Q. The consensus of city staff was that the
9 discrepancy occurred as a result of an error in Hedlund's
10 calculations?
11 A. Yes.
12 Q. What was that based on?
13 A. Our review of the Infonnation at the time ..
14 the plans, the plat, the building pad elevations, all the
15 infonnation.
16 Q. If there was an error in Hedlund's
17 calculations, that should have been caught by the city
18 engineer during the plat review process. Correct?
19 A. I don't know, you know, all the details of what
20 goes into an engineering review. I know that we expect our
21 engineer to do a thorough review, and, yeah, I would expect
22 that things like that would get caught.
23 Q. So you would expect if there was an error in
24 Hedlund's calculations that it would have been caught by SEH
25 during the review process, the plat review process. Is that
1-800-545-1955 Pages 109 through 112 of 176
Larry Kruse, March 13, 2007
1 your testimony?
2 A. I would expect them to do due diligence and a
3 high standard of review. Specifically If they review eve/)'
4 calculation In there, you know, I don't know if they do
5 that, but our expectation would be that a thorough review be
6 done and that, you know, outcomes for a good project would
7 prevail.
8 Q. Okay. And my question to you is if there was
9 an error in Hedlund's calculations, would you have expected
10 SEH to catch that error as part of the review process for
11 the plat?
12 MR. MARKERT: I'm going to object to the
13 extent it calls for speculation about what SEH would or
14 would not havecaughl. . ."
15 Q. Go ahead.
16 A. I would hope so.
17 Q. So you would expect that they would catch it?
18 A. I would want them to, yes.
19 Q. Yes. Okay. You would want them to and you
20 would expect that they catch il. Correct?
21 A. We expect a high quality project and with no
22 problems, so yes.
23 Q. SO the answer is yes?
24 A. Yes.
25 Q. And just so I can clarify, is it your testimony
114
1 that those two sentences about the discrepancy occurring as
2 a result of an error in Hedlund's calculations were added in
3 there because it was the consensus of city staff based on
4 previous meetings?
5 A. I think so, yes.
6 Q. So Mr. Couri would have added those two
7 sentences?
8 A. Yes, I believe so.
9 (At this time Larry Kruse Deposition Exhibit
10 Number 97 was marked for identification by the
11 Court Reporter.)
12 Q. Mr. Kruse, Exhibit 97 is the city council
13 meeting minutes from December 19th, 2005. Do you see that?
14 A. Yes.
15 Q. And in the first paragraph there it says City
16 Administrator Larry Kruse was present. Correct?
17 A. Yes.
18 Q. If you could flip to the last page of
19 Exhibit 97, it appears there was a discussion on Prairie
20 Run. Do you see where I am?
21 A. Yes.
22 Q. And it starts out, "City Attomey Couri stated
23 that a study of the water flow coming from the north to the
24 east of the site had been conducted." Do you see that?
25 A. Pardon? One more time?
Kirby A. Kennedy & Associates 952-922-1955
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1 Q. I'm just reading the first sentence under
2 Prairie Run Discussion. "City Attomey Couri stated that a
3 study of the water flow coming from the north to the east of
4 the site had been conducted." Do you see that?
5 A. Yes.
6 Q. What study is he referring to there?
7 A. I believe there was a study of the Prairie Run
8 watershed there.
9 Q. Do you know what one specifically he's
10 referring to on December 19th, 2005?
11 A. I guess I'd have to look Into that a little
12 further, but I think it was - I don't remember if that was
13 the larger study. There may have been a more confined study
14 which "led into a bigger study of the entire watershed. My
15 initial thoughts are it's probably a more limited study that
16 was done.
17 Q. By SEH?
18 A. It might have been Bolton & Menk.
19 Q. The second paragraph says, "When the county was
20 doing road work on County Road 18 a catch basin or box was
21 removed. Prior to the construction if you calculate the
22 floor level according to the elevations of the plat, they
23 appear to be correct." Do you see that?
24 A. Yes.
25 Q. Do you know what that means "prior to the
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1-800-545-1955
construction"? What does that mean to you?
A. I don't know. It's not quite clear to me right
Q. Do you recall what your discussions were about,
about Prairie Run that night?
A. If I read this a little more _
Q. Sure. Go ahead.
A. (Witness complies.) Yeah, I guess after-I
don't recall.
Q. Is there any document that will help you
recall?
A. Not that I'm aware of.
Q. A couple paragraphs down it says, "City
Administrator Kruse brought to the council's attention that
Mr. Johnson has submitted revised elevation plans of the
lots." Do you see that?
A. Yes.
Q. Why were you bringing that to the council's
attention?
A. I guess I think, you know, we were probably
looking at that time for some - maybe some modifications to
the home designs, i.e., if they have basements or not and if
there could be an easy way to raise the elevation of the
house and meet the minimum requirements.
Q. And Mr. Johnson appeared to be cooperating? He
Pages 113 through 116 of 176
Larry Kruse, March 13, 2007
117 119
1 was submitting revised elevation plans? 1 timing of all the dates when all this came together but _
2 A. Yes. 2 Q. SO am I understanding you that if you had known
3 Q. And the next sentence says, "City Attorney 3 that the city's own engineer had not reviewed the grading
4 Couri" -- excuse me, in the next paragraph it says, "City 4 and drainage plans, you wouldn't have refused to issue
5 Attorney Couri summarized that city staff has noted a 5 building permits?
6 possible problem with the development and wants to be 6 A. I learned about, you know, just this past few
7 proactive and address the issues before the homes are built 7 days, weeks that - during Pete Carison's testimony that SEH
8 and problems occur." Do you see that? 8 hadn't reviewed the drainage plan.
9 A. Yes. 9 Q. Okay.
10 Q. What's your recollection of that discussion? 10 A. And so at this time we had no knowledge of
11 A. I think we wanted to make sure that we, you 11 that. We assumed that that due diligence was done and we
12 know, weren't issuing additional building permits for homes 12 have to act accordingly.
13 that didn't meet the requirements of the code, and so we 13 Q. So now. sitting here today when you know that
14 wanted to be proactive and better understand the situation 14 SEH.did not review the grading and drainage plans, do you
15 through the flood study. 15 think it's fair that you are not issuing building pennits,
16 Q. Even though you had already approved the plans 16 that essentially it's the developer and the builders who are
17 over a year and a half ago? 17 being punished? Do you think that's fair'?
18 A. Yes. Based on the new Information. 18 A. You know,l believe that the city - you know,
19 Q. The pipe guy's number? The 951.5? 19 we did everything right. We went through the process.
20 A. Yes. 20 In hindsight, as SEH acknowledged they hadn't
21 Q. Do you think that's fair to the developer that 21 reviewed the plans, our expectation would be that they would
22 the city is not going to issue new building pennitsbased on 22 have reviewed the plans and that the development would
23 the pipe guy's number that it apparently recently discovered 23 comply with the ordinance. I guess this whole process here
24 when it had approved the plans over a year and a half before 24 is to determine who was responsible.
25 that date? 25 Q. And is it fair to the builder, the builder and
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1 A. I think our ultimate responsibility is to 1 the developer. that you are not issuing building pennits
2 protect current and future homeowners, so when new 2 when the city's own engineer did not review the grading
3 information comes to light, we have an obligation to make 3 plans?
4 sure that we do the right thing to protect them. 4 A. I believe that the city must protect current
5 Q. Even if it's unfair to the builder? 5 and future homeowners and that we must take action to do the
6 A. Yes. 6 right thing today and ultimately It was the developer's
7 Q. And the developer? 7 responsibility to design a project that was compliant with
8 A. They are the responsible party, and we -- our 8 the ordinances so we wouldn't be dealing with this today.
9 ultimate responsibility is to make sure that current and 9 Q. Okay. And you still didn't answer my question.
10 future homeowners are protected. 10 Is it fair to the developer? was my question.
11 Q. SO they're responsible even though the City 11 A. Yes.
12 gave its stamp of approval when it approved the final plat? 12 Q. Even though the city's own engineer is the one
13 Your testimony is the developer is the one who is 13 who didn't review the plans and catch any alleged mistakes?
14 responsible. Is that what you're saying? 14 A. Ultimately it's my belief that the designing
15 A. I'm saying that the developer hired a design 15 engineer was supposed to deliver an approved quality project
16 engineer to meet the standard of the ordinance, and if it 16 that met our code and ordinances. Our engineer reviews and,
17 comes to light that it doesn't meet that, the city is 17 you know, at the same time if we went to -I'm going to
18 obligated to take action to protect current and future 18 probably generalize this a little bit, but if we went to a
19 homeowners. 19 further extent and redesigned everything and dotted every
20 Q. Even when the city's engineer failed to review 20 "I" that the design engineer, the developer would be
21 the grading and drainage plans and catch any alleged 21 complaining to us about the high engineering fees. And, you
22 mistakes? 22 know, a review is not a redesign, and so our expectation Is
23 A. We didn't know that at that time. 23 that the design engineer delivers a quality project that
24 Q. In December '05? 24 meets the ordinance.
25 A. Yeah, I mean, once again, I don't remember the 25 Q. But in your case your engineer did not review
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Larry Kruse, March 13, 2007
1 the plans. Right?
2 A. Our engineer we've recently learned did not
3 review the plans.
4 Q. All right. None of the homes in Prairie Run
5 have actually flooded. have they?
6 A. Not that I'm aware of.
7 Q. This risk to the homeowners that you're talking
8 about is all a theoretical risk. isn't it?
9 A. Based on the amount of rainfall, yes.
10 Q. Mr. Kruse. you have before you Exhibit 86,
11 which is a December 20th, 2005, memo from the city attomey,
12 Mike Couri, to Jon Sutherland, yourself, and city council
13 members. Correct?
14 A. Yes."
15 Q. And the subject line says it's regarding a
16 "Request For Certificate of Occupancy At 5209 Kalenda
17 Court." Do you see that?
18 A. Yes.
19 Q. And are you familiar with }hat document? You
20 received it at some point.
21 A. Just a moment
22 Q. Sure. Take a minute to look through it,
23 A. Yes, I'm somewhat familiar with the document.
24 Q. Okay. On the second page of Exhibit 86, the
25 second full paragraph says, "Randy Hedlund. the engineer for
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1 the Developer of the Prairie Run/Gold Key portion of the
2 Prairie Run plat concluded that there was no 1 OO-year flood
3 level available and calculated the high water elevation for
4 this plat at 948.5 feet based on the location of the
5 permanent aquatic vegetation." Do you see that?
6 A. Yes.
7 Q. If you'd flip back to the first page of
8 Exhibit 86, there it lists the Zoning Ordinance 1000.9
9 Subdivision (d). Do you see that?
10 A. Yes.
11 Q. And in there halfway through it states, "If
12 sufficient data on known high water levels is not available,
13 the elevation of the line of permanent aquatic vegetation
14 shall be used as the estimated high water elevation." Do
15 you see that?
16 A. Yes.
17 Q. SO it's a fair statement, then, to say that
18 Mr. Hedlund was justified under the City's own ordinance in
19 using the line of permanent aquatic vegetation?
20 MR. KUBOUSHEK: I'm going to object to
21 the form of the question in that it assumes what Mr. Hedlund
22 did or did not know or research. Answer it if you can.
23 Q. Sure. Go ahead.
24 A. Yes.
25 Q. And then in the -- Mr. Kruse, handing you
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1 what's been marked Exhibit 35, it's the development
2 agreement between Gold Key and city. If you could take a
3 look at paragraph 13 and confirm for me that that paragraph
4 of the development agreement also allows the developer to
5 use the line of permanent aquatic vegetation?
6 MR. KUBOUSHEK: I'm going to object to
7 the form of the question because it's vague as to time frame
8 when the developer may use language contained in the
9 development agreement.
10 Q. Go ahead and answer.
11 A. If I could Just read it just a little bit here?
12 Q. Sure.
13 A. (Witness complies.) Repeat the question?
14 MS:'MATT: Could you'read my question
15 back, please?
16 (Whereupon the requested portion of the record
17 was read aloud by the Court Reporter.)
18 A. I believe that's what it says.
19 Q. Okay, And then turning back to Exhibit 86. the
20 third full paragraph down on the second page says.
21 "Apparently" -- halfway through the paragraph says,
22 "Apparently, SEH, the City's engineer reviewing the Prairie
23 Run plat, assumed that Mr. Hedlund's 948.5 figure took into
24 account the potential flooding situation from County Ditch 9
25 when SEH reviewed the plat prior to approval." Do you see
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1 that?
2 A. Yes.
3 Q. And so at that pOint that this memorandum was
4 written. December 20th. 2005, am I understanding that the
5 city believed that SEH had reviewed the plat prior to
6 approval?
7 A. Yes.
8 Q. The next paragraph talks about SEH apparently
9 recently realizing about the culvert number. And then it
10 states, "While this study was not a comprehensive study, it
11 represents the only information available as to potential
12 flood levels in County Ditch 9." Do you see that?
13 A. Yes.
14 Q. That's not an accurate statement, is it? In
15 fact. this Exhibit 1, SEH's flood study. was available at
16 this time, December 20th, 2005, wasn't it (indicating)?
17 A. It appears by the dates, yes.
18 Q. Could you take a look at Exhibit 1, SEH's flood
19 study, and tell me when you got that? If you flip through
20 it, you'll notice it's addressed to you somewhere in there.
21 A. (Witness complies.) The letter Is dated to me
22 June 23rd, 2004.
23 Q. And actually that flood study that you have in
24 your hand, SEH's flood study, came up with a l00-year number
25 of 950.5, didn't it?
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MR. KUBOUSHEK: Is there a specific page
where it's listed? Maybe we can expedite this.
Q. On page. Bates stamp B&M 0103, the first table,
Kaiser Avenue culvert at County Ditch 9, the first number
listed there is 950.5. Do you see that?
A. Okay.
Q. Do you understand that to be the 100-year flood
elevation number for the culvert at County Ditch 9?
A. That's what it says here. I can't read the
headers on the column.
Q. Well, when you got this flood study in June of
2004, what did you do with it?
A. The city engineer presented it to council, I
believe, and as far as the technical numbers, you know, I
can't verify those here now because I don't profess to be
the technical person.
Q. And when you say the city engineer presented it
to council, you mean SEH at that time in June of 2004?
A. I believe so.
Q. And did SEH share with you any concems about
the development that city council had just approved, the
Prairie Run development that they had approved a couple
weeks earlier, June 7th, 2004?
A. Not that I'm aware of.
Q. Did SEH share with you how this flood study
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1 might impact the Prairie Run development?
2 A. Not that I'm aware of.
3 Q. Did you share this flood study with Gold Key or
4 Hedlund Engineering?
5 A. I didn't, no.
6 Q. Were you aware of whether anyone from the city
7 shared this SEH flood study with Gold Key or Hedlund
8 Engineering?
9 A. No, I'm not
10 Q. And, Mr. Kruse, do you understand that as a
11 result of Exhibit 86, the December 20th, 2005, memorandum,
12 the city would not be issuing an occupancy permit for 5209
13 Kalenda Court? If you want to tum to the third
14 paragraph -- excuse me, the third from the last paragraph of
15 that exhibit.
16 A. (Witness complies.) That's correct.
17 Q. At that time were you expecting that the
18 builder bring that house into compliance with the ordinance,
19 that is. raise the house?
20 A. I believe that was one of the options
21 discussed.
22 Q. And are you aware that it was - the builder
23 estimated it would cost $34,000 to raise that house?
24 A. I don't remember the specific number, but
25 that's probably likely.
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Q. And you expected the builder or someone to do
that before you issued a certificate of occupancy?
A. That's what it says here, yes.
Q. Mr. Kruse, before you is Exhibit 69. It's an
e-mail from Dan Boxrud of SEH to yourself, copying Bob
Moberg, and then the second page of it is a memorandum from
Bob Moberg to yourself dated February 14th, 2006. Are you
familiar with those documents?
A. They look familiar.
Q. My question is about the second paragraph of
the first page of Exhibit 69, the e-mail. Mr. Boxrud says,
"As the anniversary of the flood approached" -- and he's
referring to the 2003 flood -- "the council expressed
concem about what had been dolieili the last year. "And I'm
wondering if you can tell me what that means.
A. Could you rephrase the question, please?
Q. Sure. I'm wondering if you can provide some
insight as to what the following sentence means. "As the
anniversary of the flood approached, the council expressed
concern about what had been done in the last year."
A. , don't recall. I assume that with the heavy
rains in the fall of 2004 and some potential flooding, the
council had expressed concerns to make sure that the
elevations were accurate and according to the ordinance.
MR. VAN DER MERWE: Excuse me, sir. Did
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you mean the rain of 2004 or 2005?
THE WITNESS: I don't recall. The two
heavy rain events, I'm making the assumption that this
followed that.
BY MS. MATT:
Q. Maybe it would help to read the whole paragraph
because I interpreted that paragraph as referring to the
rain in 2003, so if you would take a minute to read that
whole second paragraph of Exhibit 69.
A. (Witness complies.) And repeat the question
one more time, please?
Q. I'm wondering if you know what - well, let me
try to figure out a better way to ask this. You understand
that there was a flood event in June of 2003. Correct?
A. Yes, prior to my arrival.
Q. Right. And that it's that flood event that SEH
ultimately did a flood study of and that was looked at.
Exhibit 1. I think you might still have it in front of you.
Correct?
A. Yes.
Q. You understand that?
A. Yes.
Q. And do you understand that although SEH issued
Exhibit 1, the flood study report in June of 2004 _
A. Uh-huh.
Pages 125 through 128 of 176
Larry Kruse, March 13, 2007
129
1 Q. - it knew the results of that study sometime
2 prior to the time it issued it. Do you understand that?
3 A. Yes.
4 Q. And Pete Carlson, was it yesterday -- Friday,
5 testified that he knew the results of the flood study and he
6 communicated them to city council in the fall of 2003. Are
7 you aware of that?
8 A. I don't think so.
9 Q. Well, I'll represent to you that Pete Carlson
10 did testify that he communicated the results of the flood
11 study to city council in the fall of 2003. And now I'm
12 wondering if in light of all of that, this sentence makes
13 sense and if you can shed some light on this sentence for
14 me. "As the anniversary of flood approached, the council
15 expressed concern about what had been done in the last
16 year." Does that sentence mean anything to you, jog your
17 memory as to what council was concemed about?
18 A. You know, not really, other than, you know, the
19 2003 flood was such a significant event, it was, you know,
20 on the forefront of lots of people's minds.
21 Q. Do you -- well, let's go to the sentence that
22 says. "After the 2003 flood, Pete Carlson had our water
23 resources staff do the drainage calculations as a check on
24 the approved developments. knowing that the developments had
25 been approved based on developer submissions and without
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Kirby A. Kennedy & Associates
benefit of a city-wide study." Does that sentence mean
anything to you?
A. I believe it means that the city didn't have a
comprehensive citywide study and the developer didn't have
the benefit of that knOWledge.
Q. Right. And so the city approved some
developments based on whatever it is that the developers had
submitted and without knowing the results of a comprehensive
study at that point. Correct?
A. If I recall, SEH had done, on their own, done a
flood study which was eventually brought to council, dated
June 24th - 25th ..
Q. Right. Exhibit 1.
A. - June 23, 2004.
Q. And that study you're refening to is
Exhibit 1. Correct?
A. Yes.
Q. And are you aware of - let me read another
sentence and ask you a question. In Exhibit 69 it says,
"The technical results were known to SEH internally some
time in winter of 2003-2004, and were used to adjust the
Prairie Run building elevations upward." Do you see that?
A. Yes.
Q. What's your understanding of what happened
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1 A. Once again, just what it says. SEH had done
2 that internally, and once again, the city is relying on the
3 engineer to, you know, to do their due diligence In
4 reviewing these projects, plats.
5 Q. And when it says. "were used to adjust the
6 Prairie Run building elevations upward," do you have any
7 reason to disagree that that happened?
8 A. No.
9 Q. The second page of Exhibit 69 refers to a
10 meeting on February 7th, 2006. Do you see that?
11 A. Yes.
12 Q. Do you recall what happened at that meeting,
13 who attended and what was discussed regarding Prairie Run?
.14 A. You know,l doh't remembei' the specifics, no.
15 Q. Is there any document that will help you recall
16 what happened at that February 7th meeting?
17 A. Not that I'm aware of.
18 Q. Mr. Kruse, handing you Exhibit 72. the
19 feasibility report for 2004 Prairie Run Improvements, have
20 you seen that document before?
21 A. Yes.
22 Q. And it's dated January 13th, 2004?
23 A. Yes.
24 Q. And at that time did the city have an
25 understanding as to whether the grading and drainage plans
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would be reviewed by the city engineer?
A. As part of our consulting services, we would
expect SEH to provide those services.
Q. And are you aware that after this feasibility
report was issued there were going to be -- there was going
to be a public hearing on the assessments for the extension
of I believe 53rd Street? You're aware of that?
A. Yes.
Q. Okay. And Pete Carlson has testified that he
was holding off on reviewing the grading and drainage plans
for Prairie Run until after that public hearing happened as
to the assessment for the road extension. Does any of that
sound like something that Pete discussed with you?
A. I don't remember.
Q. Do you -- did Pete ever tell you that he was
holding off on reviewing the grading and drainage plans
until after the public hearing on the assessments for the
road extension?
A. I don't remember.
Q. Is there any document that will help you
remember?
A. I can't think of any.
Q. You're aware that Pete Carlson took a leave of
absence because of the death of his son?
A. Yes.
Pages 129 through 132 of 176
Larry Kruse, March 13, 2007
1 Q. Does it sound right to you that it would have
2 been in February of 2004?
3 A. Yes. Yes.
4 Q. That's what he testified it was. Okay. And
5 were you aware that Jim Schulz was going to be handling the
6 city engineering matters in Pete's absence?
7 A. Yes.
8 Q. And was the city okay with that?
9 A. Yes.
10 Q. Did the city have any concern about Jim
11 Schulz's ability to handle engineering matters for the city
12 in Pete's absence?
13 A. No.
14 Q. Did you have any discussions with Jim.Schulz as .
15 to whether he would be doing a grading -- a review of the
16 grading and drainage plans for the residential portion of
17 Prairie Run?
18 A. No.
19 Q. Did the city have any problems with Jim Schulz
20 while -- and the work that he did while Pete Carlson was on
21 his leave of absence?
22 A. I don't remember any at this time.
23 Q. Mr. Carlson, handing you -- excuse me,
24 Mr. Kruse. Handing you Exhibit 75, the city council meeting
25 minutes for April 19th, 2004, do you see that you were
134
1 pnasentonthatday?
2 A. Yes.
3 Q. And if you tum to the second page of
4 Exhibit 75, there's a discussion about the 2004 Prairie Run
5 project. Do you see that?
6 A. Yes.
7 Q. And do you see that you, in the third paragraph
8 under that subheading, you are recommending that council
9 adopt a resolution approving the plans and specifications
10 and authorize bidding contingent upon the developer signing
11 the agreement to pay all expenses should the project not
12 proceed as planned. Do you see that?
13 A. Yes.
14 Q. At this point --let me ask another question.
15 Do you understand that what you were recommending council
16 adopt was a resolution approving the plans and specs that
17 were actually going to go out for bid on that Prairie Run
18 project?
19 A. Yes.
20 Q. And at that point did you expect that the
21 grading and drainage plans had already been reviewed by the
22 city engineer?
23 A. Yes, I would assume so.
24 Q. If they're going out for bid, you would have
25 expected them to be reviewed?
Kirby A. Kennedy & ASSOCIates 952-922-1955
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1 A. Yes.
2 MS. MATT: Do you to need take a break?
3 THE WITNESS: What's your best guess now?
4 I have a 3:00 p.m. meeting.
5 (At this time a discussion was held off the
6 record.)
7 (At this time a brief recess was taken.)
8 (At this time Larry Kruse DepOSition Exhibit
9 Number 98 was marked for identification by the
10 Court Reporter.)
11 Q. Mr. Kruse. handing you what's been previously
12 marked Exhibit Number 84, do you recognize that document?
13 A. Yes.
14 Q. And it appearS to be a Sep~ember 3r(( 2004,
15 memorandum from Bob Moberg to yourself regarding preliminary
16 plat review of 2004 Shoppes at Prairie Run. Correct?
17 A. Yes.
18 Q. And have you received plat review memorandums
19 like that on other plats in Albertville?
20 A. Yes.
21 Q. On most of the other plats that you've been
22 involved in, do you receive a review memorandum such as
23 Exhibit 84?
24 A. Yes.
25 Q. So why didn' you notice that a memorandum such
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as this was missing for the Prairie Run residential plat?
A. It's not a required document, and once again,
we would expect our engineer to bring these things forward
through the process. They're very familiar with that, and I
could very easily not have recognized that
Q. Okay. On the second page of Exhibit 84, I see
Mr. Sutherland and Mr. Brixius and Mr. Couri are all copied
on that?
A. Yes.
Q. Is that fairly typical that they would be
copied on a review memorandum?
A. I think so, yes.
Q. And did any of those individuals point out to
you that we were missing a review memorandum for the
residential plat of Prairie Run?
A. No.
Q. None of those individuals had discussions with
you wondering where the review memorandum for Prairie Run
was?
A. No.
Q. Handing you what's previously been marked as
Exhibit 85, a November 3rd, 2004, memorandum to yourself
from Mr. Brixius regarding Albertville High Water Elevation
Standards, have you seen that document before?
A. Yes.
Pages 133 through 136 of 176
Larry Kruse, March 13, 2007
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1 Q. Did something happen in the fall of 2004 to
2 precipitate this memorandum?
3 A. Yes, but I don't recall the details.
4 Q. The memorandum itself is about the Albertville
5 High Water Elevation Standards and the inconsistencies
6 within the Albertville ordinances and subdivision
7 ordinances, isn't it?
8 A. Yes, it is.
9 Q. And the first full paragraph of the first page
10 of Exhibit 85. the last sentence says, "The City Engineer
11 suggests separations be uniform and that in areas that do
12 not abut a lake, that the reference should not be to lowest
13 floor but to lowest openings." Do you see that?
14 A. Yas.
15 Q. Do you have an understanding as to why the city
16 engineer is suggesting that the separations be uniform?
17 A. I guess so, yes.
18 Q. And what's your understanding of why
19 separations should be uniform?
20 A. You know, I believe this is talking between a
21 lake and a wetland. I guess I don't profess to be an expert
22 on, you know, the technical aspects of the elevations, low
23 floor, low opening. We look to our engineer, and then when
24 it comes to the building official, he also deals with those
25 types of issues. I don't get involved in those details.
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24 Q. Jon Sutherland?
25 A. Yes.
Kirby A. Kennedy & Associates
Q: You'd agree that it's a good idea to have
ordinances that are consistent, though, in terms of the
separation from high water elevations?
A. I think that Irs probably more complicated
than that. I understand DNR has, you know, some regulations
and maybe additional infonnation pertaining to lakes and how
they fluctuate and wetlands. I just remembered that that
was the discussion that we had is that do they - are they
one in the same, or are they dealing with different issues.
I don't know if that makes sense, but I don't pretend to be
the technical expert on this.
Q. And do you understand that the ordinances
relating to high water elevation standards were amended soon
after this memorandum?
A. Yes, I believe they were.
Q. Did you see pictures from the June 2003 flood
Yes, I did.
When did you see those?
Probably in late 2005, early 2006.
Do you know where you got those from?
I believe our building official had some
952-922-1955
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1 Q. And had he taken those pictures after the June
2 2003 flood event? Is that your understanding?
3 A. Yes.
4 Q. Do you know why he didn't share those
5 photographS with Gold Key or Hedlund Engineering prior to
6 plat approval?
7 A. No, I don't I would add that, you know, that
8 a lot of times our building official is not involved in, you
9 know, the early development phase of the platting. Once the
10 plat is completed and building permit applications corne in,
11 that's generally when our building official gets involved.
12 Q. Is the City of Albertville so compartmentalized
13 that if Mr. Sutherland had photographs from the June 2003
. 14. flood event in his file, that the other individuals from'the
15 city that are working on the Prairie Run plat wouldn't know
16 those existed or he wouldn't know that that Prairie Run plat
17 was going on and he should come forward and share those?
18 A. I can only say that I became aware of the
19 photos after I believe all of this happened.
20 Q. Were those photos kept in Mr. Sutherland's
21 files at the city?
22 A. I believe so, yes.
23 Q. You didn't have like a general 2003 flood file
24 that was available to everyone?
25 A. Not that I know of.
140
1 Q. How many meetings would you say you had with
2 SEH regarding the alleged problems that the city believes
3 existed in the plat of Prairie Run?
4 A. You know, I don't remember specific, but it
5 could have been four or five.
6 Q. And during those maybe four or five meetings
7 that you had with SEH, did SEH ever point out that it had
8 not actually reviewed the grading and drainage plans
9 associated with Prairie Run?
10 A. No.
11 Q. Mr. Kruse, handing you Exhibit 98, which if you
12 flip through it, you'll see it's City of Albertville's
13 Supplemental Answers to Gold Key's Interrogatories, and on
14 the third page you'll note it's signed by yourself. Are you
15 familiar with that document?
16 A. Yes, I am.
17 Q. And then tuming to the second page of the
18 supplemental answer itself, it starts off saying, "After
19 further analysis of the data available to the A1berlville
20 City Engineer, including photographs of the flooding which
21 occurred in the areas near the Prairie Run development in
22 July, 2003, the Albertville City Engineer's office has
23 arrived at revised figures for the 100-year flood elevation
24 and the highest known water elevation for Prairie Run pial."
25 Do you see that?
1-800-545-1955 Pages 137 through 140 of 176
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Larry Kruse, March 13,2007
1 A. Yes.
2 Q. What data is being referred to that is analyzed
3 and available to the city engineer?
4 A. I believe that Bolton & Menk did a flood study,
5 additional flood study work, and used the photographs.
6 Q. The photographs from the 2003 flood?
7 A. Yes.
8 Q. And when it's saying July 2003 flood, do you
9 believe that it's referring to what we know to be the June
10 2003 flood?
11 A. Yes.
12 Q. Okay. And so those two numbers that are there,
13 the 100-year flood elevation being 949.9 feet and highest
14 known water elevation.being 951.47 feet, do you understand
15 that those are coming from the Bolton & Menk 2006 flood
16 study? Is that your understanding?
17 A. Yes.
18 Q. And if we flip through the rest of that
19 document, it's my understanding that you're saying Gold Key
20 is in default of the development agreement based on those
21 numbers that Bolton & Menk determined in 2006; is that
22 correct?
23 A. Yes.
24 Q. And on the third page of Exhibit 98 at the top
25 ~ starts off, "Developer has violated the following city
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1 subdivision ordinances in the following ways." And in
2 parens it says, "(The cites below are to the ordinances as
3 they were in effect at the time of final plat approval)."
4 Do you see that?
5 A. Yes.
6 Q. So I just want to be clear that the city is
7 alleging that Gold Key is in default of the development
8 agreement for ordinances that were in effect at the time of
9 the final plat. Correct?
10 A. Yes.
11 Q. But based on numbers that the city came up with
12 in 2006 as a result of Bolton & Menk's 2006 study. Correct?
13 A. Yes.
14 Q. Does that seem fair to you?
15 A. You also have to look at other information such
16 as the culvert, box culvert elevation. You know, in earlier
17 discussions, we talked about, you know, doing a more
18 extensive study to see if that was a conservative number and
19 this would be different.
20 Q. Okay. My question to you was, Does it seem
21 fair to you that the city is saying that the developer
22 violated ordinances that were in effect at the time of final
23 plat approval but the numbers the city is using to declare
24 that default weren~ available and the city didn't come up
25 with them until 2006? Does that seem fair to you?
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1 A. I just think there's other information such as
2 the Ditch 9 information and stuff that, you know, the
3 developer could have used, and once again, I don't pretend
4 to know the difference in the numbers here of what the box
5 culvert is or this number here, if this is more less of a
6 standard than the original box culvert. For me to assume
7 that it's not fair, I guess I don't pretend to know all
8 those answers.
9 Q. And I'm not looking for answers on the
10 specifics about these numbers. I am asking if it seems fair
11 to you that the city is declaring the developer to be in
12 default for ordinances that were in effect at the time of
13 the plat --
14 'A. . Right.
15 Q. -- but using numbers two years later in 2006 as
16 a basis for that default. Does that seem fair to you?
17 That's alii want to know.
18 A. If It was just as simple as what you say, I
19 would say yes.
20 Q. That it seems fair to you?
21 A. That it doesn't seem fair.
22 Q. Right. Okay. How much has the city incurred
23 in legal fees from this litigation?
24 A. I don't know.
25 Q. Who would know that?
144
1 A. Tina Lannes, our finance director.
2 Q. Do you have an approximate?
3 A. No, I don't. Not right now.
4 Q. Has the city paid anything in legal fees yet as
5 a result of this litigation?
6 A. I believe we have.
7 Q. Is the city claiming any damages in this
8 lawsuit?
9 A. I guess I don't know the specifics on that
10 question. I believe that, you know, we want the development
11 put in compliance with the ordinances. If you interpret
12 that as damages, then yes.
13 (At this time Larry Kruse DepOSition Exhibit
14 Number 99 was marked for identification by the
15 Court Reporter.)
16 Q. Mr. Kruse, Exhibit 99 is a December 1st, 2006,
17 letter from yourself to Dean Johnson. Are you familiar with
18 that document?
19 A. Yes.
20 Q. And it looks to me like some of it was - I was
21 going to say taken from Exhibit 98. but it looks like
22 Exhibit 98 was created after Exhibit 99, so in any event,
23 some of the information in Exhibit 99 is the same
24 information that we just talked about with respect to 98.
25 Correct?
1-800-545-1955 Pages 141 through 144 of 176
Larry Kruse, March 13, 2007
145
1 A. Yes.
2 Q. And those numbers in Exhibit 99, the 949.9 feet
3 for the 10G-year and 951.47 for the highest known water
4 elevation, those were from the 2006 Bolton & Menk study?
5 A. Yes.
6 Q. If you turn to the second page - excuse me,
7 the third page of Exhibit 99, the second full paragraph
8 says, "While the city has not thoroughly studied how these
9 various ordinance violations may be remedied, City Staff is
10 concerned that the only way to bring the development into
11 compliance with Subdivision Ordinance Sections
12 A-B00.13(c)(1) and A-700.6 cited above may be to raise the
13 entire plat, including ponds, streets, and lot elevations"
14 Do you.see that?
15 A. Yes.
16 Q. Is that what you're asking Gold Key to do?
17 A. I believe right now that that is, yes.
18 Q. And have you undertaken an assessment as to how
19 that can be accomplished. what the costs are, and so forth?
20 A. No.
21 Q. Do you plan to?
22 A. I imagine that the council would act on that,
23 and obviously prior to something happening like that, there
24 would have to be a study, yes.
25 Q. And at the time the plat was approved, you
146
1 believed that the plans that were submitted were in
2 compliance with Subdivision Ordinance Sections
3 A-600.13(c)(1) and A-7oo.6; is that correct?
4 A. You know, I don't know those specific ordinance
5 numbers, but I would say yes.
6 Q. Right, because you believed that the plat
7 complied with all of the city -
8 A. Ordinances at the time of approval.
9 Q. - ordinances and subdivision ordinances.
1 0 Correct?
11 A. Yes.
12 Q. How did these violations that you cite in your
13 letter impact the entire residential portion of the Prairie
14 Run plat?
15 A. Building permits, as it says, will be held for
16 any residential lots until the violations are corrected.
17 Q. Right. But I'm wondering if a partiCUlar lot
18 is in compliance in that the -- compliance with city
19 ordinances in that the elevation is okay, there's no problem
20 with it, then does that - does the violations of the other
21 lots. alleged violations of the other lots have an impact on
22 those lots that clearly do meet the elevation requirements?
23 A. I think, you know, from a little bigger
24 perspective, there's also road issues, ponding issues, rate
25 of runoff issues and things like that, so it becomes all
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1 kind of an integral part of each other.
2 Q. SO the road, ponding, rate of runoff issues
3 affect the whole plat in your opinion. Is that what you're
4 saying?
5 A. That's not only my consensus but my development
6 team.
7 Q. But you weren't concemed about those issues in
8 June of 2004 when you approved the plat?
9 A. To the best of our knowledge, the city had
10 followed a thorough, comprehensive process, and everything
11 was according to Hoyle.
12 Q. SO you weren1 concerned with those issues in
13 June of 2004 when you approved the plat. Correct?
14. A; No;'
15 Q. No, that's not correct or, no, you weren't
16 concerned with the issues?
17 A. We didn't know there was issues, no.
18 Q. SO you weren't concemed with them?
19 A. We were not concerned.
20 Q. Okay.
21 (At this time Larry Kruse Deposition Exhibits
22 Number 100 and 101 were marked for
23 identification by the Court Reporter.)
24 Q. Mr. Kruse, handing you what's previously been
25 marked as Deposition Exhibit Number 47, if you'd turn to -_
148
1 I think I opened it for you there, 600.13. the first
2 paragraph of that subdivision ordinance requires. "A storm
3 water pollution control plan shall be submitted for review
4 and approval by the City Engineer for subdivision
5 applications for projects containing 5 acres or more of
6 land" Correct?
7 A. That's correct
8 Q. And Prairie Run would fall within the category,
9 5 acres or more?
10 A. Yes.
11 Q. SO a storm water pollution control plan was
12 required to be reviewed and approved by the city engineer?
13 A. Yes.
14 Q. And if you turn back to the December 1 st, 2006.
15 letter from yourself to Gold Key Development, the city is
16 now claiming a violation of6oo.13(c)(1). Correct?
17 A. Yes.
18 Q. Mr. Kruse, handing you what's been marked as
19 Exhibit 100. "Application For General Storm Water Permit For
20 Construction Activity." you're familiar with that document?
21 If you flip to the third page, you'll see you signed it on
22 July 22nd, '04.
23 A. Yes.
24 Q. And in that document the city is listed as the
25 owner on page 3, City of Albertville?
1-800-545-1955 Pages 145 through 148 of 176
Lany Kruse, March 13,2007
1 A. Yes.
2 Q. And page 2 of that document under paragraph 11,
3 project type "Residential" is checked. "Residential" and
4 "Commercial" are both checked?
5 A. Yes.
6 Q. This is referring to the 2004 Prairie Run
7 project, both residential and commercial?
8 A. Yes.
9 Q. And in paragraph 12, this project creates
10 pastconstruction impervious surface area of greater than
11 1 acre. Correct? 1.5 acres, in fact?
12 A. Yes.
13 Q. And in paragraph 13, for the permanent storm
14 Wi'ter management, the boxes that are checked are
15 "Infiltration/Filtration" and then "Regional Ponding."
16 Correct?
17 A. Yes.
18 Q. And paragraph 14 indicates that County Ditch 9
19 is the water body that will be receiving waters. Correct?
20 A. Yes.
21 Q. And again on page 3, it's signed by you on
22 July 22nd, 2004?
23 A. Yes.
24 Q. And that was about a month and a half after the
25 final plat of Prairie Run was approved on June 7th, 2004?
150
1 A. Yes.
2 Q. And it was after the development agreement was
3 approved on -- or signed on July 16th, 2oo4?
4 A. Yes.
5 Q. And above your signature in that paragraph it
6 says that the information is, to the best of your knowledge
7 and belief, true, accurate, and complete?
8 A. Yes.
9 Q. And under the rules of the MPCA, you aren't to
10 submit a storm water application for a permit until any
11 local approval that is required has been received; is that
12 correct?
13 A. I would assume so.
14 Q. Okay. Well, if you turn to the page that's
15 stamped CITY 0917, there's a flow chart there. And if you
16 take a minute to look at that, the first box there -- second
17 box says, "Is there a local permitting authority that
18 reviews and approves storm water plans?" Do you see that?
19 A. Yes.
20 Q. And if you follow the flow chart through, it
21 follows that you need to first submit the plan to the local
22 permitting authority before you can submit it to MPCA.
23 Correct?
24 A. That's what It says.
25 Q. SO by submitting this application to the MPCA
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1 on July 22nd, 2004, you're certifying that you previously
2 submitted a plan and it was approved by the local permitting
3 authority?
4 A, You know, I guess I -- this document was
5 prepared for my signature, so I don't pretend to know all
6 the nuances of these details. Once again, I'm advised by
7 our consultants that things are ready to go and prepared for
8 signatures, and I sign and put trust that, you know, they're
9 professionals and leading us down the proper path.
10 Q. SO who prepared it and asked you to sign it?
11 A. I don't know, but it could likely be Bob
12 Moberg.
13 Q. Why would you believe it was him?
'14 . - A. Well, it was probably prepared by SEH. Maybe I
15 can make a broader, you know, because I don't know
16 specifically.
17 Q. And SEH is the one who actually then, if we
18 turn back to the 600.3 ordinance that you read from. SEH
19 being the city engineer is the one who actually approves the
20 plan that you submit to them?
21 A. Yes.
22 MR. MARKERT: Can I ask a quick question?
23 Is there a local permitting authority in Albertville that
24 reviews storm water plans?
25 THE WITNESS: I believe we are our own
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1-800-545-1955
BY MS. MATT:
Q. SO do you believe, Mr. Kruse, that it's --
well, based on your own subdivision ordinance, 600.13(a)
that we read, "A storm water pollution control plan shall be
submitted for review and approval by the City Engineer." So
it's the city engineer who reviews these. Correct?
A. Yes.
Q. SEH at that time. Correct?
A. Yes.
Q. On the third page of Exhibit 100, whose
signature is that below yours? Do you know?
A. I'm sorry, I can't recognize it
Q. As the contractor? It doesn't ring a bell?
A. The contractor was Fehn Construction. I can't
recognize the signature.
Q. And, Mr. Kruse, handing you Exhibit 1 0 1, "The
Storm Water Pollution Prevention Plan" dated May 12th, 2004,
do you see that?
A. Yes.
Q. It's relating to the 2004 Prairie Run prOject?
A. Yes.
Q. And the City of Albertville is listed as the
A.
Yes.
Pages 149 through 152 of 176
Larry Kruse, March 13,2007
153
1 Q. Do you believe this to be the Storm Water
2 Pollution Prevention Plan that the city had in place for the
3 Prairie Run project?
4 A. It appears to be that way, yes.
5 Q. What's your understanding of why the city of
6 Albertville is refusing to reduce the letters of credit that
7 Gold Key recently asked it to reduce?
8 A. There's some pending financlalllablllty to
9 bring the development into compliance.
10 Q. Related to these alleged defaults that we've
11 discussed today?
12 A. Yes.
13 Q. Not related to the specific letters of credit?
14 A. I guess I don', understand your question.
15 Q. Well, the letters of credit that Gold Key is
16 asking to be reduced relate to municipal improvements, site
17 improvements, and landscaping plan. Correct?
18 A. Most likely.
19 Q. And so I'm wondering if the financial
20 obligations that you are referring to relate to these other
21 defaults that you're alleging that we've talked about
22 extensively today or whether they relate to the specific
23 letters of credit regarding municipal improvements, site
24 improvements, and the landscaping plan.
25 A. You know, I don't know all the nuances, but I
154
1 do know that our city attorney and engineer have reviewed
2 this and they are making this recommendation to us that we
3 take this action.
4 Q. Okay. Well, originally the February 5th, 2007,
5 minutes that were publiShed indicated approved city
6 attorney's recommendation to reduce the letter of credit for
7 Prairie Run Addition. Are you aware of that?
8 A. I think that was an error in the minutes, and I
9 think It was subsequently corrected.
10 Q. After you got my March 10th, 2007, letter?
11 After Bridgette Miller got that? Correct?
12 A. I'm not sure.
13 Q. Do you recall the discussion at the
14 February 5th, 2007, meeting regarding reducing the letters
15 of credit?
16 A. Can I ask, Do you have a copy of that? I
17 missed a meeting, and I'm wondering If that was the meeting.
18 MR. KUBOUSHEK: I think we have it as an
19 exhibit. Part of Exhibit 95 are those minutes.
20 Q. You were there unfortunately. Do you have a
21 recollection of that discussion?
22 A. Yes.
23 Q. And can you tell me what your recollection of
24 the discussion is?
25 A. I think in our precouncll staff discussions and
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1 discussions of council meetings, it was to not make any
2 reductions In the letter of credit with these pending
3 Issues.
4 Q. Because of the pending litigation issues?
5 A. Because of the default In the development
6 agreement.
7 Q. Based on the pending litigation issues? Is
8 there any other default _.
9 A. I suppose, yes.
10 Q. -- in the development agreement? Do you have
11 an independent recollection of that meeting without looking
12 through those minutes that are in front of you as to whether
13 the city attorney was recommending that the letter of credit
14 be -- thereduciion in the letter of credit be approved or
15 denied?
16 A. My recollection is that the city attorney has
17 been 100 percent in favor of not reducing the letter of
18 credit with the pending Issues and has always had that
19 position.
20 Q. Okay. Are you aware of the Ditch 9 Plan?
21 A. No, I'm not.
22 Q. The Ditch 9 Agreement?
23 A. I recently learned that there was an agreement.
24 Q, How did you learn about it?
25 A. I believe through some of the litigation
156
efforts here it was provided to us by the City of
5t. Michael.
Q. And are you aware that under that, the cities
of Albertville and St. Michael were to be responSible for
revieWing the hydrology of Ditch 9 watershed located in
their respective cities to determine the flow capacity?
A. No, I wasn't.
Q. SO if you weren't aware of it, it's safe to
assume that the city did not review the hydrology of the
Ditch 9 watershed under the Ditch 9 agreement?
A. Not that I'm aware of. I believe our city
engineer and, you know, 5t. Michael's engineer have recently
discussed it, but other than, I'm not aware of any plan.
Q. As city administrator, you'd agree that you
should be aware of agreements that would require you to
repair and maintain the ditches located within your city?
A. Yes.
Q. Have you had any conversations with Dean
Johnson other than the ones that we've talked about today?
A. None come to mind, no.
Q. Have you had any conversations with Randy
Hedlund other than the ones we've talked about today?
A. No.
Q. Anyone from Hedlund Engineering's office?
A. No.
Pages 153 through 156 of 176
Larry Kruse, March 13,2007
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157 159
1 Q. Did you attend a meeting in March or April of 1 this happens to be a pretty large one, but yes.
2 2006 regarding a comprehensive storm water management plan 2 Q. So if a problem does arise on a plat that's
3 for the City of Albertville? 3 been approved, is it the developer's responsibility to
4 A. I believe so. 4 correct that problem with the design?
5 Q. And what do you recall about what was discussed 5 A. Yes.
6 at that meeting? 6 Q. Is it the city's engineer? Is it the city
7 A. Just that staff was advising the city that __ 7 engineer's responsibility to correct the problem with the
8 the need to do a bigger, 10,000-foot broader study. 8 design?
9 Q. Instead of piecemeal studies? 9 A. No.
10 A. Yes. 10 Q. So do you believe that a developer should be
11 Q. And what was the importance of doing that 11 relying on the city's engineer to catch problems with the
12 broader study rather than the piecemeal studies? 12 plat design that he submits to. the city?
13 A. You know, so the city fully understands the 13 A. I guess you would hope that during the review
14 bigger picture reg!\rdlng storm.water management. 14 process, that there's an opp(irtunlty to do that, but I
15 Q. Why is that important to the city? 15 don't -- I think ultimately the designing engineer spends
16 A. Probably to prevent some of the problems such 16 the most amount of time researching and doing the detailed
17 as were experienced in the 2003 flood. 17 work, and if money wasn't an issue, we could spend and
18 MS. MATT: I don't have any further 18 probably redesign everything, but that isn't practical, so a
19 questions. 19 review is a review.
20 20 Q. So should the developer or the developer's
21 CROSS-EXAMINATION 21 engineer be relying on that review by the city engineer to
22 BY MR. MARKERT: 22 catch problems in their plat?
23 Q. Mr. Kruse, my name is John Markert, and I 23 A. No.
24 represent SEH in this matter. 24 Q. And, in fact, if we look at the development
25 Quick follow-up as far as questioning by 25 agreement, which you quoted a portion of in Exhibit 99 - if
158 160
1 Ms. Matt over the meeting minutes. Are the meeting minutes 1 you grab Exhibit 99 -
2 that show up on the Intemet, are those transcriptions of 2 A. (Witness complies.) Yes.
3 everything that gets said at a council meetin9? 3 Q. On the first page of Exhibit 99, you quoted a
4 A. No. 4 portion of the development agreement dated July 16th, 2004.
5 Q. So they're summaries of what was said at 5 Do you see that paragraph, the last paragraph on the first
6 council meetings; is that right? 6 page, the very first page?
7 A. Yes. 7 A. Yes.
8 Q. So are there tapes of the council meetings 8 Q. Doesn't that paragraph of the development
9 where one could sit down and listen to every word that gets 9 agreement contemplate that there may be issues that arise
10 said at a council meeting? 10 with the plat after it's been approved and that it's the
11 A. No. 11 developer's responsibility to bring a plat into compliance
12 a. So we have no way of determining the exact 12 with the city ordinances?
13 conversations that took place at any given council meeting; 13 A. Yes.
14 is that right? 14 Q. And the city has the right to stop work
15 A. That's correct. 15 pursuant to the development agreement if it's later
16 Q. Now, there was some discussion, actually quite 16 discovered that the plat does not meet city ordinances; is
17 a bit of discussion, about responsibility for these issues 17 that right?
18 that have arisen. And I have a question: In your years of 18 A. Yes.
19 experience as a city administrator, have there been 19 Q. Now, you talked about the development process
20 instances where a plat design goes through approval, gets 20 in a general sense earlier in your deposition today, and I
21 approved, and then later on a problem is discovered with 21 wanted to kind of ask you about your experience when a
22 that plat design? 22 developer approaches the City of Albertville. The first
23 A. You know, I'd just speak generally that we 23 question I have is when a developer approaches the city, in
24 don't live In a perfect world, and all those problems are 24 your experience, has that developer typically done
25 relative. I mean, there may be small grading Issues, and 25 investigation on the property that he wants to develOp?
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Pages 157 through 160 of 176
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Larry Kruse, March 13, 2007 41
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1 A. Yes. 1 engineer in the City of Albertville?
2 Q. And do you believe that a developer has an 2 A. No, I'm not aware of a specific list There
3 obligation to do an investigation into the property he's 3 may be a contract, and I don't know how detailed that would
4 going develop? 4 be, listing out some of the expectations.
5 A. Yes. 5 Q. Have you ever seen the contract between the
6 Q. Did Gold Key, or Dean Johnson, indicate to you 6 City of Albertville and SEH that was in place?
7 that he had done investigation of the Prairie Run property 7 A. No.
8 when he first approached the city? 8 Q. SO you don~ know whether that contract lists
9 A. I believe so. 9 out those responsibilities for the city engineer or not?
10 Q. And did he indicate what type of investigation 10 A. No, I haven't reviewed it
11 he had conducted or people on his behalf had conducted? 11 Q. Did you participate in the negotiations for the
12 A. I don't recall. 12 contract with Bolton & Menk?
13 Q. Did Dean Johnson show you documents with regard 13 A. Yes.
-'..",. 14 to their investigation of the Prairie Run. property? 14 Q. Does lhecon(riici with Boltana. Menk list
15 A. You know, I don't recall. 15 responsibilities the City of Albertville is expecting from
16 Q. Did Dean Johnson ever ask you for documents 16 Bolton & Menk as city engineer?
17 from the city regarding the Prairie Run property? 17 A. I would think so, but I'd have to look at the
18 A. I never received any request. 18 document.
19 Q. Did Randy Hedlund make a request to you? 19 Q. Do you know if that document has been produced
20 A. No. 20 in the city's files?
21 Q. Did Dean Johnson or Randy Hedlund ever ask the 21 A. I would think so, but "d have to verify it
22 city what the 100-year high water mark was for the Prairie 22 MR. KUBOUSHEK: Which document?
23 Run property? 23 MR. MARKERT: The contract between Bolton
24 A. Not that I'm aware of. 24 & Menk and the city for the city engineering services Bolton
25 Q. Did Dean Johnson or Randy Hedlund ever ask the 25 & Menk has been performing.
162 164
1 city for information with regard to Ditch 9 which bordered 1 MR. KUBOUSHEK: No, it hasn't.
2 the Prairie Run property? 2 MR. MARKERT: I'll probably ask for that.
3 A. Not that I'm aware of. 3 MS. MATT: Otherwise I will if he
4 Q. Did you ever discuss the flooding that took 4 doesn't.
5 place in the City of Albertville in the summer of 2003 with 5 BY MR. MARKERT:
6 Dean Johnson? 6 Q. Did you know if there's a requirement for the
7 A. I never, no. 7 city engineer to review a preliminary plat or final plat
8 Q. Were you ever in a meeting where that topic 8 approval? Is there a requirement in city ordinances for the
9 came up where Dean Johnson was present? 9 City of Albertville?
10 A. You know, I believe there probably was s.ome 10 A. I don't know if it's a requirement, but it's a
11 discussion somewhere along the line as development moved 11 practice that we have.
12 through the stages there. 12 Q. But you can't tell me whether or not by
13 Q. Do you think that that discussion took place 13 ordinance it's required for the city engineer to review a
14 prior to final plat approval? 14 preliminary plat or a final plat?
15 A. Yes. 15 A. No.
16 Q. Do you think that Dean Johnson was unaware 16 Q. Could you go back to Exhibit 96 for a minute,
17 there were flooding problems in the City of Albertville when 17 please?
18 he proposed the plat for Prairie Run? 18 MR. KUBOUSHEK: Which one is it?
19 A. I don't know, but Initially, you know, I don't 19 MR. MARKERT: It's a November 23, 2005.
20 know where he's from or anything, but by the time of the 20 unsigned memo from Bob Moberg to Mike Couri.
21 preliminary plat, I think there had been some discussions of 21 A. (Witness complies.) Yes.
22 the 2003 incident 22 BY MR. MARKERT:
23 Q. With regard to the duties of the city engineer, 23 Q. Do you have that in front of you? When
24 is it - I believe you testified to this; but is there a 24 Ms. Matt was questioning you with regard to Exhibit 96, I
25 written list of duties and responsibilities for the city 25 think she asked you who came up with the three numbered
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Larry Kruse, March 13,2007
1 issues that are on page 1. Do you remember that
2 questioning?
3 A. Yes.
4 Q. And you said - and I'm not sure I'll quote you
5 exactly, but you said Bob Moberg was obviously instrumental
6 in coming up with these points. Do you remember that?
7 A. Yes.
8 Q. What causes you to believe that Bob Moberg was
9 instrumental in coming up with these issues?
10 A. Well, to start with, It's a memo from him.
11 Q. Yes.
12 A. And he was a part of our, you know, call it our
13 development team -- our city attorney, engineer, and
14 planner -- working through these issues..
15 Q. And that was kind of my point, that it was my
16 understanding that you, the development team, which
17 consisted of Mr. Couri. Mr. Moberg, and at this point in
18 time did that also consist of Adam Nafstad. the team?
19 A. I believe so.
20 Q. And Mr. Brixius?
21 A. Yes.
22 Q. And yourself?
23 A. Yes.
24 Q. SO you're all discussing these various issues,
25 and my question is, did the team come up with these issues
166
1 and Bob Moberg happened to be the person that drafted this
2 memo?
3 A. I believe that to be true.
4 Q. SO the team would be instrumental in coming up
5 with these issues. not just Bob Moberg?
6 A. Right
7 MR. MARKERT: I have no further
8 questions.
9
10 CROSS-EXAMINATION
11 BY MR. VAN DER MERWE:
12 Q. Mr. Kruse, I represent Hedlund Engineering, and
13 happily most of the questions for Hedlund Engineering have
14 already been asked, so I won~ go over the ground that's
15 already been plowed so well by counsel before me.
16 I take it by education that you are not an
17 engineer. Is that fair?
18 A. Yes.
19 Q. What is your post-high school educational
20 qualification?
21 A. I have my bachelor's degree, and I'm In the
22 final stages of writing my thesis for my master's degree.
23 Q. In what?
24 A. Public administration.
25 Q. When you previously testified about the duties
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1 of SEH relative to Hedlund Engineering regarding the design
2 of the residential portion of the Prairie Run pial, you
3 testified that SEH was not required to reengineer those
4 plans as part of their review. Do you recall that line of
5 testimony?
6 A. Yes, I do.
7 Q. But you are not an engineer. Right?
8 A. Right.
9 Q. SO let me ask you what you meant by the phrase
10 "reengineering the plans" as part of the review of SEH.
11 A. Well, I think that the primary engineer spends
12 a lot of time and effort developing plans and a lot of
13 money, and what we end up doing as the city is have our city
14 engineer do a review. And there;s;l/wayS thafbalance of
15 not spending too much time on it because it's at the
16 developer's nickle, and when we do, they end up complaining
17 to us that our fees are too high or our costs are too high,
18 so it's a matter of striking that balance of making sure
19 that It complies with the ordinance and that the work is
20 complete.
21 Q. Okay. But do I take it that when you use the
22 phrase "reengineering," what you meant was essentially
23 starting from scratch and doing the whole plan as though it
24 had not been done before?
25 A. Right.
168
1 Q. Would you agree, though, that a review of the
2 elevations used in a plan doesn't constitute starting from
3 scratch and reengineering the plan?
4 A. I would agree.
5 Q. Would you agree that that is the level of
6 review that the city reasonably expected of its city
7 engineer?
8 A. I would agree.
9 MR. VAN DER MERWE: Give me just a minute
10 here.
11 Q. You also testified earlier regarding a review
12 memorandum, that the majority of the time the city engineer
13 will write a report that gets incorporated into the plans
14 but that it's not an invariable part of the process. Is
15 that fair?
16 A. I'm not aware that it's a requirement.
17 Q. Right.
18 A. But it's a practice that we have.
19 Q. So sometimes review memoranda are there and
20 sometimes not. Is that fair to say?
21 A. Well, I would hope for the most part that
22 they're there. You know,l think it would be more the
23 exception not to have it, but there's no requirement.
24 Q. Okay. And forgive me if this has been asked,
25 but if the review memorandum is not there, is it assumed
1-800-545-1955 Pages 165 through 168 of 176
Larry Kruse, March 13,2007
169
1 that it is because there are no comments about the plan that 1
2 has been reviewed? 2
3 A. I think that's the assumption, especially when 3
4 the consultant Is recommending approval of the project, yes. 4
5 Q. The public meetings that we've heard about 5
6 today, including the June 4 -- June 7, 2004. final approval 6
7 meeting, it's my understanding that those council meetings 7
8 are open to the public. Correct? 8
9 A. That's correct. 9
10 Q. And there are members of the pUblic that sit in 10
11 on those meetings. True? 11
12 A. That's correct 12
13 Q. And those members of the public typically will 13
14 include, for ex-ample, the developer or perhaps the 14
15 developer's engineer, folks like that? 15
16 A. That's correct 16
17 Q. And is it fair to say that when the city 17
18 council approves a development plat in a public forum such 18
19 as I've just described, that it is a representation by the 19
20 city that the development is approved in all respects? 20
21 A. If the council takes that action, yes. 21
22 Q. Is that the action that was taken in this case 22
23 on June 7th? 23
24 A. Yeah. 24
25 Q. Forgive me if you were asked this. but you 25
170
1 described how the Prairie Run project was a little unique 1
2 that multiple parties had to be brought together. Do you 2
3 recall that? 3
4 A. Yes. 4
5 Q. And you were also told that Mr. Carlson had 5
6 been waiting for the feasibility report and the assessment 6
7 regarding access roads. Do you recall that? 7
8 A. (No verbal response.) 8
9 Q. That is -- sorry, let me complete that He was 9
10 waiting for that information prior to his review of the 10
11 grading and drainage plans for the residential portion of 11
12 the Prairie Run plat. 12
13 A. I recall that Mr. Carlson was waiting for call 13
14 It drawings and other supplemental information that goes 14
15 along with the submittals to him for review. 15
16 Q. Okay. Prairie Run was a little unique in that 16
17 respect. Were you likewise aware of the need for this 17
18 assessment to proceed, a review of the grading and drainage 18
19 plans? 19
20 A. No. 20
21 Q. And let me ask you one more time, although you 21
22 did answer this previously, but in the interim between being 22
23 asked and my question now regarding the errors that Hedlund 23
24 is alleged to have made. you thought that there was a letter 24
25 that described that error other than the Brian Walters 25
43
171
report that was introduced as Exhibit 65. And I'm asking
you whether between lunch and now that you've recalled what
letter that was.
A. I think that there was one exhibit from the _
was it the soil and water? There was an exhibit that's been
submitted I thought that referenced the Ditch 9. I'd have
to go back and review.
Q. Okay. But just so I'm clear, are you saying
that there's perhaps a letter that references Ditch 9, but
are you saying that it also references errors made by
Hedlund?
A. No, I don't think so.
Q. Okay.
A. I don't oolieveso.
MR. VAN DER MERWE: All right. Thank
you, sir. I appreciate your time.
MS. MATT: Couple of follow-up questions.
RECROSS-EXAMINATION
BY MS. MATT:
Q. Mr. Kruse, you said that the minutes on the
Internet are not accurate; is that right?
A. No, I didn't say that.
Q. I thought that's what your testimony was when
Mr. Markert asked you about --
172
A. He asked me if they were a verbatim
transcription and, no, they aren't That's my
interpretation.
Q. SO the minutes that are on the Internet, there
might be some typos in them? You're saying that they're not
a verbatim transcription of what happened at the meeting.
Is that correct?
A. It's not a word for word just like the recorder
Is taking today. It's a summary.
Q. Okay. I understand. But the minutes that are
on the Intemet are the same ones that if I went down to the
city hall and wanted to pull the minutes from a particular
meeting and I compared those with the ones that are on the
Internet, they're the same. Correct?
A. You know, the council, we don't -I'm not
aware of us publishing any minutes that aren't approved by
the council.
Q. SO the minutes that are on the Internet should
be the same?
A. To the best of my knowledge, they're the
accurate reflection of the meeting action.
Q. Okay. Mr. Markert said a review is a review,
and then he went on to ask you if the developer and its
engineer should rely on that review to catch their mistakes.
Do you recall that testimony _
952-922-1955 1-800-545-1955 Pages 169 through 172 of 176
Kirby A. Kennedy & ASSOCiates
Larry Kruse, March 13,2007
173
1
2
3
4
A. Yes.
Q. -- or that question?
A. Yes.
Q. And I believe your answer was that the
5 developer should not rely on that review to catch mistakes.
6 Is that accurate?
7
8
9
10
A. I believe so.
Q. That's accurate as to what you testified to?
A. Yes.
a. But you'd agree. wouldn't you. that a developer
11 and its engineer could and should expectlhat some review be
12 done of the grading and drainage plans and submittals?
13
14
A. Yes,
Q. Okay. Then just t<)..~/l clear, the city did not.
15 provide any information regarding the Ditch 9 100-year
16 elevations to Gold Key or its engineer. Correct?
17
A.
I'm not aware of any Information being given to
18 them.
19
a. And the city didn't provide any other 100-year
21
20 information to the developer or its engineer. Correct?
I'm not aware of any.
A.
22 MS. MATT: I don't have any further
23 questions.
24
25
MR. MARKERT: None.
MR. VAN DER MERWE: Thank you.
174
1 MR. KUBOUSHEK: We'll read and sign.
2 You're all done.
3 (Whereupon, at approximately 3:10 p.m..
4 Tuesday, the 13th day of March, 2007. the
5 taking of the deposition of LARRY KRUSE was
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Kirby A. Kennedy & ASSOCiates
20
21
22
23
24
25
952-922-1955 1-600-545-1955
adjourned .)
44
175
1 (UPON COMPLETION, forward this original Reading and Signing
2 Certificate to Attorney Cindi S. Matt, who already has the
3 Sealed Original.)
4
5 (LARRY KRUSE)
6
7 I, LARRY KRUSE. do hereby certify that I have read the
8 foregoing transcript of my Deposition and believe the same
9 to be true and correct (or except as follows, noting the
10 page and line number of the change or addition desired and
11 the reason why):
12
13
14
15
16
17
18
19
20
21
22
23
24 Dated this ___ day of ______, 20____.
25 (RDH)
1 STATE OF MINNESOTA)
) SS.
2 COUNTY OF WRIGHT )
176
3 Be it known that I took the deposition of LARRY KRUSE
on the 13th day of March. 2007, at9321 Ensign Avenue South,
4 Bloomington, Minnesota;
5 That I was then and there a Notary Public in and for
the County of Wright, State of Minnesota. and that by virtue
6 thereof. I was duly authorized to administer an oath;
7 That the witness before testifying was by me first duly
sworn to testify the whole truth and nothing but the truth
8 relative to said cause;
9 That the testimony of said witness was recorded in
Stenotype by myself and transcribed into typewriting under
10 my direction, and that the deposition is a true record of
the testimony given by the witness to the best of my
11 ability;
12 That the cost of the original transcript has been
charged to the party noticing the deposition, unless
13 otherwise agreed upon by Counsel, and that copies have been
made available to all parties at the same cost, unless
14 otherwise agreed upon by Counsel;
15 That I am not a relative to any of the parties hereto
nor interested in the outcome of the action;
16
That the reading and signing of the deposition by the
17 witness was executed as evidenced by the preceding page;
18 That Notice of Filing was waived.
19 WITNESS MY HAND AND SEAL this day of
_______, 2007. --
Randall D. Herrala. RPR-------
Court Reporter
Pages 173 through 176 of 176
2003 Summer
2003 November
2004
2005 September
2005 November
2006 May
2006 December
2007 August
2007 September
Key Dates
Albertville Flood 8+ inches of rain
Larry starts work for City of Albertville
Plat approved - cooperative venture with City facilitating project for multiple
owners
Significant rain event, fish in Prairie Run Cul-de-sac
Couri letter to withold building permits on about 25 lots boardering weltlands
Gold Key sues
City issues letter to Gold Key holding building permit on entire development
Court orders release of building permits
City approves Letter of Credit reduction
Key Points
Market peaked in 2005
Last town home permit issued was in Aug 2006
Approximately 1500 vacant lots in Albertville immediate market area
Housing slow down because of financing, jobs, gas, congestion, longer
commute times
Building revenuew down approximately 2/3 from 2004
Assessments certified in late 2005 for first payment in May 2006, then October,
etc
Letter of Credits
$680,000 Municipal Improvements
$53,000 Off-site improvements
$58,000 Landscaping improvements
New Home Building Permits
2001 & 2002 = Over 200 per year
2003 & 2005 = Over 100 per year
2006 & 2007 = 90 and 54 respectively
2008 6
Questions
Do you believe it is right for the City to stop development several years after
approval.
This has been a difficult situation for all involved. The Developer, the builders,
the developer's engineer who everyone relied on, the City's consulting engineer
and the City. When you find fish in a cul-de-sac and other significant flooding
after a less than 100 year rain event, the City has the obligation to ask question
and make sure the Developer plan works. It is unfortunate and in a perfect world
the answer to your question is yes.
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A.!~~!.t'!.iJl€ Mayor and Council Communication
September 15, 2008
~ ~ ~ockf c.~ 1M.
Subject:
Gold Key Letter of Credit Reduction
RECOMMENDATION: It is respectfully requested the Mayor and Council consider
staff s recommendation to adopt a Resolution for a reduction in the Letters of Credit
posted by Gold Key as follows:
· Reduce the $680,337.00 letter of credit to $217,469.37 ($190,387.53 plus
$20,000.00 retainage for the ditch plus $7,081.84 for unpaid City bills).
· Reduce the $53,000.00 letter of credit to $34,000.00
· Keep the $58,200.00 letter of credit at its current amount until the remaining
amount of landscaping installation has been determined.
BACKGROUND: In light of the recent Court ruling in the litigation against Gold Key,
and upon the advice of myself and Iverson Reuvers, the firm representing the City in the
Gold Key litigation, City Staff is recommending a reduction in the letters of credit
submitted by Gold Key pursuant to the terms of the Developer's Agreement. Gold Key
originally submitted three letters of credit in the following amounts:
· A $680,000.00 letter of credit representing a 50% security for the special
assessments levied against the properties. Under the Developer's Agreement, this
letter of credit may be reduced in proportion to the special assessments paid. To
date, 72.02% of the special assessments have been paid. Reducing this letter of
credit by 72.02% would leave a letter of credit balance of$190,387.53.
· A $53,000.00 letter of credit for "on- and off-site improvements", which was
calculated at $1,000 per lot for items such as bituminous driveways, sod and trees
on each lot. To date, 19 lots have been completed. Reducing the letter of credit
calculation by 19 lots would leave a letter of credit balance of $34,000.00.
· A $58,200.00 letter of credit for landscaping, representing 150% ofthe estimated
cost of the landscaping improvements required. To date, all ofthe evergreen trees
that were required to be installed have been, as have the landscaping
improvements in the entrance median. However, only a handful ofthe shrubs
have been installed and four of the evergreen trees have since died. The
Developer needs to replace the four dead trees and install the remaining shrubs.
At this point we do not know the amount by which this letter of credit should be
Mayor and Council Communication - September 4, 2007
Gold Key Letter of Credit Reduction
Page 2 of 4
reduced, as the prices originally submitted for the landscaping are now three years
old. Staff recommends no reduction in the landscaping letter of credit at this time,
but we will be requesting that the Developer submit a contractor's current quote
for the replacement of the four trees and the installation of the remaining shrubs.
Upon review and recommendation by Staff, a reduction in the landscaping portion
of the letter of credit would then be brought back to the City Council for
consideration.
· The City Engineer recommends that the City retain an additional $20,000.00 in
letter of credit amount for the required separation of an existing east-west
drainage ditch from the storm water ponds on this site as a potential fix to some of
the drainage violations on this plat as cited by the MPCA. This amount should be
retained in the $680,337.00 letter of credit.
· In addition, the Developer owes the City $7,081.84 in unpaid consultant bills.
This amount should also be retained in the $680,337.00 letter of credit.
KEY ISSUES:
· Compliance with the Court Order and City Development Agreement.
POLICY CONSIDERATIONS: The City enters into Development Agreements
outlining the terms and conditions of payment and Letter of Credit Reductions. This
action is consistent with past practices.
FINANCIAL CONSIDERATIONS: The reduction in the letters of Credit for
completed work that has been accepted by the City Engineer has no financial
implications for the City.
LEGAL CONSIDERATIONS:
The City has the legal authority to reduce the letters of credit pursuant to the Developers
Agreement and advice of our City Engineer and Attorney. While the City Attorney and
special counsel are recommending that the City reduce the letter of credit, the proposed
reduction will reduce the amount of security that would be available to the City to cure
the defects the City believes remain in the design of the plat. However, the City would
only be able to draw on the letters of credit for that purpose if the District Court's
decision were reversed on appeal and the City ultimately prevailed in this case. With no
opportunity to file an appeal at this time, it may be several years and several Court
decisions before we could be in that position. Given the lengthy time periods involved,
Staff believes that granting the reductions set out in this memo is the best course of action
at this time.
Respectfully Submitted
C:\Userslikuboushek\AppData\Local\Microsoft\Windows\Temporary Intemet Files\OLK8989\09 04 2007 Gold Key Letter of Credit
Reduction RCA.doc
Agenda Item No. _
Meeting Date September 4,2007
Mayor and Council Communication - September 4, 2007
Gold Key Letter of Credit Reduction
Page 3 of 4
~
Larry R. Kruse
City Administrator
Department/Responsible Person: Finance Director Lannes
Attachments: Draft Resolution
Draft Resolution
CITY OF ALBERTVILLE
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO. 2007-
RESPOLUTION AUTHORIZING REDUCTION IN GOLD KEY'S LETTERS OF
CREDIT FOR THE PRAIRIE RUN DEVELOPMENT
WHEREAS, Gold Key has a $680,000.00 letter of credit representing a 50% security for
the special assessments levied against the properties; and
WHEREAS, Gold Key has a $53,000.00 letter of credit for "on- and off-site
improvements", which was calculated at $1,000 per lot for items such as bituminous
driveways, sod and trees on each lot.; and
WHEREAS, Gold Key has a $58,200.00 letter of credit for landscaping, representing
150% of the estimated cost of the landscaping improvements required.
NOW, THEREFORE be it resolved by the City Council ofthe City of Albertville,
County of Wright, State of Minnesota reduce Gold Key's Letters of Credit as follows:
· Reduce the $680,337.00 letter of credit to $217,469.37 ($190,387.53 plus
$20,000.00 retainage for the ditch plus $7,081.84 for unpaid City bills).
· Reduce the $53,000.00 letter of credit to $34,000.00
C:\Users\jkuboushek\AppData\Local\Microsoft\Windows\Temporary Intemet Files\OLK8989\09 04 2007 Gold Key Letter of Credit
Reduction RCA.doc
Agenda Item No. _
Meeting Date September 4,2007
Mayor and Council Communication - September 4, 2007
Gold Key Letter of Credit Reduction
Page 4 of 4
· Keep the $58,200.00 letter of credit at its current amount until the remaining
amount of landscaping installation has been determined.
Adopted by the Albertville City Council this 4th day of September,2 2007
Ron Klecker, Mayor
Bridget Miller, City Clerk
C:\Users\jkuboushek\AppData\Local\Microsoft\Windows\Temporary Internet Files\OLK8989\09 04 2007 Gold Key Letter of Credit
Reduction RCA.doc
Agenda Item No. _
Meeting Date September 4, 2007
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DEVELOPMENT TEAM - describe
Understood it complied with plans approved by city, why not ignore the
problem.
What was the city' primary concern
Not some culvert guy - elevation number came from COUNTY.
11/29/05 Letter sent - team decision?
Meeting - attempt to work it out
TELL jury what you were hoping to do to alleviate the issues?
Did you think you had resolved problem?
Suit came in May of 2006 - surprised? Why?
12/06 Letter - why sent?
DAMAGES
Some of damages claims by Gold Key are for taxes, interest penalties for real estate taxes
and assessments. To your knowledge paid? To avoid, 10% penalty that is imposed by
County, all need to do is pay the taxes.
LETTERS OF CREDIT:
$680K Municipal improvements
$53K on and off site improvements
$58,200 Landscaping
REDUCED - 9/4/07 Resolution
Mowing - Gold Key not mowing lots. Is that a problem? Why?
Cost to City
Bills
Conversations with Dean
Special Assessments
Who paid for those?
Gold Key agreed to pay?
What has City had to do in face of this?
In light of Gold Key's actions, any plans to fund the public improvements for a
subdivision in the City of Albertville in the future?
STIGMA - aware of any?