She and her husband say the $3.3 million deal did not pose a conflict of interest for her at the Legislature in 2000.
In early 2000, as real estate development boomed in Chaska, then-state Rep. Carol Molnau authored a bill that ensured a long-delayed plan to build a new Hwy. 212 there would be put on a fast track.
Molnau, as chairwoman of the powerful House Transportation Finance Committee, guided the bill to passage. But she did not disclose Hwy. 212's proximity to the land she owned in Chaska or that she was negotiating to sell the property to a national housing developer, state and local records show.
The transportation bill provided for rapid construction of what Molnau called "mega-projects." One that fit the bill's criteria was Hwy. 212, which would run less than a mile from her farm.
"If you're interested in highways, like Hwy. 14, Hwy. 23, 52, 53, 169, 371, Hwy. 60, Hwy. 212, or Hwy. 94 in Greater Minnesota, this is a good bill for you," she told the Minnesota House on March 21, 2000.
Eight days after the bill was signed by then-Gov. Jesse Ventura, Molnau and her husband, Steve, sold their 40 acres to the developer, Pulte Homes of Minnesota, for $3.3 million -- six times its estimated market value, records show.
Molnau said in an interview Saturday that she didn't publicly disclose her negotiations with developers because she believed the legislation would have no effect on her property value or benefit her financially. She said ongoing development surrounding her property was the driving force behind the increasing value of her land.
"I didn't have a personal interest because it [Hwy. 212] wasn't on my property. It wasn't adjacent to my property," Molnau said. She said the value of her property "was going to go up no matter whether 212 was built or not -- and it did."
Steve Molnau said Saturday that the timing of the sale was happenstance; a Pulte representative was in their home in May of 2000 after several months of "very serious" negotiations.
"We made a counter-offer to Pulte Homes and they said, 'If you will sign these documents today, we will accept your counter-offer,' " Steve Molnau recalled. "And we said, 'OK.' "
Carver County records show that the sale occurred May 23. A county clerk said the sale date as recorded reflected the actual date of the sale, not the day of the real estate closing or the filing date.
The Minnesota House Code of Conduct does not specifically address the issue of conflict of interest, but the Permanent Rules of the House state that a member who has a personal interest in a bill must not vote on it.
Molnau, who now serves as Minnesota's lieutenant governor and as MnDOT's commissioner, has been criticized over the last seven months for her stewardship of the state's roads and bridges. Some legislators have urged her to resign in the aftermath of the Interstate 35W bridge collapse last August, and confirmation hearings that could either extend or end her run as commissioner may convene in the next few weeks.
Earlier push for road projects
To examine Molnau's advocacy of Hwy. 212, the Star Tribune reviewed scores of documents in Chaska's municipal archives, the Carver County Assessor's Office and Molnau's voting record as an alderwoman. In addition, the newspaper reviewed voting records and videotapes of Molnau in committee and on the House floor as she advocated for the 2000 transportation bill. The paper interviewed Chaska city officials, Carver County property experts and legislators.
Molnau's work in the Legislature in 2000 wasn't the first time she pushed for a Hwy. 212-related project as an elected official.
Eleven years earlier, as a Chaska city alderwoman, she seconded a resolution approving the "official map" for the proposed Hwy. 212 project and surrounding road improvements.
One item the resolution called for was a Hwy. 212 interchange at Hwy. 41, seven-tenths of a mile from the Molnau farm. She said she didn't have a conflict in calling for the interchange because it was commonly understood an interchange had to be built on the major north-south road throuh Chaska.
Another project outlined in the resolution was the extension of Hundertmark Road to an unspecified area near her property, records show. Two years after Molnau left the City Council, the city decided to run Hundertmark along the western border of the Molnau's farm. Ultimately it would be used as the gateway for the housing development that replaced the farm.
Molnau said that in 1989, when she endorsed the road project, she felt no need to recuse herself from the issue. "No one knew exactly where it was going to go," she said. She said it was needed for the development of other land, not her family's property.
In 1994, when Hundertmark was finally extended past her farm, a special appraiser hired by the city of Chaska determined that the market value of her land had increased by an estimated $288,000.
Molnau acknowledged that, in retrospect, she may have had a conflict of interest in a separate City Council vote that involved her father-in-law, the late Fred Molnau. She made a motion in late 1989 authorizing the city to seek money from the Metropolitan Council to pay Fred Molnau for 14.8 acres that were in the right of way of Hwy. 212.
City administrators had negotiated the land sale for $335,600 and the application for Met Council funds was common practice, but Molnau expressed regret that she took the lead on a council matter involving a family member.
"If I could have done it over, I would have done it differently," Molnau said. She said the years she later spent in the Legislature gave her that perspective.
Bill signed, farm sold in days
The Molnau property had been in the family since the early 1900s. The couple raised crops and had a 50- to 60-cow dairy operation, Steve Molnau said Saturday. With residential and retail development plans buzzing around Chaska, the Molnaus said they were in talks with many developers in the late '90s about selling their farm. The development pressure had nothing to do with the prospects of Hwy. 212, which had been on the city's drawing board for decades, the couple said.
Chaska City Administrator David Pokorney said in interviews that he recalled the Molnaus as "being reluctant participants" in the city's efforts to convert farmland to residential in the 1990s. Steve Molnau said he and Carol finally gave up the idea of staying on as farmers in the mid-1990s, when the city proposed a $166,000 assessment against their property for the installation of Hundertmark Road.
The Molnaus fought the assessment.
"The benefit to these properties would relate directly to the fact that Hundertmark Road would provide access to the land for future development, increasing the values from agricultural land value to residential development land values," city planners wrote in March, 1994.
By 1999, development pressure was so great that the Molnaus were being contacted almost weekly by someone new who had an interest in buying their land, Carol Molnau said. She said she and her husband were always most comfortable with Pulte.
In October 1999, Pulte Homes hired a contractor to study the Molnau property for wetland issues. By Feb. 25, 2000, the developer had drawn a preliminary plat map of 163 townhouses for the first phase of development.
Then, early in the 2000 session, Molnau presented a bill at a hearing she also chaired. While it didn't earmark funding for Hwy. 212, it called for the Minnesota Department of Transportation to report annually on the status of major highway projects determined by legislative criteria, including Hwy. 212.
Rep. Alice Hausman, DFL-St. Paul, who was on the committee, raised questions about the bill, saying it could politicize the selection of road projects by taking decision-making out of the hands of MnDOT. Molnau responded at the hearing by saying that politics have influenced funding for road projects in the past.
Toward the end of the legislative session, Molnau's major projects bill was melded into the omnibus transportation package that she presented for passage on the House floor. The bill didn't guarantee funding for Hwy. 212 or other so-called "mega-projects," but it set the stage for them to be completed in a timely manner rather than strung out over years and years.
Molnau sat on the House-Senate conference committee that finalized the bill, and Ventura signed it on May 15, 2000.
Eight days later, on May 23, Pulte paid Carol and Steve Molnau $3,312,590 -- or $82,814 per acre -- for their farm, according to Carver County property records.
The county's estimated market value for the 40-acre tract was $552,900, or $13,822 per acre.
Steve Molnau said that in retrospect, they could have doubled or tripled the sales price of their Chaska farm if they had sat on the property for several more years.
Funding for the 12-mile stretch of Hwy. 212 from Eden Prairie to the city of Carver arrived a few years after Pulte bought the farm. The new four-lane divided highway was completed late last year at a cost of $238 million.