Greenfield tagged 'high risk'

Lawsuits, gun-toting politicians and just plain old political dysfunction in the small town of Greenfield could come with a hefty price tag for taxpayers.

The town of 3,000 people in western Hennepin County has been deemed a "high-risk" city by the organization that insures it against lawsuits.

Over the past five years, the city has racked up $801,177 in claims from three lawsuits filed by former and current city officials. And the future doesn't look much brighter, considering the political turmoil in Greenfield, according to the insurance evaluation.

In the past five years, the city has paid only $98,768 in property and casualty premiums to the League of Minnesota Cities Insurance Trust, a self-insured fund for about 800 Minnesota cities.

"It's a pooling of the risks and a sharing of the risks," said Pete Tritz, director of the insurance trust. "The concern [with Greenfield] is the financial risk it poses to the other members of the trust."

So in a rare move, the insurance trust is increasing Greenfield's deductible from $500 to $200,000 on any employment-related liability claims and all claims involving suits by current or former city officials or employees against the city or its current or former officials or employees.

That means Greenfield residents would pick up the first $200,000 on any such claim. The city's high-risk rating also means it pays premiums double the amount paid by the average city.

For example, a lawsuit filed by a former city administrator fired in 2006 ended up costing $565,053 in settlement and defense fees. If the new deductible had been in place, a bigger chunk would have had to come from taxpayers' pockets.

The deductible increase came as a shock to some city officials, including Mayor Jill Krout. "Going from $500 to $200,000 is huge," she said.

The city's total 2009 budget is $1.2 million.

"All of us are concerned about the impact that this might have," Krout said. "We'll definitely have to reconsider how things are done here."

Insurance trust administrators say the jump in the deductible is due largely to three claims:

• In 2006, the council terminated the city administrator, who then sued, alleging a hostile work environment, sexual harassment, intentional infliction of emotional distress, defamation and whistleblower violations.

•In 2007, Insurance Trust administrators say, the council terminated the new city administrator after less than a year on the job. That administrator then sued, alleging a breach of contract, defamation, harassment and open-meeting-law violations. The trial court dismissed the claims at summary judgment, but the claim was settled for $14,000 while an appeal was pending.

•In 2009, Larry Plack, chairman of the city's Charter Commission, who is also a former mayor and a political adversary of Krout, filed suit against the city and Krout, alleging slander, libel, intentional infliction of emotional distress, malfeasance, civil-rights violations and violation of the oath of office. The suit is pending and has cost the city $25,000 in defense fees so far.

Other issues cited in the "high-risk" evaluation: the city's most recent administrator resigned; controversy erupted over the fact that at least one and possibly more council members carry concealed weapons to meetings, and the city is on its third city attorney in the past two years.

Tritz notes in a letter to the board of trustees that the city's attorney has had "frank discussions" with city officials about changing their behavior to avoid additional litigation. "He believes the message is beginning to be heard, but he also does not rule out the possibility that his frankness potentially could result in his being terminated as the city attorney," Tritz states in his letter.

League issues warning

On Wednesday, the League of Cities Insurance Trust considered taking even tougher action against Greenfield after learning that city officials had failed to mention a controversial vote June 2 to hire yet another new city administrator, Tritz said.

The trustees were troubled that the council reportedly made that decision without "fully vetting options and applicants." They said city officials should have mentioned the vote, considering that employment-related claims and a contentious decisionmaking atmosphere seems to be at the heart of recent litigation against Greenfield.

"To put it very bluntly, [the League of Minnesota Cities Insurance Trust] expects Greenfield to address its political climate so that council deliberations are informed and decisionmaking processes are based on something more than political factions," states a June 12 letter to Greenfield city officials.

With that warning issued, Greenfield city officials met Monday and came up with a plan that was presented to the Insurance Trust's board of trustees on Wednesday. Under the plan, the city rescinded the June 2 hiring of the most recent city administrator -- the city's third since 2006.

Tritz said Greenfield officials agreed to get outside help in coming up with a "more orderly" process for hiring a city administrator. They also promised to hire a consultant who can teach them about better decisionmaking and possibly how to work together with less confrontation, he said.

Overcoming controversies rooted in political factions -- that's going to be a "tough one," Krout said.

Mary Lynn Smith • 612-673-4788