The Minnehaha Creek Watershed District is being accused of a conflict of interest by Southwest light-rail opponents because the proposed line would go by a Hopkins site that the district bought six years ago and intends to sell for redevelopment.

The accusation came up when the district board late last month approved a permit required by the Metropolitan Council, one of several the council is seeking from cities and other watershed districts for the 14.5-mile line.

Light-rail opponents say the watershed district stands to profit off the line and they question the impartiality of district leaders, since almost all of them are appointed by the pro-transit Hennepin County Board.

"It's undeniable they have a conflict of interest and they should recuse themselves from it," said Mary Pattock of the citizen group LRT Done Right. "They stand to gain tens of millions of dollars if the Southwest LRT is built."

The watershed district denied any conflict of interest, saying that individual board managers wouldn't benefit from approval of the Southwest line.

Before the board unanimously approved the Met Council's light-rail permit on Feb. 23, watershed district staff members said that sale of the Hopkins land for redevelopment will benefit other projects. James Wisker, the watershed's planning and projects director, said the district didn't need all 17 acres of the Hopkins site to protect the creek.

"We often purchase land to clean stormwater and then we sell off what we don't need," he said then. "And all of those costs are public. So we're investing the public's dollars to clean the water, and then the money that's recovered from the sale is then publicly available to do the next stormwater improvement."

The watershed district is a little-known agency that hasn't received much public attention, at least until recently. The number of recent applicants for board seats represents more interest in the board than has been shown in many years.

In 2015, two open spots on the board drew 11 applicants after months of division and community scrutiny over the firing of a longtime watershed leader. And on Tuesday, the County Board will be filling two other spots on the watershed district's board from among nine applicants.

Hopkins acreage at issue

The watershed district in 2011 bought the industrial property in Hopkins, at 325 Blake Road N., for $15 million. It contained cold-storage buildings along one of the most polluted sections of Minnehaha Creek, where the district planned to restore native plants, protect the creek from runoff and redirect stormwater. The land was purchased with bond proceeds, to be repaid through the district's tax levy.

But the watershed district now intends to sell 11 to 13 acres of the land for redevelopment — something that critics say proves that district managers can't be impartial regarding light-rail plans, which inevitably would raise the value of the land.

"These permitting agencies are simply government checking off what they have to do; it's entirely political," said Susu Jeffrey of Minneapolis, a light-rail critic and environmentalist. The watershed district "is out to make money instead of protecting the environment."

"Money now, to heck with the future," she added, saying she's most angry about the possible environmental impacts that light-rail poses to Minneapolis' Chain of Lakes.

Katherine Sylvia, a watershed district staff member, said at last month's meeting that "no individual manager is in a position to directly or materially benefit financially from approval of the project."

Watershed district Board Manager Brian Shekleton — whom critics have called out because he works as an aide to Hennepin County Commissioner and light-rail supporter Peter McLaughlin — said the Hopkins site was bought solely to eliminate phosphorus from Minnehaha Creek. "The rationale for purchasing the site is for ecological purposes," he said. "In no way did we buy the land because ... we're going to reap the windfall."

Shekleton said the land purchase wasn't unusual and that the district owns many parcels throughout the west metro area. A spokeswoman said that, since 2006, the district has acquired fee titles or easements to 40 properties.

Two seats to be filled

The Minnehaha Creek Watershed District is one of the largest financially in Minnesota. It was established by the Legislature in 1967 to manage water resources in a 181-square-mile area of 27 cities and two counties between Lake Minnetonka and the Mississippi River.

The district's $13.5 million budget this year is funded largely by a $9.3 million tax levy from west metro taxpayers, a 7 percent levy increase over last year and the biggest since 2006. Although the board approves taxes, its managers aren't elected; six of the seven are appointed by the Hennepin County Board while the seventh is appointed by Carver County.

That's why Pattock urged the watershed district to hand off the responsibility of approving a light-rail permit to another district.

"Given the obvious conflict of interest, which is financial, posed by its land speculation and the fact that most of your members are appointed by Hennepin County, the agency that has long been the driving force behind Southwest LRT, we believe that it would be impossible even with the best of intentions for the watershed district to conduct an objective review of the project," she said last month.

On Tuesday, watershed board incumbents Pam Blixt and Richard Miller are seeking to be reappointed by the Hennepin County Board. Other candidates for the two seats are Dan Gustafson of Wayzata, David Kaplan of Minneapolis, Jessica Loftus of Deephaven, Lili McMillan of Orono, Tom Neiman of St. Louis Park, Linnae Nelson-Seys of Minneapolis and Rachel Seurer of Hopkins.