Lisa Goodman says she did everything by the book when she invested last year in Midtown Eco Energy, which wants to generate energy in Minneapolis' Phillips neighborhood by burning wood.

The Minneapolis City Council member filed a statement with the city clerk disclosing a conflict of interest. She left the room during the council's discussion of Midtown Eco Energy's request that the city reserve up to $86 million in tax-exempt revenue bond authority for the project. She abstained from voting on the request. She didn't lobby colleagues.

Goodman said those actions exceed what's required.

But she also wrote in August to the Minnesota Pollution Control Agency, urging it to issue an air quality permit for the facility.

Although on personal stationery, the letter began by referring to her post as a council member. It didn't disclose that she had invested at least $2,500 in Midtown.

The wood-burning proposal has attracted opponents, some of whom look askance at the Goodman letter.

"I think it's a little sleazy," said Carol Greenwood, a Seward neighborhood environmental activist. She called Goodman's omission of her investment "a little disingenuous."

Goodman's action may not run afoul of the city's ethics ordinance. It says that a city official should avoid any situation that might give rise to a conflict of interest. A conflict is defined as participating in the discharge of official duties in a government decision, action or transaction in which one has a financial interest greater than an occupational peer.

An ethics professor weighs in

But the proscription appears to apply only to city officials influencing a city decision, not a state action. David Schultz, who teaches government ethics at Hamline University's law school, calls that a "statutory gap."

"She's got a conflict of interest, no doubt about it," Schultz said, even if no law is broken. "What's she's doing here more than anything else is using her position as a council member for personal gain. That fits under one of the classic definitions of conflict of interest."

In an interview, Goodman refused to disclose the amount of her investment but it's at least $2,500, the threshold that required her to disclose it on an economic interest statement last year.

"I can't afford to be making a large investment," Goodman said. But she also said: "I could lose a ton of money."

She described it as an investment in a project in which two "people who are in my life like family" are involved.

They are Kim Havey, the city's former Empowerment Zone director, and Michael Krause, a former Green Institute president and city DFL chairman. They are two of three partners in Kandiyohi Development Partners, which is proposing the Midtown project. They said they asked friends and family to invest seed money in the project.

Goodman and Havey have known each other since college days in the 1980s and shared a condo for years. Goodman, Krause and Havey own an 8-acre Kandiyohi County farmstead.

Goodman adapted form letter

Goodman, who represents downtown and the Cedar-Isles area, said most of her letter was copied from a form letter circulated by the Midtown project. But she inserted her council title at the form letter's start. Although it's on personal stationery, her letterhead also lists her council title.

Asked about that, Goodman said: "I was just listing what my job was. It wasn't a position of the city."

Schultz disagreed: "She's using her position. If she had just signed it Jane Doe at 1 Elm Street, maybe that wouldn't have been so much of a problem."

"She's using her influence as a City Council member," said Nancy Hone, one of the activists opposing the Midtown project. Another opponent, Alan Muller, who discovered the letter in state files, said it raises questions about Goodman's ethical sensitivity.

After Goodman was asked by the Star Tribune about the letter, she wrote the agency to clarify that she was not acting in her official capacity.

The city's ethics code requires those working for the city to "maintain the highest ethical principles and avoid misconduct and conflicts of interest, apparent or real."

Steve Brandt • 612-673-4438