Lake Elmo terminates finance director’s contract

Six employees at Lake Elmo City Hall have quit since March. At least three have publicly cited a hostile work environment as a factor. (Gazette staff photo by Alicia Lebens)
Six employees at Lake Elmo City Hall have quit since March. At least three have publicly cited a hostile work environment as a factor. (Gazette staff photo by Alicia Lebens)

Lake Elmo Mayor Mike Pearson called for a special meeting Jan. 31 with one agenda item — terminating the employment contract of finance director Cathy Bendel. Pearson called the move “a business decision,” while Councilmember Julie Fliflet, a political adversary, called the action “a pointed message” to staff.

The council voted 3-2, with Fliflet and Councilmember Jill Lundgren dissenting, to terminate Bendel’s employment with the city under a provision outlined in the contract that both parties can terminate “with or without cause.” The city decided to pursue termination “without cause,” meaning Bendel is not being accused of misconduct.

Attorney Mary Tietjen explained to the council the severance agreement negotiated between the city and Bendel’s attorney. Bendel will receive six months’ salary — about $41,000 — continued medical coverage for six months and the value of her remaining paid time off — about $9,000. In return, Bendel releases the city from any claims of retaliation and the city releases Bendel of any claims of data practices violations.

“This does not mean that there are any claims,” Tietjen said, explaining that legal releases are a common occurrence in separation agreements to protect against any unforeseen future legal issues.

While most of the council had little to say during the public meeting about the termination beyond procedural questions, Fliflet called the action “classic retaliation.”

“I am not surprised, but I am appalled,” Fliflet said. “It’s so telling that nothing in her performance was cited as a reason. We are basically paying for her lawsuit up front.”

Fliflet alleges that she spoke to city staff members about Bendel’s termination, and claimed that some staff members are “afraid” and feel they “better not speak out.”

Pearson said there was “no animus” and the move was a “business decision.”

“I’m disappointed with this narrative,” Pearson said of Fliflet’s claims.

Past incidents involving Bendel

Bendel has been included in several contentious issues facing the city during her five-year tenure with the city.

In 2014, the city paid attorney Jessica Schwie, of the law firm Jardine, Logan and O’Brien, to conduct a four-month investigation into a complaint made by Bendel against then-city administrator Dean Zuleger. Schwie was hired in November 2014 and presented her findings to the council in closed session April 7, 2015. The report is known colloquially as “the Schwie report.”

Based upon an independent review of the situation, Schwie concluded in her report that the allegations made by Bendel against Zuleger were not supported. According to the report, Schwie observed that Bendel “has solid accounting skills, but that her municipal financing skills were weaker.” Schwie also wrote that Bendel “knew that she did not get along well with others,” but that Bendel was professional in her communications.

Bendel was also part of an interaction that led to a council censure of Bloyer in 2015. During a meeting on Sept. 15, 2015, the council began discussing the accuracy of the water and sewer fund pro formas — financial planning documents that project the future health of the city’s utility funds. At one point in the discussion, Bloyer asked the outcome of a division exercise that he claimed showed inaccuracies in the financial planning spreadsheet. At another point, Bloyer asked Bendel whether or not she had a calculator. Bloyer claimed that inaccuracies in the documents showed errors in excess of $11 million. Since then, city staff has identified errors in the pro forma of at least $1.5 million, and the city has turned over the creation and management of the utilities pro formas to an outside agency.

Bendel did not return a request for comment. When asked in a later interview, city administrator Kristina Handt declined to comment on Bendel’s performance as a finance director.

“I will be bringing forward a recommendation at the next council meeting to contract financial services,” Handt said.

The city will hire a firm that specializes in municipal financial services to manage the city’s finance needs, Handt said, a move that will reduce operating costs.

Contact Alicia Lebens at [email protected]