FAIRMONT– The Martin County Board of Commissioners on Tuesday spent nearly an hour talking through contract details for two different investment advisor firms.

Late last year, the board had created a County Investment Committee to look for a professional management firm to assist in the day-to-day investment decisions for Martin County and after going out for a Request for Proposal (RFP) the county received six responses.

While the low bid came from local firm Sweet Financial, Commissioner Kathy Smith said that the committee recommended that the board approve the RFP from Nicollet Investment Management out of Minneapolis and to authorize the board chair to sign the required contract documents.

Commissioner Steve Flohrs said that after all of the work she and the rest of the committee had done, and after looking through the RFPs, it made sense to go with Nicollet and he made a motion to approve it. Commissioner Elliot Belgard seconded it so that discussion could be had.

“We were going to do this several months ago… a couple things came up,” Belgard said.

A representative of Nicollet, Mark Hoonsbeen, came to present to the board at its May 7 meeting, and Belgard said at that time it was asked how many counties the firm represents and it was told none.

“It’s all Charles Schwab so we thought why don’t we have someone local do it because we have Sweet Financial so we decided to go back and look at Sweet Financial because they put in a bid,” Belgard said.

He asked County Attorney Taylor McGowan to take over relaying the progression of looking over the contracts.

“We always have the desire to keep it local, yet we ran into some snags with the contractual part of it,” Belgard said in explanation.

McGowan said that after receiving a proposal from Sweet, the County Investment Committee began looking it over and then learned that Sweet had merged with Carson Wealth Management out of Omaha.

“That raised some questions as to what entity we would actually be dealing with, whether it would be Sweet Financial of Fairmont, Minnesota or this larger entity in Omaha and ultimately we were given an investment agreement from Carson Wealth Management,” McGowan said.

He referenced an October 15 board meeting where Oliver Kollofski of Carson was present and the board had asked at that time for reassurance that Sweet would be the representatives that they would deal with and was told that would be okay.

“I modified Carson Wealth Management’s agreement to specifically designate Sweet Financial as the representative that we would exclusively deal with and that our money would be managed out of Fairmont and that everything would be in accordance with the county’s investment policy and Bryan Sweet forwarded that on to Carson’s legal (team) and they basically said no-go,” McGowan said.

He said that the county did not receive contractual guarantees that it would be dealing with Sweet Financial and that everything would run locally, but instead was under the impression that everything would be contracted with Carson under Nebraska law.

Commissioner Jaime Bleess asked why it was a deal breaker when it was half as much money as going to Minneapolis.

Smith said, “it’s not local. Carson is not local and the fact that they wouldn’t entertain our needs in their contract– our needs for protection and what we can and can’t invest in as a county.”

Bleess again said it would cost twice as much money to go with Nicollet but Smith said that in looking through the contract with Sweet/Carson, there were items that could end up costing more.

“When I see Sweet Financial’s building in my district paying Martin County taxes and they employ people in Martin County and presented an offer prior to this merger that was half the price as Nicollet’s in Minneapolis, it’s difficult for me… I’ll never agree to send money to Minneapolis to pay twice as much to do it when we can keep the money local,” Bleess said.

Smith reminded Bless that she and others on the committee have been looking at all of the proposals for the last 12 months and that there was more to the contracts than he realized.

Commissioner Richard Koons asked what the urgency was and County Auditor/Treasure Michael Forstner said that there were two investments in the market and two more coming due in the near future.

Koons said he appreciated what Smith was saying, but added, “you’re asking us to vote on something that we don’t know.”

“Sometimes you have to trust your fellow commissioners… that’s why we have committees,” Smith said. “I can’t believe we spent 12 months working on this.”

Belgard added that there are two people on each committee so that open meeting laws are not violated.

Bleess spoke again and said that he had concerns beyond just the cost and keeping business local but also concerns with a relationship between a member of Nicollet’s staff and the county’s staff. (It was later confirmed that Bill Fahey’s son works at Nicollet).

“Those are the three concerns I have with going this route. I’m not concerned about investing the money, I think we should invest the money but we have a wonderful firm here locally that’s going through some natural progression with their business plan that isn’t a negative to us,” Bleess said.

Bill Fahey, Special Projects Associate, spoke to some of the added fees that could incur to the county if it contracts with Sweet/Carson.

“All the things that we’ve talked about as a committee, they couldn’t deliver to us. When I saw the letter signed by a Carson attorney and started doing other research, I saw Barron’s Financial Magazine had referred to the transaction as a purchase of the assets by Carson, not as a merger,” Fahey said.

He said that the extra fees were developed as a profit maker.

“That’s about as easy as I can say it,” Fahey said.

As Fahey was talking about additional fees, Bleess asked where it was written down on paper and was told it was on a letter to the county attorney.

McGowan said that the basis point language was in the Carson Investment agreement that the county was sent and that a cap was put on the basis points that could be charged by sub advisors. However, when McGowan amended the agreement that language was left in and when Carson looked at it they said they did not put a cap on anymore.

“They basically are saying the contract we were given is obsolete,” McGowan said. “My general concerns in this process…I’m a little concerned that we’re not always sure who we’re dealing with and what the arrangement is going to be.”

He said that he doesn’t know what the future would hold if the county would enter into the agreement because there has been a number of changes since conversations started 12 months ago.

Bleess still said he has not seen anything on paper that explicitly says that Sweet/Carson would be more expensive than going with Nicollet.

“How do we get past the point that it’s double at Nicollet than here without having the numbers in front of us,” Bleess asked.

McGowan said that his understanding was that the county would be the first government account for both firms.

Belgard said that one of the reasons why he liked the Sweet/Carson contract was because if the county didn’t like something, the contract could end whereas agreeing to the Nicollet contract would bind the county for three years. He said he would like for it to be a one or two year contract.

Koons agreed with Belgard and said that the county likely would have gone ahead with a contract with Sweet months ago but it was given a different recommendation following some confusion and then so much time passed that Sweet’s situation changed.

Smith said that Koons had asked what the urgency was and she said, “The hurry is, the county needs to be handling its investments efficiently and in a way that our taxpayers can know we’re taking care of our money.”

The board spoke more about the cost difference between the two firms and Bleess said again that he would prefer to keep the business local rather than send the county’s money to Minneapolis.

“We’re not sending it to Minneapolis. They’re investing it for us,” Smith said.

Bleess called for a vote and the motion failed. The earlier motion on the floor made by Flohrs to enter into a contract with Nicollet failed 3-2 and no further action was taken.