Insider dealing at the University of Iowa has drawn intense scrutiny since President Bruce Harreld’s hiring last year. This week, several news reports cast an unflattering light on the culture President Steven Leath is fostering at Iowa State University.
The July 9 Des Moines Register carried a front-page story by Lee Rood on Leath’s recent purchase of land from one of the companies controlled by Iowa Board of Regents President Bruce Rastetter. After trying to weasel out of answering questions regarding what he called his “personal life,” Leath insisted he got no “special deal” on the land. However, the arrangement appears highly irregular, as discussed below following excerpts from Rood’s article.
Two recent stories by Vanessa Miller for the Cedar Rapids Gazette raised further questions about what kind of operation Leath is running. Click through to read about the hiring of former Republican lawmaker Jim Kurtenbach for a high-paying job that was never advertised, as well as Kurtenbach’s restructuring of ISU’s information technology services unit, which involved eliminating 23 positions and paying 19 people not to work since May 25. Excerpts from those stories are below as well.
This is an open thread: all topics welcome.
P.S.- Speaking of cozy Republican networks, Ryan Foley reported for the Associated Press on Friday that the University of Iowa “is retaining a social media startup company with Republican Party ties that benefited from earlier no-bid contracts.” Wholecrowd is run by Jim Anderson, who served as Iowa GOP executive director during part of the time the University of Iowa’s current Vice President for External Relations Peter Matthes was a staffer for the GOP state Senate caucus. Under no-bid contracts Matthes signed with former Iowa GOP state party chair Matt Strawn’s company, Wholecrowd did the same kind of “digital advocacy” work as a subcontractor. The university’s new contract, signed directly with Wholecrowd after a competitive bidding process, seems to have cut Strawn out as the middleman.
I recommend reading Rood’s whole story, but here’s the gist: ISU President Leath wanted to purchase land in a wooded rural area, on which he could build a second home. Instead of using a real estate agent to find and buy an acreage directly, Leath “contacted a few major agricultural landowners about recreational property he was hoping to buy within an hour of lhis home and the university in Ames. […] One of the people he contacted was Eric Peterson, president of Summit Agricultural Group, of which Rastetter is chief executive officer.”
At some point, Rastetter “gave the Leaths a tour” of Hardin County, where he lives. Summit Farms, part of the Summit Agricultural Group, then got involved.
Peterson sent the Watchdog a statement that read:
“In late 2015, Summit found a potential property in Hardin County that included river frontage, timber, and bable farmland. Steve and Janet Leath had no interest in the crop land and only wanted the river frontage and timber. Therefore, Summit purchased the land and the parcel was divided between the two entities.”
Summit Farms bought 180 acres at auction. Then a limited liability corporation under Leath’s control bought 140 of those acres. UPDATE/CORRECTION: Summit Farms actually bought 215 acres and sold 145 of them to Leath’s LLC, according to this July 11 story by Foley for the AP. More on that below.
The obvious question: why didn’t ISU’s president hire a real estate agent to look for wooded land within an hour’s drive of Ames? He didn’t need to seek help from “major agricultural landowners,” certainly not a firm run by the president of the board that hired him and oversees his work.
Asked why Leath didn’t just buy the land he wanted at public auction, Peterson said it had to be purchased and surveyed to create two separate legal descriptions for the newly separated property.
“Once a survey is completed, a new abstract must be created to show chain of title. Both the survey and abstracting take quite a bit of time, and this auction required a faster close (most require 30 days). Once the survey was complete and recorded, and the abstract created, the separate parcel was purchased by SLS Holdings [the Leath family’s LLC],” he said.
Peterson emphasized in a statement to Rood that “No fees were paid to Summit Agricultural Group by Steve and Janet Leath.” Of course they weren’t. This arrangement clearly wasn’t designed to enrich Rastetter’s company. On the contrary, it looks like an effort to give the university president a sweetheart deal on land, potentially making him more beholden to the man whose company helped make the arrangements.
About the cost of that land: at first, Leath didn’t want to answer Rood’s questions, saying, “My personal life, and my wife’s personal life, are nobody else’s business.” Then, he told Rood in an interview that
he consulted a university attorney at the time and paid the same price per acre as Summit. Later, in an email, he said, he consulted his private attorney before purchasing the land. He said the cost was “at a rate directly proportionate to the price Summit paid at the auction.” […]
Summit Farms “bought it at public auction,” he said. “There was no special deal.”
Granted, farmland generally has a higher market value than timber. But it took University of Iowa Associate Professor of Biology John Logsdon only a few minutes to calculate that the farmland left in Summit Farms’ possession may be overpriced, based on what the company allowed Leath to pay for the acres he wanted.
Logsdon noted that according to county data cited by Rood, Rastetter’s company paid $1,139,400 for 180 acres ($6330/acre), while Leath paid $623,325 for 140 acres ($4452/acre). In other words, Summit Farms now owns 40 tillable acres, which cost the company a total of $516,075 or $12,902 per acre. That’s almost three times the per-acre value of “the wooded, water access 140 acre property that Leath got.” Moreover, a quick search by Logsdon didn’t turn up any farmland for sale in Hardin County priced at more than $10,000 per acre.
As Peterson indirectly acknowledged, Leath could have bought the 180 acres at public auction himself. Then he or his family’s LLC would have had to pay for the legal work and the land survey. Instead, Summit Farms paid who knows how much to handle that part of the transaction before selling 140 acres to Leath’s LLC. ISU’s president won’t have to deal with the hassle of selling or renting tillable land he can’t use.
UPDATE/CORRECTION: Logsdon’s calculations were based on numbers from the original Des Moines Register story. But as Foley reported for the AP on July 11, the deal was somewhat different.
Summit purchased the 215-acre plot for $1.14 million, Peterson said. After a survey, the company then sold 89 acres of timber and 56 acres of farmland to SLS Holdings, a limited liability corporation created by Leath’s family in November.
Peterson said that Leath paid the same price that Summit purchased it for: $7,676 per acre of farmland and $2,140 per acre of timber. Summit kept the remaining acres for farming. Peterson said that SLS Holdings and Summit split the closing costs, including fees for the land survey and related legal work.
Rood was tipped by a Hardin County farmer who wondered whether the purchase was ethical. Doing business with a company controlled by the Board of Regents president looks inconsistent with ISU’s conflict of interest policy as well as the guidelines for regents on avoiding “actual or apparent conflicts of interest involving personal and professional relationships.” (SEPTEMBER UPDATE: The language in the Board of Regents policy has been slightly revised and now refers to “actual or potential conflicts.”)
UPDATE: Speaking to Foley, Board of Regents spokesperson Josh Lehman said Leath’s land purchase was a “private business transaction.”
Rastetter has often listed Summit’s relationships with Iowa State on his mandatory conflict of interest disclosure form, including no-interest loans it has received from a state renewable energy program operated by the school. But Lehman said the company’s sale of land to Leath did not have to be disclosed since it was a private transaction.
Lots of private business transactions could create potential conflicts of interest. How absurd for Lehman to pretend that Leath buying property from a company controlled by his overseeing board’s president doesn’t create any appearance of a conflict.
Rood quoted Democratic State Senator Rob Hogg, who chairs the Iowa Senate Government Oversight Committee, expressing concern about the appearance of a “cozy personal relationship” between Leath and Rastetter, given the Board of Regents’ role in providing “independent oversight and governance for a public university.”
Both Hogg and the journalist could have been much tougher on Leath. He or his family’s LLC could have bought land and paid for dividing the parcel without getting entangled with Rastetter’s company. Incidentally, I wonder whether other “major agricultural landowners” could confirm that Leath reached out to them about recreational property, or whether he went straight to Rastetter and Peterson.
Why does it matter whether Leath saved some cash by buying property from Summit Farms, which handled the legal work and kept the acres Leath didn’t want to own?
Because Rastetter doesn’t just chair the board that supervises Leath’s work and controls his contract. He also has a history of trying to use university resources to benefit his private businesses.
The best-known example was Rastetter’s attempt to get ISU into a partnership with the AgriSol Energy, which was trying to purchase a huge amount of land in Tanzania. Ryan Foley reported for the AP in June 2012,
Rastetter blurred the line between his role as investor in AgriSol Energy, which was working with ISU on the land deal, and his position on the Board of Regents, which governs the university, according to emails released to The Associated Press. Rastetter later recused himself and Iowa State pulled out of the deal, but only after both received criticism.
While the project already has been scrutinized, the records provide details about how Rastetter’s dual roles complicated matters for ISU and emboldened critics who say he tried to use the university’s expertise for a profit motive. […]
Officials with ISU’s College of Agriculture and Life Sciences — which had received a $1.75 million gift from Rastetter in 2007 — traveled to Tanzania and hosted the country’s prime minister. Their role would be to implement an AgriSol-funded program to provide a range of services and training to help farmers living near the development. […]
Rastetter waited until June 17, 2011 — six weeks after his term started and four months after his appointment — to disclose the conflict, doing so after the project received publicity. He waited until Sept. 13 before recusing himself from discussions related to ISU’s involvement, which happened the same day the university dropped plans to seek a multimillion-dollar federal grant with AgriSol.
Bleeding Heartland posted more links related to Rastetter’s unsuccessful Tanzania venture here.
Foley reported in August 2014,
The agribusiness owned by Board of Regents President Bruce Rastetter was awarded $480,000 in no-interest loans from an Iowa State University center a few months after he joined the school’s governing board, records show.
The loans from the Iowa Energy Center helped Summit Farms LLC finance the $990,000 cost of installing wind turbines at its corporate office and two hog confinements. Rastetter owns the Alden-based producer of crops, beef and pork, which grew out of his family farm. The turbines were expected to generate $44,000 in annual energy cost savings for Summit Farms, according to documents obtained by The Associated Press under the public records law.
Iowa State officials said they didn’t give special treatment to Rastetter’s company and that the turbines met the criteria for a longstanding renewable energy loan program. Rastetter said Friday he had no regrets about seeking the assistance, saying he should have the same opportunity as every other farmer even if he faces “additional scrutiny” due to his powerful state position. […]
They show that Summit Farms applied for five $160,000 loans — $800,000 total — from the center’s Alternative Energy Revolving Loan Program for turbines in October 2011. The program, created by lawmakers in 1996 to promote renewable energy production facilities, awards no-interest loans on a quarterly basis based on merit and funding availability. Open to everyone, its guidelines call for prioritizing projects with the shortest loan terms and quickest energy payback. […]
Iowa Energy Center officials say they were unaware that Rastetter owned Summit Farms when they ranked the projects and that they only learned of the connection when Rastetter signed loan documents in January 2012.
The following month, Foley reported,
ISU researchers have been working with Rastetter’s company, Summit Farms LLC, to study whether cattle grow bigger and healthier with less feed when they stand on rubber mats instead of concrete, as the mat manufacturers claim. Preliminary findings published in an industry newsletter last year suggested mats may be beneficial but were inconclusive, and more detailed data is expected to be released in coming months.
Summit Farms manager Eric Peterson said the Alden-based corporation is awaiting the findings before deciding whether to install more rubber mats for the 8,000 cattle it feeds. He and Rastetter said the results will be public, helping all producers make similar decisions. […]
Rastetter, a former hog production and ethanol executive who has more recently invested in beef operations, called the cattle study an example of the routine but valuable collaboration between Iowa State and farmers.
“Summit Farms could have done that mat trial on their own and kept that information proprietary. We did it with Iowa State and shared the numbers because all Iowa producers are going to benefit from that information,” he said.
The study started in 2011, months after Gov. Terry Branstad appointed Rastetter to the board [of Regents].
If Leath wanted to keep his land purchase a private affair, he should have arranged it without involving Summit Farms. Iowans pay Leath’s salary and have a right to know whether he benefited financially from having Rastetter’s company buy the land at auction.
Moving on to shenanigans related to Leath’s work, Vanessa Miller’s July 7 story for the Cedar Rapids Gazette should be read in full. Her lede:
Iowa State University did not advertise or conduct a search before hiring former Republican lawmaker Jim Kurtenbach as its vice president and chief information officer.
The Board of Regents at its June meeting approved Kurtenbach’s appointment to the $252,794-a-year post — prompting questions and concerns among some employees.
Kurtenbach, who first joined the Iowa State faculty as an associate professor in 1991, had been serving as interim CIO since January 2015.
Miller notes that ISU policy calls for filling positions “through a process that includes announcement of the opening as widely as appropriate in terms of the level of duties and responsibilities.” The president can grant an exception to the advertising requirement, or can waive a search. Leath decided “not to conduct a search” for Kurtenbach’s position, meaning there was no need to seek an exemption from the policy on advertising.
“President Leath asked him to continue serving in that capacity on a permanent basis because of his significant experience and institutional knowledge,” [university spokesperson John] McCarroll said. […]
Kurtenbach, when asked about concerns with his appointment, said he was involved in two open searches with Iowa State — one before his appointment as associate professor in 1991 and one before his appointment as associate dean in 2010.
According to a staffer Kurtenbach has placed on paid administrative leave, ISU promoted two information technology employees in 2014 without advertising those positions.
Last fall, Miller obtained e-mails showing that ISU had created a position especially for former Iowa House Speaker Kraig Paulsen. Not only was that job never advertised, Provost Jonathan Wickert had gone on a fishing expedition, asking the business school dean to find a place for Paulsen and asking the political science department head to think about “potential responsibilities” for the Republican lawmaker. The ISU College of Business ended up “fast-tracking” a project that was in the early planning stages, in order to put Paulsen in charge.
Given what happened with Paulsen, I wasn’t surprised to read about Leath providing and the Regents rubber-stamping a high-paying job for a well-connected Republican. Nor was I surprised to learn Kurtenbach has used his newly permanent authority to cut some positions within information technology services so the work could be outsourced.
However, some aspects of Kurtenbach’s “restructuring” are unlike anything I’ve heard of happening at a state university. They were the focus of a second must-read story by Miller on July 7. Kurtenbach cut 23 out of 175 positions from the ITS unit.
The 23 eliminated ITS positions include 11 employees who are classified as “professional and scientific” — or P&S — and covered by a “workforce reorganization policy.” They have been told to stay at home. The remaining 12 are considered “merit” workers covered by American Federation of State County and Municipal Employees Iowa Council 61. They report to campus each work day, but sit in a room for eight hours. […]
Danny Homan, president of AFSCME Council 61 — which represents the “merit” employees — calls the situation, “an embarrassment.” […]
McCarroll confirmed 11 merit employees report to a campus room each day, “where they have the opportunity to complete applications for other jobs.” One of the cut merit employees applied and was chosen for an open P&S position. […]
Homan said he’s visited the room to which his nonworking employees have been relegated for eight hours a day.
“They said, ‘Welcome to Gitmo Iowa State,’ and I felt that was very appropriate,” he said.
Homan predicted the situation will eventually lead to “a grievance or litigation.” As well it should. I’d be bored out of my mind sitting in a room all day with nothing to do, while ISU runs out the clock on my contract.
the “warehousing” of terminated P&S employees is not unprecedented, as the same thing happened to me and a similar number of P&S colleagues in the College of Engineering’s communications office in 2010. Indeed, the “associate dean” position Kurtenbach was given in 2010 was WITH the College of Engineering, where he oversaw the elimination of dozens of jobs, including many other P&S employees who were paid to do nothing for 90 days. The “open search” that brought Kurtenbach into the College of Engineering in 2010 was as phony as the “open search” for “new” communications employees for the College of Engineering. Both were rigged with the collusion and approval of then-engineering dean Jon Wickert, whose reorganization of my office was found at trial by a judge and jury in 2012 to be fraudulent and retaliatory–and even conceded to be by the Iowa Court of Appeals in 2013–but which decision was overturned by a split Supreme Court in 2014.
In that ruling, the Iowa Supreme Court majority found Smith was entitled to “$500,000 for emotional distress, and $150,000 in reputational harm damages” but overturned “a $634,027 award for loss of income that was awarded by District Court Judge Kurt Stoebe after a jury sided in favor of Smith during a civil trial in April 2012,” saying they “did not find any connection between that job loss and Smith’s reporting to a public official.”