Charity Case

The Office of the Missouri Attorney General finally settled with Republic Services for $16 million on behalf of the Department of Natural Resources for the trash company’s egregious environmental violations at the smoldering Bridgeton Landfill. But the majority of that money will be put into the hands of a private foundation. What gives?

The St. Louis Community Foundation, #2 Oak Knoll Park, Clayton, Mo.

Amelia A.J. Bond, President and CEO of the St. Louis Community Foundation.

  Sometime in the next month, Bridgeton Landfill LLC will deposit $12.5 million into the coffers of the St. Louis Community Foundation, a tax-exempt non-profit, charitable organization. The landfill, which is a subsidiary of Republic Services Inc., did not make the contribution out of  kindness, but as part a court-ordered consent judgment signed by St. Louis County Circuit Court Judge Michael T. Jamison on June 29.

Republic Services lawyer John B. Nickerson

The agreement, part of a $16 million  settlement, closes the book for now on  five years of litigation conducted mainly behind closed doors between the state of Missouri and the trash company, which owns both the smoldering  Bridgeton Landfill and adjacent West Lake Lake Landfill that is contaminated with radioactive waste. A final plan for the clean up of the site by the EPA is still pending.

Then-Attorney General Kris Koster filed the suit against Bridgeton Landfill and its parent company on behalf of the Missouri Department of Natural Resources in 2013,

Missouri Attorney General Josh Hawley

asserting violations of the law by the landfill that caused harm to the environment and human health. The case continued after current Missouri Attorney General Josh Hawley took office last year.

The pact requires Republic to reimburse MDNR for $2 million in staff time, pay a civil penalty of $1 million and $500,000 for damages to the state’s natural resources. The corporation is also required to monitor air and groundwater under state supervision contingent upon obtaining $26 million in bond funding or face paying the state hundreds of millions of dollars.

But three-quarters of the settlement will be put into money market accounts exclusively handled by the St. Louis charity — which was not a party to the suit and does not have a depth of experience in environmental protection issues.

The agreement to earmark $12.5 million of the state of Missouri’s settlement to the private St. Louis Community Foundation was signed by Republic Services’ lawyer John B. Nickerson and the St. Louis Community Foundation President and CEO Amelia A. J. Bond. The foundation will control the money through an entity of its own called the Bridgeton Community Fund.

When initially asked by email about the agreement, a spokesperson for the Attorney General responded by sending a  link to the original press release, which does not explain the decision to award the money to the private, tax-exempt institution.  Further calls and emails requesting an explanation from the Office of the Missouri Attorney General did not elicit any answers.

Daniel C. Hartman, an aide to the Missouri Attorney General, indicated that a state Sunshine Law request for documents asking for all communications between the Office of the Missouri Attorney General and the St. Louis Community Foundation will likely not be available before Aug 14 due to the volume of records to be searched. The requisite response to the request includes this warning: “Please note that we reserve the right to close responsive records in whole or part pursuant to law.”

Controlling the message is an obvious imperative for both the private foundation and the state government. The foundation in this case deferred to the state, recommending that all questions  be directed to  Mary Compton, the spokeswoman for the Office of the Missouri Attorney General — who already had declined to respond to repeated inquiries.

Though she did not answer how and why the  St. Louis Community Foundation was selected to receive $12.5 million from the state of Missouri as a part of the settlement, Neosha S. Franklin, a spokeswoman for the private philanthropy did offer this pat response, which had already been released to the media weeks ago:

“The Bridgeton Landfill Community Project Fund will provide grants [to non-profit corporations] that promote the betterment of the environment, public health and safety, within a four-mile radius of the Bridgeton Landfill. The Fund does not address the West Lake Landfill or Coldwater Creek. St. Louis Community Foundation is prohibited from making any grants to individuals.”

The agreement, which is good for the next four years, allows  any non-profit corporation in the area to apply for a grant, but those that target their efforts within the four-mile radius of the landfill site will receive the priority.

The deal between Republic Services and the foundation, which is part of the larger consent judgment, sets up the Bridgeton Community Fund and  puts the private foundation in control of $12.5 million in public funds. Moreover, the directors of the foundation have absolute power to change how the money is used in the future and who gets it.

According to the agreement: … The Foundation shall have the ultimate authority and control over all property in the Fund, and income derived therefrom.  …  If in the sole judgment of the Foundation, the purposes for which the Fund was created ever become unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the community served by the Foundation, the Foundation’s Board of Directors shall modify any restriction or condition on the use or distribution of the income and principal of the Fund. …”

The foundation’s offices are located in a stone mansion on the grounds of the city of Clayton’s Oak Knoll Park at Big Big Bend Boulevard and Clayton Road. In 2015, the St. Louis Community Foundation Inc. claimed assets or fund balances of more than $207 million, according to its IRS non-profit tax statement.  Bond, a former Wells Fargo investment banker and the president and CEO of the foundation, was paid more than $263, 000 in annual salary, and more than $17,000 in expenses, according to the IRS.  Previously, she headed the public finance division of Wachovia Securities in St. Louis for two years in the late 2000s following its merger with A.G. Edwards. Wells Fargo bought out Wachovia during this period of financial instability. Earlier in her career, she sat on the board of the Municipal Securities Rulemaking Board. In short, Bond is an expert in municipal bonds. The settlement agreement hashed out by the state and Republic Services requires that its subsidiary, Bridgeton Landfill LLC, secure $26 million in bond funding to maintain, monitor and mitigate air and groundwater quality in the area around the troubled landfill in North St. Louis County.

Wells Fargo, the foundation head’s former employer, is one of the banks that provided Republic Services a five-year $1.2 billion loan in 2014 under the stipulation that the trash company was free from any environmental violations that would harm the company’s bottom line. The suit by the state of Missouri claiming environmental damages by Republic was filed a year earlier in 2013. To secure that loan Republic had to indemnify itself through a subsidiary located in the Cayman Islands. 

Pastures of Plenty: The back door of the St. Louis Community Foundation in Oak Knoll Park.

The directors of the well-heeled charity include former Republican U.S. Sen. Christopher “Kit” Bond.  Former directors of the foundation include Clarence Barksdale, a director emeritus of Washington University, former head of Boatmen’s Bank and a director of SBC Communications Inc.

Besides the newly created Bridgeton Community Fund, the St. Louis Community Foundation runs two other non-profit outfits, the Greater Saint Louis Real Estate Foundation and the Alberici Foundation.

The favorite means of donating to the St. Louis Community Foundation is through what is called “donor advised funding.” In this method of tax write-offs,  anonymous donors target the non-profit institutions of their choice. Donors who use this way of making contributions support a wide array of worthy causes, including St. Louis Public Radio, the St. Louis Public Schools Foundation, Channel 9,  the Special School District, Operation Food Search, the Salvation Army, Planned Parenthood, and the  St. Louis Zoo and Art Museum.

But  many other contributions are made to wealthy private institutions and religiously-affiliated organizations,  some of which are located hundreds of miles away from St. Louis.  Recipients in this category included Washington University and John Burroughs School, which both bagged more than a $1 million in recent years, according to the foundation’s tax returns. An even more generous donation of $2 million was made anonymously through the foundation to the Journey Fellowship, a fundamentalist Christian church.

The out-of-town donations to the foundation were funneled to non-profit organizations such as the exclusive Cushing Academy in Ashburnham, Mass., which charges more than $60,000 a year for tuition and boarding. Other distant recipients of the foundation’s generosity include: the Bank Street College of Education in New York City; the Regent Preparatory School of Oklahoma; The National Jewish Center for Learning and Leadership, New York City; the Miami Conservatory of Music, Miami, Fl.; and the Zion Lutheran Church of Dallas Texas.

At the top of its tax return the foundation summarizes its mission and most significant activities as being the administration of “charitable funds for the betterment of St. Louis.” But apparently there are frequent exceptions to that rule.

Analyzing the arcane aspects of the federal tax code and how it applies in this case without the aid of a battery of tax lawyers and CPAs is nigh impossible;  and lacking any explanation from the foundation itself leaves more questions than answers.

There are, for example, two non-profit tax returns filed by the foundation in 2015, which cover the same time period.  One is in the name of the aforementioned St. Louis Community Foundation Inc., the non-profit corporation,  listing claimed assets or fund balances in excess of $207 million. The second  entity that filed a return the same year is identified simply as the St. Louis Community Foundation — without the “Inc.” The latter charity is organized under state law as a Missouri Trust.  It lists a little more then $72 million in claimed assets and funds balances.

The bottom line is this: Since the St. Louis Community Foundation has agreed to be the fiduciary of  $12.5 million won in a settlement  by Missouri Attorney General Josh Hawley  it may be prudent for his counterpart — Missouri State Auditor Nicole Galloway — to examine the foundation’s ledgers.

 

 

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