The Shell Rock River Watershed District did not comply with Minnesota contracting law when it purchased the dredge for Fountain Lake, according to a review from the Office of the State Auditor.

The Watershed District purchased the dredge, pumps, pipes and other equipment on Sept. 24, 2012, during an auction at Ritchie Bros. in Owatonna. The 51-foot 2010 IMS 7012 HP Versi dredge cost $340,000 and the equipment was purchased for $435,000 after an emergency meeting with the district’s board of managers.

Minnesota statute requires entities to go through formal bidding when purchases exceed $100,000, according to the review.

“The procedure used by the district where it sends employees to an auction to compete with other buyers to pay the highest price for the equipment is not authorized by this statute and is inconsistent with the required formal bidding procedural requirements,” states a letter from the auditor. The auditor recommended using a formal bidding procedure with purchases more than $100,000 in the future.

The auditor’s office reviewed the purchase after receiving a complaint.

Clayton Petersen, board chairman, said the board made the purchase the way it did to be efficient with taxpayer money.

He said the dredge and the equipment were about 30 percent of what the same equipment would have cost if it were new.

“We did what we thought was the proper thing to do,” Petersen said, noting the savings.

Watershed district administrator Brett Behnke said in a previous interview that the dredge, which can dig 30 feet deep, had about 2,000 previous hours logged from a Canadian company that dredged near Kellogg. It fits 14-inch pipe, has a John Deere engine and is equipped with GPS.

Behnke thanked the auditor’s office for the review and said the information in it will be of “great value” in the future.

“The watershed district will continue its efforts of clean water and restoring our lakes,” he said.

The purchase came as the district is seeking state bonding dollars to dredge Fountain Lake.

 Advance bonuses

The auditor’s office also reviewed the district’s payment of advance bonuses to five employees in December 2012 and stated the payment lacked either a public purpose or the authority as required by law.

It was the first year the district had approved bonuses, and in the future it hoped to develop a policy where staff could be evaluated.

Under what was approved, Behnke received $5,000, Andy Henschel $4,000, and Jared Stricker, Carmen Christensen and Connie Enestevdt $2,500.

Petersen said most businesses have bonuses set up so they can give incentives to their staff, and that was the intent behind the board’s decision.

The board has since surveyed several watersheds to find out how the local one compares.

“We’re not the highest and we’re not the lowest,” Petersen said. “We feel our watershed is one of the most efficient ones in Minnesota, and we sure want to keep our staff.”

He said the board aligned the salaries slightly to correlate with other districts.