Despite strong opposition, St. Olaf College sold its WCAL 89.3 FM radio station and Rochester’s KMSE 88.7 to MPR for a reported $10.5 million four years ago. Unfortunately — or fortunately, depending on who’s doing the talking — St. Olaf College was holding about $3 million in endowment funds for the station at the time of the sale. Three years later, SaveWCAL attorney Michael W. McNabb requested that the Rice County District Court declare the sale void due to the conflict with donors. Since then, the details have been under investigation, pending a report from Special Master Judge Gary J. Meyer.
Here is an update email I received last month from SaveWCAL:
Northfield, Minn.-A Special Master report submitted on March 7, 2008 to the Rice County (Minn.) District Court is an important victory for supporters of and donors to public radio station WCAL and St. Olaf College, according to Ruth Sylte, the president of SaveWCAL, an organization representing the donors to WCAL.
"It is a very good day for supporters of public radio and thousands of SaveWCAL supporters!" said Sylte. "The report confirms that listener donations and support do matter."
WCAL 89.3 FM was the first listener-supported radio station in the U.S. and a founding member of National Public Radio (NPR). Until its controversial sale, the station broadcast for more than 80 years from the St. Olaf campus in Northfield, Sylte explained. WCAL’s major assets-a 100k watt C-1 FM license, Rosemount broadcasting tower and translator station KMSE 88.7 in Rochester-were sold on November 21, 2004 over the objections of thousands of donors and listeners for a reported $10.5 million by its trustee, St. Olaf College, to Minnesota Public Radio (MPR).
The Special Master’s Report, containing more than 130 separate Findings of Fact and making Recommended Conclusions of Law on the subject of the Petition and Amended Petition filed by St. Olaf College regarding the WCAL charitable trust, includes the following highlights:
- The report recognizes that the WCAL donors created a charitable trust throughout more than 80 years of support to the station. This is exactly the position that SaveWCAL has advocated since the beginning of the current proceeding and, indeed, since October 5, 2004 when the organization specifically asked the Minnesota Attorney General to intervene in the sale of the trust’s assets and the Attorney General declined. In fact, Special Master Judge Gary J. Meyer (ret.), specifically noted in his Memorandum that:
"The Attorney General notes that St. Olaf has not formally petitioned the court regarding the proceeds of the sale of WCAL assets to MPR. But St. Olaf takes the position that none of the proceeds of the sale are subject to any restriction and that St. Olaf is entitled to use the proceeds for any purpose it desires. Thus, it is unlikely that St. Olaf would ever bring a petition asking for direction from the court regarding these funds. Although the Attorney General clearly could have, and perhaps should have, brought a petition to the court, they have not done so. Instead, the court is left with the current petition, which, in the interests of justice, must be expanded to include additional funds not specified in the petition."
- The report also finds that the assets that currently comprise the trust are far greater than what St. Olaf College had represented to the court in its Petition and Amended Petition. St. Olaf claimed that it held $1.36 million in the WCAL endowment and that it should have unrestricted access to approximately $860,000 of that amount with approximately $500,000 restricted to "Core WCAL Activities." The Special Master has found that the WCAL charitable trust has assets in excess of $5 million and that the use of those assets should be restricted to "Core WCAL Activities."
- The Special Master did not include the value of WCAL’s FM license as an asset of the trust claiming that "it is impossible to discern from the record what assets were purchased with which funds or, most likely, combination of funds."
Sylte pointed out that the report fails to recognize the fact that the license itself would have been lost long ago but for the support of WCAL donors. In order to renew its license, St. Olaf had to demonstrate to the FCC that the station was serving the public interest. It was able to do so, Sylte asserted, only because of the magnificent support of the WCAL donors. Indeed, the Special Master’s Findings of Fact states:
"WCAL and St. Olaf had agreed on a goal of decreasing the St. Olaf cash contributions to WCAL and of eliminating them by 2005. From 1993 to 2004, St. Olaf’s contributions to WCAL decreased from $350,000 (which was 21% of the 1993 WCAL operating budget) to $130,000 (which was 5% of the 2004 WCAL operating budget)."
As another example, Sylte related that the station would have been completely lost in 1924 if supporters had not raised the money to save WCAL after the College announced that it did not have the funds to operate the station. The station would have been lost a number of times without the donations of listeners, without which there simply would have been no license and therefore no assets for St. Olaf to sell in 2004.
Sylte also pointed out that St. Olaf College attorneys, in an attempt to prevent information that SaveWCAL supporters (or any member of the general public) might find from reaching the Court and the court-appointed Special Master, have been denying unrestricted public access to the college’s archives, in direct conflict to the college’s stated policy, since December 7, 2007.
- The report also does not address the trust status of the building in which WCAL was housed that was built, not with funds from St. Olaf College, but solely from the donations of WCAL listeners.
The submission of the Special Master’s report is yet another step-a large one-in SaveWCAL’s lengthy and continuing journey of more than three and a half years to obtain justice on behalf of the tens of thousands of WCAL donors, living and deceased, who gave millions of dollars to build and maintain a "unique and priceless public radio station" for more than eight decades, said Sylte. "The process is still continuing. We will continue to advocate that the WCAL charitable trust also includes the proceeds from the sale of the broadcast license. "
"Our efforts remain grounded in a deep affection for the college." added Sylte. SaveWCAL’s primary goal has been to preserve the WCAL station and/or its charitable trust, preferably to spiritually, financially and educationally benefit its historical home institution, St. Olaf College, she said. "What we have achieved thus far," Sylte continued, "benefits St. Olaf by assuring its donors that they have a right to be heard and that their intentions should continually be honored."
The parties now await instructions from Rice County District Court Judge Gerald Wolf regarding how the hearing on the St. Olaf Petition and Amended Petition will proceed. Judge Wolf, who is presiding over the case, has the authority to accept or modify the Findings of Fact, Conclusions of Law and proposed Order. A hearing is expected to be scheduled soon.
BACKGROUND / TIMELINE
- In August 2004 St. Olaf College suddenly announced that it would sell the license and Rosemount broadcasting tower of WCAL 89.3 FM radio station-the first listener-supported radio station in the USA-and its translator station, Rochester’s KMSE 88.7, to MPR for a reported $10.5 million. In spite of strong opposition, including a petition to St. Olaf with more than 5,000 signatures and unsuccessful pleadings before the FCC, the station was sold to MPR and ceased broadcasting as WCAL/KMSE on November 21, 2004 – just three days after the 82nd anniversary of the station’s official founding.
- At the time, St. Olaf College was holding at least $2.96 million in endowment funds for the benefit of WCAL radio station.
- On December 28, 2006 St. Olaf College filed a Petition in Rice County (Minn.) District Court seeking a release of all restrictions on two categories of gifts in the WCAL charitable trust endowment that it now classified as the restricted non-endowment gifts and the undocumented gifts. When the gifts were made, the College placed the gifts in both categories in the WCAL endowment. It asserted in its Petition that the donors of the gifts in the first category did not specifically direct St. Olaf to place their gifts in the WCAL endowment. As for the second category, St. Olaf claimed that it was not able to find documents to explain the decision the College made to place the gifts in the WCAL endowment. The College asserted that total market value of the gifts in both categories as of April 30, 2006 was approximately $961,000.00.
- On January 12, 2007 the Minnesota Attorney General’s office responded to the filing in a letter to St. Olaf College, raising some technical questions about the Petition. This caused St. Olaf to request a continuance of the scheduled hearing and the hearing was rescheduled for March 8, 2007.
- On February 27, 2007 SaveWCAL attorney Michael W. McNabb sent a five page Letter Memorandum to the Rice County District Court to inform the Court of issues related to the Petition filed by St. Olaf. The letter stated, "A thorough investigation will reveal that the court has the facts and the law to declare that the assignment of the license for 89.3 FM to MPR is void on the grounds that (1) it was a breach of its fiduciary duty as trustee for St. Olaf to create the circumstances which rendered it impossible to honor the intention of the donors and (2) St. Olaf failed to obtain the authorization of the court to terminate the charitable trust as required under Minn. Stat. 501B.41 subd. 2 and therefore St. Olaf did not have the lawful authority to assign or sell the assets of the WCAL charitable trust.
In the alternative, the court could declare that the WCAL endowment fund (all $2.9 million) and the $10.5 million received from MPR constitute part of a continuing charitable trust and that pursuant to Minn. Stat. 501B.31 subd. 2 the trust must be administered to accomplish as nearly as possible the intention of the donors. "
- On March 6, 2007 just seven days after McNabb sent his Letter Memorandum to the Rice County District Court, St. Olaf College suddenly submitted an Amended Petition which completely removed St. Olaf’s previous assertions of the WCAL charitable trust funds as a "charitable trust". Also removed was one exhibit previously submitted by St. Olaf after an heir of the donor notified the Attorney General and Court that what St. Olaf had presented in its Petition was not the wishes of the donor.
- On March 8, 2007 SaveWCAL attorney Michael McNabb received the permission of the court to participate in the hearing. Additional hearing sessions were held on April 13 and May 25.
- On October 16, 2007 Rice County District Court Judge Wolf issued two Orders. The first Order and Memorandum indicated that the Judge is reserving a decision on the St. Olaf Amended Petition pending the result of a full investigation by a special master appointed by the second Order to, among other things, "investigate and determine the amount of assets and donations that are attributable to WCAL…" without limitation. The order also confirmed the standing of SaveWCAL as a representative of the WCAL donors. It should be noted that SaveWCAL was the only party in the case to request that a special master be appointed and that a full investigation take place.
- On October 22, 2007 Judge Gary J. Meyer (ret.) accepted the appointment of Judge Wolf as Special Master for the St. Olaf College Petition. The Special Master was instructed to report his findings and his recommendation to the Court within 60 days of his appointment. The Special Master was also instructed that he could request additional time in order to complete the investigation. On December 17, 2007 Judge Wolf issued an Order extending the deadline for the Special Master to submit his report and recommendations to February 15, 2008. On February 15, 2008 Judge Wolf signed another Order extending the deadline for the Special Master’s report to March 15, 2008.
Documents submitted to the Rice County District Court Special Master by the various parties (Minnesota Attorney General, St. Olaf College and SaveWCAL) are available for download in PDF format at: http://savewcal.livejournal
SaveWCAL is a 501(c)(3) non-profit organization that grew out of St. Olaf College’s decision to sell essential and irreplaceable assets of the WCAL charitable trust, thus destroying the first listener supported public radio station in the USA-a founding member station of National Public Radio (NPR) and a leading member of AMPERS (now Minnesota Independent Public Radio).
Since 2004, St. Olaf has been attempting to dismantle the trust and repurpose millions of dollars in funds given to the WCAL charitable trust by tens of thousands of donors over the course of more than 80 years.
For further information, see http://SaveWCAL.LiveJournal
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