Empowerment Zone Board now under wider scrutiny

I guess this is a EID project in Minneapolis that Corey had told me before.
For your reference.

Bruce Chung
—————–

EZ benefits to residents challenged
By: Chris Thierfelder
Minnesota Spokesman-Recorder
Originally posted 4/7/2004
http://www.spokesman-recorder.com/News/Article/Article.asp?NewsID=41440&sID;=4

Empowerment Zone Board now under wider scrutiny

Second in a series

Who gets what

By far, the most controversy surrounding Minneapolis Empowerment Zones (EZs) has centered on the ultimate disbursements. Numerous African American community leaders have decried that the federal dollars have not, by and large, gone to help African Americans directly.

Clarence Hightower, president of the Minneapolis Urban League, has been one of the more vocal critics of EZ Governance. He said, These dollars came to the City of Minneapolis to improve the lives of African Americans and other low- income minority groups. Efforts towards improving those lives should not be based merely on association; they should be direct. More minority-directed jobs, increased minority training, [and] minority start-up businesses are examples of direct efforts.?BR>
City Council Member Robert Liligren also expressed concern for how the EZ Board has made disbursements. Public discourse wasnt as public or as inclusive as it could be…[It seems] community people were co-opted out of the process,?he said.

But Kim Havey, director of the Minneapolis Empowerment Zones, responded by pointing out that by law, the EZ funds are disbursed based on geography, not race or ethnicity. EZ funds are distributed based on EZ priorities and EZ funding criteria, which include everything from how the investment will contribute to the economic well-being, opportunity and self-sufficiency for the people of the EZ to how programs will directly benefit EZ residents,?he said.

While the EZ Governance Board can point to 77 percent of their dollars going to benefit African Americans, there is some ambiguity as to what the direct benefit is.

One of the most controversial projects has been the Heritage Park project in Minneapolis?Near North Side. The EZ Board, under Havey, allocated $1.4 million to the project. This money was to contribute to the conversion of over 145 acres in North Minneapolis into a mixed-income community with living spaces for both low-income and market value renters, as well as retail, a park and additional green space. Many of Heritage Parks low-income residents are African American, which Havey points to as a direct benefit to the African American community.

He said, Heritage Park is a mixed-income development that serves African American EZ residents from all income levels. According to figures from Heritage Parks developer, the majority of residents who are currently occupying Heritage Park homes are African Americans.?BR>
Hightower disagrees: ?..It must be concluded that the benefit to African Americans that Mr. Havey speaks about is hugely a benefit by association,? he wrote recently in an open letter to members of the Urban League.

This particular project has had additional criticism. As columnist Ron Edwards commented in our May 22 2003 edition (Economic Development in Minneapolis ?Who Gains??, the construction company, McCormack Baron of St. Louis, has received loans from both the City and from Sun America, with the understanding that an entity named Basset?will control the development. The relationship between Basset, McCormack, and the funding process has not yet been fully explained.

The EZ Governance Board has also disbursed funds to other questionable projects. An Eco-Industrial Park?in the Phillips neighborhood, which was projected to create 200 jobs, received $291,000. To date, theyve created 50 jobs.

A Bloomington-Lake redevelopment project for low-income housing received $50,000 from the EZ, and $13 million in total. They have yet to create a single housing unit.

The Lofts on Arts Avenue project was given $200,000 of its $7 million total budget from the EZ, for lofts which are currently retailing for market value.

The University of Minnesotas Research and Technology Park was granted $1,000,000 from the EZ, in order to ?..make the university and area more competitive and attractive to students and innovative companies.?To date, not a single job for residents of the EZ has been created. Further, it is not clear how the potential students who reside in the EZ, 49.5 percent of whom live in poverty, could afford the tuition to utilize this new technology park.

Community leaders are not alone in criticizing the EZ Governance Board. In 2003, the Inspector General (IG) for the Department of Housing and Urban Development (HUD) conducted an audit of 10 randomly selected projects that the EZ funded. Of the 10, seven were found to be inaccurately reported, lacked adequate controls, or did not sufficiently benefit residents of the EZ.

For example, the IG states that for seven projects ?Opportunity Kitchen, Heritage Park, Coliseum, Park Plaza, Plymouth Christian Youth Center, the Agape Child Care Center, and Haw-thorne Homesteading ?$1.8 million was spent by the EZ Board, while only between three and 38 percent of the individuals served are residents of the EZ.

In another example, the IG cites the Heritage Park project as a case where the EZ Board did not maintain adequate oversight?over how funds were being used. Nearly $10,000 was spent on a consulting firm that was not allowed under federal guidelines for EZ fund disbursement.

Havey, however, is not concerned about the possibility of additional action by the IG office. The Minneapolis EZ hired staff to verify reports from all our funding recipients, to ensure that all data reported is accurate. The EZ office in D.C. is satisfied with the Minneapolis EZs response and is moving forward to close the audit,?he said.

A careful reading of the EZ Governance Boards most recent annual report (March 29, 2004) shows that in many cases, the cost associated with a project has not translated into tangible benefits for EZ residents. This charge is building frustration in a community that felt they were to be the direct recipients of the funds and the benefits that go along with them.

While the EZ Governance Board has weathered ?and will likely continue to weather ?criticism that will need to be answered, they have received praise for their work as well. Supporters cite projects such as the Midtown YWCA, La Clinica Health Center, the Employment Action Center, and the donations of computers to the Minneapolis Public Schools as areas were the EZ Board met their obligations and directly benefited the residents of the EZ.

In Liligrens view, while including citizens in the process may have pushed disbursements towards more projects like these, genuine citizen input was not a priority of the board. You kind of got the impression that the attitude was Citizen participation is a good thing, but this would be easier without all those pesky citizens,? he said.

What the government giveth…

In 2002, the Bush administration and the Republican congress decided to end the direct funding of the EZ and instead restructure the grants as tax incentives. The funds that have already been appropriated, in Minneapolis?case $6 million, will not be affected.

Nancy Segerdahl, a spokes-person for HUD, told the Star Tribune, Its clear that many of these empowerment zones are not spending their existing grant funds, so this budget request will shift the focus toward providing tax incentives as a more effective vehicle to promote economic development and job growth.?BR>
Whether or not the end of EZs is due to slow spending on the part of cities like Minneapolis, or due to an ideological difference in the way Republicans and Democrats handle urban development, the fact remains that for
the foreseeable future, additional money will flow into Minneapolis only as a function of tax breaks for existing businesses. To that end, only $6 million remains to be granted under the original Round 2 funding.

Said Liligren, Minneapolis is one of the more successful EZs in the country, because we spent the money…but there was the attitude that we needed to spend the money fast so we could get more… Unfortunately, there is no permanent funding source for this program.?BR>
It remains to be seen whether critics of the EZ Governance Board and Havey will be able to divert these remaining funds to their own projects as they come up.

In addition, as a result of the IGs report, the board has hired a project manager to oversee existing projects to ensure compliance. A newly inspired African American community, more vigorous oversight of the EZ projects, and new limits on funds over the next five years will ensure that business as usual for the Governance Board wont continue.

Chris Thierfelder welcomes reader responses to Cthierfelder@mn.rr.com

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