Minneapolis chose to run its EZ program as a function of the city government, rather than through a local non-profit as some other cities have done. That sometimes has meant allowing city priorities to eclipse those of the neighborhoods.
This is the fourth in a series of four articles on the Minneapolis Empowerment Zones. The ten-year Empowerment Zone program began in 1999, with grants to 15 large cities to attack poverty in specific zones with in the cities. There are large zones in north and south Minneapolis, as well as a small one in northeast that has had only one project built.
Empowerment Zone Governance Board co-chair Peter Heegaard set the tone in a 2000 meeting, when he told the group “as board members, our primary responsibility is to the City of Minneapolis and our secondary responsibility is to be advocates for our goals and geographic areas.” Since then the board has funded several projects that seem to put city goals, such as developing the Northeast Arts District, over the intended EZ goal of eradicating poverty.
Decisions about empowerment zone funding are made by a 30-member Governance Board with an inner circle that meets separately as an Executive Committee. Members are appointed by the mayor, the city council, and the other board members. Once the board votes to recommend funding for a project, it passes the decision down the line to the city council for final approval. The mayor is co-chair of the EZ board, and city council members Robert Lillegren and Don Samuels sit on the board as well. David Fey, named director of the Empowerment Zone after the abrupt departure of Jonathan Palmer in December, was formerly a member of the EZ board.
The board has included representatives from the corporate and non-profit worlds, the foundation community,
the Neighborhood Revitalization Project (NRP), City Council members, and city staff. Corporations such as General Mills, Wells Fargo, and Cub Foods are represented. So are some of the larger non-profits that serve the city’s minority communities—the African Development Center, the Hmong American Mutual Assistance Association, and the American Indian Neighborhood Development Corporation. While seven of the members selected by the City Council are required to be residents living inside the empowerment zone, many have questioned whether this truly amounts to community representation. In 2004, City Council member Robert Lilligren, himself a board member, told the Minnesota Spokesman-Recorder “Public discourse wasn’t as public or inclusive as it could be… Community people were co-opted out of the process.”
As the project draws to a close, EZ staff seem to be doing even less to bring communities into the project. EZ director David Fey said EZ representatives set up informational booths at neighborhood events such as the north side’s Juneteenth celebration, as well as others that he could not recall. For the rest of the time, members seem to keep a low profile. A look back at the city’s original application to receive the program says “..public information is an important part of the Zone governance…Staff phone numbers and email addresses will be listed for direct citizen contact…The Minneapolis Empowerment Zone website will be continually updated with progress reports and success stories.”
In reality, the city’s website for the EZ has had links stripped from it like copper wire from a boarded-up crack house. On-line records of the board’s meeting minutes had not been updated in two years—until after reporters asked for the records in 2008. The minutes were finally updated at the end of January 2008, but some remained missing at press time, and the site still lacks a staff list and contact information for board members. The last success story is several years old, and the online newsletter “Minneapolis EZ Express” hasn’t been updated since December 2002.
In 2003, a HUD audit criticized the program for a general lack of accountability as to how funds were spent. “The City inaccurately reported the accomplishments of its Zone projects,” the report found. Further, “The City provided Zone funds to projects that have not benefited Zone residents…” Auditors noted that the city funded projects without requiring that Empowerment Zone residents would benefit.
According to HUD, one of the funded projects, a youth employment program called Opportunity Kitchen, failed to benefit a single resident. HUD recommended that the city pay back the Empowerment Zone for contracts that had been improperly awarded. Former EZ Director Kim Havey said that HUD was misinterpreting the city’s data, but at the same time promised stricter controls and better data gathering in the future.
Part of the conflict was over the determination of who benefited from EZ programs. In the case of Opportunity Kitchen, the city claimed that anyone who was fed a meal at the kitchen benefited from the project. HUD’s criteria were different—since the Empowerment Zone was targeted at economic development, it measured service by the stated goal for which the program was funded: training youth for jobs and placing them in jobs. By that measure, the project failed.
Since half of the EZ’s four staff members left last year, the lack of communication is understandable. Last December EZ Director Jonathan Palmer announced he was leaving his position for a shot at the Minnesota House of Representatives. David Fey, a policy manager at the city’s Community Planning and Economic Development (CPED), was loaned out part-time to cover the position. He says no one in the office knew of Palmer’s departure until the week it was announced. Earlier last fall, the main staff member in charge of finances, Narin Sihavong, also left the Empowerment Zone and transferred into a position within the Civil Rights Department.
One Hand Greases the Other
Zach Metoyer could be considered one of these “community people” left out of the EZ process. As a non-profit consultant living in the south Minneapolis Empowerment Zone, he has worked with a laundry list of community organizations, many of which have received EZ funding over the years. Metoyer originally contacted Kim Havey in 1998 to inquire about obtaining support for the Great Lakes-Chicago Corridor Network, one of the many organizations he has either founded or attempted to found. The two ended up flying across the country together to attend national conferences for cities that had received Empowerment Zone programs. But as the initial years of the project passed he grew convinced that the minority communities the project was intended to help were being intentionally shut out of the funding process.
Metoyer had been offered a position on the EZ board by Havey, but says he turned down the request because of his ties with a number of organizations he saw as being potential beneficiaries of the project. As he stood back and promoted the program from the sidelines he saw members appointed to the board who had no qualms about being on both the decision-making and receiving end of the federal dollars. He gives an example of the grant given to El-Amin’s Fish House, a north side restaurant owned by the son of governance board member Arlene El-Amin. When her project received approval for $100,000 from the general Empowerment Zone fund in 2003, board minutes note “at the time of the discussion and voting Arlene-El-Amin was not in the room.”
“There’s no direct benefit to the community except that they gave a restaurant some money so that the residents could go there to spend their money,” Metoyer says.
“I need to not speak on that because I wasn’t involved with the vote,” El-Amin said in February 2008, regarding the Fish House decision. “I have no financial stake in that restaurant; the business is owned by my son.” Makram El-Amin could not be reached for comment. According to Minneapolis city records, $25,000 of the original $100,000 loan has been forgiven, and the remaining $75,000 is still outstanding.
Meeting minutes are full of instances of board members “removing themselves from discussions” on funding proposals that would directly benefit their organization, only to reap the benefits of the vote in the end. The Allina Hospitals and Clinics network (which includes Abbott Northwestern), a powerful employer in the southside empowerment zone, has had representatives sitting on the board and also has received EZ funds for a variety of projects. In a June 2001 vote to fund one of the hospital’s projects, the Health Careers Institute, four board members removed themselves from voting because of real or perceived conflicts of interest. They included then-mayor Sharon Sayles Belton and the current CPED director, Mike Christenson.
On the north side, radio station KMOJ received $25,000 in funding to create broadcasting internships for young people in the Empowerment Zone neighborhoods. Vusumuzi Zulu, a member of the EZ Governance Board, was the KMOJ station manager. Last year’s records reveal that less than a fifth of the jobs created through the program actually went to residents of the zone. Attempts to contact Zulu for comment were unsuccessful.
“It’s almost like for the first three or four years 90 percent of the funds went to organizations that were directly related to the Empowerment Zone governance board. That’s cronyism. It’s illegal,” says Metoyer.
To Fey’s knowledge, organizations that receive funding set their own goals and report back to the EZ board on their progress. Since the board doesn’t independently verify the accuracy of those numbers, it’s impossible to distinguish a hit from a miss. When the 2007 annual report says that Minnesota Employment and Training Project placed 1,549 EZ residents into living wage jobs, what does that mean, considering the fact that Fey admits living wage job creation isn’t tracked? When the report claims that 4,055 people were served by EZ-funded safety programs, do those numbers represent the people enrolled in those programs, those that live in areas the programs serve, or the people that could potentially benefit from them?
Empowerment Zone Loans, February 2008
Empowerment Zone Loans, February 2008
Total figures for Empowerment Zone loans, as of February 2008, are:
Loans authorized = $11,413,047
Loans actually disbursed = $10,652,913
Loan amount forgiven = $1,441,985
Principal paid back = $2,944,666
Total amount yet to be paid back or forgiven = $6,266,262
Fey doesn’t have the answers. And maybe that’s the point. With 190 projects sending streams of money throughout the local economy, who really has time to monitor all the results? If the burden of proving success can be shifted to whoever receives the money then the Empowerment Zone can’t be held accountable for its overall spending patterns.
The most likely outcome, according to Fey, is that the Empowerment Zone will be absorbed into the city. In a final reflection, he adds that history may be judging the Empowerment Zone too severely.
“One of the things I think people don’t understand about visionary grant-making is that some of the projects will fail,” he adds. “If all of them delivered, we’d be just like a bank in terms of who we lend to. I think we’re at where we need to be right now.”
The Empowerment Zone (EZ) program is now winding down, but both money and questions remain. Many of its projects were funded by loans, and loan repayments will still be coming in for years. Will the payments go to the general operating fund of the City of Minneapolis? Will they go to whatever development programs the city council and mayor favor at the time? Will there be any provision to ensure that these Empowerment Zone funds be recycled into programs that benefit the residents of the Empowerment Zones?
The TC Daily Planet’s four-part series takes an in-depth look at the Minneapolis Empowerment Zone project.
Part 1 – Public money for private business: $78 million in bonding for a project that promises to employ seven Empowerment Zone residents.
Part 2 – Falling short—business development, housing, and job creation: Out of the money that has been awarded in the last nine years, the lion’s share has gone to development firms and large, established non-profits.
Part 3 – The color of funding: Since its inception, the program has caused bitterness among some neighborhood activists, who say it hasn’t directly benefited the African-American communities it was intended to serve.
Part 4 – All power to what people? Concerns over cronyism, accountability: While seven of the members selected by the City Council are required to be residents living inside the empowerment zone, many have questioned whether this truly amounts to community representation.