City freezes half of unused NRP funds

The potluck in a small room at a Van Cleve Park building looked more like a gathering of friends than a meeting of the Southeast Como Improvement Association’s board of directors. But the issues discussed at last week’s meeting left little room for laughs.
SECIA is among many neighborhood organizations in Minneapolis addressing the negative implications of the city’s new budget and its restrictions on the Neighborhood Revitalization Program.
Established by the state Legislature in 1989 to dole out $20 million annually to neighborhoods over 20 years, NRP allocated funds from increased property tax revenues to neighborhoods for community planning. The idea was for the community investments to raise property value, resulting in property tax hikes, known as tax increment financing.
The neighborhood plans were to be developed in two phases and required approval by the NRP and the city before money could be distributed.
There is still leftover money beyond the 20-year timeframe because neighborhoods had not all submitted complete plans for phase two by 2009.
In December, in an effort to soften property tax increases, the Minneapolis City Council suspended 50 percent of all phase two funds that have not already been contracted as part of its new budget.
The NRP funds already took a hit in 2001 when the state passed a bill that changed the property tax system. The City Council’s action to cut revenue further is raising serious concerns among community members.
“The neighborhoods are just going to get slaughtered,” Robert Miller, NRP director, said.
Though the city’s action does not affect the funds for phase one and already-contracted phase two projects, Miller said it could hurt communities — some more than others. Some North Minneapolis neighborhoods with larger allocations will lose the most because they have not moved into phase two yet, he said.
Some groups, like the Marcy Holmes Neighborhood Association and the Prospect Park East River Road Improvement Association have already contracted and used most of their money, and will lose a remaining percentage — which MHNA Executive Director Melissa Bean said was expected.
“It’s hard to miss something you never really had,” she said.
But another University of Minnesota area neighborhood, Cedar-Riverside, which has not contracted any of its phase two funds, will lose 50 percent of $704,177 it was projected to get.
The University campus district was also allocated $100,000 under phase two, and because it has yet to develop a plan with NRP it is eligible for only half of that.
David Rubedor, director of Minneapolis Neighborhood and Community Relations, said that despite the cut, the city still intends to invest in neighborhood programming.
The Community Participation Program, a part of MNCR, is set up to provide $3 million annually to support neighborhood groups for the next decade.
Miller said CPP’s support is inadequate, and that the problem is in the city’s “extremely shortsighted approach to a very significant problem.” He said $3 million is enough only for administrative and staffing support, and would result in cuts to a lot of community-oriented programs and projects.
SECIA Neighborhood Director James De Sota agrees.
De Sota said a large percentage of the NRP money given to SECIA went to housing development programs, while the rest paid for a newsletter, a community garden, internship opportunities for students and other projects aimed at revitalizing the neighborhood.
As SECIA is almost entirely supported by NRP funds, the city’s money freeze means tough decisions for the organization.
Having already given up its mailed newsletter, SECIA is looking at all possible scenarios to save money — including turning to an all-volunteer staff.
De Sota said SECIA still has funds to last through 2011, but it will have to come up with a solution soon, just like many other neighborhood organizations.
“Things are changing,” De Sota said, “and probably not for the better.”