Minneapolis city officials are looking to resurrect an organization that helps low-income residents get government assistance after a state raid forced it to shut down nearly a year ago.
The City Council is seeking proposals from organizations that want to be the new Community Action agency for Minneapolis, which would fill a giant hole for low-income residents who now must travel outside the city to get assistance from similar agencies.
Gene Ranieri, the city’s intergovernmental relations director, said other established community action agencies have expressed interest in reforming a Minneapolis branch, along with a nonprofit organization in the city. Once approved by the city, the new organization would be eligible to resume doling out state and federal community service grants.
The city is asking interested organizations to submit qualifications in running a Community Action agency, including their experience in working with low income residents. The city also wants to know how the organization’s board is structured and how it intends to comply with state and federal reporting laws.
Minneapolis’ interest in re-forming the organization is a significant step as a court-appointed receiver is still trying to reconcile the finances and debts from the previous Community Action of Minneapolis, which gave out millions in heating and home insulation assistance.
The state raided the nonprofit after Star Tribune reports about alleged spending abuses by the organization’s leadership.
The Minnesota Department of Human Services accused the organization, its board and executive leaders of misspending hundreds on thousands of taxpayer dollars on lavish trips, cruises, personal loans and other unallowable expenses.
In 2009, the organization had a $17 million budget, but its revenues shrank to about $6.8 million in 2012. Most of the board members, including U.S. Rep Keith Ellison and state Sen. Jeff Hayden, resigned as the spending questions came to light.
After Community Action of Minneapolis shut down, residents were sent to other agencies outside the city, including Community Action of Suburban Hennepin in St. Louis Park.
Scott Zemke, executive director of the suburban Hennepin branch, said his organization was able to handle the influx of new customers after the Minneapolis affiliate shut down. He hired 27 temporary workers, and had to set up energy assistance offices at local Minneapolis organizations such as the Center for Changing Lives in south Minneapolis and the Urban League.
Zemke said his organization will continue to process energy assistance requests for Minneapolis residents this winter.
The suburban branch is considering submitting a proposal to be the official organization of the city, but Zemke said a final decision has not been made.
“We are not in the position to say what [a proposal] would look like yet,” he said.
Meanwhile, the state is still trying to determine how much money the former Community Action should be required to repay. The FBI and the IRS are also investigating.
By the end of July, the Minnesota Department of Commerce is expected to tell a court-appointed receiver how much money it estimates that the organization owes.
The city is asking organizations to submit plans by the end of August, and one may be selected as early as this fall.