Neighborhood activists, councilmembers debate NRP’s future, funding

Earlier this month, City Councilmembers Paul Ostrow (1st Ward), Barbara Johnson (4th Ward) and Barret Lane (13th ward) and Mayor R.T. Rybak presented a plan to close an estimated $55 million shortfall in city finances between 2004 and 2008. Their proposal calls for cuts in spending growth for police, fire, public works — so-called "core services" — and in most other city departments. The slower spending could mean layoffs, reduced salary increases and/or fewer city services.

Some neighborhood activists are concerned that the budget-cutting could threaten the Neighborhood Revitalization Program, begun in the early 1990s, that promised neighborhood control of $400 million in local funds over 20 years (since extended to 25).

State law changes in 2001 cut NRP’s dedicated funding source, and one of the plan’s proposals calls for eliminating a $4 million levy for community development — designed to help plug an NRP-type funding shortfall the state created.

Hoping to preserve NRP’s funding, an informal group of activists are circulating a resolution to neighborhoods demanding that the council keep NRP funding and independence intact. Three councilmembers — Lane, Downtown’s Lisa Goodman (7th Ward) and Scott Benson (11th Ward) — argue here that they can’t, and won’t.

Draft neighborhood NRP resolution

WHEREAS, neighborhood organizations have had a vital role in making Minneapolis a better city to live, work and do business, and

WHEREAS, the Neighborhood Revitalization Program (NRP) has been in operation for over 10 years and has made a significant impact in neighborhood-based planning and investment in the city by engaging residents and business in the decision-making process and leveraging additional financial investment, and

WHEREAS, the City Council and the Mayor of Minneapolis are in the process of addressing long-term funding issues and the organizational structure of the city, and

WHEREAS, on Jan. 13, 2003, a group of residents from 35 neighborhoods — Lind Bohanan, Windom Park, Whittier, Jordan, Stevens Square, Elliot Park, Loring Park, Powderhorn Park, Como, Nokomis, Camden, Willard-Hay, Near North, Ventura Village, Bottineau, Cleveland, McKinley, Shingle Creek, Seward, Longfellow, Phillips East, Midtown Phillips, Field-Regina-Northrup, Hale-Page-Diamond Lake, Folwell, Linden Hills, Corcoran, Fulton, Kingfield, CARAG, Bryn Mawr, Harrison, Lynnhurst, Audubon Park and Downtown — came together to support a common platform for the continuation of the NRP.

NOW, THEREFORE BE IT RESOLVED, that we demand that the City Council approve $33 million for the city’s community development resources, and

BE IT RESOLVED, that the City Council support Councilmember Schiff’s proposal to remove the Community Development Levy from the proposed budget cuts and dedicate this money to NRP and affordable-housing development with the understanding that additional resources will be available to these programs, and

BE IT RESOLVED, that the city dedicate 1/3 of the $33 million community development budget for the NRP, and

BE IT FURTHER RESOLVED, that we agree on nine principles for the continuation of the NRP. These principles are:

1. The NRP should continue as an independent agency;

2. There should be long-term funding set-asides through the program for every neighborhood in Minneapolis;

3. Neighborhoods should control designated funds;

4. The NRP Policy Board should have a higher percentage of neighborhood representation;

5. There should be more effi- cient, effective partnerships between the NRP, the neighborhoods, city departments, and other appropriate agencies on developing city policies;

6. Neighborhoods should have an important role in implementation of city goals at the neighborhood level;

7. Neighborhoods should be included in the discussions with the City pertaining to the NRP and other issues affecting Minneapolis neighborhoods;

8. Neighborhoods should be a vital and effective part of the

positive development of the City of Minneapolis; and

9. At least 1/3 of the City’s $33

million Community Development resources should be allocated to NRP on an on-going basis.

Three councilmembers respond to ‘Future of NRP’ resolution

Strong neighborhood organizations make for strong neighborhoods, which have made Minneapolis one of the most livable urban cities in the United States. With this in mind we, as three of your elected members of the City Council, want to address the long-term funding and organizational issues facing the city as we prepare to approve the city’s five-year budget priorities.

Some active members of neighborhood organizations have proposed a "Resolution on the Future of NRP" that includes a list of demands regarding NRP’s future. The four main demands that they are requesting the City Council approve are so far from the reality we face in this financial climate that we need to address them immediately so that no one is left wondering why we will be forced to reject this resolution if and when it comes before the Council.

1. Community Development

The resolution demands that the City Council approve $33 million for the city’s community development priorities.

The largest source of city community development funding is federal Community Development Block Grants (CDBG), currently $18.5 million annually. This funding is restricted to specific uses: emergency shelters, affordable housing, housing people with AIDS. It cannot simply be allocated to neighborhood NRP plans; CDBG can’t fund administrative costs or make direct contributions to an individual neighborhood’s projects. Neighborhoods can influence where money goes with CDBG rules — as several now do — but it cannot be allocated to neighborhood NRP plans.

Another $3.6 million comes from Federal Empowerment Zones, spent in specific neighborhoods. It is also not available for NRP; federal rules require it to be independent of the city and restricted to specific development projects in a city’s grant application.

Subtracting CDBG and Empowerment Zone money, we’re left with $10.9 million for community development. That may go up or down depending on economic outlook, tax increment collection, and development charges already incurred but not yet spent, such as litigation, Target Center bond payments and other community-development bond repayments such as $6 million in 2006 for the Pantages Theatre.

Therefore, the Council can’t "guarantee" that $33 million will even be available for community development. Even if it is, two-thirds of that $33 million is ineligible to fund NRP.

2. Dedicated NRP resources

The resolution asks that one-third of the $33 million be dedicated to NRP. If the council did that, no money would be available for any other community development project, including:

– Commercial corridor development on Central, Broadway or Franklin avenues or Lake Street;

– Historic preservation projects;

– Any Downtown development;

– Re-opening Nicollet at Lake Street;

– Redeveloping the Hi-Lake shopping center site;

– Light-rail re-development.

All of these programs need the same revenues as NRP. In addition, this choice would severely cut the MCDA employees working on the city’s development goals, since they are paid from these funds.

3. Community Development levy

The resolution’s third demand is that the Council remove a $4 million Community Development levy from the proposed cuts and dedicate it to NRP.

The Community Development levy was approved in 2002 because a year earlier, the state drastically cut taxes paid by a pool of downtown tax-increment districts that finance NRP. These NRP revenues were cut at approximately the same time debt that financed NRP’s first 10 years (Phase I) came due. Therefore, fewer NRP dollars had to pay back debt first, leaving very little for Phase II. The $4 million Community Development levy was to help fill that gap.

However, since the $4 million came directly from general taxes — a first since 1978 –community development became a direct competitor for property tax dollars with police, fire and public works.

Last year, the council approved an 8 percent annual growth in the city’s annual property tax levy for the next decade — an aggressive increase in which half went to cost-of-living increases (health insurance and labor costs) and half to retire other past city debt. It became clear then that the council would have to further cut core police, fire and public works services to preserve the $4 million levy.

We cannot support keeping this levy, since doing so increases cuts to these core services. Even under the proposed five-year financial plan, police, fire and public works will face significant reductions. The $4 million levy was created before we identified the need for $55 million in city budget cuts in the next five years; and with state Local Government Aids cuts a real possibility, we must preserve our ability to fund basic services in the general fund (police, fire and public works) before funding community development.

4. NRP structure

Lastly, the resolution outlines nine principles for NRP’s continuation, including keeping it an independent agency.

Given community development cuts, the days of separate staff, offices and administration for the city’s core development functions — including the MCDA, the Planning Department and NRP — are over. The whole purpose of the McKinsey Study of development functions and the adopted Focus Minneapolis Plan was to align, streamline and bring together staff that work on community planning and economic development under one umbrella department.

The purpose of NRP was to re-design city services and better integrate neighborhood planning into all City planning and development decision-making. Now, NRP has become more about the money, not the planning, and that’s unfortunate.

Conclusion

Phasing out the $4 million Community Development levy is part of the five-year package of equally unpalatable cuts to protect our core basic services to the greatest extent possible. Other sacrifices include backing off on our commitment to close our infrastructure gap, increasing debt payment periods within recommended financial practices, phasing out general fund support to the health department, and cutting the growth of property-tax supported departments such as Planning and Civil Rights.

This problem is manageable, but not without a lot of shared pain. We will need to make these and many more difficult decisions — and stick to them — if we are to lead this City into the future. This plan cannot and does not anticipate what the State will do with Local Government Aid.

We call on neighborhood associations, activists and community leaders to work with us as your elected representatives to help us figure out NRP’s future. Resolutions like the one being circulated have little basis in the financial reality we face together as a city. They only split the community and neighborhood groups into factions that will end up competing for resources, rather than planning outcomes.

Developing and sustaining healthy, safe and affordable neighborhoods, with living-wage jobs and a sense of community, can continue. Bringing all voices to the table for an honest discussion has been our desire all along. Straight talk –whether the message has been hard to deliver or hard to hear — has been a priority for us, and we will continue to tell the truth and hope you take our efforts at face value as we proceed down this difficult path.

Scott Benson, Councilmember, 11th Ward

Lisa Goodman, Councilmember, 7th Ward

Barret Lane, Councilmember, 13th Ward