Despite thawing of some funds, NRP battle may be heating up

The City Council may thaw $2.7 million of the Neighborhood Revitalization Program funds it froze last December, but the battle over NRP appears to be just heating up.

Late last year, concern over rising property taxes prompted the City Council to freeze $12.7 million in funds previously allocated to NRP. It helped to limit this year’s tax levy increase, but neighborhood leaders criticized the move for disproportionately affecting poor neighborhoods.

Recently, there has been talk of neighborhoods banding together to sue the city in hopes of recouping the full amount.

The price of tax relief

Last December, following widespread concern over a budget proposal calling for a 7.5-percent increase in the 2011 property tax levy, the council approved a property tax relief plan developed by Council Member Betsy Hodges (Ward 13), Mayor R.T. Rybak and Council President Barbara Johnson (Ward 4). The plan froze NRP Phase II funds as the city sought legislation to end the program and merge it into its Neighborhood and Community Relations (NCR) Department.

The 2011 levy increase was reduced to 4.7 percent. But tax relief came at a price, drawing into question the council’s financial commitment to neighborhoods.

The council’s action essentially redirected the NRP Phase II funds from neighborhood-specific purposes to neighborhood initiatives involving more intimate city participation.

Under NRP, specific allocation decisions are made by the NRP Policy Board, which enjoys a degree of independence from city staff. But if neighborhood programs are brought under the umbrella of the NCR, then city staff will be more directly involved in the process they were in the past.

This year, in addition to any remaining NRP funds, $3 million is available to neighborhoods through the city’s Community Participation Program. Funding for programming of this sort may have come from the property taxes in the past; now it comes from the frozen NRP Phase II funds.

“Engagement versus empowerment”

Hodges points out frozen funds are still going to neighborhood purposes. But critics argue the redirection amounts to
a disempowerment of neighborhood organizations.

“This is about engagement versus empowerment,” said Bob Miller, NRP director. “With empowerment, I have the resources and I’m held accountable for what I do. NRP is an empowerment and investment program.”

Others, like Matt Perry, Mayor Rybak’s appointee to the Neighborhood and Community Engagement Committee (NCEC) and President of the Nicollet-East Harriet Business Association, contend Miller’s concerns about neighborhood disempowerment are overblown.

“I believe the neighborhood organizations will, in fact, have more access and influence over city process and access to city staff than they had through the old NRP system,” Perry said. “They haven’t lost any of their autonomy.”

This spring, NCEC plans to seek neighborhood groups’ opinions on how they should be funded going forward.

“What could be more empowering than to know that I have an institutionalized, systematized connection into the Planning Department?” Perry continued.
“To me, that is incredibly empowering.”

Mixed reactions

Council members reported a mixed response to the NRP freeze. Hodges said most of her constituents appreciated her plan to limit property tax increases, but Council Member Mug Tuthill (Ward 10) described a different reaction.

“There has been a lot of sentiment of
‘I want NRP, and I don’t care what it costs,’” Tuthill said.

On March 9, the council’s Committee of the Whole unanimously recommended making $2.7 of the frozen funds available for NRP Phase II. Even if the full council ultimately approves the recommendation, $10 million in NRP funds will remain frozen.

The recommendation came after the council-appointed Neighborhood Funding Work Group concluded only $10 million of the $12.7 million frozen in December was needed to fund the non-NRP neighborhood initiatives such as the Community Participation Program during 2012 and 2013.

Possible lawsuit

Despite the potential thaw, neighborhood administrators remain highly critical of the council’s decision to freeze $10 million of Phase II funds. Neighborhood groups, including many in Southwest, are discussing a possible lawsuit to recoup the full NRP allotment.

A lawsuit would be complicated by the fact that neighborhoods cannot use city money to sue the city, but it’s possible money from other sources, or pro bono attorneys, could be used to get around that problem.

The crux of the legal issue is whether the city has the authority to act unilaterally and redirect money originally earmarked for NRP. NRP was established through state legislation in 1990 and is governed by a joint-power agreement between five local jurisdictions.

It remains an open question whether further legislation is needed to justify the council’s December action. There is a chance that the legislature will consider an NRP-related bill yet this session, but there has been little momentum in that direction thus far.

“A lot of people feel that the city is really overreaching on this,” said Mark Hinds, executive director of the Lyndale Neighborhood Association, adding that he hopes that the dispute can be resolved out of court.

Equity concerns abound

Legalities aside, critics of the NRP freeze argue it is fundamentally unfair since it disproportionately affects poor neighborhoods.

NRP funds were allocated to neighborhoods partly on the basis of need. Since poorer neighborhoods stood to benefit most from revitalization funds, they received more.

An analysis by NRP staff determined North’s Hawthorne neighborhood, with the third-highest poverty ranking under the NRP formula, was hardest hit by the freeze, losing $796,771 in Phase II funds. Second was Cedar-Riverside, followed by Near North, Phillips and McKinley.

Eleven of the 12 neighborhoods least affected by the NRP freeze are in Southwest, according to the same analysis.

But even though the sting resulting from the NRP freeze is more painful for neighborhoods in other parts of the city, Lyndale director Hinds argues it’s in everyone’s interest to make sure the City Council continues to devote resources to neighborhood organizations.

“Where council’s (December) action had an impact on us is in undermining the viability of neighborhood organizations throughout Minneapolis,” he said.

Reach Aaron Rupar at [email protected]