Origins of neighborhood funding debate extend back to the early 1990s

MinnPost photo by Iric Nathanson
Whittier’s NRP plan helped lay the foundation for the revitalization of a 17-block stretch of upper Nicollet Avenue, now known as “Eat Street.”

As Minneapolis’ 2015 budget works its way through the City Hall labyrinth, a financial tug of war is taking shape between Mayor Betsy Hodges and the leaders of several neighborhood organizations over the use of a projected funding windfall generated by the city’s special taxing districts.

Over the next five years, the taxing districts are expected to generate nearly $15 million in additional revenue, over and above estimates that were made in 2011. Neighborhood leaders maintain that a significant share of the additional revenue should be used to support the work of their organizations. But Hodges has other plans for the taxing-district surplus. In her 2015 budget, she wants to use $424,000 in the new funds for a variety of City Hall projects, leaving the neighborhoods groups with only an inflationary increase in their annual funding allocations.

The taxing districts first emerged as a major funding source for grass-roots initiatives when city officials launched an ambitious multiyear neighborhood-improvement effort in 1990. The idea for the plan was first floated by Tony Scallon, then a City Council member and chair of the council’s powerful Community Development Committee. Scallon had looked at the numbers and realized that the taxing districts were expected to generate much more in revenue than was needed to cover the debt-service costs for the city tax increment bonds — as much as $400 million more over 20 years.

In November 1989, Scallon had been re-elected to his Ninth Ward Council seat. That election returned Don Fraser as mayor and brought several newcomers to City Hall who had close ties to neighborhood groups in their wards. With neighborhood-friendly officials holding key local offices and a readily available funding source, support soon began to build for what came to be known as the Neighborhood Revitalization Program (NRP).

Promoted as a new way of doing business

The new initiative was viewed as more than another source of public funds for neighborhood projects. NRP’s architects, led by Deputy Mayor Rip Rapson, promoted the program as a new way of doing business in City Hall, with neighborhood residents designing and implementing their own multiyear strategies aimed at combating blight and boosting neighborhood livability.

Soon after the program was unveiled with great fanfare in City Hall, the Star Tribune’s Jim Parsons told his readers that NRP “is an attempt to do things radically different — primarily by doing them from the bottom up rather than from the top down.”

“The City’s 81 neighborhoods are going to tell the powers that be what is needed to make their neighborhood livable. And they won’t just focus on rehabbing ‘crack houses’ and other bricks and mortar projects,” Parsons continued. “The residents will talk about people problems, such as the need for day care and what’s happening or not happening in their schools and parks. City Hall, county commissioners and the park, school and library boards are supposed to listen and make a concerted effort to do what the folks want done.”

To implement the new bottom-up approach to neighborhood revitalization, city officials brought in Earl Craig, a well-known community activist, to serve as NRP’s executive director. After he was on the job, Craig cautioned neighborhood leaders not to get caught up in getting a share of the $20 million to be allocated each year for NRP. Instead he wanted them to “think big” – to find new ways to redirect the budgets of all the city’s public agencies — budgets totaling $2 billion a year. “We need to push the limits on how we address problems,” Craig said.

The ambitious Whittier plan

Whittier, the first neighborhood to prepare its comprehensive NRP Action Plan, took Craig at his word. The near Southside neighborhood, with a population of just under 15,000, presented City Hall with a plan costing $29 million. Only $7.7 million was to come directly from NRP, with the remainder to be funded from a combination of other public and private sources.

The Whittier plan called for a new park and school to serve local residents, more emphasis on home ownership in the largely rental neighborhood, and increased police presence for neighborhood pockets struggling to combat street crime. A centerpiece of the plan was its proposal to reopen Nicollet Avenue at Lake Street, blocked off 15 years earlier to accommodate a new Kmart store. More than 20 years later that goal has still not been realized, but another feature of the Whittier plan has been implemented with positive results. That provision urged creation of an economic-development fund to assist struggling local businesses. The fund was created and managed by the neighborhood’s economic-development arm, the Whittier Community Development Corporation. The CDC loan fund help lay the foundation for the revival of a 17-block stretch of upper Nicollet Avenue in Whittier, now known as Eat Street.

Earl Craig did not live to see the implementation of the Whittier plan. In January 1992 he was found stabbed to death in his downtown apartment — sending shock waves throughout the city. To succeed Craig, city officials hired an experienced local bureaucrat, Bob Miller, to oversee NRP. Miller had received high marks for managing a countywide community crime-prevention program.

Over the next 20 years, Miller, a wily bureaucrat with a down-to-earth manner, would become the driving force behind NRP. Under his watch, one neighborhood after another would prepare its own action plan and receive its share of the $20 million allocation, based on a funding formula that measured population and economic distress. Some neighborhoods combined in order to maximize the impact of their NRP plans. In the city’s southeast quadrant, four neighborhoods came together to form the Longfellow Community Council and receive a $9 million funding reservation, NRP’s largest single allocation.

A decade in, criticism mounts

During its early years, NRP received generally high marks for its work from outside reviews including those conducted by the Minneapolis League of Women Voters and Rutgers University. But, as the flow of dollars into the neighborhoods began to increase in the late 1990s and into the early 2000s, the program began to face a steady drumbeat of criticism. Some of NRP’s earliest advocates became disillusioned when they realized that the much-ballyhooed initiative was not doing much to change the way business got done in City Hall. Other critics maintained that the grass-roots planning committees were often controlled by cliques of neighborhood insiders who did not represent renters and people of color.

In the face of these criticisms, Miller and his neighborhood supporters were able to mount a vigorous defense of the program and beat back attempts to dismantle it during its second 10 years when new estimates showed that the taxing districts would spin off considerably less in revenues than had been projected during NRP’s early years.

Miller had been able to carve out a unique role for himself in City Hall, because, unlike other city officials, he did not answer to the mayor and the City Council. Instead, he reported to a Policy Board composed of neighborhood delegates and representatives from other city and county agencies. Critics maintained that this structure enabled NRP to establish an independent power base and chart its own agenda that did not always mesh with the priorities established by the city’s elected leaders.

A rally — and a dismantling

The controversy over NRP’s independent role came to a head in 2011, when it became clear that Mayor R.T. Rybak and his allies on the City Council intended to dismantle the program and transfer its function to a new city department. Miller’s supporters attempted to make an end run around Rybak by promoting a bill at the State Legislature to maintain NRP in its current structure with an independent Policy Board. But the advocates’ legislative strategy was not successful. Despite their best efforts, NRP was dismantled in 2012 and Miller was out of a job.

Under the new Department of Community Engagement, neighborhood groups continue to receive city funding, although at a substantially reduced level, and some are still spending down on their original NRP allocations.

This year’s controversy over the taxing-district windfall is driven in part by reverberations from the earlier battle over the future of NRP. Whether or not the neighborhoods prevail in their efforts to obtain a larger share of the windfall, they are now a permanent part of the city’s political landscape. Minneapolis’ neighborhood movement has now become institutionalized. In many ways, that is the Neighborhood Revitalization Program’s most lasting legacy.

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Comments (5)

  1. Submitted by Connie Sullivan on 12/01/2014 - 01:14 pm.

    Nice summary of NRP, Iric!

    Another feature to be considered is whether the traditional downtown-centric expenditures of city energy and money was ever seriously dented by funding neighborhoods in a decentralized scheme like the NRP.

    Today, we are witnessing Minneapolis officialdom paying attention to nothing much but downtown, and resenting the neighborhoods that are still able (through good stewardship of their long-ago-awarded NRP funds) to foster improvements away from downtown.

    There are still neighborhood advocates that challenge a renewed and hardened downtown-centric emphasis, but there’s a built-in Council and mayoral reluctance to let anyone other than themselves have a say over tax dollars.

  2. Submitted by David Markle on 12/01/2014 - 07:08 pm.

    NRP et al

    NRP, tax increment districts and Cedar Riverside: Prior to the establishment of NRP, the neighborhood groups officially recognized as advisory to the city got most of their money from city-administered federal block grants. Cedar-Riverside was exceptional in that its group had enjoyed a sizeable budget funded by the neighborhood’s substantial tax increment district that included what is now Riverside Plaza. But most of Cedar-Riverside’s redevelopment had taken place by the time the city and legislature decided to set up NRP using money from recycling and pooling several lucrative tax increment districts including Cedar-Riverside’s.

    Unfortunately because of the unusual influence of one person in the neighborhood–call him the “petty despot”–Cedar-Riverside was the last neighborhood to launch its NRP, apparently because he thought it would be a program he couldn’t control. After years, it became possible for the neighborhood to have a program, but even before it could be set up the Council Member and the President of the neighborhood bank pushed the neighborhood into committing nearly half of it’s NRP money towards rehabilitating historic Dania Hall (a building that should have been fixed years before).

    Unfortunately again, the petty despot assumed control of the neighborhood’s oversight committee for the rehab project. Also unfortunately and contrary to common sense and the wishes of the Assistant City Attorney, the Council Member pushed to let the private developer commence work, despite the fact that the redevelopment contract had not been signed and title of the city-owned property had not been transferred. And unfortunately once again, the petty despot insisted on many revisions of the redevelopment contract as work progressed, apparently in furtherance of greater future control of the building by himself. By the time nearly $1.5-million of the neighborhood’s NRP money had been spent on the rehab and the developer simply had to ink the papers, it had also become clear that the project was a failure for the developer: an anchor tenant had not been secured. Curiously, the new sprinkler system got turned off, the building burned down, and the developer got off the hook.

    But the neighborhood lost its most remarkable building and roughly half its NRP money. The city self insures, and the petty despot–supposedly an expert on such matters–had not seen fit to make sure the building and neighborhood investment was secured by insurance while he repeatedly delayed the signing of the papers that should have taken place before the project started.

    Much later after further difficulties, the neighborhood did establish a viable NRP program that instigated the construction of four townhomes (of three or four bedrooms each) for home ownership, using most of its remaining Phase I NRP funds. The townhomes are nearly finished and, I understand, practically all as good as sold. But in the meantime, UNFORTUNATELY, the city substantially cut Phase II funds before Cedar-Riverside’s delayed program could obtain them.

    Ultimately the main point I wish to make in this supplementary discussion of history is that Cedar-Riverside, probably Minneapolis’ poorest neighborhood in terms of family incomes and need for social services, has gotten screwed in the city’s distrubution of these resources from tax increment renewal, a significant portion of which CAME from Cedar-Riverside. That’s a situation that should be recitified.

    A second point is that the city is wrong if it simply funds itself by further renewal of tax increment districts that completed their original mission long ago: it’s bad tax policy, a misuse of redevelopment incentives and, in effect, bad accounting.

    .

    • Submitted by beryl john-knudson on 12/02/2014 - 10:39 am.

      speaking of “petty despot”…just could be

      that despots never die, they just move on to northern cityscapes and continue their “despoting”?…could be , yes indeed…

  3. Submitted by beryl john-knudson on 12/02/2014 - 10:17 am.

    Thanks indeed for a fine history piece…

    …plus the additional comments exposing or shall I say, revealing the controversy at the time .

    As a student in that time period I worked as a ‘soda jerk’ at Smiley’s Point which may or may not still exist; at the end of that triangle block.

    Cedar Riverside (going nostalgic here a bit)…did skip a class or two exploring the wonderland of Holzerman’s with its European antiques and Scandinavian foods imported at Christmastime?

    C-R was once-upon-a-time, “Main Street’ in very early settlement history?.

    Somebody should do one on Bohemia Flats and its root immigrant culture maybe?

  4. Submitted by Gary Arntsen on 12/02/2014 - 03:29 pm.

    Re: Markle’s remarks

    Remarkable!

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