Under Fire

LAST FALL MINNEAPOLIS City Auditor Bob Bjorklund got an anonymous call alleging that a neighborhood group was misusing its Neighborhood Revitalization Plan (NRP) funding. Today, five months after the call, Bjorklund will reveal the findings of the city's investigation into the Phillips Housing Team (PHT). And according to insiders, the report will not only take PHT to task; it will also find fault with city agencies for failing to exercise adequate oversight of the funds they disburse under the auspices of NRP. And since those funds involve a lot of federal dollars, any intimation of chronic misuse could result in their being cut off altogether.

Allegations surrounding People of Phillips (POP)--the umbrella organization that oversees both the Housing Resource Clearinghouse of Phillips (HRCP) and PHT--have been roiling around for some time. Last summer the HRCP board launched an investigation into the conduct of its executive director, Charles "Doc" Davis. Among the charges leveled at Davis were allegations of fiscal mismanagement, insubordination, and conflict of interest. According to board members, and by his own admission, Davis was having an affair with the housing organization's supervisor at the Minneapolis Community Development Agency (MCDA), a woman named Edie Oates. HRCP eventually fired Davis. They also complained to MCDA officials about Oates, but the agency refused
to remove her from her oversight
of HRCP.

While Bjorklund was investigating HRCP in relation to the Davis charges, circumstances soon led him to broaden his gaze to include PHT as well. According to Robert Albee, POP's treasurer and a HRCP board member, news accounts in City Pages ("A Phillips Affair," 9/18/96) and The Alley alerted city officials to the possible abuses within Phillips's NRP program. Around the same time, notes Albee, a civil suit was filed against PHT director Robert Bailey. "A PHT employee was claiming discrimination or favoritism by Bailey," he says. "This, plus the newspaper stories, caused Bjorklund to decide to look at PHT's books." Albee claims--and sources near the investigation confirm--that Bailey opened a bank account for PHT funds without the knowledge or consent of the HRCP Board.

Brewing imbroglios such as these could jeopardize the whole basis of NRP funding, which typically comes from some combination of state and federal sources. (In this instance, PHT received money from a federal fund called Empowerment Zone Enterprise Committee to pay for its labor costs. The program is administered by HUD, which filters the money through the Department of Human Services, and then on to city governments.) Since federal dollars have stricter guidelines determining how the money is used, abuses can result in federal inquiries and the subsequent loss of future funds.

Some HRCP board members claim Bailey used NRP funds to build garages for himself and two friends. "This isn't private knowledge," says one. "The garages stand in full view of the neighborhood." Another adds dryly, "Site selection appears to be slated in favor of those who control the money. His [Bailey's] neighbors were never asked if they wanted garages." (Calls to Bailey by CP were not returned.) Albee claims that once Bjorklund caught wind of the garage allegations, he froze the PHT accounts. And this, in turn, wreaked havoc on its parent organization, POP.

PHT's accounts were frozen while it was being audited; this kept the organization from paying reimbursements it owed to POP--a sum between $75,000 and $100,000, sources say. "When the [PHT] account was frozen," notes a member of the HRCP board, "half or more of POP's payroll checks bounced.

"We're concerned about the lack of full accountability for moneys spent by the Phillips Housing Team. And the City has to be worried, too, because this concerns federal dollars. If the money was mismanaged, Minneapolis could lose [a lot of] funding," claims the source.

Regarding the audit, Bjorklund said last Friday that he's prohibited from discussing the results until the report is publicly released this afternoon. "It first has to clear the Board of Estimate and Taxation, and then we'll hold a public hearing Wednesday," he explains.

According to critics of the NRP process, while PHT and Bailey should be held fully accountable for any documented improprieties, the NRP system is set up so as to let opportunists abuse the system without much effort or imagination. "The city doesn't shepherd neighborhoods through the process," says Ed Felien, the editor of the neighborhood paper Southside Pride. "Some neighborhoods don't have problems [handling NRP dollars], but these aren't the troubled neighborhoods. When you throw a potful of money in a poor neighborhood, you'll have problems." Albee says he thinks the Phillips situation stands to hurt other contenders for NRP money around the city. The blame, he maintains, should be divided equally between the MCDA, PHT, the City Council, and the NRP Policy Board.

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