IRRRB blistered in state report

The document was released at a subcommittee hearing in the Legislature Friday.

The audit was done for the years 2006-2014. Most of that time, agency commissioners were former Republican Gov. Tim Pawlenty’s appointee Sandy Layman of Grand Rapids, and Gov. Mark Dayton’s pick of former DFL Rep. Tony Sertich of Chisholm.

IRRRB Commissioner Mark Phillips and Range legislators who are on the board said they appreciate the work of the Legislative Auditor and take the report seriously. Also, they said remedies to address some of the findings have already been put in motion.

“As the members of the Iron Range Delegation of the Legislature, we take very seriously the concerns the OLA (Office of Legislative Auditor) has laid out today about the IRRRB,” a joint statement from DFL Reps. Tom Anzelc of Balsam Township, Rob Ecklund of International Falls. Carly Melin of Hibbing and Republican Rep. Dale Lueck of Aitkin), and DFL Sens. Tom Bakk of Cook, David Tomassoni of Chisholm and Tom Saxhaug of Grand Rapids.

“There is no ‘magic wand’ to achieve the complex goals of economic development and diversification. The agency staff work very hard and are extremely dedicated to this challenging work. We are grateful for their service and cooperation.

“The success stories of the IRRRB are not necessarily the focus of today’s report, but as the OLA staff noted in today’s hearing, successes do exist, and in our opinion are the result of the IRRRB staff’s thoughtful work.”

These are a summary of the findings:

• Overall, IRRRB oversight and evaluation of its loans and grants is inadequate.

• IRRRB did not adequately specify objectives — such as job growth —in many loan contracts.

• IRRRB does not require most companies to report the number of jobs they create using agency subsidies.

• The database used to maintain information on loans is inaccurate and outdated.

• There are only vague estimates of job growth with little evidence of achieving objectives.

• Some grant programs do not consistently follow agency policies.

• From 2006 to 2014, Giants Ridge operating losses increased by more than 500 percent. IRRRB has subsidized operating losses with an average of $1.9 million yearly. The agency has not set sufficient targets to measure how well Giants Ridge meets its stated goals.

• State statutes on IRRRB’s governance structure are vulnerable to a constitutional challenge. “This arrangement is vulnerable to a challenge under the Minnesota Constitution’s separation of powers clause and its prohibition against legislators holding another public office. We base our conclusion on our review of the plain language of the Minnesota Constitution, historical context from the state constitutional conventions, and opinions from the Minnesota Supreme Court and attorney general.”