ST. PAUL (AP) -- Minnesota's Iron Range Resources and Rehabilitation Agency has been cited for "questionable and excessive costs" by the legislative auditor's office.
The audit found no illegalities or malfeasance. No criminal investigation is anticipated, but the audit could prompt legislators who oversee the agency and its funding to make changes.
Among the questionable expenses for northeastern Minnesota's economic development agency were the rental of a suite -- including alcohol -- for seven Minnesota Wild hockey games at the Xcel Energy Center to promote tourism and jobs.
The agency also was criticized for the lack of a conflict-of-interest policy, allowing the perception of preferential treatment for some of its board and staff members.
One agency loan officer, for instance, was on the board of directors of a business that received about $335,000 in grants from the agency, the auditor's office said. One agency employee was the mayor of a city and represented the city at agency meetings.
Despite the concerns, agency officials said they were generally pleased with the audit, which covered July 1998 to June 2001. Any criticisms were the result of differences in interpretation or, in the case of concerns about the suite for the hockey games, a lack of understanding of the unique nature of the agency as an incubator for tourism and economic development, they said.
"We maintain that we are not the regular type of state agency," said Deputy Commissioner Brian Hiti. "We do different things in the name of economic development."
Nevertheless, the legislative auditor's office took the unusual step of reacting in the report to the agency's response.
"We saw them interpreting things a little bit farther down the line than we would have wanted to see," said Cecille Ferkul, an audit manager for the legislative auditor.
The Iron Range Resources and Rehabilitation Board, which runs the agency, was created in 1941 to cushion economic uncertainty brought about by the cyclical mining industry in northeastern Minnesota. The board is composed of 10 legislators and three non-legislative residents. The governor appoints a commissioner to oversee the agency.
The board distributes more than $27 million a year in grants and loans, with most of its money coming from fees that taconite producers pay instead of property taxes.
Criticism of the agency's deal with the Xcel Energy Center is an example of the unique nature of its place in state government and why it has often been scrutinized.
In August 2001, the agency signed a Minnesota Wild sponsorship agreement with the company that manages the St. Paul arena to promote tourism and economic development in northeastern Minnesota.
The three-year, $98,000-a-year deal included the use of a suite and board room during three regular-season home games; radio and closed-circuit TV advertising during regular-season games, and designation of the agency as the sponsor of the arena's Iron Range Grill, allowing the use of its logo on napkins, menus and wait-staff shirts.
In addition, the agency gave the use of the boardroom and a $1,500-per-ticket credit it received as a sponsor to a private company in exchange for providing beverages, including alcohol, for suite events. The arrangement was a potential violation of state policy.
Brainerd Dispatch ©2013. All Rights Reserved.