MINNEAPOLIS-A Minneapolis development organization mishandled funds, didn’t keep proper records and inappropriately paid employees, board members and the executive director thousands of dollars, according to a report from the Minnesota Auditor’s office. Officials with the NEDC dispute the conclusions of the report, and say the examination was politically motivated.

The examination was prompted by concerns of the city that the Northside Economic Development Council, a nonprofit corporation created in 1995, was not spending grant funds for their intended purpose. The report, released earlier this week, concurs with a demand by the Minneapolis City Attorney’s office that the group must return the $589,397 in program funds to the city. The examination showed that the economic development council failed to provide the auditor’s office with numerous records.Among the report’s findings:

• The City of Minneapolis approved $344,500 in loans to be disbursed to North Side businesses through the economic development council, however, the council only lent out $210,188 of the funds.

• Advances made to the council’s director were never repaid, and money was provided for an office assistant position that was never filled; consultants were paid $47,884, but the council had no invoices showing what services were provided.

• About $30,000 was paid as “cash” or in cashier’s check, with no documentation of what the money was used for.

During the three-year period examined by the auditor’s office, the economic development council took in more than $725,000 from various city sources, but a little more than a third of that was spent on loans to businesses, the development council’s primary business, the report concluded.

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