Attorneys for the city of Minneapolis have agreed to conduct regular audits of public contracts with violence interrupter groups, a partial settlement to a lawsuit alleging a city office paid millions of dollars to community organizations without using standard accounting practices to prevent fraud.

Per the agreement, the city's Neighborhood Safety Office will also require community contractors to provide a list of services rendered, receipts and canceled checks to support invoices, and to use a more rigorous and uniform process of selecting who is awarded the grant money, according to court records.

Since launching in 2018 as a public health approach to violence, the city has made the Neighborhood Safety Office a critical piece of its strategy around public safety. As the police department has struggled to rebuild its ranks, city leaders have increased the budget for the Neighborhood Safety Office by nine-fold since George Floyd's murder in 2020, up to more than $23 million this year. The money goes toward funding violence and gang interrupters and youth-based programs and to support victims.

Last year, a lawsuit filed by Minneapolis attorney Zach Coppola alleged the Neighborhood Safety Office used a process to select grant recipients that was so arbitrary it violated the law. The city also used federal COVID-19 relief money to improperly pay for lobbying and political causes and failed to track how the money was being spent, according to the civil suit.

On Wednesday, Coppola's attorney Dean Thomson appeared in Hennepin County court to argue an allegation he says is not settled — that the city violated state data laws by failing to provide public records related to the contracts. In the remote hearing, Thomson said the city ignored and delayed records requests for months, and it took filing a lawsuit to get the city to turn turn over the public documents.

"It's astonishing the city was not able to find contracts it had actually executed and had actually paid," Thomson told Judge Michael Browne. He asked Browne to fine the city for violating the law and issue a declaration forcing the city to abide by the Minnesota Government Data Practices Act, which stipulates a government entity must turn over public records in a "reasonable" timeframe.

Assistant Minneapolis City Attorney Munazza Humayun denied any violations of data law, attributing some delays to human error and a time-consuming process of untangling private and public data. She said Coppola in some cases asked for documents that didn't exist or that he described incorrectly in his request.

Humayun said Thomson was "grasping at straws" by arguing the evidence points to a structural failure in the city's public records system.

The lawsuit is one of two active civil actions alleging the city of Minneapolis systemically flouts the law around public records. A separate suit alleges the city has illegally hid police misconduct records from the public through a secretive process called coaching.

Contactors must show receipts

The Neighborhood Safety Office oversees the Violence Prevention Fund and Gang Violence Initiative — grant programs funded in part by a pandemic stimulus package passed by Congress in 2021.

The lawsuit says the evaluation process for choosing who is awarded these contracts falls short of "the most basic competitive bidding or proposal evaluation process."

In court documents filed earlier this summer, Thomson alleges the city violated federal law by making payments through the Gang Violence Initiative to contractors for "personnel wages," though the contractors couldn't provide invoices showing the amount paid was accurate. In one invoice, attached as an exhibit to the lawsuit, a contractor billed the city for more than $350,000 over two months in personnel wages without listing the names of the employees or specific dates of work performed — identifying them only as "violence interrupter" and a number — and without evidence of actual payment. In other cases, the lawsuit said, the city gave money to people with conflicts of interest with the city or who demonstrated a "lack of fiscal responsibility," such as a person being sued by her bank on allegations of failing to pay back a $77,000 loan.

City Attorney Kristyn Anderson would not comment for this story, but in court documents, city officials have denied the allegations. "Grants are lawfully awarded to organizations that have proven to do good and well-connected work in the community," said spokesman Casper Hill in a statement last fall. "Oftentimes, those organizations are run by leaders that have deep ties to the community, and many times work for various community-facing entities. There's nothing criminal or illegal about that."

Brian Feintech, a spokesman for Commissioner of Community Safety Todd Barnette's office, said in a separate statement Wednesday: "The Neighborhood Safety Department (NSD) is currently managing more than 70 contracts with several different community-based service providers who provide services ranging from gun violence intervention, hospital-based services, violence interrupters and behavioral crisis response. Director [Luana] Nelson-Brown's focus remains on restructuring and building the capacity of the department for accountability and compliance as we work together to develop a sustainable community safety ecosystem our residents and visitors want and deserve."

The city's agreement doesn't admit wrongdoing, but it addresses many of the allegations in the lawsuit. The terms include requirements that any future violence prevention requests for proposal by the city explicitly demand that applicants comply with basic accounting standards, including the ability to provide receipts and cancelled checks to support invoices. Each contract proposal will now be evaluated by the same three reviewers to ensure the selection process is fair and uniform. The city will implement new standards on how proposals are submitted and vetted, and community groups must provide more detailed information on "what, how, when and where" services will be provided, according to the agreement.

The city will also mandate a two-hour accounting course for any groups awarded contracts over $50,000. Contractors must submit monthly billing descriptions on services rendered and more granular payroll data. And the city will conduct a formal audit of past invoices for violence prevention contracts within 180 days.

Thomson called the settlement a victory for Minneapolis residents who will have assurances that city money isn't being misspent, noting Mayor Jacob Frey has proposed raising property taxes in the city next year by 8.1% to help close a $21.6 million budget gap.

"Important procurement protections were either not being followed by the city or inconsistently being applied," Thomson said. "They deny any wrongdoing, but they weren't doing it before and they're agreeing to do it now."

Public data debate

In court Wednesday, Thomson said the city has turned over public documents in the lawsuit discovery process that should have been produced in response to the data requests, which he said shows the city systemically fails to follow public records laws.

"The Act requires the City to have procedures in place to timely and properly respond to [data practices act] requests, not repeatedly frustrate them," he said in a court document. "It is painfully obvious the City had no such procedures and it did not — and still does not — seem to care that it did not. Reckless disregard for obligations qualifies as willful conduct, and the City's repeated pattern of bad behavior proves it disregarded its obligations recklessly if not intentionally."

In a 21-page opposition brief filed in late July, Minneapolis city attorneys argued that data analysts correctly withheld documents they deemed private under state law.

"There is nothing that was turned over in discovery that has been improperly withheld in response to their data request," Humayun said in court, asking Judge Browne to dismiss the lawsuit.

Browne said he will rule on the motion to dismiss in the next 90 days. If the lawsuit isn't fully settled, a trial is scheduled for December.