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Audit says the Iron Range board can't prove it's creating jobs

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Minnesota's legislative auditor has slammed the Iron Range Resources and Rehabilitation Board (IRRRB) with a report, saying the board has been spending millions and not keeping an eye on loans and grants.

The board owns Giants Ridge Recreation Area in Biwabik, and provides loans and grants to help with economic development in northeast Minnesota.

However, the Office of the Legislative Auditor's 89 page report says the IRRRB hasn't been doing a good enough job overseeing and evaluating those loans and grants.

Loans reviewed in the report include those to PolyMet, Silicon Energy and Meyer Associates.

Additionally, the board hasn't specified objectives or goals for job growth in many loan contracts. And it didn't collect evidence that the loans actually met their objectives, noting it's unclear if the group gave loans to some people who didn't actually need them.

Since the IRRRB does not require most companies to report how many jobs they create using the board's money, the board can't prove it's actually creating jobs, the audit says. When loans did refer to job creation, the audit says there were only "vague estimates" of job growth.

State law requires agreements over $150,000 to contain specific measurable objectives.

As far as Giants Ridge Recreation Area, the audit says its operating losses increased by more than 500 percent.

The board has subsidized operating losses with a yearly average of $1.9 million, or $17 million between 2006 and 2014. And the IRRRB has not set target points so that Giants Ridge can measure where it's at with goals.

The audit also raises concerns that the board might not be constitutional. According to the Star Tribune, the governor appoints a commissioner to oversee the IRRRB. The board is made up of nine DFL legislators, and the audit suggests that it may not be constitutional to have them in charge of a state agency's money.

That could become an issue regarding separation of powers, Aaron Brown – who writes about issues on the Iron Range – says.

The lawmakers – including Senate Majority Leader Tom Bakk, Rep. Rob Ecklund, and Rep. Jason Metsa – issued a statement saying they're taking the audit and the concerns it bring up "very seriously."

They also say they'll go over the report and use it to make sure the board is "operating at the highest standards."

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