State grant gave $1.5 million in taxpayer money for purchase of mansion now facing foreclosure

State grant gave $1.5 million in taxpayer money for purchase of mansion now facing foreclosure Eric Rasmussen KSTP From millions to foreclosure Minnesota taxpayers have a financial interest in the outcome of foreclosure proceedings on the historic Gale Mansion in Minneapolis. When the nonprofit Somali Community Resettlement Services bought the property for $2.6 million in 2022, more than half of the price was covered by a state grant, 5 INVESTIGATES has learned. The Grant Contract Agreement from the Minnesota Department of Employment and Economic Development (DEED) awarded $1.5 million to Somali Community Resettlement Services specifically to “assist it in the purchase of 2115 Stevens (Avenue).” Now the terms of that agreement are being scrutinized since the nonprofit defaulted on a mortgage including the mansion and another vacant property in New Hope. In a statement to 5 INVESTIGATES late Friday, Executive Director of Somali Community Resettlement Services Sharif Hared acknowledged “certain mortgage obligations have fallen behind,” but added that the mansion is involved in the foreclosure process because it was used as “collateral” to purchase the property in New Hope. A spokesperson for that city says Somali Community Resettlement Services applied for a conditional use permit to open an adult day care facility, but the project never moved forward. “We are actively working toward a responsible resolution,” Hared said in his statement. Jennifer Urban, an attorney with Legal for Good, does not represent Somali Community Resettlement Services, but advises other nonprofits across the state. She points to a clause in the grant agreement that gives the nonprofit seven days to notify the state after it has “obtained knowledge” of any default. “If the nonprofit did not provide notice, they’re likely in violation of the grant agreement, and that is what creates this uncertainty and perhaps misuse of charitable assets and public funds,” Urban said. “If there is no money, theoretically the state should have some rights to the proceeds of the sale.” The state has not responded to an interview request, but in a statement said Somali Community Resettlement Services “has not notified DEED of any default under the grant agreement.” A DEED spokesperson insisted that “The State is entitled to first distribution” of any proceeds if the mansion is sold. Founded in 1999 to provide a variety of services to immigrant communities near Rochester, Somali Community Resettlement’s annual revenues spiked from less than $500,000 in 2019 to more than $4.1 million in 2021. Prosecutors later filed court records connecting the nonprofit to defendants accused of defrauding a federal relief program to help feed children during the COVID-19 pandemic. No one employed by Somali Community Resettlement Services has been charged with a crime. Hared blamed his nonprofit’s recent “financial hardship” on recent “immigration enforcement activities” and “widespread publicity surrounding fraud investigations in Minnesota.”