TEL: (218) 740-3175 FAX: (218) 740-3179 EMAIL info@MnResponsibleRec.org WEBSITE: www.MnResponsibleRec.org

March 22, 2004 Via Fax and U.S. Mail

Commissioner Gene Merriam
Minnesota Department of Natural Resources
500 Lafayette
St. Paul, MN 55105

Re: Misuse of public grant-in-aid snowmobile trail funds by the City of Orr

Dear Commissioner Merriam:

As part of a larger attempt to understand motorized recreation decisions being made by the DNR and St. Louis County, MRR has recently learned that grant-in-aid snowmobile trail funds are being used for non-allowable purposes by at least one local government sponsor in Northern Minnesota.

On March 16, 2004 MRR sent evidence to the State Auditor requesting an investigation of conflicts of interest and potential misuse of public trail funds regarding the City of Orr, local government sponsor and fiscal agent for the Voyageurs Trail Society, Incorporated (VTSI). Since filing this complaint, further analysis of public documents has convinced MRR that the City of Orr is in fact using grant-in-aid snowmobile funds for non-allowable purposes.

Attached please find a copy of a City of Orr document dated February 9, 2004, (labeled "C2" in our complaint to the State Auditor). This document shows an incoming snowmobile trail grant of $28,000. The document shows that $5000 of this public trail grant was deducted on February 9, 2004 to "make payments to [ Orr] American Legion for expenses incurred in operating the Orr Community Center". Our reading of "allowable expenses" in the DNR grant-in-aid manual does not include payments for this purpose. (The document also shows an additional $5000 deduction from the $28,000 trail grant to the City of Orr. It is our understanding that this $5000 has been annually used to pay the VTSI Trail Administrator, who is simultaneously the City of Orr City Administrator, for work performed on city time. That we find this procedure questionable is one concern we have relayed to the State Auditor.) Please note that the remaining balance on this incoming grant after the above two deductions is $18,000.

MRR is deeply concerned that public trail funds are being used by the City of Orr for non-allowable purposes. We are especially concerned given continuous reports from the DNR, and corroborated in the 2003 Office of the Legislative Auditor report on the agency’s motorized trail program, that the DNR already lacks sufficient funds to provide adequate planning, enforcement, and other resources to mitigate the unwanted impacts of motorized recreation.

To insure that grant-in-aid program funds are being spent only for program purposes MRR requests that the DNR immediately withhold future grant-in-aid payments from the City of Off and VTSI until:

• current and past payments can be accounted for and misappropriated funds have been reimbursed back to the DNR’s grant-in-aid snowmobile trail fund,
• oversight and accountability recommendations from the 2003 legislative audit are put in place by the City of Orr to insure that future grant-in-aid funds to the city will be used only for allowable purposes.

Because we are convinced that the above problem is not unique to the City of Orr but is systemic throughout our grant-in-aid system of payments to local governments, MRR also requests that the DNR:

• work with the State Auditor to fully understand what is occurring in the City of Orr and VTSI,
• review grant-in-aid funds expenditure by other fiscal agents to determine to what extent similar problems are occurring throughout our state.

As the above concerns are of urgent importance to our members statewide we ask that you communicate with us as soon as possible as to what course of action you intend to take given the attached evidence of the misuse of grant-in-aid trail funds by the City of Orr.

In the meantime please call on me at 218-740-3175 with any questions you might have or if there is any further information I might provide.

Sincerely,

Jeff Brown,

Executive Director

3. Terry Diamond, Special Investigations Division, State Auditor

Representative Alice Hausman

Senator John Marty