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ST. LOUIS — A consultant hired by the city’s economic development office is reviewing its embattled $37 million North Side grant program and has already recommended some updates, including taking into account scores that were tallied but not used for the initial round of awardees.

The preliminary report from national accounting consultancy was requested by St. Louis Development Corp. staff following months of bad headlines for the program, including Post-Dispatch reporting that raised questions about some of the grant winners and criticism from applicants and some city officials.

Armanino had already completed an initial review of the program by the time the SLDC board on Thursday approved the agreement to hire the firm. The contract was awarded without a request for proposals under SLDC’s rules, which allows it to directly negotiate contracts when the work is urgent.

“Here, time is of the essence; given SLDC’s strong desire to resume the grant program and distribute needed funds to deserving and eligible applicants, a sole-source procurement is appropriate,� SLDC wrote in a memo to its board.

The SLDC staff memo justifying the contract for an extra set of eyes on the program cited “additional feedback� it received Oct. 22, an apparent reference to a “preliminary risk assessment� St. Louis Comptroller Darlene Green released last month criticizing the program and calling for a reset.

“While SLDC is confident in its due diligence process and believes that its compliance verification is complete and accurate, SLDC’s top priority is ensuring that grant funds are equitably and ethically awarded and disbursed to deserving North St. Louis businesses who were disproportionately affected by the COVID-19 pandemic,� the agency’s memo says.

On Thursday, SLDC said the Armanino report demonstrated the North Side grant program “is largely fair, consistent and meets all federal guidelines and local requirements.�

Post-Dispatch reporting has highlighted grant winners with offices outside of north St. Louis, in vacant buildings or only on paper. And $1.3 million in grants are set to go to entities with ties to the family of Alderwoman Shameem Clark Hubbard, who sponsored the grants bill and sits on the board of SLDC. SLDC has refused to release the full applications from grant winners under the state’s open records law even though its board approved the awards, arguing they are still contracts being negotiated until the money is actually paid out.

In the wake of the criticism, SLDC on Oct. 10 paused the program while it reviews its procedures and does more vetting on the winners. The agency has said it would also resubmit the largest grant awards to its board for a final vote before disbursing funds.

But as SDLC reevaluates the process used to choose more than 300 businesses and nonprofits out of some 700 applicants for grant funding, Armanino’s Keenan McKinney told the agency’s board Thursday that the program appears to meet guidance from the U.S. Treasury, which oversees the federal pandemic money funding the program.

He noted, however, that SLDC’s two consultants hired to vet applicants used a rubric to score applicants, but those scores didn’t appear to be taken into account when they determined whether the applicant was “viable.� SLDC has previously raised issues with the quality of work from one of its contractors, Grow America.

Even so, McKinney said, SLDC should take the points-based scoring into account as it reassesses grant applicants.

“The scoring was not necessarily tied to the final results or conclusions of those viability assessments,� he said. “And so we’re recommending that SLDC make sure that those scoring mechanisms are actually tied to the final results.�

He also said SLDC should be careful if it wants to begin taking the length of time applicants have been operating into account. Comptroller Green last month called for barring applicants that hadn’t been open for several years after some longtime north St. Louis businesses complained some speculative developments and new nonprofits set up after the program was established won preliminary grant approval.

McKinney said SLDC should discuss the idea with the city counselor’s office since the change could disqualify some businesses that won preliminary approval over the summer.

The contract with Armanino is worth $20,000 for the initial report. SLDC can ask the consultant to dive deeper in a second phase worth as much as $30,000 that would follow applications from submittal to SLDC’s final award decisions. The contract says Armanino will review only a “sample� of applications, not all of them.

The grant program controversy has become embroiled in the city politics ahead of April’s mayoral election. Alderwoman Cara Spencer, who is challenging Mayor Tishaura O. Jones, resigned her seat on SLDC’s board last month, saying she had lost confidence in the agency. She was on the board per her position chairing the aldermanic budget committee, so SLDC amended its bylaws Thursday to allow Board of Aldermen President Megan Green to appoint a replacement.

SLDC Director Neal Richardson said he was told that Green would appoint Alderwoman Alisha Sonnier of Tower Grove East to fill the seat.