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ST. LOUIS — When the city’s top development official went before aldermen last week to tamp down concerns about a $37-million North Side business grant program, he promised to make grant applications public and resubmit them to his board.

But the chief of the St. Louis Development Corp., Neal Richardson, also mentioned a new culprit for the problems: one of SLDC’s main consultants on the program, hired two years prior — a national community development nonprofit called Grow America.

In remarks to the aldermen and a statement released after the hearing, SLDC and Richardson blamed Grow America for inaccurate “viability assessments,” or site visits and other verification activities that the nonprofit was supposed to conduct on grant applicants. SLDC said it would review over 200 of them, most of which were from applications submitted before the program was expanded to all of north St. Louis.

And he said Grow America had been offering to sell its other services to grant applicants.

“They offer other products and services, and they were offering those products and services to those businesses,” Richardson told aldermen Sept. 24. “We put forth a cease and desist letter out to them about that and told them that any conversation had to be limited to the scope of the work within the contract.”

But just a month before that letter, SLDC had approved nearly doubling Grow America’s $175,000 contract. The nonprofit is still a consultant for the program.

Richardson’s comments came in response to questions from Alderman Michael Browning of Forest Park Southeast, who said one of the consultants had “left us a little wanting” and asked whether SLDC was “holding them accountable.”

“It’s kind of alarming to hear they were offering services, I would imagine, saying, ‘I’ll get you, I’ll mark you as viable for this community enhancement grant if you contract with me to do the work,’” Browning said after Richardson detailed the concerns with Grow America.

Richardson responded: “I’m not sure exactly how much went into it, but again, as we were receiving feedback that, confirmation that there was, immediate questions about them, or advertising or soliciting other products and services, we immediately sent out a cease and desist.”

After the hearing, Richardson told reporters the cease and desist was “not about the poor quality of the viability assessments” but about Grow America “soliciting other information” that was inappropriate.

“They should not be leveraging our program for the purpose of soliciting any of their products and services,” Richardson said.

What the letter said

A copy of the July 24 letter SLDC provided to the Post-Dispatch after the meeting doesn’t mention anything about Grow America selling its other services to businesses.

Rather, the letter tells Grow America to “ensure your staff does not inappropriately interact with applicants regarding the grant determinations by SLDC.” It was sent less than a month after SLDC won board approval for the awards and publicized them.

When Grow America was originally hired, one of its jobs was to serve as an intermediary between SLDC and businesses and help them fill out applications. Some applicants had been in contact with Grow America about the program for well over a year.

In its letter, SLDC told Grow America to not “communicate anything related to the evaluation, scoring or funding recommendation within the program.”

“We expect that as part of your role as our business partner, you would also maintain a neutral stance regarding the issuance of grants and ensure your staff does not inappropriately interact with applicants regarding the grant determinations by SLDC,” wrote SLDC senior vice president Lance Knuckles, one of the grant program’s main administrators.

Knuckles, Richardson and a spokeswoman for SLDC, Sara Freetly, did not respond to requests for comment for this story.

Asked this week about the letter not containing any reference to Grow America selling its services, Browning said he “noticed that too” after receiving a copy following the hearing. But he hadn’t read it thoroughly.

The letter was addressed to Joseph Gray of Grow America’s Cleveland office. Gray, in a brief phone conversation, said he didn’t want to discuss the letter and the city was the party to address “what their intentions were” in the cease and desist letter.

“I only know what we do and we do training and technical assistance for businesses,” he said.

Told that there had been a suggestion at a public hearing that Grow America was trying to sell its services in exchange for helping businesses qualify for grants, Gray said it was news to him.

“This is the first I’ve heard that, and so I think if they had something like that that they want to discuss with us, they’ll let us know,” Gray said.

He declined to comment further and said a spokesman for Grow America would be in contact with the Post-Dispatch. He did not respond to a subsequent phone call and email, and a Grow America representative never followed up.

A ‘valuable partner’

Three months ago, SLDC approved doubling Grow America’s contract to $344,000 through next June, payment for financial assessments and a technical assistance course for grant applicants.

Richardson’s comments about Grow America last week marked the first time SLDC publicly raised an issue about the nonprofit's performance. SLDC didn’t mention any concerns about Grow America at three board meetings following the cease and desist letter. At its August meeting, an SLDC staffer mentioned another consultant would be helping take some of the workload off of Grow America, which she said had been “bombarded” with trying to finish financial assessments.

SLDC awarded Grow America, formerly known as the National Development Council or NDC, a $175,000 contract in September 2022 to help small businesses complete grant applications under the new program. Grow America was tasked with running a “technical assistance” class and conducting financial assessments that applicants could complete for reimbursements of $2,500 each.

Grow America also performed “viability assessments” on the initial round of 227 businesses and nonprofits that applied in 2022, before SLDC paused the application process and aldermen expanded eligibility from just establishments along several main thoroughfares to all of North St. Louis.

In its statement following the hearing last week, SLDC said it was a “misstep to ask SLDC’s Board of Directors to conditionally approve grant awards prior to internal verification of the accuracy of the viability assessments performed by Grow America.” Richardson said his staff would go back and “review” each viability assessment performed by Grow America and now has a new contractor for viability assessments.

“Following (Grow America’s) completion of their initial scope of work, we decided to move forward with a separate third party, Morgan Graves Consultants, that we feel much more confident in,” Richardson told aldermen.

Morgan Graves, led by Marnée Morgan, had been asked to begin conducting viability assessments of applicants back in April. That month, SLDC’s board added $33,000 to the firm’s $135,000 contract, which was first awarded in September 2022, the same time as Grow America was hired. SLDC said the extra money was to cover the cost of the remaining viability assessments, citing the extra 500 applications that came in after the program was expanded.

Morgan Graves, originally hired to spread the word about the program to eligible businesses, was already closely involved in the vetting process. SLDC Program compliance chief Lorna Alexander said in April that Morgan Graves had already helped SLDC conduct some 500 “one-on-one business assessments.”

But rather than presenting Morgan Graves as a replacement for Grow America, SLDC staff pitched them as a way to “accelerate” the viability assessments and allow Grow America to focus on the financial assessment of businesses. And staff said they wanted to up Grow America’s contract, too.

“There is a subsequent resolution that is being prepared to come back to this body to ensure that Grow America has the right capacity to complete that work,” Knuckles told the board in April. “We’re in conversation as well with Grow America as their original contract was to only provide service to 225 businesses.”

By June, a week before the grant awards were announced, Alexander said Morgan Graves had conducted some 75 final viability assessments, with another 150 to 200 remaining. A week later, at the special June 27 meeting where SLDC presented the grant awards to its board, it also asked to double Grow America’s contract to $344,000 to continue offering the technical assistance course to grant applicants.

In its resolution doubling the contract, SLDC called Grow America a “valuable partner.”

Post-Dispatch reporter Austin Huguelet contributed to the report.