Audit: Meet Minneapolis overstated success by nearly $200 million

The nonprofit charged with drawing tourism, conventions and national events like the X Games to Minneapolis overstated its success by nearly $200 million over the past three years.

Meet Minneapolis gave flawed estimates by double counting money generated by events, relying on pre-event estimates instead of readily available final counts and, in at least one case, ignoring a contractual mandate to procure an independent audit, according to a city audit presented Monday.

"I just think that this was sloppy work by Meet Minneapolis," said Council Member Linea Palmisano, who chairs the audit committee.

Palmisano said the city relies on these numbers to decide how to invest in the city, including the $140 million Target Center renovation. The city budget includes about $10 million per year for the group, the bulk of Meet Minneapolis' annual budget.

"Our contract with them is predicated on performance metrics," she said. "So we rely on accurate performance metrics to know if our city investments are paying off and by how much. We need to know we can trust their reports."

The audit also found the city failed to properly verify that Meet Minneapolis was complying with its contract obligations, and that it relied on verbal progress reports in lieu of documentation.

Meet Minneapolis achieved its economic goals but overstated its impact by $121.8 million in 2015, $25 million in 2016 and $49 million in 2017, according to the audit.

She said the audit found only "minor errors and missing elements" and does not undermine the success of the organization. "This is great feedback for us to take into consideration," she said.

Meet Minneapolis receives taxpayer funding each year to promote the city as a national destination for travelers and major events. Its 44-member board includes seven City Council members and two Hennepin County officials, in addition to members from the private sector.

When its president and CEO, Melvin Tennant, received a renewed contract and increased salary in 2016, then-Board Chairman Bob Lux said the pay was tied directly to Tennant's performance and bringing in "$430 million in economic impact to Minneapolis."

Those estimates were off by $121.8 million, according to the audit. Meet Minneapolis generated about $308 million that year. Tennant made about $290,000 in total compensation in 2015, according to tax documents.

To conduct the audit, city staff interviewed employees and reviewed documents dating back to 2015. On Monday morning, Kiril Vassiliev, the city's audit manager, told the council's audit committee that, beyond the size of the overstatement, the problem was that Meet Minneapolis miscounted certain events in "a systemic way over the course of several years." The audit did not cite individual events in which the numbers were inflated, and instead presented them as broad annual totals.

The city also paid Meet Minneapolis an extra $500,000 last year for fulfilling specific goals, though it never asked for or reviewed documentation to confirm the goals were completed, according to the audit. "Because the verification process was conducted verbally, there were no records or materials demonstrating the adequacy of the City's oversight process," the audit said.

Ries said that Meet Minneapolis' bonuses were based on specific criteria, not the overstated total impact.

Palmisano said the audit will likely factor into talks when the current contract is up in two years.

"If we're going to continue offering contracts to Meet Minneapolis with public money attached to it, they will need to be more accurate," she said. "I'm glad we found it out now."